Tag: Financial Participation Agreement

Horry County Council Votes Unanimously to Cancel I-73 Contract

Horry County Council voted unanimously at its regular meeting Tuesday night to cancel the Financial Participation Agreement with the South Carolina Department of Transportation that would have provided funding for the Interstate 73 project.

The agreement was approved by council during a special meeting held on November 28, 2018 and signed by former county administrator Chris Eldridge on December 13, 2018. Former council chairman Mark Lazarus led the charge to get the agreement signed before he left office December 31, 2018. Lazarus and Eldridge were the two foremost proponents of having the county enter into the agreement with SCDOT.

In addition, Lazarus and Eldridge were instrumental in orchestrating the elimination of a sunset provision from the county’s hospitality fee legislation earlier in 2018 in order to direct revenue to I-73.

But it all began to fall apart in March 2019 when the City of Myrtle Beach sued Horry County over continued collection of hospitality fees after the bonds for the first RIDE projects were paid off, an action the city called illegal.

Last spring, Horry County Council approved a resolution to refund hospitality fee revenue collected within the municipal boundaries to the respective cities where it was collected. The resolution included a proposal for the municipalities and the county to provide some funding for I-73 with percentage contributions from each agency in line with the percentage of the total amount of hospitality fee revenue each city received.

The cities dismissed that resolution out of hand.

Now, the cities and the county are considering a settlement agreement to the lawsuit with virtually the same terms with the exception that the cities will be on the hook to pay their attorneys 33% of the refunded revenue, approximately $7 million.

The blame for the cancellation of the I-73 agreement can be laid directly at the feet of Myrtle Beach and the other cities that joined in the lawsuit and refused to accept virtually the same settlement they are now considering.

Several county council members, including Chairman Johnny Gardner and council members Harold Worley and Johnny Vaught made exactly the point that the cities could have had the same settlement without paying such large attorney fees by accepting the resolution in the spring. It must also be noted the I-73 contract would not have been cancelled if the cities had taken this action.

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Horry County Council at Precipice of I-73 Decision Wednesday

Horry County Council will decide the fate of its Financial Participation Agreement with the South Carolina Department of Transportation at a specially called meeting Wednesday.

The agreement, which was signed by the county and SCDOT December 13, 2018, commits the county to provide up to $25 million per year for funding the Interstate 73 project.

The county does not have the money and the only sane step for council to take is to cancel the contract before it takes effect and SCDOT begins committing money the county does not have.

County officials planned to use revenue from a countywide 1.5% hospitality fee on prepared food and beverages, accommodations, admissions tickets and rental car fees to provide the $25 million per year.

However, that plan, hatched by former council chairman Mark Lazarus and former county administrator Chris Eldridge was fatally flawed from the beginning.

The countywide hospitality fee was enacted specifically, with the consent of the cities and a hard sunset provision, for the purpose of funding the short term projects listed in the Road Improvement and Development Effort report of October 1997 and approved by then Gov. David Beasley. I-73 was not included with those projects.

County council overstepped its bounds when it removed the sunset provision from hospitality fee legislation in April 2017 at the urging of Lazarus and Eldridge who specifically wanted to use the revenue for construction of I-73 when the RIDE bonds were paid off.

That first blunder was compounded by a second when the Lazarus/Eldridge tandem put a full court press on county council to provide up to $25 million of hospitality fee revenue for I-73 in July 2018 without consulting the cities.

A trifecta of blunders was completed when, one month before he left office, Lazarus effectively bullied council into contractually obligating itself to SCDOT for I-73 funding. This was only weeks after Hurricane Florence again demonstrated to county officials the desperate need for upgrades to roads and other critical county infrastructure already in place.

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I-73 Funding, the County’s Hidden Objective in Hospitality Fee Squabble

Hidden beneath an ever rising pile of complaints, answers, motions, injunctions and exhibits in the City of Myrtle Beach v. Horry County lawsuit regarding the 1.5% countywide hospitality fee is the determination of a core group of county council members, county senior staff and special interests to retain sufficient funding for the construction of Interstate 73 in the county.

