Judge gives final approval of hospitality fee settlement, ending dispute between Myrtle Beach, Horry County

Grand Strand

Photo of Judge William Seals, Jr.’s final approval of the hospitality fee settlement. (WBTW)

HORRY COUNTY, S.C. (WBTW) — A judge gave final approval Tuesday to a hospitality fee settlement, ending the dispute between Horry County and Myrtle Beach.

Circuit Court Judge William Seals, Jr., approved the settlement. The county and municipalities all agreed on the settlement in February but a final hearing was scheduled for April 16.

“The Court finds the Agreement to be fair, reasonable, and adequate,” Seals wrote. “This matter was forcefully litigated by both sides, both before this Court and the South Carolina Supreme Court. The parties engaged in extensive arms’ length negotiations, and they reached a compromise that ultimately was approved by the governing bodies of eight political subdivisions before being presented to this Court.”

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“The ultimate resolution of this case returns the allegedly improper Hospitality Fee collections to the payors of the fee, with the unclaimed balance of the Common Fund otherwise being used to benefit the Class Members, and further keeps future Hospitality Fee collections with the respective municipalities to provide additional benefits to the Class Members,” Seals wrote.

The Settlement Agreement provides the following:

  • A class will be certified for settlement purposes only consisting of those who paid the Hospitality Fee within the City and/or other municipalities from January 1, 2017 through August 10, 2019.
  • The County will pay $19 million to the City to establish a common fund from which verified claims and other disbursements will be paid.
  • Settlement class members will be able to submit verified claims for reimbursement until May 15, 2021 for 100% of the Hospitality Fees they paid during the period in question.
  • 50% of the amount remaining in the common fund after payment of those claims and disbursements will be distributed to the City and the other participating municipalities for use on tourism-related projects and programs authorized by statute on an agreed allocated basis.
  • 25% of the amount remaining will be distributed to the South Carolina Bar Foundation for use on access to justice programs and services within Horry County on a priority basis, in exchange for a release and waiver of any claim to a greater amount.
  • The remaining 25% will be held in trust by the City in an interest-bearing account for a period of three years to address any further claims from class members and/or any collateral claims. After the three-year period has run, any funds remaining will be distributed to the City and the other participating municipalities on the same agreed allocated basis.
  • The County will recommence collecting its Hospitality Fee within the City and other participating municipalities, and the City and the other participating municipalities will return to charging their hospitality and accommodations fees and taxes at the levels that were in effect prior to January 1, 2019. The County, City, and participating municipalities will coordinate this transition with one another.
  • The Hospitality Fee collected by the County within each municipality, less a standard administrative fee, will be returned to that municipality for use on tourism-related projects and programs authorized by statute.

All towns involved in the settlement approved the agreement, sending it to a judge for approval.

In March 2019, the City of Myrtle Beach filed a lawsuit against Horry County, claiming the county had been illegally collecting “tens of millions of dollars per year” through the hospitality fee.

In the complaint filed in 15th Circuit Court, the city took issue with a 1.5% hospitality fee Horry County has collected from Myrtle Beach and other municipalities since Jan. 1, 2017. The fee was collected on accommodations, food and beverage, and amusements.

“Reaching this point was anticipated as part of the agreement, and we’re pleased that the settlement has been approved,” City of Myrtle Beach Spokesperson Mark Kruea said.

Horry County didn’t immediately respond to News13’s request for comment.

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