Tag: hospitality fees

Horry County Council Rejects I-73 Funding

By a 6-5 vote, Horry County Council, at its regular meeting Tuesday night, rejected a proposal to dedicate $4.2 million per year for 30 years from hospitality fee revenue to the construction of Interstate 73.
The margin was one vote, but it wasn’t that close. It was a clear demonstration that six members of council are solid in their determination to vote in the interests of the citizens not special interests.
The vote was a clear defeat for council members Johnny Vaught and Dennis DiSabato, the two on council who drank the Chamber Kool-Aid and spearheaded the effort to dedicate funding to I-73. It wasn’t their idea, but Vaught and DiSabato agreed to ‘carry the water’ for the Chamber and its cronies in this latest effort to obtain local funding for the road. They spilled most of that water.
The question now is, have Vaught and DiSabato destroyed any hope for the Chamber to secure local funding for its pet project?
The effort to secure funding for I-73 from countywide hospitality fees has been four and one-half years in the making. It began in Spring 2017 when former council chairman Mark Lazarus convinced county council to remove the sunset provision from the county ordinance establishing hospitality fee collection.
Lazarus next tried to convince council to dedicate the entire approximately $45 million annual revenue from countywide hospitality fees to fund construction of I-73. However, the people were beginning to be heard as their rejection of Lazarus for reelection in 2018 demonstrated, and Lazarus, in his final days in office, was only able to push through authorization for the county to enter into a funding agreement with the South Carolina Department of Transportation for up to $25 million per year from hospitality fees for I-73 construction.
That funding agreement was immediately challenged by a lawsuit brought by the cities against the county and the agreement was cancelled by county council in late 2019 with no money having ever been sent to SCDOT.
The settlement of that lawsuit included vague language that the county and the cities would work together to try and find alternative means of providing local funding for I-73.
After a break due to the uncertainties of the effects of Covid on local governments, a small group reportedly consisting of Chamber officials, state Rep. Case Brittain, Myrtle Beach Mayor Brenda Bethune, North Myrtle Beach Mayor Marilyn Hatley and DiSabato began meeting last summer to concoct a new local funding plan for I-73.
The spin at the time was dedicated funding from local governments could be taken to the S. C. General Assembly to lobby for state funds to be appropriated to I-73 construction and that resulting package could be taken to Washington to lobby for federal funds.
That entire concept seems to be upside down logic. Why should local governments be the first to dedicate funding for an interstate highway in an attempt to convince the state and feds they should contribute?

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County Council Must Make Hard Decisions on Budget

Two weeks after voting to defer second reading of the county budget for fiscal year 2021-22, Horry County Council will again consider second reading at its regular meeting Tuesday night.
How to pay for growth and who should pay for it will again be at the center of the council’s considerations.
Council rejected a staff proposal for a 2 mill increase in the county general fund, a 2.5 mill increase in the county fire fund, a 3 mill increase in the county solid waste convenience center fund and a $45 per year increase in the county stormwater fee two weeks ago.
According to several sources, county staff has come up with four possible options for council consideration Tuesday.
At one extreme is the proposal that council rejected. At the opposite extreme, reportedly is a small tax increase to help the convenience center fund.
The answer will probably lie somewhere between the two extremes.
While there is no doubt that the rapid growth currently being experienced and expected to continue in residential construction is straining county resources, the question of raising taxes on every taxpayer in the county to fund increased goods and services is a sticking point.
This is especially true when considering the hospitality fee money that was freed up with the settlement of the lawsuit with Myrtle Beach (approximately $26 million), with the money coming from the federal government American Rescue Plan (approximately $34 million per year for two years) and from impact fees should the council pass an impact fee ordinance after its scheduled June 10, 2021 workshop on impact fees.
It’s difficult to raise taxes when there is a spare $60 million in the bank with another $34 million promised next year and a new potential revenue resource from impact fees.
Here is where the discussion comes down to who is calling the shots in the county. County staff constantly warns against spending what it calls one-time money such as the hospitality fee and federal government money on recurring expenses such as funding increases for police and fire personnel.
There is nothing wrong with that logic in static times. However, staff reportedly has designs on the entire $60 million one-time money available this year for its own ‘wish list,’ another way of saying increase the size of the bureaucracy.

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Hospitality Fee Lawsuit – What Does Myrtle Beach Really Want

With the City of Myrtle Beach announcing last week it plans to appeal the judge’s order on a settlement of the hospitality fee lawsuit it brought against Horry County, it appears the city has taken the stance of ‘my way or the highway’ on the lawsuit issue.

Everything has been settled and agreed to between the parties in the lawsuit except for the disbursement of approximately $19 million the county collected in the various city jurisdictions in the county between March and August 2019.

Horry County asked the judge to order that money be returned to the city’s in which it was collected. The judge agreed.

