Horry County Council's I-73 contract died last week, but the fate of a proposed settlement between the county and Grand Strand cities remains undecided.
If that settlement were to be approved by all the groups involved, it would generate more than $14.5 million annually for I-73. But if it fails, that would essentially end the local effort to pay for the interstate.
“We either have an agreement or we don’t,” said Horry County Council Chairman Johnny Gardner, who wants all the councils to vote on the deal next month. “There’s eight bodies voting on this thing. And all it takes is one to vote it down and we’re back to the drawing board. I don’t think that would happen, but who knows? I’ve seen stranger things happen. So we need to go ahead and get it done.”
The settlement centers on the county’s 1.5% hospitality fee, which has traditionally been collected on restaurant meals, hotel stays and admission tickets sold countywide. The fee was created in the 1990s to pay for road projects such as S.C. 31 and S.C. 22.
County leaders had planned to use that money for I-73, but they also hoped to spend a portion of those dollars on improving public safety services. That upset some municipal leaders, who objected to fees being collected inside their borders paying for county services. The City of Myrtle Beach sued the county in March, accusing the county of illegally collecting the fee inside the city limits. North Myrtle Beach and Surfside Beach leaders also joined the push to end the collection of the hospitality fee within their borders.
So far, court rulings have gone in the cities’ favor. The county is barred from collecting the fee inside city limits while the lawsuit is pending.
But after 10 hours of mediation on Oct. 31, county officials said they had a tentative agreement that each council would consider.
If that settlement is approved, the 1.5% hospitality fee is projected to bring in $43.7 million per year annually, according to records obtained by myhorrynews.com. The proposal calls for pledging more than $14.5 million of that money to I-73 and providing the city of Myrtle Beach with $12.8 million (the city collects the most fee revenue of any local government). Horry County would get $8.5 million. North Myrtle Beach ($5.3 million), Surfside Beach ($1.1 million), Conway ($1.1 million), Aynor ($133,272), Loris ($160,288), and Atlantic Beach ($46,463) would each receive a share as well.
Despite the tentative deal, the parties have not agreed when to vote on it.
“The NMB City Council is still familiarizing itself with the terms of a proposed ‘agreement in principal’ and continues to receive advice from outside counsel on some related issues,” city spokesman Pat Dowling said in an email.
North Myrtle Beach officials discussed the matter behind closed doors Monday, but no vote was taken.
Myrtle Beach spokesman Mark Kruea also said he had not heard of a concrete date for a vote.
Since the tentative agreement was announced last month, county officials have objected to two parts of the proposed settlement: they worry the cities’ attorney fees would claim more than $6 million in public money and they are concerned some of the cities will simply tack on the 1.5% hospitality fee to the 1% hospitality taxes they created this year to replace the county's fee. That would mean taxpayers in those cities would be taxed 1% more for hotels and restaurant meals than they would have before this saga began.
Gardner said the settlement question needs to be answered by December so the parties can go to a judge and either present the deal or explain that the mediation failed. If the two parties can’t resolve the matter, the S.C. Supreme Court has agreed to hear the case.
“The original idea was we would have eight different council bodies having eight different meetings on the same day and the white smoke will come out and everything will be fine,” Gardner said. “That hasn’t happened yet and we don’t know if it’s going to happen. But that is what the lawyers and council people are working on.”
If the deal can be worked out, Gardner said the local governments could begin talks with the S.C. Department of Transportation (DOT) about drafting a contract to build I-73.
County council canceled its 2018 interstate contract with the DOT last week because the county had planned to use hospitality fee revenues to pay for that construction and there’s no guarantee how much money will be available.
“It would better to go back to them,” Gardner said. “That’s what we said the other night. … At some point in time, we’re all going to sit down and have a little powwow and figure out if there’s any way to save I-73.”
If the local fight can’t be resolved, hope for I-73 may lie in Columbia.
Gardner stressed that he wants state lawmakers to use some of the state’s $2 billion budget surplus for the road.
Last week, other council members also they expect state lawmakers to address the issue.
“It’s time that the delegation step up to fix this problem,” county councilman Harold Worley said. “They can save I-73.”
A day after county council canceled its I-73 contract, state Rep. Alan Clemmons, R-Myrtle Beach, prefiled a bill that had been tailored to Horry County’s situation. If it becomes law, the bill would allow the county to collect the fee countywide again, and the money would go toward interstate infrastructure.
Clemmons said he filed the bill to maintain the “status quo” — reestablishing the tax levies that existed before the recent hospitality fee lawsuit. However, he would rather see the two sides reach a settlement to preserve funding for I-73 than change state law.
“Absolutely that’s my hope,” he said. “I hope that cooler heads will prevail between the municipalities and the county and that a reasonable resolution will be reached. In the event, however, that that should not happen, we now have a vehicle in the General Assembly that will allow us to find a resolution.”
But if Clemmons’ bill became law, would Myrtle Beach be able to charge both the 1.5% hospitality fee and the 1% tax the city created to replace it earlier this year?
Clemmons said his opinion is the city could not keep that 1% tax because the combined rate would exceed a cap in state law for hospitality levies.
However, he said his bill doesn’t address this issue and an opinion from the S.C. Attorney General’s Office might be needed for clarity.
For the DOT, the county’s 2018 contract was an important part of a federal grant application the agency submitted for I-73 funding. DOT Secretary Christy Hall has warned that the state could be forced to withdraw its request for the $348 million grant because of uncertainty about how much local tax money would be available for the I-73 project.
Despite the council's decision last week, Hall hasn't given up on preserving funding for the interstate.
“SCDOT understands the importance of this project to the economic prosperity of this region and the power of collaboration and cooperation to accomplish a shared goal,” Hall said in a prepared statement. “I am still optimistic that the local governments can resolve their differences to keep the project from stalling out.”