Hospitality Fee Mediation Impasse Demands New Direction by Local Governments

By Paul Gable

After two extended mediation sessions between representatives from Myrtle Beach and Horry County, it is obvious the two sides are at an impasse for any agreement with regard to the ongoing hospitality fee lawsuit.

This may have been the result the city was looking for from the beginning. According to sources familiar with the proceedings, not one elected council member from Myrtle Beach participated in either of the mediation sessions.

Horry County had several elected council members participate in the sessions. It is extremely difficult to come to any solution if those who will ultimately pass the legislation that would be needed to approve and institute the agreement do not participate in the process.

With a view to court decisions to date, Horry County cannot now nor hope in the future to collect a 1.5% countywide hospitality fee as it has since 1997 until challenged in court by Myrtle Beach.

The simple way out of this mess is for both sides to step away from the legal process. Myrtle Beach and the other cities can collect the revenue from the new hospitality and accommodations taxes they passed earlier this year and spend that money as they choose.

Likewise, Horry County could continue to collect either the 1.5% hospitality fee it now receives from the unincorporated areas or choose to pass new ordinances under current state law for hospitality and accommodations taxes. The county could then spend those proceeds on the projects they need locally.

There is one possible perceived obstruction from the walking away process. Included in the initial lawsuit filed by Myrtle Beach is a claim that the countywide collection of the hospitality fee has been illegal since January 1, 2017 and that the county should refund the approximately $60 million collections from that date amount to.

Several considerations seem to make this claim spurious.

Those refunds cannot go to the cities. If taxes are collected illegally the refunds must go back to those who paid them, in other words the consumers.

According to current law, a person must have suffered at least $100 in damages in order to be able to participate in such a class action claim. That means someone would have had to spend at least $6,700 on hotel rental, car rental, prepared food and beverages and/or venue tickets and have the ability to prove those expenses.

Additionally, the claim is probably overstated by Myrtle Beach since most of that $60 million revenue was used to pay off Ride I bonds, the original reason for instituting the countywide fee. Those bonds were not paid off until February 2019.

This means the $6,700 would have had to be spent in the past several months.

And Myrtle Beach does not have any standing to initiate such an action.

With no compromise in sight and every court decision going against Horry County to date, there is no funding mechanism available for the Interstate 73 project. With that in mind, there is no reason, other than plain obstinacy or stupidity, why Horry County Council does not immediately vote to cancel the Financial Participation Agreement with SCDOT that currently promises up to $25 million per year from Horry County to be used at the discretion of the state transportation department for the I-73 project.

Any future revenue the county receives from hospitality fees would be better spent on improving and expanding current infrastructure such as roads and stormwater management as well as public safety needs.

With the greatest portion of current and future growth expected in the unincorporated areas of the county, council members should concentrate on the job for which they were elected, i.e. serving the needs of the citizens, rather than trying to cater to the wishes and profits of a very few individuals and businesses.


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