A proposal to commit $88 million in city taxes toward upgrades at Quicken Loans Arena cleared its first hurdle Tuesday, when City Council's Development, Planning and Sustainability Committee gave its approval.
The committee approval means the controversial deal could come up as early as next Monday for a vote by the full council.
Following a six-hour hearing Tuesday at which proponents, opponents and representatives from the Cleveland Cavaliers organization gave testimony, the panel sent the measure on to council's Finance Committee, the last stop before a final vote of the full council.
The proposed upgrades to the arena involve building a large glass atrium that would significantly expand the indoor footprint of the arena, allowing for more dining and gathering places. The proposed deal involves contributions from the Cleveland Cavaliers, Cuyahoga County and the city of Cleveland.
Cleveland's share would involve an estimated $88 million in admissions taxes, paid over 11 years beginning in 2024.
As part of the project, the Cavaliers would commit to a lease extension to play in the arena until at least 2034.
Cuyahoga County Council already has passed a resolution to borrow money to fund the transformation of arena, which will mean issuing $140 million in bonds.
Addressing pressing needs
Leaders from the Greater Cleveland Congregations and Cuyahoga County Progressive Caucus made the case that Cleveland has serious pressing needs in its neighborhoods and that investing in The Q project downtown won't address those needs.
"We'll stipulate for the record that it generates income, but that's not why we're here," said Richard M. Gibson, pastor of Elizabeth Baptist Church in Cleveland. "It's about how we allocate the money."
While Cleveland's downtown has rebounded, many of Cleveland's neighborhoods are shackled by unemployment, poverty and violent crime.
Pastor Kyle Earley, speaking for the progressive caucus, argued the city has a moral obligation to address those issues first.
It's not a question of whether they support the Cavaliers or support investment in the downtown, opponents said. It's a question of where money should be spent first and whether the deal for The Q is the best the community can get.
Support for construction jobs
Terrence Joyce, president of the Cleveland Building and Construction Trades Council, and Norman Edwards, who heads up the Black Contractors Group, praised the project for the construction jobs it would create.
Joyce estimated that the work would keep about 1,000 people employed across all of the building trades. That's important, he said, because those workers often are moving job to job and project to project.
"I think you're going to impact thousands of lives for a two-year span," Joyce said. "It's a great comfort for people who realize they've got a home for a couple of years."
Edwards praised Cavaliers owner Dan Gilbert for his work to promote minority employment and noted that the work at The Q could help launch careers.
"These are life-changing jobs," Edwards said.
Keeping The Q viable
Cleveland lawyer Fred Nance, who has participated in the project, told the panel that the decision isn't one that requires City Council to choose between downtown or the neighborhoods.
In addition to locking in the Cavaliers until 2034, the improvements to The Q also will keep the arena competitive for big name concerts and other acts for an additional 10 years.
The team's projections for growth in that admissions tax, as well as increased revenues in other taxes -- parking taxes, hotel taxes and income taxes from employees -- show that the city comes out ahead, with additional money that could be used in neighborhoods.
A portion of the admission taxes now pays debt service on construction bonds for the arena. Once those bonds are paid off, that money would be applied to the bonds for The Q upgrades.
Data from the Cavaliers shows that The Q generated $9.5 million in 2016, after taking away the money steered toward construction debt.
The Cavaliers project that amount will climb to $13 million a year, after diverting money toward The Q improvements, by 2026.
What happens next
It appeared from the debate Tuesday that five members, all from the East Side, are ready to oppose the deal when it gets to a final vote before City Council.
All of them expressed concerns about investing more money in the downtown when neighborhoods are so distressed. Some urged creating of equity funds as part of the deal that could target money to specific neighborhood projects.
If only those five members vote no, that would still leave 12 "yes" votes.
The Finance Committee gets the proposal next. It could vote next Monday to move the plan to City Council for a floor vote that evening.