Elrich and the Live Nation suit: Tempest in a Teapot
Controversy has swirled around the deal to put a large music club in downtown Silver Spring ever since County Executive Ike Leggett negotiated it behind closed doors in 2007.
For one thing, the arrangement gives very favorable terms to two behemoths: Live Nation -- the self-proclaimed “largest live entertainment company in the world” (which is certainly the case since its merger with TicketMaster) – and Lee Development Group, one of the county’s largest businesses and a major source of political contributions.
Another element of the controversy surrounds Seth Hurwitz, a Bethesda resident and owner of the hugely successful 9:30 Club in D.C. As soon as the preliminary Live Nation deal was announced three years ago, Hurwitz offered the county substantially better terms than Live Nation had, but was rebuffed by the Leggett administration for being too late. In mid-June, Hurwitz filed suit to stop the project, claiming that its true costs were being concealed by public officials.
Sure enough, in late August, county officials admitted that the project was $3.2 million over the price tag of $8 million they had repeatedly assured concerned lawmakers and citizens was ironclad. Furthermore, it came to light that Leggett had quietly shifted $2.6 million to cover the overruns at around the same time that plans for a new Silver Spring library were being cut by $3 million. (The two items come out of different budgets, so the trade-off is not direct.)
Last week, the controversy took a fresh turn. Councilman Marc Elrich (D-At Large) – one of two council members to vote against the original deal (Roger Berliner [D-Chevy Chase] was the other) and a continuing advocate for its reconsideration got himself involved in the legalities. On Aug. 31, the councilman filed an affidavit to support Hurwitz’s effort to stop a Sept. 2 groundbreaking.
The substance of Elrich’s affidavit doesn’t seem particularly controversial. In it, he states that:
- In 2008, the Leggett administration held hearings in which it committed to a top price tag of $8 million and a county share not to exceed $4 million.
- The county council approved the deal on that basis.
- The conveyance agreement spelling out the terms of the deal states that the county executive would have to obtain an additional appropriation in case of overruns.
- The county executive has not sought such an appropriation and must do so.
What makes this a big deal is not that Elrich is wrong. In fact, according to the Montgomery Gazette and The Post, several other council members echo the demand for Leggett to consult with the council. Rather, Elrich may have run afoul of county ethics law, which forbids public employees from providing “expert opinion” to support a suit against the county.
Making matters appear worse for Elrich is the $2,500 contribution the 9:30 Club made to his campaign on June 4. Though Elrich’s consistent record of opposition to the Live Nation deal mitigates any accusation that the contribution was pre-payment for the affidavit (several observers agree that Hurwitz was, in effect, thanking Elrich for having taken his side all along), it hardly looks good.
Nearly everybody else elected in the county is happy enough to have their campaign coffers filled by the Lee family and other developers; Elrich, on the other hand, has long refused such contributions. So was it hypocritical for him to have accepted this check? It’s a legitimate question. Hurwitz is not primarily a real estate developer, of course, but he does own a large business and is fighting to get his share of this particular real estate deal.
When I asked Elrich why he took the contribution, he said that -- as of June 4 -- Hurwitz had no business in front of the council. This is correct: The suit Hurwitz filed a couple of weeks after the contribution was against state officials, including Gov. Martin O’Malley and Comptroller Peter Franchot. It was not until Aug. 31 that Hurwitz added county officials to the suit.
Elrich repeats the point made by others I spoke with: that Hurwitz was rewarding him for having fought the battle when the issue was before the county in 2007-08. He also wonders why more isn’t being made of myriad developer contributions to politicians considering their business deals.
As for the substance, Elrich says his recent actions have not been about trying to shut down the project but rather about getting better terms for the county. He believes that putting the matter back in front of the council could improve the deal.
Among the council members I spoke to, none was willing to go on the record about Elrich's actions, with the exception of Berliner, who condemned those who would “demonize Marc for doing the right thing.” But there was near unanimity that Elrich had made a mistake, with some calling his affidavit “ill-advised” and “dumb.”
Most also thought the matter would blow over quickly; however, one insider considered friendly to the councilman sharply disagrees. He thinks Elrich has done long-term damage to his image and, by making the council look bad, will end up strengthening the other competitors in the at-large race. Furthermore, this source characterizes Elrich’s action as a “declaration of war” on Leggett, who he says has invested a great deal in burnishing Elrich’s reputation in the business community.
I am on the record as a supporter of Marc Elrich. He was my Takoma Park city councilman and is my neighbor and friend. I have also contributed to his campaigns, including holding a fundraiser this year. Nothing I have learned in the past few days shakes my belief in his integrity or commitment to do the right thing for the people of Montgomery County.
On the contrary, Elrich’s actions in this case are all about trying to do the right thing, even if emotion and passion seem to have gotten in the way of good judgment this time.
I think a huge stink should be made about the sweetheart deal the county executive and seven members of the council gave Live Nation and the Lees. I find it shameful that the county executive would attempt to cover huge overruns without public debate and at a time when county government is being cut to the bone (not to mention when the council is on recess).
I wholeheartedly support Elrich’s commitment to shed light on this mess. It’s too bad his approach turned out to be counterproductive, in effect ruining his ability to be a forceful advocate.
As for the campaign contribution, there’s nothing legally wrong with it. But Elrich has chosen to set a higher standard for himself in refusing to accept contributions from the development industry. Hurwitz’s contribution violates the spirit of the commitment, if not the letter.
Though it hardly seems just to me that anyone would focus on one questionable contribution, when many other campaigns joyfully accept cash from the Lee family, I still hope the Elrich campaign will return the check or donate it to a worthy cause.
On the question of whether this scandal is anything more than a tempest in a teapot, I side with those who think not. Sure, Leggett’s feelings may be bruised, but it’s not in his interest or anyone else’s to go after Elrich on what is essentially a technicality. Leggett and pretty much everyone else involved don’t want any more public discussion of this matter than is required, which – of course – is why Leggett didn’t want to go to the council in the first place.
In two weeks, we’ll still be talking about the rotten Live Nation deal, but no one will remember how Elrich mishandled his opposition to it. As for the election itself, this will cost him a handful of votes among insiders, but not many. To the extent I thought Elrich might finish first among the at-large candidates, I would now downgrade those chances by about 2 percent and no more.
| September 7, 2010; 1:30 PM ET
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