Supreme Court Case No. 2017-0753 STATE EX REL. BARBARA A

Home , Cleveland Monsters

Supreme Court of Ohio Clerk of Court - Filed July 20, 2017 - Case No. 2017-0753

IN THE SUPREME COURT OF OHIO

Supreme Court Case No. 2017-0753

STATE EX REL. BARBARA A. LANGHENRY, Director of Law,

Relator,

PATRICIA BRITT, City Clerk, Clerk of Council

Respondent

AMICI CURIAE DOWNTOWN CLEVELAND ALLIANCE AND GREATER CLEVELAND SPORTS COMMISSION’S BRIEF IN SUPPORT OF RESPONDENT

Michael W. Deemer (0075501) Stephen W. Funk (58506)) Downtown Cleveland Alliance Leighann K. Fink (0077765) 1010 Euclid Avenue Roetzel & Andress Cleveland, Ohio 44115 222 South Main Street, Suite 400 Telephone: 216-325-0998 Akron, Ohio 44308 E-mail: [email protected] Telephone: (330) 849-6602 Facsimile: (330) 376-4577 Counsel for Amici Curiae Downtown E-mail: [email protected]; Cleveland Alliance and Greater [email protected] Cleveland Sports Commission Attorneys for Relator Barbara A. Langhenry R. Todd Hunt (0008591) City of Cleveland Director of Law Aimee W. Lane (0071392) Walter & Haverfield LLP Andrew R. Mayle (0075622) The Tower at Erieview Mayle Ray Mayle LLC 1301 East 9th Street, Suite 3500 210 South Fremont Street Cleveland, Ohio 4114 Fremont, Ohio 43420 Telephone: (216) 781-1212 Telephone: (419) 334-8377 Facsimile: (216) 916-2372 E-mail: [email protected] E-mail: [email protected]; [email protected]; Attorneys for Amicus Curiae Property Investor’s, Inc. Attorneys for Respondent, Patricia J. Britt

Subodh Chandra (0069233) Peter Patakos (00822884) The Chandra Law Firm LLC 1265 West 6th Street, Suite 400 Cleveland, Ohio 44113 Telephone: (216) 578-1800 Facsimile: (216) 578-1800 E-mail: [email protected]; [email protected]

Attorneys for Intervening Relators Diane Bufford, Jennifer Blakeney, Verdia Conner, Khalilah Worley, and Linda Robinson

TABLE OF CONTENTS

Table of Authorities ...... ii Statement of Amici Curiae’s Interest in the Case ...... 1 Statement of the Case and Facts ...... 2 Argument ...... 2 I. Relators’ interpretation of City Charter Section 64 would make enacting emergency measures authorizing the City to enter into contracts to advance economic and community development projects virtually unworkable ...... 2 A. This Court should not issue a writ of mandamus because Charter Section 64 does not apply to emergency measures authorizing the City to enter into contracts and which adopt provisions for specific terms in those contracts……………………….3 B. The City’s strong public policy interest in responding to substantial economic and community development opportunities support this Court denying Relators’ motion for writ of mandamus..……………………….……………………….………….....4 1. The Supplemental Agreement advances the City’s public policy of keeping the Q renovated and competitive to attract more events and greater tax revenue and economic impact generating events.……………………….…………………...5

2. The renovation and improvement of the Q will achieve these substantial economic and community development benefits with significant support from the Cavaliers, without raising taxes, and with substantial protections for taxpayers.……………………….……………………….………………………6

3. Subjecting the Ordinance to the costly delays and uncertainty of the referendum process would delay, diminish, or deny the project’s substantial economic and community benefits.……………………….……………………………………7

II. Relators’ interpretation of City Charter Section 64 would yield absurd results that would virtually paralyze the City from participating in economic and community development projects, many of which require swift government action to negotiate and enter into contracts ...... …7

III. Even if the Ordinance is subject to referendum, this Court should deny the writ of mandamus because the referendum process itself unconstitutionally impairs a valid and binding contract between the City and County ...... 8 Conclusion ...... 9 Proof of Service ...... 10

