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A long-awaited music venue in downtown Silver Spring is $3.2 million over budget, with groundbreaking just weeks away, Montgomery County officials said.

The construction of the Live Nation venue was expected to cost $8 million, with the state and county each paying $4 million. In a memo sent Wednesday, David Dise, director of the county Department of General Services, said the cost has escalated to $11.2 million.

Groundbreaking is scheduled for Sept. 2, said Diane Jones, the county's assistant chief administrative officer.

The $8 million amount was an eight-year-old figure that was not adjusted for inflation or the rising costs of construction materials, she said. The plans for the project have not changed.

"The cost of the project is still very reasonable," Jones said. "It's still a great project."

Councilman Marc Elrich (D-At large) of Takoma Park says the County Council asked county officials more than a year ago whether the $8 million figure was accurate.

"They assured us it wouldn't go over," he said. "If those numbers were eight years old, they should never have given them to us."

Plans for the site include a renovated Fillmore music hall that will be operated by Live Nation, a California-based concert promotion company. Live Nation agreed to spend $2 million on the interior of the building and any construction overages.

Those overages were to be deducted from Live Nation's rent — $90,000 annually paid to the county.

The Fillmore project also is the focus of a lawsuit that, if successful, would prevent the state from paying its portion.

The lawsuit filed in June against the state by It's My Party Inc., a Bethesda-based firm that owns the 9:30 Club in Washington, D.C., claims Montgomery County did not meet two criteria needed to receive the state money for the Fillmore music hall.

The lawsuit is still pending, according to Audrey Schaefer, an IMP spokeswoman.

In his memo, Dise said the county saved money on several county recreation projects and already has transferred $2.6 million from those projects to the Fillmore construction project.

The other projects include the White Oak Community Recreation Center, Upper County outdoor pool, MAC diving tower and Wheaton Community Recreation Center, the memo states.

Jones said the county learned the project was over budget Aug. 5, when Lee Development Group received a project bid from its general contractor, Davis Construction.

Lee Development Group currently owns the building and is overseeing construction. Eventually, the building will be given to the county.

The bid from Davis Construction, which is based in Rockville, totaled $8 million, according to Dise's memo. The project includes another $2.2 million in what is known as "soft costs," including money for staff, permits, attorneys and other expenses not associated with building.

The project also has a contingency fund of $973,296, which would be used for any overages that occur during construction.

Jones said that contingency — if it goes unused — could make up for the increased bid amount.

If not, Live Nation has agreed to pay the remaining $724,926. That would mean the concert company would not pay rent for the first eight years it occupies the building.

"They ought to go back to the negotiating table, because this deal no longer makes any sense whatsoever," Elrich said.

Councilman George L. Leventhal (D-At large) of Takoma Park, a major supporter of the project, says he questions whether County Executive Isiah Leggett's (D) office can transfer the funds from other projects without approval from the council.

The County Council has final fiscal authority.

"I don't want to delay the groundbreaking, but I do think the council should have been involved in the decision," Leventhal said.

The council has been on recess since Aug. 2 — three days before the higher bid was received. The council will not return from break until after the Sept. 14 primary election.