This has been the objective since April 2017 when former council chairman Mark Lazarus convinced council to remove the sunset provision from the county’s hospitality fee ordinance. Lazarus’ stated purpose at that time was to provide funding for I-73.

The month after Lazarus failed to retain the Republican nomination for council chairman, he conducted a special meeting of council to dedicate the revenue from the 1.5% countywide hospitality fee to the I-73 project.

At that meeting, council approved two resolutions, 82-18 and 84-18. Resolution 82-18 dedicated up to $25 million of the revenue from the countywide hospitality fee to the I-73 project. Lazarus tried for the entire amount of revenue, approximately $43 million, but was argued down by council member Harold Worley who was holding out for $18 million to be dedicated to public safety and infrastructure needs within the county.

However, under county ordinance, all the revenue from the 1.5% hospitality fee collected by the county is placed into a special road fund. Resolution 84-18 directed county staff to prepare an ordinance amendment to allow that revenue to be spent on roads, public safety and infrastructure.

The ordinance amendment dictated by Resolution 84-18 has never been prepared to this day. County staff, with the unspoken agreement of a majority of council, ignored the will of council expressed in Resolution 84-18 so the revenue from hospitality fees cannot be used for public safety and infrastructure other than roads.

During a budget workshop in late November 2018, Lazarus led council in approving entering into a contract with the South Carolina Department of Transportation, called the I-73 Financial Participation Agreement, for the county to commit up to $25 million per year for funding the project.

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I-73, Indian Wells Controversies Highlight Council Agenda

The agenda for Tuesday night’s regular meeting of Horry County Council has only two items of consequence on it.

Under Old and New Business, council will discuss the Financial Participation Agreement with the South Carolina Department of Transportation for the I-73 project.

The agreement has been in effect since December 2018 when it was signed by former administrator Chris Eldridge for the county after receiving council approval to do so. However, the real date for its beginning is the start of the new fiscal year on July 1, 2019.

Generally the agreement provides that Horry County will provide up to $25 million per year from Hospitality Fee revenues to fund the construction of I-73 within Horry County (the Project) and SCDOT will oversee the project from design through construction.

The written agreement states, “SCDOT shall provide an Annual Work Plan to the county on the activities proposed by March 31 that the county shall approve prior to June 30 before commencing work in the succeeding fiscal year.”

SCDOT provided a work plan for next fiscal year which allots $6 million for engineering services and $6.5 million for right of way acquisition. Council has yet to act on that work plan, but there is NO money in the upcoming budget to pay for it.

The plan was for Horry County to provide up to $25 million per year from 1.5% Hospitality Fee revenues collected countywide as funding. Since March 2019, the county has been sued by the cities over hospitality fee collections and there is no guarantee at this time how much, if any, of the countywide 1.5% fee revenue will be available to the county in the next or ensuing fiscal years.

However, Section V of the agreement, “Payments by the County”, states,  “The County shall maintain an account balance which shall be sufficient to cover the Project expenses for the relevant fiscal year including annual payments to the consultants, contractors or SCDOT…”

In addition, Section III D of the agreement states, “Nor shall the County’s prior approval be required for any right-of-way acquisition agreement or consultant agreement for work of the Project provided the cost thereof does not exceed the estimates provided in the Annual Work Plan.”

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County Council Ends Eldridge Nightmare

The nightmare that has been the reign of county administrator Chris Eldridge ended Tuesday night when county council approved a termination package to end Eldridge’s employment.

The specific details of Eldridge’s package were not announced. However, it is believed to be in the neighborhood of one year salary, benefits and allowances or approximately $300,000 cost to the county.

And it is worth every penny to get rid of a poisonous influence at the top of county government who was unilaterally despised by county employees; who often confused his role as one of being in the middle of making policy rather than carrying out the decisions of others and who quite unsuccessfully attempted to disgrace current council chairman Johnny Gardner even before Gardner took office.

