Bill Seeks to Validate KOCE Sale

An assemblyman has quietly introduced legislation to allow an Orange County community college district to sell its public television station to a well-connected local foundation for less money than a Dallas-based televangelist network has offered.

The bill was introduced in late June by Tom Umberg (D-Anaheim) after a court ruling voided the 2004 sale of KOCE-TV to the foundation because it was not the highest bidder, as the law requires.

Milford Dahl, attorney for the Coast Community College District, which sold the station to the KOCE-TV Foundation, said the bill was his idea. Jerry Patterson, a former congressman who sits on the district’s board of trustees, said he helped write the bill. Umberg said he was carrying the bill at Patterson’s request.

Richard Lloyd Sherman, lawyer for the televangelist network, Daystar, said district officials were surreptitiously trying to create an exception for themselves under state law.

“They broke the law, so now they’re trying to change the law to suit their needs, and you can’t do that,” he said.

The bill has received a hearing in the Senate Education Committee, which approved it 8 to 1, with Umberg and Patterson testifying in support. They were the only people who testified. Daystar was not notified of the bill or the hearing.

The legislation must receive approvals from both houses of the Legislature before it reaches the governor’s desk.

The legislation is the latest attempt by the college district to sell the station to the foundation, the fundraising arm of the station before the sale.

Many of Orange County’s wealthiest and most influential people have supported the foundation’s bid, including drug company executive David Pyott, former baseball commissioner Peter Ueberroth, technology executive Henry Samueli and Rep. Loretta Sanchez (D-Santa Ana).

Despite its tiny viewership, operating losses and the fact that much of its programming duplicates that of Los Angeles-based KCET, the public station is a source of civic pride, offering PBS programming,a tiny bit of Orange County news, and public affairs shows and telecourses through Coastline Community College.

The district decided to sell the station after subsidizing it for years for about $2 million annually. District trustees have said they preferred to sell the station to the foundation because it would retain the PBS affiliation and increase local programming.

Daystar offered $25.1 million in cash in 2003. It raised its offer to $40 million a day after the sale deadline, but the district would not consider the new bid.

Foundation officials made an offer they said was worth $32 million, with an $8-million down payment and the rest to be paid over time with interest. But when the sale was completed, the payments were to be made over 30 years at no interest, with no payments for five years.

In addition, the district cut an additional $4 million off the price.

Daystar, the world’s second-largest televangelist network, sued to overturn the deal. A three-judge appellate panel said the changes in the deal put the price between $19.5 million and $23.5 million, substantially changing the sale terms.

The court twice reversed the deal, calling it “the rankest form of favoritism” and ordered the district to hold a new auction or resume control of the station.

District officials have appealed the ruling to the state Supreme Court.

In the meantime, district officials have sought to change state law with Umberg’s help, so that if they have to hold another auction they will be able to choose the bidder they want.

Current law requires community college districts to sell assets to the “highest responsible bidder.” The change would allow districts to sell assets for less than the highest bid and take into consideration other factors, such as public interest.

“We have a nonprofit educational television license,” Patterson said. “I think we have a duty to see that it stays that way.”

The bill was created through a parliamentary tactic known as a “gut and amend,” in which the original language of a bill is stripped out and entirely new language is substituted. Originally, the bill, AB 523, dealt with regulation of vocational schools; district officials asked Umberg to carry the legislation after the deadline for introducing new bills had passed.

Umberg will be termed out of the Assembly when the legislative session ends Aug. 31. He ran for a state Senate seat representing Santa Ana but was defeated in the Democratic primary by Orange County Supervisor Lou Correa.

Umberg said he agreed to carry the bill to keep KOCE “a vibrant part” of the community.

“They don’t necessarily have to award it to those with the most cash,” Umberg said. “It is a community resource, and they can take that into account. In fact, I think they should.”

Umberg denied that the bill was being pushed in secret but acknowledged that his office did not notify Daystar of its existence.

He said the bill was not an effort to circumvent the court decision but rather an attempt to give the college district “more opportunity and a greater number of potential purchasers.”

“I don’t think it subverts it; it just adds an extra dimension to it,” he said.

Mel Rogers, the president of the KOCE Foundation and the general manager of the station, denied that the station and foundation were a driving force behind the legislation but said they nonetheless supported it.