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The announcement of the new financing arrangements for Playa Vista have been widely misconstrued. First, the impression purveyed by the "spin control" news release of developer Maguire Thomas was that this was a good development. In fact Maguire Thomas is the big loser in the new financing proposal.

A second misconception is that the proposal is a done deal. This is not true. The developers have simply agreed to negotiate exclusively with Pacific Capital Group. There will be many pitfalls in hammering out the details over the next several months.

Published reports indicate that with the new proposal Maguire Thomas will in essence default on their $150 million mortgage on Playa Vista. The mortgage holder, Chase Manhattan Bank, will receive only 65 cents on the dollar for its loans on the property. In real estate this is called a "short sale."

Thus, Maguire Thomas becomes the second developer to fail to develop the Ballona Wetlands, following in the footsteps of Summa Corp. Under the new terms it is said that Maguire Thomas will have to pay $15 million just to retain a mere 15 percent interest in the project.

DreamWorks, now taking the lead role in the development, wants to bring in former Michael Milken partner Gary Winnick of Pacific Capital to finance the project with union pension funds. This would put the retirement savings of millions of union workers at risk on a speculative real estate scheme which has already failed twice. This financing plan holds as much risk as the Lincoln Savings and Whitewater fiascoes combined.

Here' s why:

- Two lawsuits are pending on the current phase of development, one state and one federal. With the likelihood of more to come in the future phases, the legal wrangles could last longer than the projected life-span of the hapless union pension holders.

- Powerful consumer and environmental groups are opposing the project. Citizens United to Save All of Ballona, a coalition of groups opposing the project, has grown to 73 organizations, including Sierra Club, Greenpeace, CalPIRG, Surfrider Foundation, Last Chance for Animals, and Americans for Democratic Action. The opposition is well organized and resolute.

At this time there is word that boycotts of DreamWorks film and children' s animation projects are being organized. Imagine a campaign to school children depicting Steven Spielberg atop the wetland-destroying bulldozer. There is a very real possibility that DreamWorks could succumb to market pressure and bail out of the project.

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