Overtime for LeBron James Stadium Tax: Repeal Petition Pulled

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By Alex Ebert

What a difference three days can make.

Once set on killing a $140 million stadium-renovation deal, protesters against the ticket tax funding a facelift to the Cleveland Cavaliers’ arena suddenly withdrew their petition to repeal the tax under heavy pressure from community leaders on Aug. 31.

The Greater Cleveland Congregations (GCC), which only three days before claimed that it “makes no apologies” regarding the team backing out of its renovation plans due to the group’s referendum, sent the Cleveland City Clerk a signed letter officially withdrawing their referendum. The group came under fire this week from community leaders and politicians, including U.S. Rep. Marcia Fudge (D), who chastised the group for forcing the Cavaliers to abandon a deal they claim would have brought jobs to the very communities where the GCC wanted more local funding.

Fudge’s office didn’t have a comment regarding the withdrawal. But earlier this week, she called the referendum “misguided.”

“I am deeply concerned that this small group of people have derailed the project, along with its thousands of jobs, the extension of the Cavs’ lease, and the NBA All-Star week and its projected $100 million economic impact,” she said in a statement. “I am also concerned about the long-term implications of this type of politicking. Their strong-arm tactics have no place in good community organizing, and, to the contrary, could have a chilling effect on future, cooperative economic development efforts in Cleveland.”

Bowing to Pressure

The GCC didn’t immediately respond to requests for comment about the negotiations. However, Steve Holecko, Cuyahoga County Progressive Caucus political director, told Bloomberg BNA that the group was in talks with county officials regarding a deal that might include funding for a mental health clinic as part of a renewed stadium deal.

Cleveland Mayor Frank Jackson (D) said in a statement that he was “encouraged that those who once stood in opposition of the Q Transformation Deal have reconsidered.”

However, Holecko said that bowing to pressure from the centrist business community was a breach of the GCC’s obligation to those that signed the petition.

“I don’t think the 20,000 people that signed the petition were expecting any kind of a deal,” he said.

Negotiations

The GCC’s discussions with local politicians might be too little, too late. According to a statement by the Cavs this week, due to delays caused by the potential referendum, the Cavs claim they lost out on funding needed to construct the renovation under the deal’s schedule.

However, the GCC might still get what it wants. The driving force behind the GCC repeal petition was that funding for local clinics for the poor should have been included in any tax package for the stadium renovation. Subodh Chandra, a lawyer for the GCC who successfully defended their repeal petition before the Ohio Supreme Court, said that the GCC was getting what it asked for the whole time.

“All along, the Greater Cleveland Congregations wanted to establish community-based, mental-health centers to improve public safety,” he told Bloomberg BNA in an email. “It’s good that the politicians finally saw the value of this.”

Long-Term Implications

What happens to the renovation deal, and the stadium’s ticket tax, is still unclear. The tax provides funds to pay down bonds that would fund the stadium’s renovation, and matching funds for city revenue. Thus, if the tax were repealed, the stadium and the City could each have lost out on $45 million collected from admissions to the stadium.

Earlier this week, Cleveland City Council President Kevin Kelley said that without the deal, the Cleveland Cavaliers might choose to leave for Columbus or a city more receptive to financing a stadium.

However, the city of almost 400,000 breathed a sigh of relief Aug. 31 when Cavs owner Dan Gilbert took to Twitter to dispel the rumors of a potential move.

“CLE, Let’s put any silly rumors to rest: I will never move the Cleveland Cavaliers out of Cleveland. Period. And that’s unconditional,” he tweeted.

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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