LeBron James Home Stadium Tax Lawsuit Nets New Parties

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By Alex Ebert

The Ohio Supreme Court is allowing petitioners against Cleveland’s ticket tax ordinance to join a lawsuit that endangers the city’s NBA stadium renovation deal.

The Ohio Supreme Court ruled July 12 that petitioners seeking to repeal a key part of the Cleveland Cavalier’s Quicken Loans Stadium’s renovation deal may join the legal fray between the city and the city council. The court further asked the parties to brief the court on what should be done with more than 20,000 signatures seeking to repeal the ticket tax ( State ex rel. Langhenry v. Britt , Ohio, No. 2017-0753, motion to intervene granted 7/12/17 ).

This is the latest step into a legal quagmire with a massive stadium deal on the line. In April, the city council passed an emergency ordinance that will provide $45 million toward a $140 million renovation of the Cav’s stadium, the home court of Lebron James. The ordinance extends the city’s ticket tax through 2034, and in return the city got a commitment for the team to stay through that period and to pay half the costs of renovation.

Full-Court Repeal Press

The ticket tax takes a portion of sales from Cavs home games and other Quicken Loans Stadium events. Half of the money raised goes to payment for the stadium, and the other half goes to the city’s general fund.

A group of Clevelanders, headed by a coalition of community church leaders, sought to undo the renovation deal and put the ticket tax money toward other community purposes. The group collected and presented more than 20,000 signatures to the Cleveland City Council and requested that repeal of the ticket tax appear on a ballot for a citywide vote. When the council said it would be unconstitutional for the city to back out of the funding deal, the petitioners threatened suit.

But the city beat them to the punch. The city filed a mandamus action in the Ohio Supreme Court against the city council clerk seeking the court’s guidance on what should be done with the petitions.

“The clerk cannot take an unconstitutional act without violating her oath of office,” R. Todd Hunt, attorney for Cleveland City Council Clerk Patricia Britt, told Bloomberg BNA in an email. “The referendum petition is a substantial unconstitutional impairment of contract— i.e., the already-executed agreement between the City of Cleveland and County of Cuyahoga related to financing of this significant public improvement.”

Hunt, a partner at Cleveland firm Walter | Haverfield LLP, said the court would have to address the petitioners’ arguments sooner or later, because they filed their own separate Ohio Supreme Court mandamus action in late June.

The petitioners couldn’t be immediately reached for comment. They are represented by Subodh Chandra, the founding and managing partner of Cleveland-based Chandra Law Firm LLC.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bna.com

To contact the editor responsible for this story: Jennifer McLoughlin at jmcloughlin@bna.com

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