The vote was 9-2 to end Eldridge’s tenure, with council members Bill Howard and Tyler Servant the odd men out. Gardner did not vote as he participated in the negotiations of the package with Eldridge’s attorney.

Howard’s no vote was for reasons apparently only he can understand. Servant tried to play his ‘guardian of the people’s money’ schtick because of the size of the settlement, never considering how much more it would have cost the county in poor management and personnel decisions to keep Eldridge in place.

Immediately prior to the vote on Eldridge, council voted to defer cancellation of a Financial Participation Agreement with SCDOT for funding of I-73 while “aggressively pursuing” defense of the lawsuit recently brought against the county by Myrtle Beach over hospitality fee collections.

Among other pleadings in the lawsuit, the city requested a permanent injunctions against the county’s ability to collect a countywide 1.5% hospitality fee for its special road fund. A portion of that fund was to be used to fund the agreement with SCDOT.

In addition to the lawsuit, three cities, Myrtle Beach, Surfside Beach and North Myrtle Beach have moved on to pass ordinances capturing all hospitality and accommodations fees collected within their corporate limits.

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Horry County’s Embarrassing Special Meeting

Horry County Council proved during its special meeting last night it doesn’t need the county administrator or attorney to embarrass the county. Council did a fine job embarrassing itself on its own.

Two key items were up for a vote last night – not to renew the administrator’s contract upon its April 21, 2019 termination and termination of the financial participation agreement between the county and SCDOT for the I-73 project.

Council kicked both votes down the road.

There may have been some justification for not voting on the administrator’s contract because council chairman Johnny Gardner was contacted by an attorney representing administrator Chris Eldridge yesterday morning requesting negotiation of an exit package for Eldridge.

Gardner said he believes agreement can be reached on a termination package so Eldridge will depart county employment within two weeks.

Delaying cancellation of the I-73 agreement, however, is an entirely different story.

There is no benefit to the county and its citizens of keeping an agreement in place, the funding for which is a great mystery at this point.

However, the Myrtle Beach Chamber and its cronies were in full lobbying mode yesterday to keep the financial participation agreement in place.

Those council members, I’m thinking here of council’s Deep Six in particular, who are much more inclined to listen to the special interest lobbyists at the expense of the citizens of the county fell right in line.

Council member Harold Worley, the apparent leader of the Deep Six, was reportedly in favor of cancelling the financial participation agreement at the end of last week. Monday night, Worley was the foremost proponent from the council dais in maintaining the agreement and negotiation with the county’s municipalities on a new split of hospitality tax revenues.

In the past few weeks, Myrtle Beach, North Myrtle Beach and Surfside Beach have all passed ordinances whose sole purpose is to capture all hospitality tax revenues collected within their respective corporate limits.

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County Council Defers I-73 Decision Until Next Meeting – Updated

Update—————————-Update

John Bonsignor and I hosted North Myrtle Beach Mayor Marilyn Hatley today on our television show Talking Politics. During the discussion with Mayor Hatley, I asked about the new North Myrtle Beach city ordinance keeping all hospitality tax collected in the city. Mayor Hatley said the city expects an additional $7 million annually from the hospitality tax.

I specifically asked Mayor Hatley if anyone had approached the city about dedicating some of the new hospitality tax revenue to the I-73 project. Mayor Hatley responded that she had received a call from Myrtle Beach Mayor Brenda Bethune on that subject. 

Mayor Hatley said North Myrtle Beach would consider the request but ONLY if EVERYONE has some “skin in the game”. I inquired if “everyone” includes the state and federal governments and she said “yes.”
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Horry County Council members deferred taking any action amending the I-73 Financial Participation Agreement with SCDOT until the next regularly scheduled meeting April 2, 2019.

Issues with the agreement first arose when the cities of Myrtle Beach, North Myrtle Beach and Surfside Beach passed ordinances recently reducing hospitality tax revenues to Horry County thereby removing much of the anticipated money needed to fund the I-73 agreement.

