County Says No to Secret Negotiations on Hospitality Fees

March 29, 2019 8:30 AMViews: 8747

By Paul Gable

Horry County Council members have given a resounding NO to holding secret negotiations with representatives from the municipalities about hospitality fees and possible funding for I-73.

The City of Myrtle Beach proposed discussions behind closed doors by sending a confidentiality agreement to the county and the other seven municipalities in Horry County. The city is trying to couch any discussions on hospitality fees as a resolution conference with regard to the lawsuit it recently filed against Horry County over the subject. The city said S.C. Rules of Procedure Section 408 applies to the discussions.

In the very best interpretation of the city’s position, this is a stretch.

The city filed its lawsuit against the county claiming the county’s continued collection of the 1.5% portion of the hospitality fee beyond January 1, 2017 is illegal. The complaint was structured in a way that a class action lawsuit (municipalities v the county) could be requested.

However, to date no other municipality has joined the lawsuit and no judge has certified a class action.

Therefore, any negotiations that includes representatives from other than Myrtle Beach and Horry County couldn’t truly be considered a dispute resolution conference as it would include third parties not currently included in the lawsuit.

More importantly, any discussions about dividing public tax revenues or spending public tax dollars for public projects by public agencies should be held in the open.

What appears to have happened is Myrtle Beach jumped the gun on the hospitality fee issue. It hurried a city ordinance through two readings in order to capture all hospitality tax, 2% on just prepared food and beverages, allowed under current state law, collected by the city to remain in Myrtle Beach tax coffers.

Myrtle Beach next filed its lawsuit against Horry County claiming the original hospitality tax ordinance passed by Horry County with consent of the cities in late 1996 expired on January 1, 2017. The original ordinance placed a 2.5% tax on all accommodations, prepared food and beverages and tickets sold within the county. Of that, 1.5% collected countywide was specifically designated to pay off the bonds for the Ride I projects.

The original bonds were for 20 years. However, through the years, other projects were added to the list with approval of the cities, the extension of SC-31 to name one, and a sunset provision for 2022 was placed in the ordinance. The final payment for those bonds was made in January 2019.

Horry County Council removed the sunset provision by ordinance amendment in May 2017 with the intention of using the 1.5% revenue for I-73 after the Ride I bonds were paid off.

Even if a judge ruled that the 1.5% collected countywide after January 1, 2017 was illegal, the revenue would not go back to the city, as Myrtle Beach requested. Any tax collected illegally would have to go back to the taxpayer to whom it was originally charged.

Sometime after its lawsuit was filed, Myrtle Beach officials apparently put pencil to paper and discovered the original hospitality fee ordinance they claimed had expired actually meant considerably more revenue potential for the city, even if some went to the county, than the new ordinance the city passed in February 2019.

Now Myrtle Beach wants to go behind closed doors with the county and other municipalities to straighten out the mess it has created.

However, that is not going to happen in secret as county chairman Johnny Gardner and a number of his colleagues on council have stated. County council is expected to refuse approval of the confidentiality agreement at its next regular meeting.

Council member Harold Worley was most on point in comments to the media regarding any discussions with Myrtle Beach.

“That bunch in Myrtle Beach will argue with a sign post, pick up the sign post and argue with a hole. That’s all they want to do,” Worley told MyHorryNews.com.

 

 

 

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