TABLE OF AUTHORITIES

Cases:

Donnelly v. City of Fairview Park, 13 Ohio St.3d 1, 2233 N.E.2d 500, paragraph two of the syllabus (1968)…………………………………………………………………………………….4

Middletown v. Gerfuson, 25 Ohio St.3d 71 (1986).…………………………………………...... 8

Perona v. Arceci, 129 Ohio App.3d 15 (9th Dist. 1998)…………………………………………..9

Peppers v. Beier, 75 Ohio App.3d 420 (3rd Dist. 1991)…………………………………………..9

City of London v. Proctor, 10th App. 01AP-34, 2001 WL 548756……………………………….9

Charter Provisions:

City of Cleveland Charter, Section 64…………………………………………...... 2, 3, 4, 7, 8, 9

Constitutional Provisions:

United States Constitution, Article I, Section 10……………………………………………..2, 3, 9

STATEMENT OF AMICI CURIAE’S INTEREST IN THE CASE

Downtown Cleveland Alliance (“DCA”) is a non-profit corporation, organized under

Section 501(c)(3) of the Internal Revenue, established to assist with the improvement, development and enhancement of the downtown area of the City of Cleveland. DCA works with property owners, residents, business leaders, philanthropies, neighborhood community development organizations, and other interested parties in fulfillment of this purpose.

Because of the complexity of downtown real estate development, DCA stakeholders are deeply interested in public and private sectors being able to work effectively together, leverage each other’s resources, and collaboratively invest in the community. DCA is interested in ensuring that local government is able to effectively work with the private sector to create jobs, generate tax revenue, provide quality services, and improve the overall condition of the community.

Greater Cleveland Sports Commission (“GCSC”) is a non-profit corporation, organized under Section 501(c)(3) of the Internal Revenue, established to generate economic impact and improve the quality of life and image of Northeast Ohio by attracting and managing sporting competitions and events.

The issues that Amici DCA and GCSC would like to address are 1) the extent to which the City of Cleveland’s charter protects both the right to referendum and the City’s ability to govern effectively 2) the compelling public policy objectives that Relators’ interpretation of the

City’s charter would impede and 3) the extent to which Relators’ interpretation of the City of

Cleveland’s charter provisions would impede the City and other similarly situated political subdivisions in the State of Ohio from governing effectively.

STATEMENT OF THE CASE AND FACTS

Downtown Cleveland is undergoing a renaissance fueled by increases in jobs, population and visitors. This continued progress depends upon local government being able to participate as a reliable partner in economic and community development projects. The outcome of this case will determine whether the City of Cleveland and other similarly situated political subdivisions in the State of Ohio can effectively negotiate and follow-through on economic and community development projects that provide substantial job creation, tax revenue, and other community benefits.

Amici curiae DCA and GCSC hereby adopt the statement of facts outlined in Respondent

Britt’s Memorandum in Support of the Motion to Dismiss.

ARGUMENT

I. Relators’ interpretation of Charter Section 64 would make enacting emergency measures authorizing the City to enter into contracts to advance economic and community development projects virtually unworkable.

This case is about whether the City of Cleveland (“City”) can effectively govern and participate in job creating and tax revenue generating economic and community development projects. Subjecting the Ordinance to Referendum would delay, diminish or deny the Project’s substantial job creation and other significant community benefits. Fortunately, neither the City

Charter nor Section 10, Article I of the United States Constitution (“Contract Clause”) permit such an undesirable outcome. Charter Section 64 does not permit emergency measures like the one authorizing the Supplemental Agreement to be subject to referendum, advancing the City’s public policy of ensuring its ability to effectively govern, negotiate and participate in economic and community development projects. Even if the Court accepts Relators’ interpretation that City

Charter Section 64 requires that the Ordinance be subject to a referendum, the writ of mandamus

2 should be denied because the referendum unconstitutionally impairs the Supplemental

Agreement and the City’s contractual obligations, as well as the substantial economic and community development benefits that will flow from their fulfillment.

