County Council Adds More Controversy to Hospitality Fee Settlement

December 17, 2019 5:55 PMViews: 4421

By Paul Gable

Horry County Council approved an amended settlement agreement at its special meeting Monday night that added to the controversy regarding settling the hospitality fee lawsuit.

Council split 7-5 on votes to amend the settlement agreement and to approve the settlement agreement as amended. Those voting for the agreement were Johnny Vaught, Dennis DiSabato, Cam Crawford, Gary Loftis, Bill Howard, Tyler Servant and Orton Bellamy.

The Deep Six (Vaught, DiSabato, Crawford, Loftis, Servant and Howard) can always be counted on to support anything the Myrtle Beach Area Chamber and other special interests in the county want. Vaught is counting on that group to fund his run for chairman in two years while DiSabato, Crawford and Loftis expect significant donations from special interests to fund their upcoming reelection campaigns.

The special interests want I-73, they fall in line to keep it in play.

Voting against the settlement were Chairman Johnny Gardner, Harold Worley, Al Allen, Danny Hardee and Paul Prince.

As Worley said at the beginning of open debate on the question, the elephant in the room was I-73.

The settlement agreement as presented Monday night would provide approximately $14.5 million per year toward I-73. As Worley pointed out this amount is a drop in the bucket for a project that will require approximately $670 million to complete the road in Horry County, $1.3 billion to reach I-95 and over $2 billion for the total project to the North Carolina border in Marlboro County.

But the drop in the bucket is important to those landowners in Horry County who will benefit from right of way purchases for the road and the engineering and other businesses who will profit from the early design and site work for the project.

The federal and state governments will have to come in with significant money for the road to ever be completed but the local special interests can realize a significant income from the early work that can be paid for if the county contributes. Like always, it’s all about the money.

DiSabato and Servant attempted some verbal gymnastics to say the county money was not for I-73 but would be used for raising and improving SC-22. The SC-22 project has not been studied nor approved by SCDOT to date.

The county already paid to build SC-22 with hospitality fees then turned it over to the state. It should be SCDOT responsibility to fund any improvements to the highway, not Horry County.

To demonstrate how bogus the argument by Servant and DiSabato is, the county is currently carrying $12.5 million for I-73 in its planning for next year’s budget. That is the amount the SCDOT previously requested for engineering and right of way purchases in the first year of the I-73 project.

Servant and DiSabato attempted to divert the I-73 discussion to SC-22 because they apparently believed that would be an easier sell to the taxpayers and a way to keep the settlement agreement alive for the benefit of those they appear to be fronting for.

Crawford and Howard attempted to say the county would lose money for public safety if the agreement was not passed. They were referring to state pre-filed legislation, of which Crawford’s wife is one of the sponsors along with Alan Clemmons, Tim McGinnis and Russel Fry, which would require the entire 1.5% fee to be used for an interstate project.

But that scenario presumes the county would continue collecting the 1.5% hospitality fee.

The cities passed maximum 2% local hospitality tax and 3% local accommodations tax just before they sued the county to stop the collection of the 1.5% hospitality fee. The county can do the same thing for collections in the unincorporated areas with no money dedicated to I-73.

The threat voiced by Howard and Crawford is hollow, just another attempt to twist the debate toward keeping I-73 funding and the proposed settlement agreement in place.

Vaught and Loftis are unabashedly supporting whatever it takes for continued funding of I-73 for their special interest buddies.

DiSabato moved the amendment to the agreement. Its main points are that the cities in the county, except Briarcliff Acres, must vote unanimously for approval of the amended agreement and language to prevent any of the $19 million ‘common fund’ to be used to pay attorney fees. Common fund money is that collected with the 1.5% fee between February 2019 and June 30, 2019, which would go back to the cities if the agreement is ever finalized.

The stipulations about attorney fees comes from the approximate $7 million the cities’ attorneys expect to collect if they are successful in getting the lawsuit certified as a class action.

The entire class action issue is ridiculous. Basically it would have the cities receiving the $19 million common fund and drawing it down by crediting tourists in future stays for hospitality tax they paid during the period mentioned above. What about local residents who paid hospitality taxes during the time frame? Don’t they count?

It was the cities who brought the lawsuit, not tourists, who are contending the fee was collected illegally. The cities never were involved in the collection or remittance of the hospitality fees to the county. The cities are not a damaged party here and I would submit have no standing to bring a class action lawsuit on behalf of those who actually paid the fees.

There is no justification for a class action as Horry County Treasurer Angie Jones stated in a motion to the court. That motion has never been ruled on.

Jones’ motion remains an active part of the suit. Horry County Attorney Arrigo Carotti said the Jones’ motion was inactive when questioned about it during Monday’s meeting. That is not true.

The cities’ attorneys intend to attempt to have the lawsuit certified as a class action by the court if a final settlement agreement is presented to the court. As Gardner said during the discussion, this would be the first class action lawsuit ever certified at time of settlement if the cities’ attorneys are successful.

This is a simple case of various players see a pot of money and want to grab a piece of it.

 

Much about the proposed settlement agreement is bad. There are too many players behind the scenes attempting to promote their personal agendas in the settlement.

The issue is far from settled because the seven cities included in the amendment must all give approval to the amended agreement for it to go forward to the court.

Hardee said the entire lawsuit is a ‘sham and BS’. He is correct. Hardee suggested those city council members who voted for it should leave Horry County. That wouldn’t be a bad idea for the seven council members who voted for the amended agreement. At the very least, the citizens should retire them at the next opportunity at the ballot box.

 

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