No settlement reached in Horry County, Myrtle Beach hospitality fee dispute

Grand Strand

CONWAY, S.C. (WBTW) — While no settlement has been reached in the nearly 18-month hospitality fee dispute between the City of Myrtle Beach and Horry County, leaders in both governments took action before a South Carolina Supreme Court hearing Wednesday.

Horry County Council and Myrtle Beach City Council held meetings Tuesday night to discuss the settlement. City council approved litigation after a three-hour executive session.

Horry County Council voted 11-0 to approve how it will argue to the court that the hospitality tax revenue should be distributed, but did not approve a settlement. Paul Prince was not present at Tuesday’s meeting.

Since a settlement was not reached, the case will be argued in front of the South Carolina Supreme Court Wednesday at 11:20 a.m.

The lawsuit, led by the City of Myrtle Beach, argues cities and towns should have control of hospitality tax revenue generated within its own borders.

Horry County Council chair Johnny Gardner didn’t explain any specifics behind the county’s argument to the Supreme Court, but said he’s confident a settlement can be reached.

“I feel positive and everybody’s moving in the right direction,” Gardner said. “I think we will have a settlement before everything’s over, but right now, we’re still in the process.”

“We have two things happening,” Gardner said. “One is the court-ordered mediation, which is confidential by court order. The rest of it was in the executive session, which is confidential by other orders and other rules.”

County council also voted unanimously against a plan to use tourist tax collections on legal fees.

“I’m not going to vote to give $9 million, plus or minus, to the court system out of that fund, when it plainly states in there that’s not a use for it,” said Harold Worley, a county council member representing North Myrtle Beach.

Gardner said he doesn’t expect too much from Wednesday’s hearing beyond oral arguments.

“We don’t anticipate an order from them, normally it takes them a while to digest all that, come back and write an opinion,” Gardner said. “We may, in fact, have an agreement before then. We may not.”

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

In the complaint filed in 15th Circuit Court, the city takes 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.

The 1.5% hospitality fee took effect on Jan. 1, 1997 and was supposed to end on Jan. 1, 2017, according to the city’s complaint.

Myrtle Beach requests an end to the collection of that fee from the city and any other municipality since that date. The city also claims that a refund would be appropriate for any fee money collected after that date.

On June 21, 2019, a judge ruled in favor of Myrtle Beach, which claimed in court documents that an agreement to give portions of hospitality taxes and fees to Horry County had expired. The judge denied an injunction, which would have forced Myrtle Beach to continue giving the money to Horry County.

Days later, Horry County leaders said they intended to continue collecting the money from other municipalities in the county such as North Myrtle Beach, Conway, Surfside Beach, Loris, Aynor and Atlantic Beach.

The judge later clarified his statement saying that the decision also applied for other municipalities in Horry County, not allowing them to take hospitality tax dollars from those cities either.

In January, Grand Strand lawmakers proposed a bill to use the hospitality fee money to fund the I-73 project.

Under this bill, tourist tax revenue not put towards I-73 would have been given back to the municipality where it was generated.

Before the cities and towns filed the lawsuit, Horry County Council pledged up to $25 million in hospitality taxes towards I-73. Council voted to leave that agreement in November 2019.

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