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University says letter released by Cross bondholders is misleading, could warrant legal action due to defamation

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Cross Residence Hall (copy)

Cross Village pictured Sept. 6.

In a letter released by the university Tuesday, an OU representative called statements from a representative of the Cross Village bond trustee "patently false, misleading, and disparaging."

David Dubrow, an attorney representing UMB Bank, sent a letter to the university Sept. 6 that said the university's failure to renew Cross Village commercial and parking leases violated a moral obligation of the university. The letter also stated this decision could negatively affect the university and the state in future financial dealings, and warned of potential legal action.

In response to Dubrow's letter, attorney Molly Stephens wrote on behalf of the OU Board of Regents and the university in a letter obtained by The Daily Tuesday evening.

The university's letter asserted that the UMB letter was an attempt to "disseminate falsehoods in an effort to damage the reputation of the university and bully the university into bailing out sophisticated private institutions."

"Simply, the University has met its financial obligations to Provident and has no indebtedness related to Cross Village," said University of Oklahoma Senior Vice President and Chief Financial Officer Ken Rowe in a statement from the letter. "When tough choices have to be made to keep OU fiscally healthy, our first commitment is to protect the students, taxpayers and the state of Oklahoma not a private entity.”

Cross Village is owned by Provident Oklahoma Education Resources Group, and was financed by bondholders represented by UMB.

The university's letter said that UMB's letter misstated several elements of the university's involvement in Cross Village, the decision not to renew the commercial and parking leases, and the potential consequences for the university and the state.

The letter said UMB's letter misrepresented OU's involvement in seeking Cross investors, and that the university held no obligation to service debt related to the Cross project.

The letter also said UMB's assertion that the university had assured investors it intended to lease all of the commercial and parking spaces through the end of the life of the Cross bonds was inaccurate. 

According to the letter, UMB's statement that the university has been unwilling to negotiate regarding Cross was inaccurate, and that the university negotiated with Provident Oklahoma and RBC Capital Markets -- an investment bank involved in the financial transaction -- in May 2019, but that UMB refused to participate in the negotiations.

Regarding UMB's statement that the university violated a "moral obligation" that could affect the credit of the university and the state, OU's letter said the university did not have any moral obligation to continue to lease the commercial and parking spaces.

“We are monitoring the situation and are confident that the state’s credit will not be affected by recent developments," said Oklahoma State Bond Advisor Andrew Messer to The Bond Buyer on September 9, 2019, shared in the letter with Messer’s permission.

And even if it violated such a moral obligation, according to the letter, the university's credit would only be affected if it indicated the university does not have the ability or willingness to satisfy its own debts -- and the university asserts it does have that ability and willingness.

The university's letter also said that UMB's statement that OU has a "sinister plan" to purchase Cross at a cheaper price is false, and that the statements or actions of the representatives could warrant legal action.

"Your letter," Stephens wrote in OU's letter, "intentionally circulated widely to media outlets and containing demonstrably false statements made for the obvious and express purpose of injuring the university and the state of Oklahoma, rises to the level of defamation and tortious interference with contract."

Cross Village, which as of Aug. 23 had a 34.7 occupancy rate, was marketed as a luxury housing option for upperclassmen.

Scott Kirker is a letters and Spanish senior and assistant news managing editor for The Daily. Previously he worked as summer editor-in-chief and as a news reporter covering research and administrative searches.

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