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County Council Adds More Controversy to Hospitality Fee Settlement

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.

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Questions Surround Proposed Hospitality Fee Settlement Agreement

As Horry County and the municipal councils prepare to vote on a proposed settlement agreement for the Hospitality Fee lawsuit Monday night, many questions remain about what really has taken place behind closed doors since the lawsuit was filed last March.

According to sources familiar with the settlement agreement, the basic proposal approved in a resolution by Horry County Council at its April 2, 2019 regular meeting and publicly rejected by Myrtle Beach Mayor Brenda Bethune within a few days thereafter is the agreement that will be voted on Monday night?

The basic terms of that proposal as it was offered in April and will be considered Monday night are as follows: a) Horry County will continue to collect a 1.5% Hospitality Fee countywide; b) one-third of that fee (0.5%) will go toward funding I-73; c) the remaining two-thirds (1%) will be remitted to the respective taxing jurisdictions (unincorporated county or city) in which it was collected; d) Revenues from the 1.5% countywide hospitality fee collected between the date bonds for Ride I projects were paid off (sometime in February 2019) and June 30, 2019 will be remitted in a lump sum to the respective taxing jurisdiction in which those revenues were collected.

Horry County Council Chairman Johnny Gardner sent a letter to each of the city mayors proposing that settlement on April 3, 2019.

The county was prohibited from collecting the 1.5% countywide hospitality fee within the city jurisdictions after June 30, 2019 by judge’s order. The sum collected within city jurisdictions between February 2019 and June 30, 2019 (currently held in escrow) and subject to lump sum payments back to the cities is approximately $19 million.

Why is a proposed settlement that was publicly and totally rejected by Bethune in April 2019 suddenly the terms for settlement? (See Gardner’s letter to the mayors and Bethune’s rejection letter at the links below)

The mayor’s main points of contention have not changed in the agreement to be voted on for approval Monday night: a) continued collection of the countywide hospitality fee is illegal; b) the city cannot delegate to the county the authority to control the disposition of revenues which are properly within the city’s authority to collect and manage and c) no benefit to city residents from that arrangement.

What has changed?

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Council Defers Four Mile Road Rezoning

Horry County Council deferred consideration of second reading of an ordinance to rezone a parcel of land on Four Mile Road until its first meeting in February 2020.

The deferral was taken to allow the developer to discuss a stormwater runoff plan for the project with county planning staff that will address concerns of surrounding residents.

However, after listening to public input from both sides of the rezoning, those opposing it and the developer, and to questions from council, it seems obvious that requesting the stormwater plan is a delaying tactic.

While stormwater runoff has to be a consideration with any current or future development, especially when considering the flooding that has happened in the county in three of the last five years, it is not the central issue of contention in this particular rezoning.

The central issue is that this particular parcel is inside the boundaries of what is known as the 319 Area Plan, a plan adopted in 2011 whose goal is to protect the rural heritage of this corridor between Conway and Aynor.

The 319 Area Plan stipulates that single family housing requires half acre lots for each home built. The rezoning request is for quarter acre lots for 202 single family homes.

However, the current zoning for the parcel is commercial forest agriculture (CFA) a zoning designation that predates the adoption of and is grandfathered into the 319 Area Plan.

CFA zoning allows multi-family housing with a density of three units per acre for the gross acreage being developed. This means the developer can build, on this parcel, a total of 387 multi-family units without any approval from council required.

The 319 Area Plan cannot stop the multi-family development. The public input from those opposing the rezoning and questions from some council members appeared to demonstrate ignorance of that fact.

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Good or Bad Development on Four Mile Road?

Horry County Council faces an interesting conundrum Tuesday night when it considers second reading of Ordinance 113-19, which is a request for rezoning a parcel of approximately 129 acres on Four Mile Road.

The rezoning requests a change from the current zoning of Commercial Forest Agriculture (CFA) on the parcel to SF10 (minimum lot size of 10,000 sq. ft.) for 202 single family detached homes.

The land is located near the Conway end of the Highway 319 Area Plan which was established in 2011 to limit the impact of residential development and maintain the rural character of the area.

The 319 Area Plan calls for minimum lot size of 20,000 sq. ft. for single family homes. The request was recommended for disapproval by the Horry County Planning staff but recommended for approval by the county Planning Commission by a 5-4 vote.

Some residents in the area expressed concerns about lot size, potential stormwater runoff and increased traffic from the proposed development. The residents were upset that the minimum lot size they expected for single family homes in the area plan was twice the size being requested by the developer. They felt the 319 Area Plan minimums should be adhered to.

In a perfect world the residents demanding adherence to 20,000 sq. ft. minimum lot size would probably win their point. However, zoning and development within Horry County is far from a perfect world.

The current CFA zoning would allow the developer to build three units per gross acre of multi-family housing with no approval needed from county council to proceed. The residents opposing the rezoning that I spoke with after one planning commission meeting were unaware of this provision in CFA zoning.

