Tag: accommodations tax

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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Horry County Bungled Hospitality Fee Issue

Horry County officials look like the gang that couldn’t shoot straight with respect to a Hospitality Fee issue that county government has bungled for at least the past three years.

In a MyHorryNews.com story yesterday, council member Johnny Vaught tried to pass off the latest brouhaha over the continued collection by the county of a 1.5% hospitality fee in every city except Myrtle Beach as a “mistake” because of a misinterpretation of a June 21, 2019 judge’s temporary restraining order.

The order, signed by Judge Seals, suspended collection of the hospitality fee by Horry County in the “City of Myrtle Beach for Itself and a Class of Similarly Situated Plaintiffs,” as the lawsuit is titled.

Additionally, the order denied a request by Horry County that a temporary restraining order be placed against the cities with respect to collection of new accommodations and hospitality taxes the cities respectively passed and are scheduled to go into effect July 1, 2019.

One of the county’s arguments in requesting a TRO against the new city taxes was that they would illegally exceed local hospitality and accommodations tax limits mandated by state law when taken in conjunction with the county hospitality fee.

The city hospitality and accommodations tax ordinances were passed in accordance with entirely separate sections of state law and have nothing to do with the uniform service charge hospitality fee in question, a point I’m not sure county officials entirely understand.

The new city hospitality tax is collected on prepared food and beverages only. The countywide uniform service charge hospitality fee is collected on accommodations, prepared food and beverages, admissions and rental car fees.

On June 25, 2019, the county sent an email to the cities stating it would continue to collect the 1.5% hospitality fee everywhere except within the city limits of Myrtle Beach where it said collection of the fee was temporarily suspended pending final settlement of the lawsuit.

The county’s email immediately caused an outcry from the other cities in the county, led by North Myrtle Beach, which issued a statement saying the county was attempting to continue to “illegally” collect the hospitality fee in the other cities.

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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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Public Monies, Chambers of Commerce and South Carolina Supreme Court

It has been nearly four months since the South Carolina Supreme Court heard arguments in the DomainsNewMedia.com v Hilton Head – Bluffton Chamber of Commerce.

The question before the court deals with whether the Chamber of Commerce is a public body and subject to the provisions of the S. C. Freedom of Information Act.

The Myrtle Beach Area Chamber of Commerce (MBACC) filed an amicus curiae brief to the S. C. Supreme Court supporting the Hilton Head – Bluffton Chamber of Commerce position.

A Circuit Court judge in Bluffton County ruled in favor of Plaintiff DomainsNewMedia.com finding the Chamber is a public body within the definition of the law.

Actually, the law is quite straightforward. Section 30-4-20 of the S. C. Code of Laws defines a public body subject to the Freedom of Information Act as, “…any organization, corporation, or agency supported in whole or in part by public funds or expending public funds…”

The Hilton Head – Bluffton Chamber of Commerce receives accommodations tax money from the towns of Hilton Head and Bluffton as well as Beaufort County. The Chamber is the designated marketing organization for these governmental entities to expend the tax funds collected for tourism promotion.

The Chamber claimed before the Court that being the designated marketing organization for those public agencies did not negate its status as a private non-profit corporation not subject to FOIA.

The Chamber does provide a marketing budget and quarterly and year end reports for the public money to the governments involved.

In answer to a question from Justice Few about how a member of the public could find out specific information about the line items in the Chamber’s budget, the attorney for the Chamber suggested they would have to file a FOIA request with the town, who would then go to the Chamber for the specific information.

The argument was not that the public did not have a right to the information, it just didn’t have the right to request the information directly from the agency expending the funds, which is ridiculous.

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WestJet Deal Still Haunts County

A 2013 contract between WestJet Airlines and Horry County Government is still costing the county three years later.

Boiling the deal down to its essence, Horry County Council agreed to guarantee WestJet a 15 percent profit on a new airline route established for the 2013 summer tourist season. The county placed a maximum payout of $1 million on its guarantee.

At the time the deal was struck, we heard pronouncements from members of county council such as it was ‘almost guaranteed that this deal would not cost the county one cent.’

Instead the county owed WestJet $500,873 at the end of 2013 in order to live up to its contractual obligations.

A meeting of the Horry County Administration Committee, held on October 11, 2013, agreed to a payment plan whereby the Myrtle Beach Area Chamber of Commerce would pay WestJet the total amount due and the county would repay the Chamber out of its 5 percent set aside funds from county accommodations tax.

At that time, a balance of approximately $250,000 was in the county’s set aside account. The remainder would be repaid to the Chamber from county set aside accommodations tax funds in the coming years.

The Administration Committee approved a resolution at its meeting Tuesday to allow for continuing repayment of those funds.

The deal with WestJet raises several points about the functions of county government.

