All the Ohio sports teams angling for a cut of the state’s unclaimed private funds pool got a dose of cold water yesterday when a Franklin County judge issued a preliminary injunction against the money being disbursed, on the grounds that a lawsuit charging that state’s use of private money was unconstitutional is substantially likely to win. The injunction replaces a temporary restraining order the court issued in December, and will now be in place for the remainder of the trial.
To recap briefly: The unclaimed private funds first became an issue last June, when Ohio state senators announced they’d be using the pool of money — dormant bank accounts, uncashed checks, and other stuff that didn’t belong to the state but was sitting in its bank accounts — to temporarily fund a Cleveland Browns stadium while waiting for tax money from the development itself to roll in, after which that would be used to replenish the private funds. Then it turned out last July that the state actually planned to just raid the unclaimed cash fund and never replenish it, prompting the class action lawsuit from former Ohio Attorney General Marc Dann and former state Rep. Jeffrey Crossman on behalf of those whose money was being held by the state.
In issuing the injunction, Franklin County judge Jennifer Hunt pointed to two possible violations of the state constitution by the state’s use of the unclaimed funds. First, by failing to require that the state notify property owners that it was seizing their funds, lawmakers may have violated due process requirements. Second, and even more interestingly, Hunt warned that using the money specifically for sports stadiums could be an issue, as the benefits of private sports venues aren’t enough to satisfy state constitutional requirements that private funds can only be taken for “public use.”
So what happens now with the Browns stadium? Nothing immediately — preliminary excavation has already begun, even with the state funds having been blocked already by the restraining order. If Dann and Crossman win their suit, though, things start to get interesting: Eventually Browns owner Jimmy Haslam isn’t going to proceed with construction without that $600 million in state cash. Would Ohio go back to its old plan of redirecting state taxes from the stadium district? Would it dig around for some completely new revenue stream, like Minnesota had to do when its initial plan to fund a Vikings stadium with video tablet gambling at bars fell massively short of its goal? Is it possible it could go back to the drawing board entirely and reconsider whether giving $600 million to Haslam to move his team from one part of the state to a neighboring one is really such a great idea?
All the other team owners scrambling for a piece of the unclaimed private funds pie, meanwhile — which is pretty much every sports owner in Ohio — will need to cool their jets and wait for the lawsuit to play out. The Ohio attorney general’s office is “reviewing the decision and determining next steps,” spokesperson Bethany McCorkle told Cleveland.com. Stay tuned.
This is very welcome news. Whatever the ultimate outcome of this trial, it would serve no purpose if the money (and access to it) being argued over is already spent.
It’s a little disconcerting that there is any legislation that specifically grants the state the power to seize private funds without a ‘normal’ reason (IE: debts to the state, bankruptcy, default, general liability etc)… or ‘just because they are unclaimed’.
This is doubly true when the main reason that these funds seem to be unclaimed is that the state makes it difficult if not impossible for it’s citizens to claim their entitlement.