Last week, members of the county’s Infrastructure and Regulation Committee tasked county staff with renegotiating two key areas of the financial agreement with SCDOT – delay of the start of any work under the agreement until January 1, 2020 and remove Section III(D) of the agreement which reads in part, “…“The County’s prior approval shall not be required to enter into contract agreements for improvements to SC-22, provided the cost thereof does not exceed the estimates provided in the Annual Work Plan. Nor shall the County’s prior approval be required for any right-of-way acquisition agreement or consultant agreement for work of the Project provided the cost thereof does not exceed the estimates provided in the Annual Work Plan.”

Members of the I&R Committee did not want to allow SCDOT to enter into any type of contract agreements without prior approval of county council.

As the agreement currently reads, county council only has prior approval on construction contracts.

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High Drama Surrounds County’s I-73 Agreement with SCDOT

High drama surrounded a recent decision by the Horry County Council Infrastructure and Regulation Committee to consider changes and/or cancellation of the Financial Participation Agreement the county signed with SCDOT last December for the Interstate 73 project.

Like many issues in the political arena these days, this one included its share of drama queens heightening and confusing the discussion while voicing veiled threats about possible state government retaliation should local government officials significantly alter or cancel the agreement.

According to local council members who spoke with Grand Strand Daily, Reps. Russell Fry and Alan Clemmons as well as former representative and current Myrtle Beach Chamber lobbyist Mike Ryhal quickly took to phone calls and texts when they heard of the planned I&R discussion earlier this week.

Their collective message, reportedly, was leave the agreement alone or face the possibility of the General Assembly altering current state law to remove control of hospitality and accommodations tax revenue from local governments in favor of control in Columbia.

Ever since July 2017 when former county council chairman Mark Lazarus and members of county government senior staff led council down the path to partial funding of the I-73 project by removing a sunset provision from the county’s hospitality tax law, this controversy has been inevitable.

Despite massive propaganda efforts through the years by the Chamber and a few elected officials about the necessity of I-73 to provide a connection to Interstate 95, local residents have remained unconvinced of the purported benefits of the project.

Many of those who cried the loudest – the Chamber, Clemmons and U.S. Congressman Tom Rice – have been collectively unsuccessful at acquiring funding for the project at the state and federal levels.

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Horry County’s Flawed I-73 Agreement

The Financial Participation Agreement between Horry County and the South Carolina Department of Transportation, approved by Horry County Council November 28, 2018, appears to have many flaws not discussed before a resolution was passed allowing Horry County Administrator Chris Eldridge to sign the agreement.

Generally the agreement provides that Horry County will provide up to $25 million per year from Hospitality Fee revenues to fund the construction of I-73 within Horry County (the Project) and SCDOT will oversee the project from design through construction.

The written agreement states, “SCDOT shall provide an Annual Work Plan to the county on the activities proposed by March 31 that the county shall approve prior to June 30 before commencing work in the succeeding fiscal year.”

I find the use of the word “shall” interesting here in that it means a strong assertion or intention of something happening. Are we to take it to mean the county intends to approve the work plan prior to each June 30th? Does this mean county council really has much of a choice in the decision?

At least a half dozen times during the over one hour discussion about the project and the agreement county council members were told by then council chairman Mark Lazarus and/or county staff members, predominantly administrator Chris Eldridge and attorney Arrigo Carotti, that no money could be spent on the project without prior approval from county council.

To support those statements, Carotti quoted to council the first sentence of Section III (D) of the agreement which reads, “SCDOT shall not enter into a construction contract without the County’s prior approval based on considerations that the contract provide a meaningful connection to the proposed I-73 corridor in part or in its entirety.”

What Carotti did not quote were the next two sentences of Section III (D) which read, “The County’s prior approval shall not be required to enter into contract agreements for improvements to SC-22, provided the cost thereof does not exceed the estimates provided in the Annual Work Plan. Nor shall the County’s prior approval be required for any right-of-way acquisition agreement or consultant agreement for work of the Project provided the cost thereof does not exceed the estimates provided in the Annual Work Plan.”

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