Chapman University increases purchase price for Crystal Cathedral campus

Chapman University increased its purchase price for the bankrupt Crystal Cathedral campus by $1.5 million to a total price of $51.5 million, and creditors officially designated the school as the preferred buyer of the Garden Grove property in court documents filed Monday.

The filings made clear why the church and its creditors support Chapman’s plan over a $53.6-million offer by the Roman Catholic Diocese of Orange. In some documents, cathedral attorneys argued that the diocese offer, which would require the Crystal Cathedral to seek a new place for worship within three years, was financially risky to the ministry and the weekly “Hour of Power” broadcast.

“The broadcast has originated from, and remains inextricably associated with the Crystal Cathedral and the Crystal Cathedral Campus,” documents said, adding that the relocation would hamper donations and cause the Garden Grove campus to “lose the singularly unique religious identity it has had for the last 55 years.”

According to the documents, 70% of church revenue is derived from the “Hour of Power.”

But that did not deter the Roman Catholic Diocese of Orange from holding firm in its stance that the Crystal Cathedral, founded by Robert H. Schuller, would not survive under the Chapman plan.

“Even with that increase, that would not be sufficient to satisfy the shortcomings on meeting all of the obligations to creditors,” said Alan Martin, an attorney for the diocese.

On Friday, the diocese asked a judge to block the sale to Chapman, alleging that the plan not only would fail to pay creditors in full but that the cathedral wouldn’t be able to afford monthly rent of up to $215,000. Ultimately, according to the diocese’s filing, the Crystal Cathedral could file for bankruptcy again.

The diocese, which had upped its initial bid of $50 million, said the extra $3.6 million could be used as a rent reserve, lessening the ailing ministry’s financial burden, according to documents.

“It’s a much more realistic future and scenario for them,” Martin said.

Chapman has increased its initial offer of $46 million several times. In a letter dated Oct. 28, President James L. Doti increased the price to $51.5 million. The university’s plan would allow the Crystal Cathedral to lease core buildings with the option to repurchase them within five years.

The diocese said that while the Crystal Cathedral’s revenues have declined, its expenses remain high and if the Chapman offer is accepted, it could deplete its general accounts entirely by 2012 through a loss of about $340,000 per month.

But the creditors and the Crystal Cathedral defended Chapman as the buyer.

In a response filed Monday, Nanette Sanders, the attorney for the creditors, called the financial assessments by the diocese “improper layperson testimony.”

Marc Winthrop, the Crystal Cathedral’s attorney, said the church doesn’t believe the diocese’s offer is better.

“We don’t think they have the standing to challenge the decision,” he said.

The diocese has come under fire for its aggressive pursuit of the property.

John Manly, a Newport Beach lawyer who prosecuted about half of the Roman Catholic sexual abuse cases that came out of Orange County, called the diocese “hypocritical.”

“The bottom line is … is it really appropriate to take $50 million in cash and buy a televangelist mega-studio?” he asked. “It just seems offensive.”

Steve Dzida, president of Voice of the Faithful in Orange County, an organization that promotes Catholic Church reform, said more transparency is needed in the diocese in regard to planning for a new cathedral.

“Those are all major decisions,” he said, “which we think should involve a broad and deep discussion across our faith community.”

He said that to his knowledge, that discussion did not happen.

The Crystal Cathedral filed for bankruptcy a year ago, citing more than $50 million in debt. A judge will consider the plan and objections at a hearing Nov. 14.

nicole.santacruz@latimes.com