The University of Oregon plans to move forward with its purchase of the former Concordia University Portland campus — a critical step toward creating The Ballmer Institute for Children’s Behavioral Health. In documents made public on Monday, UO’s Board of Trustees will be asked to approve a $60.5 million purchase agreement for the former campus in Northeast Portland.
Voting on that purchase agreement is set to happen at the board’s meeting next week. The board documents acknowledge the Concordia property has been included in an ongoing legal dispute, but the university doesn’t anticipate that conflict holding up the purchase.
The funds to purchase the former private university campus would come from a more than $425 million donation by philanthropists Steve and Connie Ballmer made to launch the namesake institute.
The former Concordia campus, where the institute would reside, has a more than 100-year history in Northeast Portland, located in a neighborhood named after it. Concordia Portland opened in 1905 as a high school connected to the Lutheran Church, according to UO board documents, later growing into a private university — still affiliated with the church.
The campus spans more than 19 acres, according to UO, with 23 buildings — including a recently renovated athletic building, as well as space for more than 500 students in on-campus housing. Included with the purchase of that property are most of the buildings’ contents such as classroom furniture, gym equipment and library books.
Since Concordia Portland’s closure in 2020, there have been numerous questions about what would happen to the campus — many spurred by a $302 million lawsuit filed by technology company HotChalk.
HotChalk had managed the Portland university’s online programming before it closed, helping Concordia grow into the largest private university in Oregon at the time.
In its lawsuit, HotChalk argues that Concordia Portland and others associated with it owe money for a breach of contract, fraud and other allegations.
Along with Concordia Portland, HotChalk is suing the Lutheran Church Missouri Synod, which supervises the larger Concordia University System and the Lutheran Church Extension Fund, a nonprofit financial institution that supports Synod organizations and currently owns the Concordia campus. The suit also names individuals who served on Concordia Portland’s Board of Regents.
According to board documents, UO acknowledges the HotChalk lawsuit but says the purchase agreement contains legal protections to prevent disruptions to its acquisition of the Concordia campus.
One of the “known issues” on Concordia Portland’s title is a “lis pendens” filed by HotChalk, UO writes in board documents.
A lis pendens is a notice that there is pending litigation connected to a property. A federal judge recently upheld the lis pendens, acknowledging that HotChalk is arguing that Concordia Portland made “fraudulent transfers” to its partners, including the Lutheran Church Extension Fund, or LCEF, which purchased the property during a foreclosure sale last year.
UO writes in its board documents that it is not taking a side in the lawsuit, but that it agrees with the LCEF that there was no fraudulent transfer of the Portland property.
The LCEF has argued in court documents that regardless of a sale of the Portland property, it owns assets valued at more than $1.8 billion, and therefore would be able to pay HotChalk if the court were to rule in the technology company’s favor.
“[W]e are satisfied LCEF has resources well in excess of any potential judgment in that litigation such that HotChalk would have no legitimate need to disrupt our ownership in order to receive full payment on such judgment,” UO wrote.
Jim McDermott, attorney for HotChalk, said the LCEF’s planned sale of the Portland property to UO shows the “significant value of Concordia’s former campus,” and he said that the transaction “appears to be part of the LCEF’s continuing pattern of diverting assets to elude bona fide creditors like HotChalk.”
He continued: “HotChalk has a judicially-approved lis pendens on the property, and HotChalk will continue fighting for its legal rights.”
In addition to that lis pendens notice, the Lutheran Church Missouri Synod also has a “right of reentry” on the Portland property, UO notes in its documents. That means the Missouri Synod could take over the property title if it is used for a purpose other than “a religious or educational institution affiliated with the Lutheran Church.”
The University of Oregon said as a condition of the sale, the LCEF must reach an agreement with the Lutheran Church Missouri Synod to end that right of reentry.
“Should for any reason LCEF fail in doing so, the University will not purchase the property,” UO wrote.
Joe Russo, a spokesperson with the LCEF, did not comment on the UO’s interest in extinguishing the Missouri Synod’s right of reentry, but he said LCEF is happy about UO’s plans for the Concordia site.
“LCEF was committed to finding the highest and best use of the property,’’ Russo told OPB in a statement. “We are encouraged that a provider of higher education will occupy the campus and deliver programs that will positively impact the developmental and mental health of children in the community and across the state. We are happy the education, training, and community impact legacy of Concordia will be continued.”
UO was not the only institution interested in purchasing the Concordia property.
According to reporting from the Portland Business Journal, Warner Pacific University lost out on a bid on the Concordia Portland campus in hopes of relocating its own Southeast Portland campus, which is facing roughly $75 million in deferred maintenance.
If UO’s board approves the purchase agreement for the former Concordia Portland campus, the university has big plans for the Ballmer Institute.
According to the university, along with the purchase of the Concordia property, the $425 million lead gift from the Ballmers will fund the hiring of 25 faculty members, provide $100 million toward an endowment for scholarships and endow the future operations of the institute.
The board’s upcoming decision is only related to the purchase of the Concordia real estate, not to any of the other parts of the Ballmers’ donation.
UO has said the new institute will unite university research programs, Oregon public schools and community groups to create and deliver “intervention and treatment programs” for K-12 students. The Ballmer Institute would begin its work through a partnership with Portland Public Schools, eventually spanning across the state.
It plans to offer a certificate and a bachelor’s degree focused on children’s behavioral health — though the degree program would need approval from Oregon’s Higher Education Coordinating Commission.
The Ballmer Institute would not be the only occupant of the former Concordia property.
OPB reported last week that some of UO’s current Portland-based programs would relocate from the city’s Old Town neighborhood to the Concordia campus if the purchase goes through.
Although the board has not yet approved UO’s purchase of the Concordia property, the university wrote in board documents that it has begun its due diligence on the property. If any problems arise during its inspection, UO said it could change that $60.5 million purchase price.
If that inspection goes well, and the board approves the purchase agreement, UO says it should close on the Concordia sale in the second week of June.
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