The Cleveland Cavaliers announced on Monday that they are no longer participating in a proposed renovation to Quicken Loans Arena. This announcement comes after it was confirmed that the project could be the subject of a voter referendum.
Quicken Loans Arena was proposed for a $140 million renovation, which would have included contributions from the Cavaliers, Cuyahoga County, Destination Cleveland, and the City of Cleveland. The city had previously approved its contribution–estimated at $88 million in admissions tax revenue over 11 years, beginning in 2024–only for it to be faced with serious political opposition.
A coalition that includes the Greater Cleveland Congregations, Cuyahoga County Progressive Caucus, and Service Employees International Union District 1199 led the push to have the proposal placed on the ballot. As was noted here last week, it was confirmed that the group obtained enough valid signatures to place the city’s funding contribution on a voter referendum.
Though the timing of when a referendum could take place had not been confirmed, the Cavaliers revealed on Monday that they will withdraw their participation in the project, which they had previously hoped would begin in June. “The prospective referendum will cause the groundbreaking of The Q Transformation to miss the current construction cycle, which pushes the overall price tag of the project higher due to rising construction costs,” a statement explained. “In addition, a time sensitive financing package that included historically low interest rates would be negatively impacted by further delay due to a prospective referendum exposing the project to an expected higher interest rate environment. ”
“Quicken Loans Arena brings over 2 million people a year to downtown Cleveland and last year alone produced $245 million in economic activity including the RNC and the NBA Finals. This facility is Cleveland’s gateway to the world as many of our events are broadcast nationally and internationally. The investments over the years into The Q have paid back multiples in economic impact, job creation and tax generation. It is very disappointing to see our further private investment into The Q Transformation project reach this ending point,” said Len Komoroski, CEO of the Cleveland Cavaliers.
The Cavaliers appreciate the strong leadership of Cuyahoga County Executive Armond Budish and Cleveland Mayor Frank Jackson, along with Cuyahoga County Council President Dan Brady and Cleveland City Council President Kevin Kelley. Both the Cuyahoga County Council and Cleveland City Council overwhelmingly agreed with the project, by way of supermajority votes of support, understanding that there is a need to update the publicly-owned Quicken Loans Arena for the future benefit of the entire community. United States Congresswoman Marcia Fudge has also been a major supporter. State Senator Sandra Williams has been a strong advocate as well. There was also tremendous support and partnership from many civic, community and business leaders and organizations both locally and regionally, including the NAACP, the United Pastors in Mission, Cleveland Clergy Coalition, ACEE/Black Contractors Group, the Urban League of Cleveland, the Cleveland Building & Construction Trades Council, Laborer’s International Union Local 310, the President’s Council, Greater Cleveland Partnership, Downtown Cleveland Alliance, Greater Cleveland Sports Commission, and many others.
Civic and community support for the project was earned by the public-friendly, private and self-generating funding source structure being an efficient, significantly less costly and beneficial way to extend the life of a core public asset for the long term.
The Cavaliers organization will no longer participate in the partnership formed for The Q Transformation project and the need for a referendum no longer exists.
With the Cavaliers withdrawing their $70 million contribution, local officials will now have to decide how to proceed. More from The Cleveland Plain Dealer:
Cleveland City Council President Kevin Kelley said there’s been no discussion of repealing the legislation that allowed the city to partner with Cuyahoga County on the upgrades. But Kelley conceded that it would be something to consider now that the Cavaliers have pulled out of the agreement.
“Perhaps we could just repeal it,” Kelley said Monday in an interview. “There’s really no sense in going forward if the Cavaliers aren’t a partner in it.”
Opponents of the deal had urged the city to put the repeal issue before voters Nov. 7, but it appeared unlikely that would happen. City Council isn’t scheduled to meet again until Sept. 18, late enough that a vote on repealing the ordinance would be pushed into 2018.
Now, though, the timeline isn’t the issue. More important, Kelley said, is the impact caused by the loss of the upgrades, starting with loss of 1,000 construction jobs that would have materialized beginning in September.
The agreement called for the Cavaliers to cover any cost overruns, and would have led to the team extending its lease from 2027 through 2034. It was also anticipated that Quicken Loans Arena could be selected to host a future NBA All-Star Game, with 2020 or 2021 reported as possibilities, though the league reportedly warned that Cleveland’s bid would not be considered if work did not start by September 15.
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