The developer stated in several meetings with the residents and planning staff that he was prepared to go forward with multi-family housing if the request for rezoning for single family homes was voted down, in order to protect his investment in the property.

Therefore, in opposing the rezoning because the requested lot size is only one-half of that in the 319 Area Plan, the residents in the area would see as many as 387 units of multi-family housing built on the parcel instead of 202 single family homes.

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Horry County Legislative Delegation Hospitality Bill Will Not Serve County Citizens Interests

A bill to amend South Carolina law on hospitality tax, pre-filed November 20, 2019 by four members of the Horry County legislative delegation, will not serve the general interests of Horry County citizens if it ever becomes law.

The bill, H 4745, sponsored by Reps. Alan Clemmons, Heather Ammons Crawford, Russel Fry and Tim McGinnis, is specifically designed to collect approximately $43 million per year in hospitality fee revenue specifically for the Interstate 73 project.

The bill was pre-filed one day after Horry County Council voted unanimously to cancel its Financial Participation Agreement with the South Carolina Department of Transportation. The agreement would have funded I-73 at up to $25 million annually.4745 is an expansion on a bill, H. 4597, filed just before the legislative session for 2019 ended last May. H. 4597 was filed after the cities filed a lawsuit against the county to stop collection of the 1.5% countywide hospitality fee within the limits of the respective municipalities in the county.

H 4745 is an expansion on a bill, H. 4597, filed just before the legislative session for 2019 ended last May. H. 4597 was filed after the cities filed a lawsuit against the county to stop collection of the 1.5% countywide hospitality fee within the limits of the respective municipalities in the county.

Both bills are designed to allow Horry County to resume collecting the 1.5% ‘legacy’ hospitality fee. Horry County is the only county in the state that has continuously collected the 1.5% countywide ‘legacy’ hospitality fee until stopped by the lawsuit.

The need for the second bill appears to be that H. 4597 allows the 1.5% hospitality fee revenue to be used on all the tourism related purposes as defined in S.C. Code of Laws Section 6-1-730. Those purposes include police, fire, emergency medical services, roads, highways, streets and bridges and recreation facilities which are tourism related.

The second bill limits uses of the hospitality fee revenue to interstate infrastructure, interstate interchanges and roads that directly connect to an interstate until no viable interstate highway projects remaining in the county.

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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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Runoff Elections Tuesday Will Finalize Municipal Council Seats

Voters will go to the polls Tuesday to decide runoff elections to finalize who will represent them on municipal councils in Conway, Myrtle Beach and Surfside Beach.

The Conway runoff is between newcomer Justin Jordan and on again, off again former council member Randy Alford.

Jordan became interested in public service after founding Conway Cares, a group that helped citizens during the flooding from Hurricane Florence. He said the experience helped open his eyes to greater service to the citizens of his native city. He believes it’s time to bring some new thinking to council to preserve the Conway he grew up in for future generations and to be open minded and a voice of reason for all citizens in the city. It is believed Jordan would work well with newly elected council member Alex Hyman to bring a new dynamic to council.

Alford previously served on council but was defeated for reelection just two years ago.

The Myrtle Beach runoff for the final city council seat is between incumbent Mary Jeffcoat and newcomer John Krajc. This race brings an interesting dynamic in that Mayor Brenda Bethune has promoted the Krajc candidacy against incumbent Jeffcoat who has basically supported all of the mayor’s initiatives.

The government directed central planning of the city will apparently continue to the detriment of the businesses and citizens south of the former pavilion  site regardless of which candidate wins the runoff.

In Surfside Beach no candidate won election in the first round of voting. Bob Hellyer and Julie Samples finished one-two in the mayoral race while incumbent council member David Pellegrino was ousted. Paul Holder, Michael Drake, Cindy Keating and Kathryn Martin finished in that order for council seats. The top three vote getters in the runoff among those four will win council seats.

Surfside Beach politics is always interesting. In this election, no incumbent whose term was up chose to run for reelection. Pellegrino’s council term ends in two years. Samples previously served on council, choosing not to run for reelection when her term ended in 2017.

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Proposed Hospitality Fee Lawsuit Settlement Taking Money from Taxpayers

The proposed agreement that county and city councils will be voting on to settle the hospitality fee lawsuit between the county and the cities will see money that should go to the benefit of the taxpayers instead going to pay attorney fees.

This is the first lawsuit settlement negotiation that I can remember where the injured parties, the taxpayers, were not even represented in the room.

In the case of the cities through three negotiation sessions, no elected officials from any of the cities, those elected to represent the citizens, could be bothered to be present. Several elected county council members attended each session.