A. This Court should not issue a writ of mandamus because Charter Section 64 does not apply to emergency measures authorizing the City to enter into contracts and which adopt provisions for specific terms in those contracts.

Charter Section 64 does not apply to emergency measures authorizing the City to enter into contracts and which adopt provisions for specific terms in those contracts. Charter Section 64 governs how the right of referendum applies to emergency measures. It states that emergency measures for purposes other than “for the immediate preservation of the public peace, property, health, or safety and providing for the refinancing of bonds, notes or other securities” can be subject to referendum, but the emergency measure goes into effect at the time indicated in the ordinance.

Charter Section 64 should be read to allow the City to effectively govern and nimbly respond to economic and community development opportunities, while also protecting the right to referendum in broad circumstances. Economic and community development projects, by their very nature, often require government to move swiftly at the speed of business.

The Ohio Constitution and case law recognize the need to afford government to the ability to timely execute or administer existing laws. Article I, Section 1(f) of the Ohio Constitution limits the power of referendum to legislative actions. Administrative actions akin to authorization to enter into a contract are exempt from the right to referendum.

The test for determining whether the action of a legislative body is legislative or administrative is whether the action taken is one enacting a law, ordinance, or regulation already in existence.

Donnelly v. City of Fairview Park, 13 Ohio St.3d 1, 2233 N.E.2d 500, paragraph two of the syllabus (1968).

Charter Section 64 essentially codifies this distinction, recognizing the practical reality of governance and simultaneously protecting the right to referendum among a broad array of emergency measures. Accordingly, Charter Section 64’s right to referendum would very narrowly not apply to emergency measures authorizing the City to enter into contracts and which adopt provisions for specific terms in those contracts.

In the case at bar, the City enacted an emergency measure to enter into a Supplemental

Agreement with the County of Cuyahoga. This agreement supplemented a 1992 Cooperative

Agreement between the City and the County. Neither the 1992 Cooperative Agreement nor its authorizing legislation ever expired. The City and County entered into the Supplemental

Agreement effective April 25, 2017 in anticipation of issuing bonds to renovate and improve

Quicken Loans Arena (“the Q”). As described more fully below, the City moved quickly in order to take advantage of an opportunity to create and retain jobs in the City, generate significant revenue, and protect taxpayer interests. This Court should adopt a reading of Charter Section 64 that allows such action.

B. The City’s strong public policy interest in responding to substantial economic and community development opportunities support this Court denying Relators’ motion for writ of mandamus.

Compelling public policy considerations support Respondent Britt’s legal arguments. The

Supplemental Agreement advances the City’s strong policy interest in keeping the Q competitive to create and retain jobs and to maximize the number of tax revenue and economic impact generating events. Furthermore, the Supplemental Agreement achieves these public policy objectives while attracting significant financing support from the Cavaliers, avoiding a tax

4 increase, and protecting the City’s General Fund. Finally, subjecting the Supplemental

Agreement to referendum would delay, diminish or deny the project’s substantial economic and community benefits.

1. The Supplemental Agreement advances the City’s public policy of keeping the Q renovated and competitive to attract more events and greater tax revenue and economic impact generating events.

Quicken Loans Arena is a publicly owned facility and is one of the most significant economic engines in the City of Cleveland. Since its opening in 1994, the Arena has generated

$2.7 billion in direct spending and $500 million in tax revenue, including $179 million for the

City of Cleveland and $47 million for Cuyahoga County. An estimated 2,500 people work in the

Arena.

The renovation of the Q (“the Project”) will add 2,500 construction and permanent jobs

in addition to the 2,500 jobs that the Arena already supports.1 Moreover, the Project will also

extend the Cavs’ lease until 2034, ensuring that the Cavs’ remain in Downtown Cleveland.2

This lease extension also ensures that the restaurants, retail shops, neighborhood bars, other

entertainment venues, and hotels will continue to benefit from continued and increased

programming, events, and attendance at the Arena. The demand generated by this activity

helps to catalyze a virtuous cycle of economic activity that attracts neighborhood amenities,

which, in turn helps to increase demand for housing development and employment growth.

