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Discovery in HCS lawsuit against Myrtle Beach will likely last another month

MB TIF Case

Attorney Kevin Hall (left), who's representing plaintiffs Horry County and Horry County Schools, argues his case against attorney John Hoefer (right), who's representing Myrtle Beach in the ongoing lawsuit over how TIF funds from the Myrtle Beach Air Force Redevelopment Authority were spent. Photo by Christian Boschult

After more than an hour of contentious arguments in Beaufort County on Monday, Myrtle Beach, Horry County and Horry County Schools agreed to extend the discovery period in the county and school district’s suit against Myrtle Beach over how the tax incremental financing (TIF) funds were spent in the Myrtle Beach Air Force Base Redevelopment area.

It will likely be another four or five weeks before the school district completes its analysis of transaction data that it plans to get from the city, officials said.

In December 2018, the school district and county sued Myrtle Beach over its new plan for the redevelopment area that includes The Market Common. The new 2017 plans excluded a new school that was originally promised to the district. The school district also took issue with the city’s expenditures of excess TIF funds.

After millage rates were frozen in 2004, the school district and county continued to receive tax revenue based on the 2004 property appraisal values with the understanding that any taxes generated from the area’s rising property values would be used to pay off bonds issued for improvements in the redevelopment area.

That agreement was made when the plans included a new school in the area, but the city removed the school from the plans in 2017, citing a lack of students.

The plaintiffs also argue that the city was supposed to issue refunds to the county and school district for any excess TIF funding that wasn’t spent on infrastructure projects. Instead, the plaintiffs allege that the city used TIF funds on maintenance and other projects that were not in the redevelopment plan and did not issue any refunds until 2019, despite excess funds.

John Hoefer, the attorney representing Myrtle Beach, said the city’s expenditures of funds were legal and proper, and that the city had complied with every discovery request the plaintiffs had made.

“This is a complaint in search of facts,” Hoefer said.

Monday’s hearing was held to settle a dispute between the city, county and school district over 39,000 pages of financial documents that the county and school district had requested from the city in order to determine if the city spent any excess TIF funds improperly.

The plaintiffs claimed the financial documents the city sent were not in readable PDF format that would allow the district to perform the analyses that they wanted to run in order to find out where the excess TIF money was going.

Myrtle Beach argued that they gave the district the files as they were stored at the city, and that their software wasn’t new enough to run the reports the school district had requested.

Before the court adjourned, both parties agreed that Myrtle Beach would bring in a programmer to make changes to the city’s software program at the plaintiff’s expense so the school district could run their analyses to see how the city spent TIF funds.

“The question here is whether the city has misused or misspent TIF dollars,” said plaintiff attorney Kevin Hall. “The city’s own financial records demonstrate that $1.6 million of TIF money was used to service the debt on city bonds. That’s an inappropriate use of that $1.6 million. So that’s an example of the type of problems that we see.”

As for the missing school, Hall said that was a question for another day.

“What we’re focused on here is whether there has been misuse of TIF dollars received to date.”

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