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Contact: Audrey Fix Schaefer

for I.M.P.
Montgomery County, Maryland Sued over illegal funding of Silver Spring Music Hall
BETHESDA, MD. Sept. 2 -- The Montgomery County, MD, Administration has been sued
by Bethesda, MD-based I.M.P. over illegal funding of the Silver Spring music hall. The
illegal funding is the latest in a series of clandestine moves that have been discovered
in the Administration’s activities to build the Silver Spring music hall without following
proper procedures as detailed in the lawsuit. The lawsuit was filed in the Anne Arundel
County Circuit Court as part of a lawsuit against the State of Maryland.
The lawsuit states that The County’s Chief Administrative Officer told the County
Council that the County would not spend a penny more than $4 million on the music
hall and that all costs were capped at $8 million. To assure that no additional County
funds would be spent without further approval by the County Council, an
Agreement between the developer LDG Inc and the County states several times that
the County must obtain council approval to use more County funds on the project. The
County has failed to seek the contractually required appropriation and therefore lacks
the appropriate funds necessary to pay for the project. Under the terms of the
Agreement, the project may not begin until the County Council through a budgetary
appropriation approves all necessary funds. The Agreement further states that once
construction begins, the County is liable for millions of dollars in damages to LDG Inc.
should an unacceptable condition, such as improper funding, stop the project.
The County has yet to release to the County Council or the Maryland General Assembly
the construction budget for the project. Documents produced solely in response to a
subpoena in this lawsuit reveal that the County has known since 2008 that the
construction estimates for the music hall exceeded $8 million. In other words, the
County knew the price tag was millions of dollars more than the $8 million cap when it
testified before the County Council in March 2008 seeking approval for $ 4 million and
promised that the County would never pay a penny more. Knowing the project was
millions of dollars over budget, the Administration nonetheless denied to the County
Council there would be a cost overrun. In addition, the County consistently refused to
produce construction cost documents to the Maryland General Assembly despite
several specific requests for the documents and a statutory requirement to provide
such documents.
A cost overrun of $3.2 million was revealed on August 10, 2010
in lawsuit documents. In short, the Administration hid the cost overrun from
legislators and the public for more than two years. Most significant, the documents
revealing the cost overrun were produced just after the Montgomery County Council
recessed for the next seven weeks.
The Administration’s deliberate failure to provide construction costs figures is an
attempt to avoid the necessary legislative hearings to appropriate the additional funds
because the Administration intends to avoid public discussion, debate, and perhaps
censure regarding the handling of this project.
As part of its attempt to avoid the required legislative hearings, the Administration also
accelerated plans for a groundbreaking of the music hall when it realized the cost
overrun would become public.
Last spring, the County Administration bragged to the County Council that an
aggressive date for groundbreaking was set for the fall, most likely in October 2010.
When a lawsuit was filed in June challenging the use of State funds, the
groundbreaking was moved to September 11, 2010 – just days before the primary
election for county executive and county council. After the subpoena was served on
the County Administration requiring production of construction cost documents in July
2010, the groundbreaking was moved to September 2, 2010, leaving little time for
review or action by anyone once the County finally revealed the construction costs on
August 10, 2010.
The County Administration revealed on Wednesday Aug. 31 the construction actually
began secretly several days prior, before the groundbreaking, thereby precluding any
budget review or interference by the County Council before the legal agreements
finalized. Nevertheless, the Administration breaches several provisions of the
Agreement unless it obtains an additional appropriation approved by the County
Council. There was sufficient time for the Administration to fulfill its required
funding obligations prior to the original planned groundbreaking in October 2010. For
instance, the County Council is scheduled to reconvene on September 24,
2010 when the Administration can ask the County Council to appropriate the
additional funds at that hearing or at later hearings. The Administration also
may seek County Council approval at that time to cover the $3 million cost overrun for
the new Silver Spring library. A Council hearing on the music hall appropriation as
required in the Agreement enables a public discourse on the expenditure of County
funds at a time when the County faces a large deficit and has cut back extensively on
county services.
In conclusion (and not part of the lawsuit) efforts to delay the groundbreaking were
intended to (1) provide time to pursue Council approval for additional funding and (2)
to avoid possible County liability if the funding is ruled illegal. Those efforts were
blocked when the County admitted only in a court proceeding on Wednesday, Aug 31
that it already had started construction. It turns out the "groundbreaking" was a
ruse to divert attention from the fact work had begun. It is actually just a ceremonial
event for speeches and photographs. The County Council is now left with the task of
finding out what the Administration has done to rush this, including why $3.2 million
has been magically procured for the music hall while the Silver Spring library budget is
slashed by $3 million. The Council is also left with the task of uncovering who is
benefiting from the Administration's music hall gamesmanship.