Myrtle Beach requested one half of those funds be returned to the cities and one-half established as a fund from which it may pay out refunds to individuals who paid the hospitality fee between the above months with any unclaimed amount going to the South Carolina Bar Association’s fund for legal services for low income residents.

Under the county plan, Myrtle Beach would receive $11,170,800 of the approximately $19 million total. This money could be spent on infrastructure and public safety services associated with tourism, according to state law.

Under the city plan, Myrtle Beach would receive $5,585,400. Why would the city want to receive less money and why would it appeal a judge’s order that awarded it more?

The dispute over the settlement money split is about interpretation of Rule 23 of the South Carolina Rules of Civil Procedure, which deals with class action lawsuits.

Myrtle Beach issued the following statement as an explanation, “This appeal is necessary to finally determine the rights of the other members of the class — those who paid the Hospitality Fee to Horry County during the period when it was in dispute — regarding distribution of the portion of the $19 million common fund that was not otherwise resolved by the settlement agreement.

Myrtle Beach Mayor Brenda Bethune and City Manager John Pedersen have both added the city’s attorneys said the appeal is necessary in order to shield the city from any potential liability related to a suit that may be brought by a potential claimant.

I have spoken to two attorneys not involved in the lawsuit who said the city is already shielded from any claim by the trial judge’s order. In addition, neither believe this is a class action suit.

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Decisions by County Government Determined by Who the Voters Elect

Ultimately the type of government we have is a consequence of those we elect to serve in it.

In Horry County, I submit some of our incumbent council members are the wrong choice. These are charlatans who hold elective office for self-aggrandizing, self-enriching or ego boosting reasons, or some combination thereof.

They are happy to serve themselves, their large campaign donors and those they perceive to be power brokers. The needs of the citizens at large are a rare afterthought.

For decades, the development industry in Horry County has held influence over this type of council member, using that influence to get virtually anything it wanted, including developing wetlands, flood plains and areas without the necessary supporting infrastructure, approved by council.

Three council members up for reelection who fit completely into that mold are Dennis Disabato, Cam Crawford and Gary Loftus, in my opinion. Disabato and Crawford each draw over 50% of their campaign contributions from the development industry. Loftus was appointed to the advisory board of a developer funded institute at Coastal Carolina University that the development donors hoped would “tell their side”, as one of the big donors put it, on any study completed by the institute.

Crawford, Loftus and Disabato strongly supported the reelection of Mark Lazarus two years ago. After Lazarus lost the council chairman seat to Johnny Gardner, they bought into the fictitious plot, devised by former administrator Chris Eldridge, in consultation with Lazarus, to attempt to keep Gardner from taking office.

After a SLED investigation concluded there was nothing to the allegations by Eldridge, these three did everything they could to keep Eldridge in his administrator’s position including a bombastic display by Disabato in a special council meeting held to discuss Eldridge’s future.

They continue to support the Lazarus agenda two years after Lazarus lost a primary for reelection. For example, when Lazarus worked behind the scenes to get an area designated scenic and conservation rezoned for development, Crawford, Loftus and Disabato voted for the rezoning regardless of the potential flooding issues associated with the development.

Council will be making important decisions over the next few years regarding land use regulations, impact fees and improvements to the county’s stormwater management plan. Citizens need council members who will consider the welfare of the county as a whole as these important issues are considered, not ones who consider nothing more than what developers want.

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Myrtle Beach Lawsuit Sealed Fate of Local I-73 Funding

The day the City of Myrtle Beach filed suit against Horry County to end collection of the countywide hospitality fee, local funding for Interstate 73 was doomed.

This may not have been the intention of the lawsuit, but it was the inevitable result.

When Gov. Henry McMaster met with local leaders a couple of months ago encouraging them to find a way to maintain I-73 funding, Myrtle Beach Mayor Brenda Bethune told the governor the lawsuit was not about I-73.

She was right. The lawsuit was about stopping the county’s ability to keep collecting the countywide hospitality fee and keeping all revenue collected in the city for the city’s use.

What Bethune did not understand was stopping the countywide hospitality fee collection stopped the funding stream for I-73 as an unintended consequence. Myrtle Beach must take sole blame for this consequence.

A county resolution to settle the lawsuit last April provided one-third of the countywide hospitality fee revenue would go toward funding I-73. Bethune and the city rejected the offer immediately.

Horry County Council approved removing a sunset provision from its hospitality fee ordinance in May 2017. The intent at that time, as clearly stated by then council chairman Mark Lazarus, was to use the countywide hospitality fee revenue to fund I-73 construction in Horry County.

However, it wasn’t until February 2019 that RIDE I bonds were paid off (the original purpose of the hospitality fee). Myrtle Beach filed suit just a few weeks after claiming the fee collection by the county has been illegal since January 1, 2017.

