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The North Carolina attorney general’s office raised “serious concerns” this week regarding a financial deal that could provide a financial lifeline to Saint Augustine’s University, sparking worries that the historically Black college won’t be able to bolster its budget in time to save its accreditation.
Saint Augustine’s struck a deal in November to partner with 50 Plus 1 Sports, an athletics development firm,to lease a majority of its land —a deal the university anticipated would bring in $70 million.
The private university’s officials are hoping the deal will prove it is financially stable enough to meet requirements set by its accreditor, the Southern Association of Colleges and Schools Commission on Colleges. The university is meeting with SACSCOC in February to appeal the agency’s recent decision to remove Saint Augustine’s from its membership — a move that could deal a devastating blow to the institution.
But the attorney general’s office raised concerns that the deal is overly generous to 50 Plus 1 Sports, and could put Saint Augustine’s nonprofit status at risk.For instance, the deal’s upfront lease payment — between $20 million and $70 million — is far too low for the university’s 103-acre property, which is appraised at over $198 million, the office said Monday.
“That large of a gap raises red flags about the defensibility of the deal,”Kunal Choski, director of the office’s consumer protection division, said in a letter to the university obtained by local news outlets.
The road so far
Saint Augustine’s has been fighting for years to keep its accreditation. Last summer, it successfully contested SACSCOC’s 2023 decision to terminate its accreditation. But the agency voted again to remove the university from its membership in December.
In its vote that month, SACSCOC cited Saint Augustine’s noncompliance with its standards on finance, governance, and federal and state responsibilities.
Saint Augustine’s remains accredited while it appeals the decision, it said in December.
Losing accreditation could be the nail in the coffin for the university. It would mean the university would no longer be eligible for federal financial aid, which the vast majority of its students receive.
As a nonprofit, the university needs approval from the state’s attorney general’s office to enter a leasing deal with 50 Plus 1 Sports. It urged its supporters to petition North Carolina Gov. Josh Stein and Attorney General Jeff Jackson to fast track the authorization.
Last week, Saint Augustine’s said it had requested the office’s decision by the end of 2024. When that deadline passed, it said approval from the attorney general’s office “must happen by January 24.”
The longer the university waits, it said, the more it risks losing its appeal.
“Without securing the needed funding from the deal before January 31, SAU risks failing to demonstrate financial sustainability for its upcoming appeal hearing with SACSCOC in late February,” the university said Jan. 21.
The attorney general’s review is still underway, but Choski indicated that the department is unlikely to approve the deal in its current form.
“To ensure that SAU’s assets remain dedicated to a charitable purpose, the deal should be renegotiated to, among other things, reflect the true value of the property being transferred,” he said. The firm “could either provide SAU with a greater upfront payment or the deal could involve a smaller percentage of SAU’s property for the same payment.”
Choski said the attorney general’s office wants the university to keep operating in the short term amid “financial and time constraints.” But he also said that the office has requested from the university additional information — such as financial projections to justify the “apparent gulf in valuation” of the campus — that it had yet to receive.
A Saint Augustine’s spokesperson Wednesday forwarded a Monday statement from the university but did not provide further comment.
In the statement, Saint Augustine’s thanked the attorney general’s office. “However, we are concerned about the process that led to the recent rejection of our proposed 50 Plus 1 Sports deal,” it said.
Outside interference
The university Monday raised concerns that the attorney general’s office had been inappropriately swayed by a third party — Martin Eakes.
Eakes is the CEO of both the nonprofit Center for Responsible Lending and the Self-Help Credit Union,a multi-state lender based in North Carolina.Saint Augustine’s also alleged that Eakes has close ties with state officials.
He, along with the SaveSAU coalition, raised concerns against the terms of another recent financial deal Saint Augustine’s made — a $7 million loan from the firm Gothic Ventures that carried a 26% interest rate.
“Saint Augustine’s University was desperate and the lender took advantage of them,” he told Open Campus earlier this month.
Eakes argued that that interest rate aimed to extract “an unreasonable amount of interest that was not justified by the risk of the loan,” the publication reported.
Eakes heavily criticized the firm and its leadership, and he told one local outlet that Self-Help would provide lending assistance, if needed
But Saint Augustine’s contested that statement, alleging that it had reached out to Self-Help repeatedly in the first half of 2024 and its requests had gone unanswered. The credit union’s “lack of willingness to support SAU” further exacerbated its financial woes, the university said last week.
On Monday, the university expressed further concerns about Eakes. It said it suspects that the 50 Plus 1 Sports proposal “was shared with Mr. Eakes without our consent before we received a response” from the attorney general’s office. And the letter it eventually received mirrored public comments made by Eakes, Saint Augstine’s alleged.
“We suspect that the Attorney General’s Office used Mr. Eakes’ counsel and input to subsequently influence their decision,” the university said Monday. “Such interference by Self-Help raises significant concerns about fairness. It suggests their attempt to weaponize the NC Attorney General’s Office to obstruct the approval process for the 50 Plus 1 Sports deal.”
Eakes said in an emailed statement Wednesday that Self-Help conducted its own analysis of the proposal, but it did not share its findings with any staff at the attorney general’s office.
“We did not see nor know the results of the AG review prior to seeing news reports and the release of the AG letter,” he said in an email Wednesday.
“Instead of creating fiction about anyone who disagrees, let’s find sensible solutions,” Eakes said. “The fact remains the lease deal proposed is very unfavorable to SAU’s continued financial health. The risk of losing the entire campus under this proposal is very high. Anybody who reads and reviews the proposal would reach the same conclusion.”
Saint Augustine’s also alleged that it requested a meeting with the attorney general’s office. Instead, state officials met with Eakes. But the university said it still wishes to work with the office to get the deal approved.
Pushback and criticism
Saint Augustine’s leaders have faced pushback about how they’ve handled the university’s finances.
The SaveSAU Coalition shares the university’s goal — preserving Saint Augustine’s — but has been critical of the institution’s leadership.
In May, the coalition sued to have the university’s board of trustees removed, alleging the group failed to meet their fiduciary duties.The lawsuit was ultimately dismissed in November.
SaveSAU also partially blamed Saint Augustine’s board for SACSCOC’s decision in December 2023 to withdraw Saint Augustine’s accreditation.
“Their decision, in part, was based on historic issues with the Board of Trustees’ noncompliance in providing fiduciary oversight,” the coalition said on its website.
Saint Augustine’s vocally pushed back against SaveSAU’s criticisms and similar ones from community leaders.
“This depiction is rooted in hypocrisy and smear tactics, which aim to undermine the Board’s genuine efforts to address significant financial challenges that the university has faced,” the university said in a Jan. 21 statement.
The university also sent out a timeline of institutional actions regarding its financial stewardship, in an effort at “setting the record straight.” Entries included the $7 million loan from Gothic Ventures, the dismissal of SaveSAU’s lawsuit and an audit clearing the university board chair of financial misconduct allegations.
However, the university’s timeline did not include one of its more drastic moves to stay afloat. Just prior to the most recent accreditation decision, Saint Augustine’s cut half of its workforce — 67 staff positions and 69 faculty positions — and ended several academic programs with low enrollment.
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