The absence of city elected officials, especially mayors Brenda Bethune of Myrtle Beach, Marilyn Hatley of North Myrtle Beach and Bob Childs of Surfside Beach, the three cities at the forefront of the lawsuit, resulted in attorneys representing the cities to structure the settlement with no input of those elected to represent the citizens.

According to information received by Grand Strand Daily, the settlement will structure the lawsuit as a class action which will allow the attorneys representing the cities to split 33% of the settlement amount for themselves.

The reported settlement amount is the approximately $19.5 million revenue from the countywide 1.5% countywide hospitality fee collected within the respective city limits of the cities in the county from the time the bonds for the RIDE I program were paid off in February 2019 until June 30, 2019. That means the attorneys will split a cool $6.5 million from the settlement. In addition, those attorneys have already billed the cities a total over $750,000 in legal fees before the settlement is finalized.

County council member Harold Worley stated from the council dais that he would not vote to approve any settlement that gave $7 million taxpayer dollars to attorneys. Worley was speaking as the representative of county council District 1, which includes all of North Myrtle Beach. He believes that money should be spent for infrastructure improvements, public safety and like needs allowed by the hospitality fee law.

The $7 million will come out of the settlement amount for the cities. The county is only on the hook for approximately $350,000 billed by its attorneys.

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Questions Surround CCU’s Planned Institute for Principled Development

Documents obtained by Grand Strand Daily raise some questions about recent media reports regarding the planned Institute for Principled Development at Coastal Carolina University.

According to media reports, the institute will be housed at the E. Craig Wall Sr. College of Business Administration at CCU. Barbara Ritter PhD, Dean of the College of Business Administration, said the institute will be an impartial and credible source for those seeking answers to some of the complex planning and development issues facing the region and it will provide unbiased, data-driven analysis to Horry County’s growth.

Robert Salvino Jr. PhD, professor of economics and director of the Grant Center for Real Estate and Economics at CCU, will reportedly oversee the institute.

The institute is funded almost exclusively by developers, builders, realtors, engineers and associated development industry firms. According to a document obtained by Grand Strand Daily, as of September 2019, the institute had funding commitments of $152,666 for 2019 and $409,500 in three year pledges. The largest contributors are Burroughs and Chapin, DDC Engineers, Clay and Matthew Brittain, Ocean Sands Resort, Palmetto Corporation, Ralph and Tradd Teal and Waccamaw Land and Timber each pledging $30,000 over three years.

According to the media reports, the first step is to hire an executive director for the institute and next to craft an advisory board to address questions surrounding development. The reports state the institute is set to launch in spring 2020.

However, Grand Strand Daily obtained a document that names a five member Board of Advisors elected July 31, 2019 for the “Institute for Responsible Development in the Wall College of Business Administration at Coastal Carolina University.” The name of the institute was reported as Institute for Responsible Development in news articles last week. “Responsible” was changed to “Principled” in a press release from CCU over the weekend.

Members of the Board of Advisors listed in the above named document are Mark Lazarus, Chairman, Drew Flynn and Tradd Teal, Co-Vice Chairmen, Clay Brittain, Secretary and Horry County Council member Gary Loftus, Ad Hoc Member.

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Seriously Flawed Settlement Agreement Proposed for Hospitality Fee Lawsuit

The proposed settlement agreement presented to county council at its regular meeting Tuesday night appears to have many serious flaws, according to information gathered by Grand Strand Daily.

Council member Harold Worley vented his frustration with the settlement agreement during the council meeting. His complaint was having attorney fees of approximately $7 million come off the top of an approximately $20 million the settlement award if the lawsuit is settled as a class action.

The $20 million was collected from a countywide 1.5% hospitality fee collected between the date the bonds were paid off in February 2019 until June 30, 2019. Worley’s statement is based on a 1/3 contingency fee to be paid off the top of the settlement amount to the attorneys representing the cities.

The basic claim in the original lawsuit was that Horry County illegally collected a 1.5% countywide hospitality fee since January 1, 2017. The fee was collected with the agreement of the cities for an initial 20 year period beginning January 1, 1997, in order to pay off bonds issued to pay for the initial RIDE road projects.

The county first extended collection of the fee until the bonds were paid off and, later, in perpetuity. The cities allege they did not give approval for the extensions which prevents the county from legally collecting the fee in their respective taxing jurisdictions. However, the cities apparently dropped a claim for fees used to pay off the bonds between January 1, 2017 and February 2019.

But that money is not the cities to claim, a fact GSD first reported last spring when the lawsuit was filed. It is not the cities’ money. It is not the county’s money. It is taxpayer money.

 If it were held the county did illegally collect hospitality fees after the bonds were paid off, any rebates of tax revenue would be owed to the people from whom the taxes were collected, not the cities in which the fee was collected.

Hospitality fees are collected by vendors at point of sale and remitted monthly directly to the county in accordance with the provisions of state law. The cities are not involved in the collection process at all, nor is it their money being collected.

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