Opinion divided on Live Nation deal

Some County Council members call the outcome of the music hall saga ‘terrible’ for the county, but others doubt a better arrangement existed

‘‘There are no high-paying, quality jobs associated with this,” Elrich said. ‘‘It’s basically bringing in bouncers and wait staff. We’re talking about Montgomery County; to masquerade this as economic development is ridiculous.”

But Councilwoman Nancy M. Floreen (D-At large) of Garrett Park said the deal could fill a niche for the county.

‘‘Silver Spring continues to be a work in progress,” Floreen said. ‘‘This is a piece of that. But there are a lot of details to be sorted. This is just the beginning.”

Floreen said she did not know if the county could have obtained a better deal with another promoter. She said she respected County Executive Isiah Leggett’s and Chief Administrative Officer Timothy Firestine’s negotiating.

On Friday, Leggett signed a lease with Los Angeles-based Live Nation to bring a Fillmore music hall to the former J.C. Penney site on Colesville Road. If construction and approvals go as planned, the venue could open in 2010.

Elrich called the county’s process flawed and said the county should have taken bids to bring in the best deal.

Responding to Elrich’s criticism, Leggett spokesman Patrick K. Lacefield said the county and state will get an ‘‘incredibly good deal” in the estimated $1.6 million net annual benefit from taxes, rent and maintenance to be done by the tenant.

‘‘It’s a much better deal than the Birchmere was and a better deal than the initial letter of intent,” Lacefield said.

Rich Swanson, who created a ‘‘Save the Birchmere” group when those negotiations fell through, said he still felt the venue would become a ‘‘2,000-person stand-up bar in downtown Silver Spring.”

‘‘I would challenge Leggett to demonstrate that there’s been a wide range of support for this project,” Swanson said. ‘‘It’s not too late for the County Council to canvass the community to see if there truly is a wide range of support. ... That’s where the challenge needs to be.”

Council President Michael J. Knapp (D-Dist. 2) of Germantown said the council expects to be briefed by the administration Tuesday about the deal and the process behind it.

‘‘There is potential concern on what we’re on the hook for, how much this is going to cost us,” Knapp said.

Lacefield said the original letter differs greatly from the signed lease. Most significantly, Live Nation no longer has an option to purchase the property. The lease is valid for 20 years, with two five-year options to renew. The lease also allows for three free annual uses by the county, and another three free uses by charitable organizations. Another 30 community events are also allowed at discounted rates. The county still has to determine which events would fall into the community use category.

‘‘We decided we’d rather own it. Now, we’ll not only get the income from the economic activity that it’ll be generating, but also own that asset from now on,” he said.

With the county owning the land, the deal eliminates what some critics called an $8 million subsidy to music giant Live Nation. Unlike other music venues in the county, including the Music Center at Strathmore, the Fillmore music venue will receive no county subsidies.

The lease agreement also includes a promise from Leggett to appoint a community Silver Spring Arts and Entertainment District Advisory Committee that will advise the county of residents’ concerns regarding the project and arts and entertainment venues more generally.

Councilman Philip M. Andrews (D-Dist. 3) of Gaithersburg said he thought Leggett ‘‘done a good job negotiating an agreement.” And he said he didn’t believe the county could have gotten a better deal by opening up the process.

‘‘You can’t compare a hypothetical that might be out there to what might be on the table and that you can be certain of. [This deal] has got many attractive features. I’m not confident the county could get a better deal from anybody else,” Andrews said. ‘‘There’s a strong argument for negotiating in good faith with people you sign a letter of intent with and when you look to build long term confidence in the county.”

Since the county signed a nonbinding letter of intent with Live Nation, Bethesda-based concert promoter I.M.P. had tried to woo the county into reopening negotiations, claiming the process did not consider other companies that might provide a better deal. County officials, however, refused, saying that although the letter had been labeled as nonbinding, the county would not abandon its good faith effort.

‘‘It’s important that people understand that this is not a done deal, that it can’t be a done deal unless the Council approves it,” I.M.P. spokeswoman Audrey Fix Schaefer said. ‘‘So now, all the effort is on that process.” I.M.P. operates the 9:30 Club in Washington and the Merriweather-Post Pavilion in Columbia.

The deal includes $4 million apiece from the county and the state, and a $3.5 million land donation from the Lee Development Group, which owns the Penney site. Live Nation will be responsible for paying for utilities and outfitting the building. Any cost overruns will also be paid by Live Nation, or the company will have to ensure through engineering that the project remains within budget, Lacefield said.

Lacefield said the next step would be working with the Lee Development Group to close on a contract to finalize the land donation, and begin getting approvals from Park and Planning.

Lee Development President Bruce Lee said he was ‘‘absolutely thrilled” by the news, and the prospect of incorporating the music venue into future plans for the site.

Lee said his company still needed to iron out details on the land transfer. Lee Development wants protections from some county taxes and zoning regulations. Leggett and Lee are talking with council members regarding the company’s request, Lacefield said.

At least two zoning text amendments would be necessary to secure the provision, giving the council some leverage in the deal.

The county and state have already designated $2 million apiece for the project; the remaining funds are included in both Gov. Martin O’Malley’s (D) and Leggett’s fiscal 2009 capital budgets.

Douglas M. Duncan had left office in 2006 after trying to work a deal with the Birchmere to open a music hall at the site. Leggett cut off negotiations shortly after taking office, saying the deal with the Birchmere was no good for the county.

Alan Friedman, co-leader of Silver Spring Forward, a group that was a long-time supporter of a music venue in downtown Silver Spring, said he was pleased to see that a citizen advisory group appointed by Leggett was included in the lease.

‘‘It looks like it should be a profitable venture,” he said. ‘‘It seems like it’s going to be very good for the AFI Silver Theatre, and the restaurants in downtown Silver Spring. The county’s going to get a valuable asset that’s also going to allow Silver Spring to grow.”

Staff Writers Sean R. Sedam and Janel Davis contributed to this report.