9:30 club sues over subsidies for planned Live Nation venue in Silver Spring

By Miranda S. Spivack
Washington Post Staff Writer
Thursday, June 17, 2010; 7:34 PM

The owner of the District's 9:30 club is suing to prevent Maryland from giving Montgomery County $4 million to help build a music venue in downtown Silver Spring, saying government officials are hiding the project's real costs.

Live Nation, a major force in the music business with artists such as U2, Madonna and the Eagles, would rent out the venue on Colesville Road and hold rock-style concerts for about 2,000 standing patrons. Ground is expected to be broken this year on what will be known as Fillmore Silver Spring.

The lawsuit against the state, filed this week in Anne Arundel County Circuit Court by the club's parent company, IMP Inc., and that company's co-owner Seth Hurwitz, challenges the state subsidy for the project; Montgomery County is also spending $4 million in county funds. The suit says state officials would be breaking the law by paying the subsidy because Montgomery has provided only "skimpy" information about the project's costs, despite requirements by the General Assembly for more information.

"It's bad enough they're laying off teachers, cutting budgets and expecting everyone else to make sacrifices at the same time they're spending $8 million to build a rock club, but the least the government can do is follow the law in the process," Hurwitz said.

A spokesman for Montgomery County Executive Isiah Leggett (D) disputed the claims and said the county has "met the conditions" required by the General Assembly, which also has been affirmed in writing by the chairmen of the budget and appropriations committees.

Hurwitz, whose company also books acts for Merriweather Post Pavilion in Columbia and Rams Head Live in Baltimore, has questioned the deal before. He says Montgomery officials should have put the operating agreement out to bid instead of privately negotiating with Live Nation after a deal with the Alexandria-based Birchmere went sour. He also has said his company could create a music venue in Silver Spring without public funds.

The Live Nation deal, crafted by the Leggett administration, would be the first for-profit arts venue to receive direct subsidies in Montgomery.

The arrangement, approved by the County Council, compels Montgomery to absorb any cost overruns, which have occurred before in county construction of arts venues.

During the administration of County Executive Douglas M. Duncan (D), the $100 million Music Center at Strathmore was $50 million over projections; there were also overruns at the American Film Institute and the Round House Theatre, both in Silver Spring. In most instances, public funds made up the difference in the overruns for those nonprofit ventures.

In the Live Nation deal, Montgomery will own the building and rent it to Live Nation for $7,500 a month. Live Nation is to spend about $2 million outfitting the inside of the hall, and will pay for maintenance and utilities. Lee Development Group will donate the former J.C. Penney facade and land, worth about $3.5 million. The county also has promised to loosen liquor laws to allow Live Nation to serve alcohol and light fare prepared off site.

Lee Development would retain rights for more than a dozen years to build on the remainder of the property, more than twice the usual time. The developer also was allowed to count the Live Nation building as its required public space.

This week, another county-subsidized arts venue, the art deco Bethesda Theatre, foundered and was put on the auction block. It had undergone a $12 million renovation as part of a deal with Bozzuto Group, which included state and local tax breaks, and a $2 million county economic development grant that was paid through a nonprofit group.

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