In the Dog House Now

KA-BOOM: For those of you who regard train wrecks as a spectator sport, we currently have two such collisions unfolding before our very eyes. The first and more obvious crash involves the Santa Barbara News-Press, whose owner Wendy P. McCaw has proven yet again her willingness to cut off her head to spite her face. Citing disgust with McCaw’s poisonous management style, two more reporters walked off the job this past Friday, bringing the number of resigning editors and reporters to 13. The latest are Josh Molina and Chuck Schultz. With seven years under his belt, Molina was a heavy lifter in the newsroom and one of the News-Press’s rising stars. Schultz worked just about every beat during his 25 years at the News-Press except City Hall. Most recently he covered the courts with an understated ease that belied the complexity of the assignment. McCaw and her spin doctors blame the mass exodus afflicting her paper on the alleged sour grapes of disgruntled newsroom employees intent on using the news pages of her paper to vent their own personal political beliefs. But anyone who’s spent five seconds with Schultz knows what nonsense that is. With Chuck there is no hidden agenda; what you see is what you get. While Wendy talks about restoring ethics, fairness, and professionalism to the newsroom, she has, in fact, been doing the exact opposite.

Last Tuesday, for example, the paper ran a mysteriously unsigned article about the permanent restraining order that McCaw and the News-Press sought four weeks ago against former business editor Michael Todd, one of the first five editors to resign. The article detailed allegations made by a News-Press photographer that Todd had made threatening remarks to her on two occasions some time in May, and her dissatisfaction that Todd was not disciplined in return. For the record, Todd has never denied making the comments attributed to him, insisting they were made in jest. When the photographer first brought her discomfort to his attention, Todd claims he apologized profusely. This is not new news. In fact, we reported all this four weeks ago and included both the allegations and Todd’s response. (We also reported that the paper’s management never saw fit to express concern about the issue until just after Todd wrote a stinging letter to McCaw late in June, rebuking her for interfering with news coverage on behalf of the rich and famous.) Last week’s unsigned article was conspicuously — and unprofessionally — one-sided. That’s fine for editorials, perhaps, but not for news articles. Todd told me he was never contacted for his version of events, nor was his attorney. Given that the story was already moldy by the time the News-Press got around to reporting it — four weeks after the fact — one might wonder why the newspaper couldn’t have waited just one more day to get Todd’s response. According to persistent — if unconfirmed — reports emanating from the paper’s gossip mill, the Todd story appeared out of the blue just minutes before deadline and the editor in charge feared for his job if he did not run it. If the Todd story reflects the new professionalism of the News-Press, perhaps the paper’s new motto should become “Burn Every Bridge, Reward Every Friend, and Punish Every Enemy.”

The other train wreck involves developer Bill Levy’s last-gasp efforts to build 62 Ritz-Carlton time-share condos on lower State Street. The ever ebullient Levy has worn out his welcome even among his City Hall protectors, embarrassing himself and everyone else associated with the high-gloss enterprise by his chronic failure to obtain funding necessary to get the project underway. Two months ago — just moments before allowing one of his many permit deadlines to expire — Levy revealed that he’d finally obtained financing from an outfit called Mountain Funding, which specializes in extending short-term, high-interest loans to developers in distress. It may as well be called “Bank of the Short Hairs,” because that’s typically the anatomical region by which Mountain Funding exercises its grasp.

But two weeks ago, on July 22, Mountain Funding entered a notice of default against Levy for his beachfront pipe dream. The legal document declares that unless Levy pays $35 million within 11 days, he’s in default and the project is theirs. Given that the project is officially DOA if construction does not commence by December 12 — no more extensions are possible — this news could be kind of a bombshell. As Levy is not returning phone calls and folks from Mountain Funding have declined to comment, I don’t pretend to understand exactly what this means. But the legions of trained Levy watchers contend it’s a kamikaze game of high-stakes chicken between Levy and Mountain for control and how much Levy makes on the deal. Conventional wisdom suggests that the costs of the project have risen perilously close to the $250 million Ritz Carlton had pledged to pay for it. That means there won’t be much, if anything, left over for Levy or his many and much-abused investors. Given that Levy’s been working on this deal for roughly 15 years, you can imagine this might not sit well for the former Boy Wonder of high-rolling finance. One school of thought holds that by precipitating a default action, Levy — always the consummate bluffer — has initiated a legal conflict that could entangle the project well past the December 12 deadline. If that came to pass, Mountain Funding’s position in the deal would be worth precisely zero. By keeping his finger on the self-destruct button, Levy hopes to negotiate a deal that will enable him to ride off into a golden sunset. The other school of thought holds that Levy — having burned so many people over the course of his career — has simply run out of wiggle room and his comet is about to crash and burn. Should Humpty Dumpty finally fall, City Hall will find itself in a mad scramble to reassemble the giant egg. As for myself, when that happens I expect to be eating omelets for some time to come. But I won’t be getting any of my recipes from the pages of the News-Press.

— Nick Welsh

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