NORMAN — The developer that partnered with the University of Oklahoma to construct Cross Village is suing the university for more than $750 million, alleging that OU misled Cross investors and breached its contract.
Provident Oklahoma Education Resources filed suit against the university Monday in Cleveland County District Court, claiming that OU had a "costly but hopelessly flawed vision” for Cross Village.
Provident, a subset of Louisiana-based nonprofit Provident Resources Group, partnered with OU to develop Cross Village, an on-campus housing development for upperclassmen that was designed to provide food and shopping options in the same complex as student apartments.
The Monday suit claims that while Provident and investors went into bond debt to fund the $250 million Cross project, OU misrepresented the demand for housing at Cross and the profit the development could produce.
The university disputed Provident’s claims Monday in a statement.
"In an apparent attempt to gain leverage in an ongoing dispute, Provident today filed a lawsuit against the University, which parrots the same baseless claims it has previously put forth,” OU’s statement reads. "The University will respond to the lawsuit as appropriate. OU’s obligation remains to its students and the taxpayers of Oklahoma, not to Provident or its debt."
According to Provident’s suit, OU wanted to develop Cross as a “flagship housing project” for upperclassmen that would attract older students to on-campus housing. The university leased land to Provident to build the development with bond funding, with the agreement that OU would rent out the facilities Provident built.
Provident claims in the suit that it would have only funded a basic student housing facility with a surface parking lot and dining facility, but that OU asked for a multi-level parking garage as well as commercial and retail spaces, which the university planned to use for shops and restaurants.
According to the suit, Provident and investors agreed to OU’s request with the understanding that OU would use rent from the commercial spaces and parking revenue to help fund the spaces. According to Provident, OU promised to rent the commercial and parking spaces every year during the life of the bonds, but failed to do so.
Provident claims that OU misled investors, claiming to have received the right permissions to set up the leases for the parking and commercial facilities when it never did. According to the suit, the university’s Board of Regents eventually contradicted OU’s claim, acknowledging it had never approved the leases and only retroactively doing so in 2018.
The regents later canceled the parking and commercial leases in July 2019, according to the suit, leaving Provident reliant on student rent alone. The suit also alleges that OU misled Provident about profits from student rent, which should have made up about two-thirds of the revenue from Cross Village.
According to the suit, the university knew from the start that rent revenue couldn’t fund the housing facility, commercial spaces and the parking garage at Cross, since the amount of money needed to do those things “would have made the student housing too expensive for the students to afford.”
Provident also alleges that OU misrepresented student demand for the type of housing it was building at Cross. The university wanted a more-than-2000-bed development in which the units didn’t have kitchens, so students would be encouraged to eat at the restaurants in Cross. Provident claims that OU misled investors about student interest.
While the units OU wanted would have been suited to freshman students, Provident said, there was little upperclassmen demand for apartments without in-unit kitchens. The OU Daily reported that as of August 2019, only 34.7% of Cross’ 1,200 beds were occupied as the apartments’ rent rates were on par with those of other luxury housing developments in Norman.
"The university had a flawed vision of the demand for on-campus upperclassmen housing and the type of units upperclassmen would rent,” the suit reads. "In order to induce the construction of student housing that fit its misguided view, the University misrepresented the core facts.”
Provident’s suit claims that OU breached its lease multiple times and has broken its contract, and asks for more than $750 million in damages against the university.
“Provident and the bond investors have funded and constructed a costly and unnecessarily large project, designed for freshman students but restricted by the university to upperclassmen only,” the suit reads. “Had the true facts been known, these parties would have been able to evaluate objectively the need for the commercial space, a parking facility, and more than 1,200 beds of highly undesirable suits. They would have never agreed to build a project that fit the university’s flawed vision.”
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