Although known most widely as the home of the Cavs, the Q is active over 200 days per

year, playing host to the Cleveland Monsters (American Hockey League), Cleveland

1 Frank Jackson, Quicken Loans Arena deal is good for Cleveland, its neighborhoods and its people: Frank G. Jackson (Opinion), Cleveland.com (April 30, 2017), http://www.cleveland.com/opinion/index.ssf/2017/04/quicken_loans_arena_deal_is_go.html (accessed July 19, 2017). 2 Id.

Gladiators (Arena Football League), concerts, performances and conventions.3 The Q also

served as the primary venue for the 2016 Republican National Convention. Amicus GCSC

has successfully attracted National Collegiate Athletic Association events to the Arena,

including multiple Men’s Division I Basketball tournament games, Women’s Final Four, and

Division I Wrestling Championships. In addition, the Q has hosted the U.S. Figure Skating

Championships, as well as portions of Gay Games 9 and the National Senior Games. As a

result of the Project, Amicus GCSC is also working with the National Basketball Association

and the Cavs to attraction a future NBA All-Star Game, with a projected economic impact of

$100 million. All of these events are highly desirable for communities and the competition to

secure them is fierce. A first rate, up-to-date, state-of-the-art facility is a major competitive

advantage.

Extending the Cavaliers lease at the Q until 2035 will do more than keep the Cavaliers in

Downtown Cleveland. It also means the Cavaliers will provide substantial financial support to the Project through additional rental payments.4 In addition, the only funds pledged to support the County’s construction bond service payments are payments in lieu of admissions taxes only from events at the Arena.5 Moreover, only a percentage of the admissions tax at Arena events

3 Id. 4 Karen Farkas, Cleveland Cavaliers explain Q transformation project details: construction timeline, jobs and total cost, Cleveland.com (March 15, 2017), www.cleveland.com/cuyahoga- county/index.ssf/2017/03/cleveland_cavaliers_explain_how_money_will_be_spent_for_renovati on_number_of_jobs_and_other_informat.html (accessed July 19, 2017).

5 Id.

6 will help finance Arena improvements.6 The rest of the admissions tax will continue to flow to the City’s General Fund, just as it has since the 1990s.7 Finally, the City negotiated a commitment from the Cavs to protect the City’s General Fund by requiring the Cavs to make a contribution to the General Fund if the amount of admissions tax allocated to debt service is greater than the share that goes to the General Fund.8

3. Subjecting the Ordinance to the costly delays and uncertainty of the referendum process would delay, diminish, or deny the project’s substantial economic and community benefits.

The proposed referendum has already delayed delivery of the Project’s economic and community development benefits. This delay risks driving up the Project’s labor and material costs, jeopardizing the Project’s job creation, tax generation, and community benefits. If the referendum petition at issue is ordered by the Court to be processed by the Clerk and, if processed, is placed on the ballot or is successful in overturning the ordinance authorizing the agreement to fund the bonds for the project, the City and the County will be significantly delayed or denied from carrying out their contractual obligations under the Supplemental Agreement for the issuance of construction bonds.

6 Frank Jackson, Quicken Loans Arena deal is good for Cleveland, its neighborhoods and its people: Frank G. Jackson (Opinion), Cleveland.com (April 30, 2017), http://www.cleveland.com/opinion/index.ssf/2017/04/quicken_loans_arena_deal_is_go.html (accessed July 19, 2017). 7 Id. 8 Id.

Relators’ interpretation of Charter Section 64 would virtually paralyze the City from participating in economic and community development projects. Economic and community development projects in Midwestern downtowns and surrounding neighborhoods require more public support than similar developments in wealthier markets. Relators’ unworkable interpretation of Charter Section 64 would subject any economic or community development project that requires authorization to enter into a contract to the uncertainty of the referendum process. The City would be faced with the choice of waiting thirty days after an emergency measure is enacted to sign a necessary contract to see if a referendum materializes or signing the contract and risking running headlong into the Contracts Clause of the United States Constitution if a referendum does, in fact, materialize. In either case, the costs of labor and materials for job creating, tax generating projects would rise while the uncertainty played out. Would-be job creators, developers, lenders or investors, would be faced with an uncertain and unreliable public partner that would have a chilling effect on economic and community development.

