Ohio Top Court Assists Challengers of Cleveland Cavs’ Stadium Tax

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By Alex Ebert

A divided Ohio Supreme Court took an unprecedented step that may help petitioners detonate the stadium funding deal underpinning a $140 million renovation of the Cleveland Cavaliers’ stadium.

Cutting through what the dissent called a “morass,” the court held Aug. 10 that the Cleveland City Council clerk had to accept and count signatures on a petition to repeal a ticket tax that would contribute $45 million to the renovation of LeBron James’ home stadium ( Langhenry v. Britt , Ohio, No. 2017-Ohio-7172, slip opinion 8/10/17 ).

The clerk had argued she couldn’t accept the petitions because repeal of the ordinance would mean an unconstitutional breach of contract related to the deal signed between the city, county, and stadium developers.

“But the issue before us is not whether the arena deal should go forward. The issue here is simpler: whether the clerk must determine the sufficiency of the petition and, if the petition is sufficient, allow the people to vote on the referendum,” Justice Sharon Kennedy said in the majority opinion. “One may reasonably be in favor of both the arena renovation and providing citizens the opportunity to vote on the renovation.”

Joan Mazzolini, spokesperson for the city council, told Bloomberg BNA in an email that the city council didn’t have comment because the clerk is still reviewing the decision with attorneys. Although the clerk has to verify 6,000 voters signed the petition, that is considered a foregone conclusion because 20,000 signatures were submitted.

‘Naked, Brazen, Ham-Handed Attempt’

Subodh Chandra, the founding and managing partner of Cleveland-based Chandra Law Firm LLC and attorney for the petitioners, told Bloomberg BNA the ruling was a “triumph for the rule of law.” Voters will now get to decide whether the deal survives in a vote either this September or November.

“My own review suggests that such a naked, brazen, ham-handed attempt to obstruct democracy has not taken place in a modern American city,” Chandra said, referring to the city council’s rejection of petitions due to the petition’s substance—not for procedural reasons.

Justice Terrence O’Donnell, writing for three dissenting justices, said the court should have dismissed the unusual case.

“In my view, the court ought not to wade into this morass, where the city is essentially suing itself to repeal legislation approved by the legislative branch—because it was enacted by the city council—and authorized by the executive branch—because it was signed into law by the mayor—all in an effort to invalidate a contract that the relator herself signed,” he wrote.

Courts Decide Constitutionality

City Council President Kevin Kelley previously told Bloomberg BNA the referendum petition is unconstitutional because it forces the city to back out of a contract the government signed with the stadium developers.

However, the court said the question of whether a petition is unconstitutional is something only a court, and not a city clerk, may decide. If the referendum passes, the developers could then challenge the constitutionality of the referendum in their own suit.

The stadium’s developer, Rock Ventures, didn’t immediately respond to requests for comment.

It’s unclear whether this decision will affect the construction timeline or the developer’s plans to bring an NBA All-Star Week to the city. The developers estimated this could bring a $100 million “economic impact” to the city, and have said the renovation is key to getting that event.

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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