http://www.washingtonpost.com/wp-dyn/content/article/2007/11/24/AR2007112400614_pf.html Critics Question Fillmore Plans 9:30 Club's Offer For Silver Spring Tantalizes Some By Ann E. Marimow
Washington Post Staff Writer
Sunday, November 25, 2007; C01
When negotiations to bring a Birchmere Music Hall to Silver Spring collapsed after five years in the works, Montgomery County leaders were anxious to find a new partner to enliven a boarded-up downtown block. County Executive Isiah Leggett had spent political capital fighting to fund the Birchmere project, so his advisers were relieved to learn that Live Nation, a national brand, was interested in taking its place.
"I thought, wow, a national company with a great name and access to a lot of acts," said Timothy Firestine, Leggett's chief administrative officer. "I thought it was an exciting opportunity."
But even as Leggett (D) intends to finalize an agreement with Live Nation by the end of next month, a group of residents and County Council members are questioning whether his plan to spend $8 million in state and local funds to build one of the company's Fillmore clubs is the best deal for taxpayers.
They are urging Leggett to consider a pitch from local promoter Seth Hurwitz, who says he can provide a "superior music venue at a dramatically reduced cost." Hurwitz, whose company owns the District's 9:30 Club and operates Merriweather Post Pavilion, said he is willing to pay twice as much in monthly rent as Live Nation, contribute $2 million to defray taxpayer cost, split the naming rights with the county and offer the venue rent-free to some community nonprofit groups.
"The idea that you need to subsidize anyone in this place is nuts. Why they'd feel they need to give the place away is beyond me," said Hurwitz, of Bethesda-based IMP Productions. "This is such a ridiculous deal."
Much is at stake for the county executive in the most high-profile, costly public project he has announced since taking office a year ago. Leggett and the owners of the property at the old JCPenney site, Lee Development Group, say the offer from Hurwitz arrived too late. To entertain Hurwitz's proposal would undermine the county's credibility in future business deals, they say.
"You may be able to produce an immediate beneficial cost, but down the line, the loss of the credibility, your reputation, your honest dealings with people," Leggett said in an interview last week. "Not negotiating in good faith costs the county big time going down the line."
He called the counteroffer "just a distraction."
But some Silver Spring residents and council members, who control the county's checkbook, are not convinced.
"I don't consider the case closed in support of any one operator," said council member George L. Leventhal (D-At Large).
A neighborhood advisory committee appointed by the county executive is also pressing Leggett to look at Hurwitz's homegrown offer before signing a deal with the Los Angeles company.
"If a local business owner is able to do what a national brand is able to do, and in a less expensive way, I don't know how or why we're not entertaining such offers," said Evan Glass, president of the South Silver Spring Neighborhood Association.
Local sentiment is not unanimous. An organization that represents the presidents of 11 civic associations in the neighborhoods surrounding downtown Silver Spring reached consensus last week that the county should continue its course with Live Nation.
Barbara Ditzler, president of the Woodside Park Civic Association, compared the county's relationship with that of a betrothed couple: "We shouldn't have Silver Spring dating other people now that he is engaged."
Under the tentative agreement signed in September, the county and state would each invest $4 million to build a 32,000-square-foot venue at Colesville Road and Georgia Avenue. The developers would donate the land, worth about $3.5 million, to the county as part of their plans for a $110 million multiuse real estate project.
Bruce Lee, president of Lee Development Group, said he is committed to Leggett and his deal with Live Nation. "We're moving fast and furious," he said.
Ted Mankin, a Live Nation executive, deferred to the county on questions about the process. "We are really focused on completing our deal and moving forward," he said.
Live Nation intends to create a venue for up to 2,000 people, for which it would pay monthly rent of at least $7,500 -- the same amount the Birchmere would have paid for a 750-person venue. The asking price for retail space in downtown Silver Spring generally ranges from $35 to $50 per square foot. Live Nation would pay just under $3, a reduced rate that the county says is a necessary incentive. The letter of intent also gives the company the option to buy the property after 16 years for $8 million.
The numbers don't add up to council member Marc Elrich (D-At Large). "Why would we sell it for less than the current value, let alone the future value?" he asked.
At a time when the county is facing a budget shortfall of about $400 million and legislators are poised to make $550 million in spending cuts statewide, Leggett should have used a formal bidding process, Elrich and some community members say.
Hurwitz is trying to make that case. He has hired former Planning Board chairman Gus Bauman to provide political advice, enlisted a local law firm, consulted with an Annapolis lobbyist and is meeting one-on-one with council members and residents.
When former county executive Douglas M. Duncan (D) was negotiating with the Alexandria-based Birchmere, Hurwitz said he took a pass because of that venue's special cabaret-style setting. But when he learned that the county had changed gears to create a larger nightclub, "it was time to speak up," Hurwitz said. His initial letter arrived six days after the county had signed with Live Nation.
Firestine dismissed Hurwitz's proposal as a "cut and paste job" that cherry-picked details from an existing offer. "If you did business this way, anyone could come in at the eleventh hour, " he said.
It seems unlikely, though, that the county would have been inclined to get serious with Hurwitz. When the Birchmere talks broke down, Leggett's spokesman Patrick Lacefield said, "the feedback we were getting from people was, 'whatever you do, we don't want the 9:30 Club.' "
Hurwitz's spokeswoman, Audrey Fix Schaefer, said the company wants to build a new brand for Silver Spring, not re-create the 9:30 Club.
Hurwitz has tangled with Live Nation before, arguing last year that its plan to build one of its House of Blues venues near the Walter E. Washington Convention Center would cut business at the 9:30 Club in half. Privately, some county officials question the seriousness of Hurwitz's Silver Spring offer, believing that it is nothing but a bid to keep out the competition.
Hurwitz says he just wants a chance to compete with what he says is a better deal for taxpayers in the county where he lives.
Montgomery's contracting law makes four exceptions for noncompetitive bidding, none of which Hurwitz's attorney says apply to the Live Nation deal. Raymond Sherbill, who represents IMP, said the county code, much like state and federal law, makes sole-source deals "the exception rather than the rule."
Leggett administration officials say the county is on solid legal footing. The county's regulations apply to the acquisition of goods and services, not to land transactions or building leases. And the law provides an exemption for "obtaining entertainment services, including but not limited to contracts for musical performers."
Just as the county has courted biotech companies with tax incentives, the county can seek out a single operator for a specific location when it involves an economic development initiative, Firestine said.
In a letter to residents who have urged Leggett to think again about Live Nation, the county executive wrote that he views the company as a "unique partner for a unique project." That definition meets one of the sole source exceptions in county law, and is a case Duncan made in approaching the Birchmere.
Hurwitz doesn't buy it. An analysis by his company shows an 84 percent overlap in performers who played at both the 9:30 Club and either a Fillmore or a House of Blues in 2006.
No matter how the law is interpreted, residents who want Leggett to open up the process say the spirit of his approach to Live Nation seems at odds with his reputation for deliberation and promise as a candidate to create a more transparent form of government.
"I don't care at the end of the day which one is there," said Philip Olivetti, a member of the Silver Spring Citizens Advisory Board. "It's what it does to people's trust in county government. When public money is involved, and at least on paper there is a potential savings for taxpayers, how you can simply dismiss it?"