No entity or person that enters into a contract with the City of Cleveland in future will be able to rely on the City’s ability to perform its obligations under the contract for fear of interference by a referendum petition. The result would be a chilling effect on private investment and an inability for the City to partner in job-creating economic and community development projects.

Because the proposed referendum itself unconstitutionally impairs the Supplemental

Agreement, even if the Court accepts Relators’ argument that Charter Section 64 permits a referendum, the Court should deny Relators’ motion for writ of mandamus.

It is well-established in Ohio case law that action through initiative or referendum that prevents the financing of a project which is prescribed by a valid and binding contract unconstitutionally impairs the contract in violation of the Contract Clause and, thus, the initiative or referendum is void ab initio. See generally Middletown v. Gerfuson, 25 Ohio St.3d 71 (1986),

Perona v. Arceci, 129 Ohio App.3d 15 (9th Dist. 1998), Peppers v. Beier, 75 Ohio App.3d 420

(3rd Dist. 1991), City of London v. Proctor, 10th App. 01AP-34, 2001 WL 548756.

Protecting the City’s ability to enter into contracts protects the public interest by ensuring that the City can effectively participate in economic and community development projects.

Furthermore, ensuring that the referendum is not misused to unconstitutionally impair the City’s contracts will provide potential public and private development partners that the City is a reliable collaborator.

CONCLUSION

Subjecting the Ordinance to Referendum would delay, diminish or deny the Project’s substantial job creation and other significant community benefits. The City’s ability to effectively govern and participate in future economic and community development projects would be severely limited. Neither the City Charter nor Section 10, Article I of the United States

Constitution (“Contract Clause”) permit such an undesirable outcome. Charter Section 64 does not permit emergency measures like the one authorizing the Supplemental Agreement to be subject to referendum, advancing the City’s public policy interest participating in economic and community development projects. Even if the Court accepts Relators’ interpretation that City

Charter Section 64 permits a referendum, the writ of mandamus should be denied because the referendum unconstitutionally impairs the Supplemental Agreement and the City’s contractual

9 obligations, as well as the agreement’s substantial concomitant economic and community development benefits.

Respectfully submitted,

/s/ Michael W. Deemer (0075501) Counsel for Amici Curiae Downtown Cleveland Alliance and Greater Cleveland Sports Commission

PROOF OF SERVICE

I hereby certify that on July 20, 2017 the foregoing Amici Curiae Downtown Cleveland Alliance and Greater Cleveland Sports Commission Brief in Support of Respondent was electronically filed with the Supreme Court of Ohio. Notice of this filing was to all parties by operation of the

Court’s electronic filing system. Parties may access this filing through the Court’s system. A copy has also been served, pursuant to Civ. R. 5(B)(2)(f) by electronic mail upon all counsel of record at the following e-mail addresses:

Stephen W. Funk Attorneys for Relator Barbara A. Langhenry [email protected] City of Cleveland Law Director Leighann K. Fink [email protected] Roetzel & Andress, LPA 222 South Main Street, Suite 400 Akron, Ohio 44308

Subodh Chandra Attorneys for Intervening Relators, [email protected] Diane S. Bufford, Jennifer A. Blakeney, Peter Pattakos Verdia Y. Conner, Khalilah A. Worley, and [email protected] Linda Robinson The Chandra Law Firm LLC 1265 West 6th Street, Suite 400 Cleveland, Ohio 44113

10 R. Todd Hunt Attorneys for Respondent, Patricia J. Britt [email protected] Aimee W. Lane [email protected] Benjamin G. Chojnacki [email protected] Walter & Haverfield LLP The Tower at Erieview 1301 East 9th Street, Suite 3500 Cleveland, Ohio 44114

Andrew R. Mayle Attorneys for Amicus Curiae [email protected] Property Investor’s Network, Inc. Mayle Ray & Mayle LLC 210 South Front Street Fremont, Ohio 43420