It’s Your Money: Myrtle Beach calls dollars invested in lawsuit a ‘meritless fishing expedition’

It’s Your Money: Myrtle Beach calls dollars invested in lawsuit a ‘meritless fishing expedition’

MYRTLE BEACH, SC (WMBF) - Horry County School District and Horry County sued Myrtle Beach for alleged misuse of taxpayer funds in 2018.

Nearly a year later, the lawsuit is still pending, and each party has racked up hundreds of thousands of dollars.

Myrtle Beach reported spending $209,266 on the lawsuit so far.

Horry County School District’s transparency reports reveal the district paid the law firm representing it, $242,551 since last September. The district has not confirmed if this is the only case the firm Womble and Dickinson is working on.

Horry County’s check register shows it spent $74,525 on the law firm representing it since January. The county has also not confirmed if this is the only case the firm is assisting with.

Back in February, My Horry News reported city officials estimated the litigation would cost around $42 million.

“Plaintiffs have jeopardized over $40,000,000 in tax revenues [the] City will receive, and over $100,000,000 projected to flow to [the] Plaintiffs themselves, from continued redevelopment of the Air Force Base,” a court document filed by the city in February stated.

The suit against the city of Myrtle Beach and the Myrtle Beach Air Force Base Redevelopment Authority claims the entities misused tax increment financing (TIF) intended for the redevelopment of the former Myrtle Beach Air Force bases.

The allegations also included the city failing to include construction and funding for a new school in the redevelopment plan. That area ultimately became The Market Common.

The city has denied any misuse of funds and called out the county and school district for failing to produce, “sufficient ultimate facts demonstrating that.”

Myrtle Beach has called the case a “meritless fishing expedition from its inception.”

This week was the end of the 90-day discovery period both sides had to determine if there were enough facts to establish the claims in the lawsuit.

Plaintiffs, however, argue they have not had a fair and full opportunity to review the facts because of the way the city produced its records.

At the end of October, the plaintiffs alleged that the defendants gave them a “massive document dump.” Court filings reveal the county and district received more than 39,000 pages of documents. According to court documents, the material was in an unsearchable PDF and didn’t identify which pages related to each request.

Meanwhile, the defendants said the county and district spent the last few months, “concocting grounds for seeking a frivolous delay to this Court’s resolution of the motion to dismiss.”

Myrtle Beach filed a motion earlier this month for summary judgment “on the grounds that there are no genuine issues of material fact.”

However, the plaintiffs wrote in a court document, “Defendants are wrong” and pointed to three affidavits submitted this month.

“Collectively, these affidavits demonstrate both that there are genuine factual issues with respect to the misuse of TIF funds and that further discovery is likely to uncover additional relevant evidence,” according to court documents filed Monday.

The affidavits are from Spartanburg public accountant Quincy Halliday, Horry County Schools Chief Financial Officer John Gardner and Horry County Chief Financial Officer Barry Spivey.

The affidavits claim it should be easy for the city to convert the material to usable and searchable documents.

“In my experience as an auditor of local governments in South Carolina, this is the first time I have encountered a public body refusing to provide its financial data in a format that can be readily assimilated and used by a CPA to conduct routine auditing procedures to test the expenditures of public monies,” Halliday is cited as stating.

Gardner said in his affidavit the city’s materials do reveal it used $1.6 million in TIF funds to pay for debt service on a general obligation bond in 2012.

“This does not appear to be a proper use of TIF funds under South Carolina law,” according to the court document.

Halliday also references this finding, “I do not see anything in the relevant statues that would authorize the City to exercise unilateral discretion and spend money it collects from its own taxpayers on projects within the redevelopment district and then reimburses itself with funds from a difference tax base.”

On Monday, Myrtle Beach filed a document that called out the defendants for not researching governing law and instead, taking a “shoot first, ask questions later” approach to this case that continues to waste public resources due to Plaintiffs’ frivolous legal arguments.”

The city also submitted affidavits from Myrtle Beach Chief Financial Officer Mike Shelton and David C. Dekleva, a CPA who has audited the city, responding to these claims made by the plaintiffs.

Shelton defends the city’s production of records.

Dekleva said he received the city’s reports the same way the plaintiffs did and said, “We were able to review, analyze and process the information contained on green bar reports timely and expeditious fashion.”

Shelton goes on to say in the affidavit that Gardner does not have the qualifications to conclude TIF funds were used improperly based on state law.

A spokesperson for Horry County said, “It is County policy not to offer commentary on substantive matters related to pending litigation.”

Myrtle Beach also declined to comment at this time.

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