Whose Music in Silver Spring?

By Steven Pearlstein
Friday, November 30, 2007

It wasn't too many years ago that even street musicians would refuse to perform in downtown Silver Spring. Now things are so hopping that you've got Live Nation, the country's biggest live music outfit, and Seth Hurwitz, owner of the District's 9:30 Club and operator of the Merriweather Post Pavilion, in a nasty political catfight over the right to operate a new music venue there.

This being Montgomery County, lawyers, lobbyists and public relations consultants have been hired, community groups have weighed in and there's as much concern about process as the actual decision itself.

Caught in the middle is Ike Leggett, the county administrator, who sees the live music venue as the final piece of a thriving downtown entertainment district in Silver Spring.

And pulling the strings behind the scenes is the politically connected Lee family -- Blair and Bruce -- which was willing to donate the land for a project that would serve as an amenity to a much larger development it is contemplating next door.

The problem began in the spring when Leggett and the Lees concluded that they were never going to reach a satisfactory deal with the Birchmere, despite $8 million in state and county subsidies and strong community support for a Silver Spring branch of the Alexandria music hall.

Part of it had to do with money: The Birchmere was adamant it could afford to put only $1 million of its own cash into a $9 million project that was increasingly looking as if it would cost even more. It didn't help matters that the Birchmere was also talking about opening another restaurant and club in Loudoun County.

It was the Lees who made the first overture to Live Nation, which has recently been looking to open one of its House of Blues venues in the District after two of its other clubs (the Bayou and Nation) closed their doors. A public company with deep pockets and lots of development experience, Live Nation was willing to move quickly and sign the same deal hammered out with the Birchmere, along with a commitment to protect the county from any cost overruns. Worried about losing the Lees' land offer and anxious for agreement on a project that had already consumed five years of negotiation and $500,000 in design work, Leggett moved to close the deal.

It was only then that Hurwitz raised his hand. In a proposal delivered to Leggett's office earlier this month, he offered to throw an extra $2 million of his own money into the project and pay double the rent while honoring all of the other obligations agreed to by Live Nation. Even more intriguing was an alternative offer to purchase the land from the Lees and build the club himself, with no government money at all.

There is no mystery about Hurwitz's sudden interest in a Silver Spring venue. While the Birchmere's folk and bluesy offerings don't overlap much with those of the 9:30 Club, one of Live Nation's Fillmore clubs would compete directly for the limited number of rock music acts that draw a thousand patrons a night at anywhere from $25 to $50 a head. And, as we've seen, competition is not something Hurwitz accepts lightly.

Last year, when a District agency announced a subsidized deal to bring a House of Blues to a downtown location, Hurwitz mounted an aggressive lobbying effort at the D.C. Council that effectively killed the proposal.

And, according to a letter recently sent to county officials by Bill Muehlhauser, the owner of the Rams Head clubs in Annapolis and Baltimore, Hurwitz has used his leverage with bands to block them from appearing at Muelhauser's venues.

Hurwitz claims that he's not against competition, just competition that is subsidized, as has been proposed in both the District and Silver Spring. But in the next breath he allows how competition is overrated. In a world where the most popular bands already have undue leverage over club owners in negotiating the financial split from ticket sales, Hurwitz predicts that having more clubs would only drive ticket prices higher and erode profit margins.

You don't have to accept Hurwitz's critique of competition, however, to acknowledge that he's put forward a financial proposal attractive enough that county officials cannot ignore it. I don't buy Leggett's argument that backing out of the Live Nation deal now will forever brand the county as an unreliable business partner. Any business that has negotiated deals with local governments understands the political risks involved.

The better course would be for Leggett to give Hurwitz 120 days to negotiate a land deal with the Lees, line up financing and sign a binding memorandum of understanding to build the facility. If he can pull it off, Leggett will have saved the state and county $8 million, a fraction of which could be used to compensate Live Nation for its time and trouble. And if Hurwitz fails, Leggett can claim to have been right all along while getting credit for fiscal prudence. Politically and economically, either way's a winner.

By the way, it's not correct to say, as most critics do, that Leggett is proposing to hand $8 million in state and county funds to Live Nation. In exchange for its investment, the county will own a building and parcel of land valued today at $11.5 million (A provision allowing Live Nation to buy it later for $8 million will be dropped.) And it is a fair guess that the extra meals and sales tax revenue generated by the facility will more than cover the $400,000 a year in interest payments on the bonds used to finance it.

However you slice it, it's still a subsidy. But considering the tens of millions of public dollars already invested in a successful downtown revitalization, it's a small enough subsidy that it would be foolish not to use to finish the job.

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For my annual holiday column, I'm looking for stories of local companies that made extraordinary efforts this year on behalf of a particular cause, charity or nonprofit. If you know of such a partnership, send an e-mail to pearlsteins@washpost.com with some of the details, along with a contact phone number. And please put Holiday Column in the subject line.

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