University of Okla housing fiasco

[Sooner or later]

What a mess. I won't get into too much detail but I am pissed.

Back in 2016 the school wanted to add some high end dorms. The school entered into an agreement to have non profit Provident Oklahoma Education Resources build they residences. OU specified much of the specs. About 250 million for the project. Most being tax exempt. Term was for 49 years. One year contracts due to state law. Bonds were issued through the The Oklahoma Development Finance Authority. Provident is on the hook for the bond repayment. Provident leased the land from OU for about a million a year.

OU wanted some of the area to be commercial along with an expansive parking area. OU agreed to pay around 7 million a year for the rights to the commercial and parking revenue leases. OU would get a cut of housing revenue. OU also received 20 million in advance pre payment to use as they pleased on other projects. Most of that 20 million hasn't been spent. Invesco and many other funds bought the bonds.

The bond issuance statement showed an expected 95% occupancy. It ended up being 27%. No freshman were allowed to live in the new dorms. The statement also stated:

“The University intends to rent all of the Commercial Spaces on an annual basis,” the statement notes on page 6.

But on page 24, it states: “The University initially intends to license all parking spaces in the Parking Facilities.”

Well, the commercial didn't do squat. Parking was empty. Revenue from the dorms is nill. So OU decides to walk and not renew after 1 stinking year. And they plan on keeping the 20 million in prepayment. The bonds have been downgraded from BBB to CC junk. Basically they are telling Provident to file BK.

Needless to say Provident ain't happy. They have filed an 800 million dollar lawsuit.

Based on what I have dug up I think OU is within the contract to walk away. Not sure how the 20 million in prepayment should be handled. I think it is a terrible look for the school and state. Who would ever buy the bonds in the future?

Shakes head.

[LWJ]

Enter the lawyers...

[jyl]

https://www.bondbuyer.com/news/double-cross-on-p3-will-cost-oklahoma-bond-trustee-warns

Sounds like if the bonds default, OU gets the housing? Tricky!

[Sooner or later]

Originally Posted by jyl

https://www.bondbuyer.com/news/double-cross-on-p3-will-cost-oklahoma-bond-trustee-warns

Sounds like if the bonds default, OU gets the housing? Tricky!

I know. I got a lot of info from that bond buyer article. The entire deal smells.

[red-beard]

The Aggies, I mean the Cowboys, wouldn't have fallen for that...

My Grandfather helped build a lot of those older buildings in the 1930s