Live Nation deal's rising cost hits sour note with some on Montgomery council
Tuesday, August 24, 2010
The plan crafted by County Executive Isiah Leggett (D) to bring the entertainment company Live Nation to Silver Spring, pitched as a way to help its struggling downtown, included $8 million in state and local aid.
There were special exemptions from zoning and design rules for the developer of the rock venue; a promise that the government would cover most increased construction costs, $80,000 in annual tax breaks for Live Nation and a chance for the company to profit from naming rights and rentals on what eventually is to be county-owned property.
But in a lawsuit filed in June by Seth Hurwitz, co-owner of the District's 9:30 Club, a Live Nation competitor, who said he would pay his own way in Silver Spring, Montgomery officials disclosed new information about how much the project is expected to cost the public: $11.2 million, not the $8 million they had repeatedly promised. The lawsuit alleges that county officials were deliberately hiding information about costs.
Word of rising costs for the project, which will be known as Fillmore Silver Spring, comes a few months after the County Council and Leggett had approved the jurisdiction's first spending cuts in 40 years. There have been layoffs and furloughs of government employees and unpopular reductions in parks, recreation and school spending. Soon, voters will turn out for the Sept. 14 Maryland primaries. Leggett faces no opposition, but several County Council members have challengers.
"We could have spent the money on something else," County Council member Marc Elrich (D-At large) said Monday. Elrich had questioned the deal when it was approved by the council two years ago. (Nancy Navarro, D-East County, was not a council member at the time).
The additional $3.2 million will be borne by taxpayers because the county's agreement with Live Nation and the Lee family, which owns the site on Colesville Road, requires Montgomery to either pay the extra funds directly from its treasury or allow Live Nation to front the money and reduce its $90,000 annual rent. Most of the money is coming from county projects that came in under budget, county officials said. Live Nation is paying $2 million to outfit the inside of the building.
Groundbreaking for the Live Nation project is scheduled for Sept. 2. Bruce Lee, of Lee Development Group, did not return calls seeking comment.
Leggett administration officials say the project is crucial for downtown Silver Spring.
"Yes, the costs are higher, but it is still a very good deal for the county," said Diane Schwartz Jones, a top Leggett aide who, along with Chief Administrative Officer Timothy Firestine, promised the council two years ago that the price tag would not rise.
Schwartz Jones said the actual "hard costs" to construct the building remain around $8 million, she said.
"This project brings a highly successful first-class entertainment venue to Montgomery County," she said.