The North Carolina legal professional common’s workplace raised “severe considerations” this week concerning a monetary deal that would present a monetary lifeline to Saint Augustine’s College, sparking worries that the traditionally Black faculty gained’t be capable of bolster its funds in time to save lots of 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 personal 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 latest choice to take away Saint Augustine’s from its membership — a transfer that would deal a devastating blow to the establishment.
However the legal professional common’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. As an example, the deal’s upfront lease cost — between $20 million and $70 million — is much too low for the college’s 103-acre property, which is appraised at over $198 million, the workplace mentioned Monday.
“That giant of a spot raises pink 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 street up to now
Saint Augustine’s has been preventing for years to maintain its accreditation. Final summer time, it efficiently contested SACSCOC’s 2023 choice 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 obligations.
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 could imply the college would not be eligible for federal monetary help, which the overwhelming majority of its college students obtain.
As a nonprofit, the college wants approval from the state’s legal professional common’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 Basic Jeff Jackson to quick monitor the authorization.
Final week, Saint Augustine’s mentioned it had requested the workplace’s choice by the top of 2024. When that deadline handed, it mentioned approval from the legal professional common’s workplace “should occur by January 24.”
The longer the college waits, it mentioned, the extra it dangers shedding its attraction.
“With out securing the wanted funding from the deal earlier than January 31, SAU dangers failing to reveal monetary sustainability for its upcoming attraction listening to with SACSCOC in late February,” the college mentioned Jan. 21.
The legal professional common’s evaluation 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 property stay devoted to a charitable objective, the deal ought to be renegotiated to, amongst different issues, replicate the true worth of the property being transferred,” he mentioned. The agency “may both present SAU with a higher upfront cost or the deal may contain a smaller proportion of SAU’s property for a similar cost.”
Choski mentioned the legal professional common’s workplace needs the college to maintain working within the quick time period amid “monetary and time constraints.” However he additionally mentioned that the workplace has requested from the college extra info — akin to 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 common’s workplace. “Nonetheless, we’re involved in regards to the course of that led to the latest rejection of our proposed 50 Plus 1 Sports activities deal,” it mentioned.
Outdoors interference
The college Monday raised considerations that the legal professional common’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 based mostly in North Carolina. Saint Augustine’s additionally alleged that Eakes has shut ties with state officers.
He, together with the SaveSAU coalition, raised considerations towards the phrases of one other latest 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 instructed 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 instructed 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 assist 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 acquired a response” from the legal professional common’s workplace. And the letter it will definitely acquired mirrored public feedback made by Eakes, Saint Augstine’s alleged.
“We suspect that the Legal professional Basic’s Workplace used Mr. Eakes’ counsel and enter to subsequently affect their choice,” the college mentioned Monday. “Such interference by Self-Assist raises important considerations about equity. It suggests their try and weaponize the NC Legal professional Basic’s Workplace to hinder 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, however it didn’t share its findings with any workers on the legal professional common’s workplace.
“We didn’t see nor know the outcomes of the AG evaluation previous to seeing information stories and the discharge of the AG letter,” he mentioned in an e mail Wednesday.
“As an alternative of making fiction about anybody who disagrees, let’s discover wise options,” Eakes mentioned. “The actual fact stays the lease deal proposed could be very unfavorable to SAU’s continued monetary well being. The chance of shedding the complete campus below this proposal could 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 common’s workplace. As an alternative, state officers met with Eakes. However the college mentioned it nonetheless needs to work with the workplace to get the deal authorized.
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 purpose — preserving Saint Augustine’s — however has been essential 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 finally dismissed in November.
SaveSAU additionally partially blamed Saint Augustine’s board for SACSCOC’s choice in December 2023 to withdraw Saint Augustine’s accreditation.
“Their choice, partly, was based mostly 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 towards SaveSAU’s criticisms and related ones from group leaders.
“This depiction is rooted in hypocrisy and smear ways, 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 concerning 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 monetary misconduct allegations.
Nonetheless, the college’s timeline didn’t embody considered one of its extra drastic strikes to remain afloat. Simply previous to the newest accreditation choice, Saint Augustine’s minimize half of its workforce — 67 workers positions and 69 college positions — and ended a number of tutorial applications with low enrollment.