The original county ordinance put a period of 20 years on collection of the fee, which ended on the above date. The ordinance was later amended to continue collections until RIDE I bonds were completely paid off.

It is clear from the initial complaint filed by Myrtle Beach that the city wants to keep all hospitality fee revenues collected within the city limits for uses determined by city council. One must wonder why the city waited until March 2019 to file suit against the county if the fee has indeed been illegal since January 2017 as the city claims.

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Horry County Council at Precipice of I-73 Decision Wednesday

Horry County Council will decide the fate of its Financial Participation Agreement with the South Carolina Department of Transportation at a specially called meeting Wednesday.

The agreement, which was signed by the county and SCDOT December 13, 2018, commits the county to provide up to $25 million per year for funding the Interstate 73 project.

The county does not have the money and the only sane step for council to take is to cancel the contract before it takes effect and SCDOT begins committing money the county does not have.

County officials planned to use revenue from a countywide 1.5% hospitality fee on prepared food and beverages, accommodations, admissions tickets and rental car fees to provide the $25 million per year.

However, that plan, hatched by former council chairman Mark Lazarus and former county administrator Chris Eldridge was fatally flawed from the beginning.

The countywide hospitality fee was enacted specifically, with the consent of the cities and a hard sunset provision, for the purpose of funding the short term projects listed in the Road Improvement and Development Effort report of October 1997 and approved by then Gov. David Beasley. I-73 was not included with those projects.

County council overstepped its bounds when it removed the sunset provision from hospitality fee legislation in April 2017 at the urging of Lazarus and Eldridge who specifically wanted to use the revenue for construction of I-73 when the RIDE bonds were paid off.

That first blunder was compounded by a second when the Lazarus/Eldridge tandem put a full court press on county council to provide up to $25 million of hospitality fee revenue for I-73 in July 2018 without consulting the cities.

A trifecta of blunders was completed when, one month before he left office, Lazarus effectively bullied council into contractually obligating itself to SCDOT for I-73 funding. This was only weeks after Hurricane Florence again demonstrated to county officials the desperate need for upgrades to roads and other critical county infrastructure already in place.

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Time to End the County’s Hospitality Fee Lunacy

Events occurring over the last week served to magnify the need for the county and the cities to get past the lunacy that has developed over the county’s efforts to continue collecting a countywide Hospitality Fee that is in all likelihood now illegal.

Myrtle Beach initially filed a lawsuit against the county “for itself and “similarly situated plaintiffs” on March 21, 2019 stating its claims against the county’s continued collection of the hospitality fee and requesting a temporary restraining order on the county’s continued collection of the fee while the case was being litigated.

After District Court Judge Seals issued a temporary restraining order on the county’s continued collection of a 1.5% hospitality fee within the City of Myrtle Beach and “similarly situated plaintiffs”, on June 21, 2019, the cities expected the county to stop collecting the fee within their jurisdictions.

Last Tuesday, the county dashed those expectations by sending out an email announcing it would only stop collecting the fee within Myrtle Beach and would continue to collect it in the other cities in the county as well as the unincorporated areas.

This led to outrage from North Myrtle Beach officials who called the county’s continued collection of the fee within their city “illegal.” In addition, Myrtle Beach filed a new motion requesting the county be required to show cause that it was not in contempt of the judge’s order.

With the angry rhetoric flying, a special meeting of county council was called for June 29, 2019 at which council was expected to vote on a recommendation to suspend collection of the fee within the cities until the lawsuit was settled.

Instead, council convened, immediately went into executive session where, according to sources with knowledge of the discussion, county attorney Arrigo Carotti and attorney Henrietta Golding, representing the county in the case, urged council to “stay the course” and continue collecting the fee in the other cities until ordered not to by the Court. In addition, the attorneys reportedly told council the judge had used the wrong standard of review in making his ruling. Golding filed a request for reconsideration of the ruling and was prepared to take the issue to the S. C. Supreme Court where, she told council, she expected the restraining order would be overturned.

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Horry County and Illegality are Becoming Synonymous

For the past week, Horry County and illegal have been combined in local media headlines about several issues..

Wednesday was a banner day for the county in such actions. Not only did Jay Bender, the preeminent legal authority on the South Carolina Freedom of Information Act, say county council conducted an illegal executive session but also lawyers for the City of Myrtle Beach went to court requesting the judge to find the county “in contempt of the authority of this Court” for apparently violating a court order issued last Friday with respect to the county’s continued collection of the Hospitality Fee.

The actions that led to executive session were well orchestrated. After council member Johnny Vaught made the motion to go into executive session, council chairman correctly called it out of order because no executive session was listed on the agenda. County attorney and council parliamentarian Arrigo Carotti jumped up to say under Robert’s Rules of Order, a motion for executive session was proper.

