Horry County lost its latest court battle with Myrtle Beach.
Myrtle Beach owns nearly 145 acres south of the city limits. It can sell the property and not give the county a cut of the proceeds, a Monday court ruling from Circuit Court Judge Benjamin Culbertson states.
Late last year, the county filed a lawsuit asking the court to stop Myrtle Beach from selling land inside Lakewood Camping Resort and PirateLand Family Camping Resort. The land spans from South Kings Highway to the ocean. It includes about 700 privately-owned structures that sit on the city-owned property.
In November, the city council agreed to sell the property to the owners of Lakewood and PirateLand for $60 million. Lakewood’s portion of the $60 million deal is about $33.5 million for the more than 81 acres inside of its boundaries.
PirateLand’s part of the deal is more than $26 million for nearly 64 acres inside of its boundaries.
Former City Manager John Pedersen said the property was appraised at $76 million by the city and $46 million by the campground owners. He said they had all agreed at $60 million since it was roughly in the middle of the two appraisals.
At the time, he said the land sale to the campground owners would allow the owners of the structures the ability to sell their property without any uncertainty of ownership casting a shadow over their negotiations.
The city had discussed the property in 2019 and the possibility of selling it to the campground owners. Several structure owners contacted myhorrynews.com said they didn’t know the ground beneath their homes belonged to the city.
After the late 2020 city council agreement to sell the land, the county responded with a lawsuit to stop the sale. The county continued to argue it was entitled to 75% of the proceeds from the lease agreement reached between the city and the campground owners. The money, the county said, was tied to the Myrtle Beach International Airport and cemented in a 2004 agreement with the city and county. And the county argued if the city is allowed to sell the land, the county should get a share of the sale.
Currently, the city gets about $3.6 million annually in lease payments from the campgrounds. The county’s take of the revenue is about $2.7 million to be used at the airport.
Mark Kruea, city spokesman, said on Tuesday the city has given Horry County $32.7 million in lease revenue since the 2004 agreement.
“As noted in the order, that agreement does not require any sharing of revenues should the city choose to sell the property in question,” he said.
The county’s take is dissolved if the land is sold since the 2004 agreement only applies to lease proceeds, city officials have argued in the discussions about selling the land.
The campground land has been called “Seascape Properties” in court proceedings.
“The County lacks any legal title interest in the Seascape Properties and has, in fact, entered into an agreement to resolve all prior disputes between it and the City involving these properties,” Monday's court ruling states. “That agreement, while entitling the County to receive a portion of rental proceeds from leases the City has given on the Seascape Properties and to use these proceeds as the County sees fit, does not create any beneficial or equitable interest in the properties that would entitle the County to prevent the sale of, or receive any proceeds from the sale of, these properties. Nor does it entitle the County to require that the City continue to lease these properties.”
Monday’s ruling harkens back to the 2004 city-county agreement. Basically, the court states, the county is not entitled to any money from the sale of the property and it cannot force the city to continue leasing the property to ensure the county gets a share of the lease revenue.
The judge stated that the Seascape lease revenue is not generated by the airport. He wrote that the county’s “pledge” to use the Seascape lease revenue for the airport “appears to be a purely voluntary restriction by the County, which is not binding on the City and which does not mandate that the City keep leasing the properties.”
The judge ruled that the sale of the property will not harm the airport, citing $35 million in unrestricted assets and the county’s ability to increase user fees at the airport and increase service charges imposed on travelers.
The county argued that cutting off the Seascape lease revenue stream would make county taxpayers the victims of a “cascading effect.”
Culbertson called that assertion “frivolous.”
Using figures from the airport website, Culbertson said the county could add a $1 per passenger fee to each of the two million passengers annually at the Myrtle Beach International Airport and that would just about cover the $2.7 million generated from the Seascape Properties lease revenue.
The judge also stated the Department of Airports does not rely on county tax dollars to support its operations, rather it makes money from its operations and fees as well as state and federal funding.
The 2021 fiscal year budget for the Department of Airports forecasts $45.3 million in revenue and $40.8 million in expenses, according to the ruling.
Culbertson said the resolution to the suit can be summed up in three maxims.
“First, equity aids the vigilant, not those who slumber on their rights,” he said pointing out the county argued the city has been using its 25% of land lease revenue not on the airport since 2004 but had not brought the issue up until this 2021 hearing.
“The second maxim is that equity follows the law,” stating the 2004 agreement resolves past disputes between the city and county but “stops short of giving the County legal title to the Seascape Properties, require that they be leased in perpetuity to support an airport owned by the County, or require that the City or County use the proceeds to support any airport operations.”
The final maxim is “one who comes into equity must come with clean hands.”
Culbertson states the 2004 agreement allows the city to use its 25% of the land lease revenue on whatever it wants and that is at odds with the county’s claim the revenues are held in trust for the airport.
It's unclear if the county will appeal Culbertson's ruling. County spokeswoman Kelly Moore declined to comment on the county's plans.
How did the city get the land?
After World War II, in late 1948, the government deeded the land to Myrtle Beach, restricting the use of the proceeds to a public airport. In 1953, the city was released from those restrictions but was not allowed to construct buildings on the property that would be hazardous to aircraft.
The city began leasing the land as early as 1963, according to the Monday ruling.
The county filed a suit in the 1980s surrounding the use of the Seascape land, but the courts ruled in favor of the city.
In 1990, the city and the campground owners entered into a lease agreement and by 2000 the city agreed to use the lease revenue to build Harrelson Boulevard to enhance access to the airport terminal. Later in 2000, the city agreed to give $3.2 million to Horry County Airports.
In 2001, the county asked the state attorney general to investigate the city’s “airport trust fund” that had been created in 1995. The attorney general referred the request to the State Law Enforcement Division. The city was cleared of any wrongdoing.
In 2002, the county asked the Federal Aviation Administration to investigate the city in regards to a trust for the airport.
“Apparently, no action was taken by the FAA on the County’s request,” Culbertson’s ruling states.
By 2004, the city and county agreed on the 25-75% split of lease money to dissolve past disputes.
Culbertson noted the county has “persistently challenged the City’s conduct regarding the Seascape Properties civilly, administratively, and criminally, during a twenty plus year period (between 1980 through 2004) without obtaining any determination in any forum that the City had acted inappropriately in any manner.”
Quoting the judge, Kruea, the city spokesman, summed up the order in one paragraph.
“The 2004 Agreement gives the County no interest in proceeds from the sale of the Seascape Properties…. The County cannot change its mind 16 years later.”