FOLLY BEACH — A dispute over who will operate a lucrative parking lot at one of the area’s most popular beaches could be headed to court.

Following a rare protest hearing Tuesday at a meeting of Folly Beach City Council, the council voted unanimously to stick with the contract it had awarded on April 10. That contract gave management of the 3rd Street West parking lot, also known as 3W, to Wolffies on the Beach LLC.

That contract is being challenged by Palmetto Parking LLC, which maintains that it has had a contract since 2007 to manage public parking areas on Folly Beach.

The contract includes 3W, which has restrooms and 35 to 40 parking spaces, as well as areas such as “The Washout,” attorneys for Palmetto said.

After the council turned down Palmetto’s protest, Palmetto representative Thomas Pritchard said, “We’ll see what a Circuit Court judge says,” as he left council chambers.

City officials said at the hearing they decided at a spring work session to separate management of 3W from the other parking sites. The new contract would include maintaining restrooms, something the city has done up to now.

Council members and Mayor Tim Goodwin appeared to agree with Councilman Paul Hume’s statements that the contract with Palmetto allows the city to change or terminate it.

Mark Mason, representing Wolffies, contended that the firm was awarded the new contract legally and properly after advertising in a newspaper for bids. The only way the contract can be voided, Mason said, is if it can be shown that illegalities or irregularities were involved.

“The party that is protesting has a very heavy burden of proof,” Mason said.

Jason Llewellyn, owner of Palmetto, told the council that the 2007 contract requires the city to notify the firm in writing before changes to contract terms are to be made. He said the firm was never notified of the city’s planned changes and was unaware that the contract for 3W was put up for bid.

“I would have bid on it,” Llewellyn said. “It’s a favorite parking lot for everybody, and you can charge $8 per day. It’s 30 percent of the total revenue. It’s a big piece of the total package,” he said.

Carl Wolff, owner of Wolffies, said after the hearing that the council acted properly in response to the protest. He said his firm hopes to assume management of 3W as soon as the city finalizes the contract.