This was a bad deal from the beginning. County government has no business guaranteeing a private business a profit that includes the use of any county tax funds, property or otherwise.

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Budgets - Cuts, Spending and You

Beaufort County Court Decision Could Impact MBACC

A recent court decision in Beaufort County could have an interesting impact in Myrtle Beach.

Circuit Court Judge Michael Nettles ruled the Hilton Head-Bluffton Chamber of Commerce must allow public access to information regarding how the chamber spends public funds under the provisions of the South Carolina Freedom of Information Law.

Hilton Head businessman Skip Hoagland brought a lawsuit for access to the chamber’s records of how public funds are spent. At issue were the accommodations tax monies that the chamber receives from the towns of Hilton Head and Bluffton as well as Beaufort County and grant money from the SC Department of Parks, Recreation and Tourism.

The Hilton Head-Bluffton Chamber of Commerce argued its records were not subject to FOIA requests since it is a private, non-profit organization.

In his ruling, Nettles noted the SC Freedom of Information Law defines, “any organization, corporation or agency supported in whole or in part by public funds or expending public funds,” as a public body.

Nettles also noted that while the chamber provides a budget and accounting summary of how those funds are spent, neither provides specific information on, for example, vendors used.

The MBACC receives approximately $5 million per year from City of Myrtle Beach accommodations tax collections and approximately $22 million per year from the city’s one-cent tourism sales tax. In addition, the MBACC receives approximately $6 million from Horry County accommodations tax collections and approximately $5 million or more annually from SC Department of Parks, Recreation and Tourism grants.

The MBACC uses those funds for “out-of-area” tourism marketing. Through the years, the MBACC has been criticized by non-members for giving preferential treatment in its marketing efforts to chamber members even though public funds are being used to fund them.

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Gingrich, Myrtle Beach, Oil and Interstates

Horry County – Myrtle Beach Land Deal

Horry County and the City of Myrtle Beach are investigating a joint purchase of the former Hard Rock Theme Park.

According to sources familiar with the talks, the reason for the purchase is to build additional sports fields for the sports tourism industry.

This is not a good idea on several levels.

Horry County and Myrtle Beach should not use public tax dollars for the purchase of land and construction of sports facilities for the tourism industry.

Horry County just raised property taxes by 7.2 mils (the maximum increase allowed by state law) for this current fiscal year ostensibly for pay increases and public safety improvements.

Now it not only proposes to use tax dollars to purchase land and build sports fields, but the purchase of the former theme park property by local governments would remove that land from the tax rolls, a double whammy for local taxpayers.

Horry County already wastes over $1 million per year funding the operations budget of the Myrtle Beach Regional Economic Development Corporation. If this is such a good idea, shouldn’t MBREDC be able to recruit private business to purchase the land and build the facilities?

Myrtle Beach raises tens of millions of tax dollars, with its one cent tourism sales tax, that it turns over to the Myrtle Beach Area Chamber of Commerce to use for tourism advertising. This is something that should be funded by marketing budgets of the private businesses in the tourism industry.

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Gingrich, Myrtle Beach, Oil and Interstates

Accommodations Tax Money Doesn’t Solve Myrtle Beach Policing Problems

Recent changes in state law have made as much as an additional $5 million in accommodations tax money available for law enforcement in the Myrtle Beach area for the month of May.

This money is specifically targeted at providing additional police officers from around the state, and possibly from out of state, to handle crowds during the Atlantic Beach Bikefest over Memorial Day weekend.

Obviously there was insufficient law enforcement in Myrtle Beach during this past Memorial Day weekend when crowds got out of control in the south end of the city.

But, more and better policing is needed in Myrtle Beach throughout the year.

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Atlantic Beach Bikefest, Money and Myrtle Beach

Much has been made about the extra money from accommodations tax that will be available to purchase the services of extra police for next year’s Atlantic Beach Bikefest.

Thanks to quick work in the General Assembly, approximately $2.3 million dollars will be allowed to be diverted from tourism marketing and promotion to law enforcement costs next year.

I have even heard some talk about some of that money being used for private security firms, such as Blackwater Security, if a few additional changes can be made to state law to allow it.

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Accommodations Tax Fuels MB Chamber Greed

When Horry County Council begins in-depth considerations of next year’s budget later this week, the question of how much accommodations tax revenue goes to the Myrtle Beach Area Chamber of Commerce will be a major point of discussion.

While the accommodations tax concept is to help meet the costs of expanded services required by the introduction of millions of visitors to an area, the state law allowing accommodations tax collections requires 30 percent of the revenue generated to be spent on tourism marketing. This provision was one of the trade-offs put in the law to get the buy-in of the tourism lobby.

For a number of years, that 30 percent, approximately $2.3 million from the unincorporated areas of the county, has gone to the Chamber in a block to spend on its marketing efforts.

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