The North Carolina legal professional basic’s workplace raised “severe considerations” this week relating to a monetary deal that might present a monetary lifeline to Saint Augustine’s College, sparking worries that the traditionally Black faculty received’t be capable of bolster its finances in time to avoid wasting its accreditation.
Saint Augustine’s struck a deal in November to companion with 50 Plus 1 Sports activities, an athletics improvement agency, to lease a majority of its land — a deal the college anticipated would herald $70 million.
The non-public college’s officers are hoping the deal will show it’s financially secure sufficient to satisfy necessities set by its accreditor, the Southern Affiliation of Faculties and Colleges Fee on Faculties. The college is assembly with SACSCOC in February to attraction the company’s current resolution to take away Saint Augustine’s from its membership — a transfer that might deal a devastating blow to the establishment.
However the legal professional basic’s workplace raised considerations that the deal is overly beneficiant to 50 Plus 1 Sports activities, and will put Saint Augustine’s nonprofit standing in danger. For example, the deal’s upfront lease cost — between $20 million and $70 million — is way too low for the college’s 103-acre property, which is appraised at over $198 million, the workplace mentioned Monday.
“That enormous of a niche raises crimson flags in regards to the defensibility of the deal,” Kunal Choski, director of the workplace’s client safety division, mentioned in a letter to the college obtained by native information shops.
The highway to this point
Saint Augustine’s has been preventing for years to maintain its accreditation. Final summer time, it efficiently contested SACSCOC’s 2023 resolution to terminate its accreditation. However the company voted once more to take away the college from its membership in December.
In its vote that month, SACSCOC cited Saint Augustine’s noncompliance with its requirements on finance, governance, and federal and state tasks.
Saint Augustine’s stays accredited whereas it appeals the choice, it mentioned in December.
Dropping accreditation could possibly be the nail within the coffin for the college. It will imply the college would now not be eligible for federal monetary support, which the overwhelming majority of its college students obtain.
As a nonprofit, the college wants approval from the state’s legal professional basic’s workplace to enter a leasing take care of 50 Plus 1 Sports activities. It urged its supporters to petition North Carolina Gov. Josh Stein and Legal professional Common Jeff Jackson to quick monitor the authorization.
Final week, Saint Augustine’s mentioned it had requested the workplace’s resolution by the tip of 2024. When that deadline handed, it mentioned approval from the legal professional basic’s workplace “should occur by January 24.”
The longer the college waits, it mentioned, the extra it dangers dropping its attraction.
“With out securing the wanted funding from the deal earlier than January 31, SAU dangers failing to display monetary sustainability for its upcoming attraction listening to with SACSCOC in late February,” the college mentioned Jan. 21.
The legal professional basic’s evaluate continues to be underway, however Choski indicated that the division is unlikely to approve the deal in its present type.
“To make sure that SAU’s belongings stay devoted to a charitable goal, the deal must be renegotiated to, amongst different issues, mirror the true worth of the property being transferred,” he mentioned. The agency “might both present SAU with a better upfront cost or the deal might contain a smaller proportion of SAU’s property for a similar cost.”
Choski mentioned the legal professional basic’s workplace desires the college to maintain working within the brief time period amid “monetary and time constraints.” However he additionally mentioned that the workplace has requested from the college further info — resembling monetary projections to justify the “obvious gulf in valuation” of the campus — that it had but to obtain.
A Saint Augustine’s spokesperson Wednesday forwarded a Monday assertion from the college however didn’t present additional remark.
Within the assertion, Saint Augustine’s thanked the legal professional basic’s workplace. “Nonetheless, we’re involved in regards to the course of that led to the current rejection of our proposed 50 Plus 1 Sports activities deal,” it mentioned.
Exterior interference
The college Monday raised considerations that the legal professional basic’s workplace had been inappropriately swayed by a 3rd celebration — Martin Eakes.
Eakes is the CEO of each the nonprofit Heart for Accountable Lending and the Self-Assist Credit score Union, a multi-state lender primarily based in North Carolina. Saint Augustine’s additionally alleged that Eakes has shut ties with state officers.
