More money coming? All Horry towns, cities approve hospitality fee lawsuit settlement

With a unanimous vote Wednesday afternoon, North Myrtle Beach became the final Horry County municipality to vote to approve a settlement agreement that would allow the county to begin collecting a 1.5% hospitality fee again.

The councils in Aynor, Loris, Conway, Surfside Beach, Atlantic Beach Myrtle Beach, North Myrtle Beach and Horry County all had to vote to approve the settlement. A judge, likely South Carolina Circuit Court Judge William Seals, will still have to rule in favor of the settlement to formally approve it.

But North Myrtle Beach’s vote Wednesday was nonetheless significant and signaled that the nearly two-year-long battle over the hospitality fee could finally be over. North Myrtle Beach Mayor Marilyn Hatley called the settlement “good common ground.”

“I am very happy that the City of Myrtle Beach and the Horry County Council could work together to come to a final decision,” she said after Wednesday’s vote.

The Aynor town council also voted to approve the settlement deal on Wednesday, said Tony Godsey, the town manager.

Details of the settlement are sparse, in part because mayors, council members and attorneys have all declined to comment on its substance before the agreement is finalized. But the settlement appears to be a compromise of two competing settlement options that Horry County and Myrtle Beach brought before a judge last year. In Horry County’s settlement option, the hospitality fee money collected between 2017 and the beginning of the lawsuit in 2019 would be proportionally distributed to each of the municipalities. In Myrtle Beach’s settlement option, part of that pot of money would be proportionally distributed and part of the money would go to the South Carolina Bar Foundation, the charitable arm of the state Bar Association.

Some of the money — a total of $19 million — will go to the Bar Foundation, but it’s not clear how much, Horry County Council member Johnny Vaught said Friday.

Under the originally drafted settlement plans, both Myrtle Beach and Horry County assumed about $1 million of the $19 million would be used to settle claims that the hospitality fee was improperly collected between 2017 and 2019. With $18 million left over, Horry County proposed distributing $11.2 million to Myrtle Beach, $4.6 million to North Myrtle Beach and the rest to Conway, Surfside Beach, Aynor, Loris, and Atlantic Beach. Atlantic Beach would have received the smallest share of the pot, at $39,600. None of the money under Horry County’s plan would have gone to the SC Bar Foundation.

Myrtle Beach, however, proposed sending $9 million to the SC Bar Foundation, and distributing the other $9 million to the municipalities. Under their plan, Myrtle Beach would have received $5.6 million and North Myrtle Beach would have received $2.3 million. Atlantic Beach would have received only about $20,000.

Last fall, Seals sided with Horry County, and selected its distribution plan as the one the two sides should follow.

The dispute over that $19 million dates back to 2019 when Myrtle Beach sued Horry County, alleging that the county was improperly collecting the fee. Horry County began charging the fee on hotel stays, ticket sales and food and beverage sales in 1997 as part of its first RIDE program, with the money funding road improvements and related infrastructure. The fee was supposed to be in place for 20 years, expiring at the end of 2016. But in 2016, Horry County Council voted to continue collecting the fee for another six years, through 2022. At the time, Horry County was bringing in around $37.7 million from the 1.5% hospitality fee each year, and now brings in more than $40 million annually.

A judge ordered the county to pause collection of the fee in 2019.

As the coronavirus pandemic swept over the tourism-reliant Grand Strand in 2020, the dispute over the hospitality fee took on a new importance as Horry County, Myrtle Beach and other local governments sought to plug budget holes and make up for lost revenue. Horry County alone lost some $22 million from the slowdown of tourist traffic over the summer.

When a South Carolina Supreme Court judge threw out the settlement between Horry County and Myrtle Beach in December, both sides were sent back to the negotiating table. That left questions about how Horry County would plug its budget holes, causing county officials to delay a budget workshop as they re-crunched numbers.

By Feb. 1, a new settlement agreement was drafted and in need of approval by all of the municipalities, which are all party to Myrtle Beach’s lawsuit. At the tail end of a three-and-a-half hour meeting, the Conway City Council voted unanimously to approve the settlement, kicking off a wave of approvals that continued through Wednesday.

Myrtle Beach and Horry County then held special meetings on Friday, Feb. 5, where they announced that the two governments had reached a new settlement. Loris, Surfside Beach and Atlantic Beach all voted Tuesday, Feb. 9 to approve the settlement, officials from those municipalities said.

“I’m just happy it’s going to be put to rest. It’s a good thing for the citizens of Horry County,” said R. Mark Causey, the Horry County Council member who represents the Loris area.

Like other local officials, Surfside Beach Council member Cindy Keating said she couldn’t share details of the settlement.

“But, I will say that I believe this is a better agreement for the communities than the first agreement proposed,” she said in an email Wednesday.

Aynor and North Myrtle Beach then voted Wednesday afternoon.

If the settlement is approved by a judge, the hospitality fee will again be collected at hotels, event venues and restaurants. Stephen Greene, the CEO of the Myrtle Beach Hospitality Association, said the businesses he represents are prepared to again collect the fee and that his group will help spread the word.

“We’re glad they’ve been communicating and working toward a resolution to get this issue put behind us. For us, our goal is going to be getting info out to our members,” Greene said Wednesday. “(Business owners) have everything in place, they just need to see where they’re sending the appropriate percentages to the county and the municipalities.”

This story was originally published February 10, 2021 at 3:36 PM with the headline "More money coming? All Horry towns, cities approve hospitality fee lawsuit settlement."