Before shovels were scheduled to hit the ground, a new Maryland concert venue developed by Live Nation reportedly is already in the red by a few million dollars.

Groundbreaking on the venue, which will be located at the site of a former J.C. Penney department store in Silver Spring, MD, is scheduled to begin early next month, but city officials this week disclosed that the project is $3.2 million over budget.

The overruns will balloon the cost of the proposed $8 million, 2,000-capacity venue to $11.2 million. Officials have worked on the plan for years, and brought in Live Nation nearly three years ago to develop it. Live Nation is slated to separately spend about $2 million for interior renovations, but the rest of the now $11.2 million construction project will be paid for by the city and county.

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But, earlier this summer, area concert promoter and 9:30 Club owner Seth Hurwitz sued state officials to stop some of the funding for the project, in part because he did not believe the true costs of constructing the venue were disclosed. In addition, he claimed that $4 million in bonds issued by the state to help pay for the venue allegedly were done so illegally.

“I think if the public knew how every step of this thing has been back-roomed and steam rolled, they would be properly outraged,” Hurwitz said in a statement when the lawsuit was filed in June. “We are going to begin the process of uncovering these layers.”

A spokesperson for Hurwitz could not be reached for comment, but the lawsuit is still pending.

According to The Gazette newspaper in Gaithersburg, MD, part of the problem is that the original $8 million figure is an eight-year-old estimate that was never adjusted over the years.

“The cost of the project is still very reasonable,” Diane Jones, Montgomery County assistant chief administrative officer, told The Gazette. “It’s still a great project.”

However, the escalating cost of the project is not sitting well with some legislators, who reportedly were led to believe the cost estimates were accurate. In addition to the $2 million in interior work payments, Live Nation contractually is supposed to pick up the cost of overages.

“They assured us it wouldn’t go over,” County Councilman Marc Elrich told The Gazette. “If those numbers were eight years old, they should never have given them to us.”

From the Hurwitz lawsuit, “Despite promising Live Nation that it would build the music hall, Montgomery County never provided the Maryland General Assembly a cost estimate for this promise for the specific terms of the agreement. The few sparse documents submitted by Montgomery County in supposed satisfaction of the General Assembly’s conditions were deemed inadequate by the Capital Budget Chairman and the Department of Legislative Services in 2008.”

Last Updated on August 23, 2010