He, together with the SaveSAU coalition, raised considerations in opposition to the phrases of one other current monetary deal Saint Augustine’s made — a $7 million mortgage from the agency Gothic Ventures that carried a 26% rate of interest.
“Saint Augustine’s College was determined and the lender took benefit of them,” he advised Open Campus earlier this month.
Eakes argued that that rate of interest aimed to extract “an unreasonable quantity of curiosity that was not justified by the chance of the mortgage,” the publication reported.
Eakes closely criticized the agency and its management, and he advised one native outlet that Self-Assist would offer lending help, if wanted
However Saint Augustine’s contested that assertion, alleging that it had reached out to Self-Assist repeatedly within the first half of 2024 and its requests had gone unanswered. The credit score union’s “lack of willingness to help SAU” additional exacerbated its monetary woes, the college mentioned final week.
On Monday, the college expressed additional considerations about Eakes. It mentioned it suspects that the 50 Plus 1 Sports activities proposal “was shared with Mr. Eakes with out our consent earlier than we obtained a response” from the legal professional basic’s workplace. And the letter it will definitely obtained mirrored public feedback made by Eakes, Saint Augstine’s alleged.
“We suspect that the Legal professional Common’s Workplace used Mr. Eakes’ counsel and enter to subsequently affect their resolution,” the college mentioned Monday. “Such interference by Self-Assist raises important considerations about equity. It suggests their try to weaponize the NC Legal professional Common’s Workplace to impede the approval course of for the 50 Plus 1 Sports activities deal.”
Eakes mentioned in an emailed assertion Wednesday that Self-Assist carried out its personal evaluation of the proposal, but it surely didn’t share its findings with any workers on the legal professional basic’s workplace.
“We didn’t see nor know the outcomes of the AG evaluate previous to seeing information experiences and the discharge of the AG letter,” he mentioned in an e-mail Wednesday.
“As a substitute of making fiction about anybody who disagrees, let’s discover wise options,” Eakes mentioned. “The very fact stays the lease deal proposed may be very unfavorable to SAU’s continued monetary well being. The danger of dropping the whole campus below this proposal may be very excessive. Anyone who reads and opinions the proposal would attain the identical conclusion.”
Saint Augustine’s additionally alleged that it requested a gathering with the legal professional basic’s workplace. As a substitute, state officers met with Eakes. However the college mentioned it nonetheless needs to work with the workplace to get the deal accredited.
Pushback and criticism
Saint Augustine’s leaders have confronted pushback about how they’ve dealt with the college’s funds.
The SaveSAU Coalition shares the college’s aim — preserving Saint Augustine’s — however has been crucial of the establishment’s management.
In Could, the coalition sued to have the college’s board of trustees eliminated, alleging the group failed to satisfy their fiduciary duties. The lawsuit was in the end dismissed in November.
SaveSAU additionally partially blamed Saint Augustine’s board for SACSCOC’s resolution in December 2023 to withdraw Saint Augustine’s accreditation.
“Their resolution, partially, was primarily based on historic points with the Board of Trustees’ noncompliance in offering fiduciary oversight,” the coalition mentioned on its web site.
Saint Augustine’s vocally pushed again in opposition to SaveSAU’s criticisms and comparable ones from group leaders.
“This depiction is rooted in hypocrisy and smear techniques, which goal to undermine the Board’s real efforts to deal with important monetary challenges that the college has confronted,” the college mentioned in a Jan. 21 assertion.
The college additionally despatched out a timeline of institutional actions relating to its monetary stewardship, in an effort at “setting the file straight.” Entries included the $7 million mortgage from Gothic Ventures, the dismissal of SaveSAU’s lawsuit and an audit clearing the college board chair of economic misconduct allegations.
Nonetheless, the college’s timeline didn’t embrace certainly one of its extra drastic strikes to remain afloat. Simply previous to the newest accreditation resolution, Saint Augustine’s lower half of its workforce — 67 workers positions and 69 school positions — and ended a number of educational applications with low enrollment.