Update-March 2022

UO “is taking no position” in Hotchalk litigation

The University of Oregon “is taking no position” in Hotchalk’s lawsuit against Concordia University and its religiously affiliated co-defendants, according to documents from this week’s Board of Trustees meeting and Vice President and General Counsel Kevin Reed, who spoke before the Board voted to purchase the Northeast Portland campus for $60 million.

“We don’t have a position on if that’s true or not,” said General Counsel Reed about Hotchalk’s allegation that “[the Lutheran Church Extension Fund] and the Lutheran Church Missouri Synod are essentially alter egos of each other and should be paying each other’s debts.”

He continued: “We just know, at the end of the day, what HotChalk is looking for is money, and we are satisfied that the Lutheran Church Extension Fund has enough cash to satisfy a judgment way separate and apart from the value of this property. So, we are not worried that even if everything took the weirdest bounce, and the worst bounce for us–that we’d end up in a situation where Hotchalk has a large judgment against the Lutheran Church Extension Fund–that suddenly they would have to cash in the value of the property we just bought in order to satisfy that judgment. 

“That’s really what Hotchalk wants at the end of the day, and again, we are trying to stay out of that fray.”

General Counsel Reed also said he didn’t “know how true it is” that “church politics, between a more liberal Portland campus at Concordia and a conservative church in Missouri led the conservative church to withhold some loans that helped precipitate the financial downturn of Concordia University,” calling this “an allegation in the lawsuit.” 

Meeting minutes from November 2019 show the Lutheran Church Missouri Synod Board of Directors voted to “inform the leadership of the Concordia University System and Concordia University, Portland, that it will not again approve any financial action for the benefit of the university until the university has substantively addressed the issues regarding the Gender and Sexuality Resource Center and brought its articles and bylaws back into conformity with the requirements of the Lutheran Church–Missouri Synod.”

Terry Wilson, a former member of the Concordia University Portland Board of Regents, stated in a deposition last year that the Lutheran Church Extension Fund “provided the money” for a revolving line of credit that flowed through the Concordia University System for ongoing operations at Concordia Portland.

“The revolving line of credit needed to be provided by CUS,” Wilson said. “The money that funded the line of credit came to, for example, in our case, Concordia University Portland through CUS, and CUS added an interest rate factor on top of the interest that was paid to LCEF for arranging and coordinating this activity.”

Senior officials at the Extension Fund have deep ties to the LCMS. CFO Kevin Bremer worked for the LCMS Internal Audit Department for seven years before joining the LCEF in 1993. President and CEO Bart Day is an ordained minister with the LCMS who served as Associate Pastor of Memorial Lutheran Church in Houston from 1997-2011. The Rev. Day called at least one meeting in April 2018 where officials for Concordia Portland, the Concordia University System, and the Extension Fund discussed Concordia Portland’s relationship with Hotchalk. In 2021, the Extension Fund acquired Concordia Portland’s campus through foreclosure proceedings with a $3 million credit bid.

In its materials to the Board, the UO said its acquisition of the Portland campus is contingent on the Synod revoking an interest in the property known as a “right of re-entry”. David Foraker, an attorney representing the Lutheran Church Extension Fund, was recently quoted in The Oregonian saying the Synod is “reluctant to engage” with the Fund about extinguishing this interest. “There have been no negotiations,” Foraker said. 

The Synod previously extinguished its right of re-entry in the former Concordia College New York campus, which was sold last year. A purchase agreement between Iona College and Concordia New York included the provision that “Seller shall have terminated and/or removed any reversionary interests in the Real Property…including, without limitation, as set forth in that certain deed recorded on May 29, 1936.” This nearly 100-year-old deed said the Lutheran Church Missouri Synod “may, at its option, re-enter the aforesaid premises, and the title thereto shall thereupon immediately revert to [the Synod].” Iona acquired the campus in December for $29 million. 

According to documents filed with the Westchester Supreme Court, Concordia New York owes the Lutheran Church Extension Fund $25 million.