Music clubs tax cut passes 19-0; 'big breakthrough,' says Beachland owner

The tweet hit my iPhone just before last night's Cloud Nothings and Herzog Rock Hall show: After a year of protest and lobbying by music fans, Cleveland City Council has slashed the admissions tax for small concert clubs.

Cleveland's 8 percent tax on ticket sales will be eliminated for music clubs that hold 150 people or less. It'll be cut in half for clubs that hold 151 to 750.

"It's a big breakthrough," said Beachland Ballroom owner Cindy Barber, who was at the Rock Hall's summer show in the plaza last night, looking happy and relieved. The tax cut will be a huge help for the Beachland, she said: its tavern holds 148 people, its ballroom 500.

The 19-0 vote breaks an impasse between the clubs and Mayor Frank Jackson, who started collecting the once-forgotten tax in 2009 and didn't want to give it up.

But city councilpeople are music fans too, it turns out.

"Everybody on council was talking about sneaking into the Agora underage," Barber said. "It was priceless."

Key to the compromise was city council president Martin Sweeney. Barber says Sweeney announced the two-tiered tax cut idea in Plain Dealer editorial writer Chris Evans' Tuesday column, after Evans put him on the spot with a phone call. The pen still has some power in Cleveland, it seems.

The Beachland and Peabody's still need to work out an agreement with City Hall over back taxes they didn't collect. The Beachland's tax bill stands at $400,000, about half of it penalties and interest.  Sweeney wants to work out a compromise on that too, Barber says.

Politically, the tax cut is significant because it's one of the few times City Council has defied Jackson during his 6 1/2 years as mayor.  The 19-0 vote is veto-proof.

Sweeney, normally a supporter of Jackson's agenda, gave the mayor some of what he wanted (the tax isn't gone). But he made Cleveland's clubs more competitive with those in Lakewood and Columbus (no tax) and Cleveland Heights (3 percent).

The tax cut will also boost the hipster cred of Joe Cimperman, Matt Zone, Jay Westbrook, and Mike Polensek, the four councilmen who sponsored admissions-tax legislation last year to support the clubs in their wards. "Thank you @clecitycouncil Marty Sweeney for this legislation passing common sense music venue taxes!" Cimperman tweeted triumphantly yesterday.

Update, 7/18: Roldo Bartimole, who has an elephant's memory about the city's tax earmarks, points out that the admissions tax went to 8 percent from 6 percent in the 1990s to help pay for Cleveland Browns Stadium.  He defends the new tax cut, arguing that small music clubs shouldn't subsidize stadium bonds.  (To read him, click here and scroll down to "Can We Remember What We Did Now That It Hurts.")

City council to consider exempting small music clubs from admissions tax

*Updated 10/18

For months, fans of Cleveland’s small music clubs have been challenging the city’s entertainment admissions tax. Now they’ll have some legislation they can get behind.

Councilman Joe Cimperman says he’ll introduce a proposed ordinance tonight or next Monday to exempt clubs with less than 1,000 700* capacity from the 8 percent tax on ticket sales.

“Local music is a huge return on investment in our communities,” Cimperman says. “Without the Beachland [Ballroom], Waterloo [Road] would be less. Without places like the Happy Dog and Brothers, those parts of town would be less.”

Music fans have been questioning the tax since this summer, when the Jackson Administration hit the Beachland with a $400,000 bill for back taxes, penalties and interest. The Plain Dealer broke the news, but Beachland aficionados really started rallying after this Scene cover story, which recounted the club's 11-year history of operating on a budget as thin as a guitar string.

The Beachland and five other local clubs formed the Cleveland Music Club Coalition to fight the tax. They argue that the 8 percent rate is too high compared to other cities (Columbus and Lakewood have no admissions tax, Cleveland Heights levies 3 percent).

“The goal is to support smaller clubs that have a tighter margin to work with, to support local music in the rock capital of the world,” Cimperman says. Other councilmen with music clubs in their wards — Mike Polensek, Jay Westbrook and Matt Zone — have also been working on the issue.

The 1,000 700*-capacity cutoff would exempt a bunch of locally-owned venues, but not their chain-owned competitor, the 1,200-seat House of Blues. One member of the Club Coalition, the Agora, might have to add the tax to some tickets and not others, depending on whether it used its ballroom or main theater.

Cimperman says the exemption won't be retroactive -- which means the Beachland will still have to settle its tax debt.*

Prospects for the proposed ordinance aren’t clear. The admissions tax generated almost $16 million in 2010, a revenue stream Mayor Jackson’s administration may be less than eager to trim in tough budget times. The city already faces a possible $4.5 million dip in admissions tax revenue if the NBA labor dispute scuttles the Cavaliers’ season.

*Update, 10/18: The ordinance was introduced last night, with a cutoff of 700 (not 1,000), and Cimperman, Polensek, Westbrook and Zone as co-sponsors. Clubs that owe back taxes, such as the Beachland and Peabody's, would have to settle their debts before they could qualify for the exemption.

Jackson sounds like he's against the proposal: "People owe, they should pay. We have a city to run. We can't run it on air." See the Plain Dealer story here.