What Carotti never addressed were the requirements of the FOIA law, which made executive session illegal in this case, according to Bender’s statement. Shouldn’t the county attorney and parliamentarian have addressed those requirements before ruling executive session legal?

As Bender pointed out, this is at least the third time this year Horry County has not adhered to FOIA requirements. Unfortunately, the FOIA law has no teeth. There are no consequences for the county if it chooses to ignore the law, which it does when necessary.

While Vaught stated some reasons for executive session that sounded shaky at the time, he accomplished his goal in keeping the interviews of candidates for the administrator position out of the public eye.

I submit Vaught did not want the public to be able to compare the candidates’ respective presentations, especially make comparisons with his chosen candidate Steve Gosnell. In that Vaught was successful even if it took an illegal executive session, which Carotti ruled appropriate, to accomplish it.

The Hospitality Fee issue is one that could affect the county significantly. Last Friday, Judge Seals ordered a temporary restraining order, which prohibits the county from collecting hospitality fees within the at least the city limits of Myrtle Beach and quite probably in any of the incorporated municipalities.

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County Response to City Lawsuit Follows Recent Pattern

Horry County’s response to the lawsuit over hospitality fees filed last month by the City of Myrtle Beach follows a pattern the county has used in recent years when it is challenged in court.

That pattern is to launch a subjective attack on the opponent rather than argue objective facts of the case.

The county claimed SkyDive Myrtle Beach committed 112 safety violations and was running an unsafe operation at Grand Strand Airport. To date, neither the county Department of Airports nor the Federal Aviation Administration has yet to produce documentation of even one safety violation but SkyDive Myrtle Beach has been closed down since 2015.

The county claimed Horry County Treasurer Angie Jones mismanaged her department and fired employees in order to provide openings for political allies. The county’s counterclaim called for Jones to personally bear responsibility for any shortfall in her department funding, of which there was none.

In its answer to the city’s lawsuit, Horry County claims Myrtle Beach has mismanaged its budget for years and “now attempts to circumvent state law to shore up its own finances.”

Obviously the county’s claim that the city has mismanaged its budget is a subjective political one as well as being erroneous. One guide to effective budget management is bond rating. The city’s bond rating is AA, the same as the county’s.

On the basis of the city’s original complaint and the county’s response, the city appears to have the better legal argument to this non-lawyer observer.

The county’s claim of budget mismanagement on the part of the city appears to have no more validity than the false allegations of wrongdoing made by county attorney Arrigo Carotti and former administrator Chris Eldridge against Chairman Johnny Gardner. The county’s tendency to create a narrative then try to claim it as fact is too repetitious to be accidental, but it is not a legal argument.

The city’s initial act to claim all hospitality fee revenue collected within the city limits and the county’s attempt to extend a countywide 1.5% hospitality fee collection ad infinitum are the starting point of this dispute. The cities of North Myrtle Beach and Surfside Beach followed Myrtle Beach’s lead with new hospitality fee ordinances.

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County Council Ends Eldridge Nightmare

The nightmare that has been the reign of county administrator Chris Eldridge ended Tuesday night when county council approved a termination package to end Eldridge’s employment.

The specific details of Eldridge’s package were not announced. However, it is believed to be in the neighborhood of one year salary, benefits and allowances or approximately $300,000 cost to the county.

And it is worth every penny to get rid of a poisonous influence at the top of county government who was unilaterally despised by county employees; who often confused his role as one of being in the middle of making policy rather than carrying out the decisions of others and who quite unsuccessfully attempted to disgrace current council chairman Johnny Gardner even before Gardner took office.

The vote was 9-2 to end Eldridge’s tenure, with council members Bill Howard and Tyler Servant the odd men out. Gardner did not vote as he participated in the negotiations of the package with Eldridge’s attorney.

Howard’s no vote was for reasons apparently only he can understand. Servant tried to play his ‘guardian of the people’s money’ schtick because of the size of the settlement, never considering how much more it would have cost the county in poor management and personnel decisions to keep Eldridge in place.

Immediately prior to the vote on Eldridge, council voted to defer cancellation of a Financial Participation Agreement with SCDOT for funding of I-73 while “aggressively pursuing” defense of the lawsuit recently brought against the county by Myrtle Beach over hospitality fee collections.

Among other pleadings in the lawsuit, the city requested a permanent injunctions against the county’s ability to collect a countywide 1.5% hospitality fee for its special road fund. A portion of that fund was to be used to fund the agreement with SCDOT.

In addition to the lawsuit, three cities, Myrtle Beach, Surfside Beach and North Myrtle Beach have moved on to pass ordinances capturing all hospitality and accommodations fees collected within their corporate limits.

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