Mediator declares impasse in hospitality fee case; Horry County, Myrtle Beach fire back at one another

MYRTLE BEACH, S.C. (WMBF) – A court-appointed mediator has declared an impasse in the ongoing dispute over hospitality fees between Myrtle Beach and Horry County, and the city is ready to head to court.

According to a press release from the city of Myrtle Beach, the county is “unwilling to settle” despite the city’s and the mediator’s best efforts.

“The mediator has since declared an impasse in the talks. The City of Myrtle Beach will vigorously prosecute its case to protect our citizens’ interests and the interests of those who were required to pay the county’s unauthorized Hospitality Fee. Unlawfully collected money is not ‘tax’ revenue and should be returned to those who paid it,” according to a statement from the city.

Horry County fired back at the claims that the city has done its best to resolve the issue. The county said in a statement that during the mediation process, none of the leaders from the municipalities took part in the meetings.

“The County, staff and County elected officials in reality were eminently more engaged in the process than the municipalities, no elected officials from any of the municipalities attending even one of the mediation sessions,” Horry County spokesperson Kelly Moore said in a statement. “At the meeting with the Governor, the Mayor of North Myrtle Beach stated that she knew very little about what had been discussed in mediation.”

The battle surrounding hospitality fees began last March, when the city of Myrtle Beach filed a lawsuit against Horry County, claiming the county collected millions of dollars in hospitality fees illegally.

According to the lawsuit, Horry County passed a resolution in 1996 to begin collecting the 1.5% hospitality tax in the unincorporated areas and the municipalities to help fund road projects through the RIDE I program. Myrtle Beach city leaders adopted a resolution supporting the tax.

It became effective on Jan. 1, 1997 and was to expire on Jan. 1, 2017.

In December 2016, the county enacted an ordinance to extend the termination date of the hospitality tax’s “Sunset Provision” to Jan. 1, 2022.

Myrtle Beach claims in the lawsuit that it never consented to an extension, while Horry County has said it didn’t need Myrtle Beach’s consent.

Horry County was using the hospitality fee to help fund the Interstate 73 project and bring the major interstate all the way into Myrtle Beach.

Over the next several months both parties filed appeals and injunctions, which brought confusion to businesses over who is supposed to be collecting the hospitality fee.

After three rounds of mediation, a proposed agreement on hospitality fees was reached and sent to all parties involved in the lawsuit.

On Dec. 16, Myrtle Beach, North Myrtle Beach, Surfside Beach, Aynor and Atlantic Beach all voted in favor of the proposed settlement.

Horry County leaders then met and decided to amend the proposal to say that Myrtle Beach cannot use the part of the settlement money to pay attorney fees. Council members voted 7-5 in favor of the proposed settlement.

Myrtle Beach City Council met on Thursday, Dec. 19 and they rejected the county’s change.

The county went on to say in a statement that it is willing to move on and settle the case but as long as the settlement money goes toward public use and not to pay for attorney fees.

“The County stands willing to settle, but will not participate in a scheme of diversion of public monies for private gain, will not participate in a fictitious class action scheme, and will not exclude municipalities from the settlement, as the City is willing to do. And the County will continue to vigorously defend the flawed litigation initiated and prosecuted by the City, litigation that at the hands of the City already has cost over a million dollars of taxpayer money to pursue, for the best interests of the County’s residents and visitors,” Moore said in the statement.

See below for a timeline tracing this ongoing dispute over the hospitality fee:

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