Saint Augustine’s University land-lease deal in jeopardy, what happens next

The clock is ticking. Next month, Saint Augustine’s University must be able to prove to its accrediting board that it is in a better position financially. However, it hasn’t been able to fully execute a deal meant to do that.

“If we don't get this approved by the end of the week, the future of the university is in jeopardy,” said Demarcus Williams, the university's spokesperson.

WRAL News first discovered a $70-million land-lease deal in November in the school’s 2024 financial audit. In the agreement, 50 Plus 1 Sports was expected to pay Saint Augustine's University $60 million by the end of 2024 and then another $10 million by June 2025. The deal is designed to eliminate its debt and secure operating funds.

However, as a nonprofit, the university must follow certain protocols to actually set the deal in motion. State law requires a written notice to the Attorney General’s Office before St. Aug's can sell or lease all, or a majority, of its property.

According to the university, it has sought approval from the Attorney General’s Office since December when Josh Stein was still in that role before becoming governor. Jeff Jackson is now serving as the state’s attorney general.

On Wednesday, a spokesperson with the Attorney General’s Office said they’re still reviewing the deal. The lack of response prompted the university to request the public’s help to put pressure on the office to do so by Jan. 25.

In an email, a spokesperson for the Attorney General’s Office said, “Our office is doing a thorough review to make sure that this deal complies with the University’s charitable purpose.”

David Heinen is the vice president for public policy and advocacy within the North Carolina Center for Nonprofits. He called the AG's review "standard."

"The Attorney General's going to look at a transaction [to] make sure there's not any type of improper benefit," he explained.

University leadership is still “optimistic” that Jackson’s office will finalize the approval process.

“Nothing has given us pause to suggest that the deal will not be finalized pending their approval,” according to a university statement. “The AG’s Office has the lifeline of the university in its hands.”

What this means for St. Augustine University’s accreditation

After the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) Board voted to remove the university from its membership, university leadership pointed to the deal as a Hail Mary to fully regain accreditation.

Currently, the school is on probation as it tries to prove leadership and financial stability and longevity.  

Its next hearing is scheduled in February. Ahead of that, the university said it’s trying to “set the record straight” about public questions about its financial decisions and leadership ethics.

“The urgency to set the record straight is paramount considering the ongoing smear campaigns that threaten our success,” reads an email to WRAL from the university.

What is St. Aug's deal with 50 Plus 1 Sports?

Saint Augustine’s University plans to lease its property to 50 Plus 1 Sports for 99 years. 50 Plus 1 will sublease the majority of the academic campus property (approximately 70%) back to Saint Augustine’s for $1 per year.

The university said there are plans for a mixed-use development, comprising of multifamily housing, condominiums, retail spaces and more. Saint Augustine’s says it will retain prohibitive covenants regarding the use of the property. It's not clear if those developments will happen on the main campus or off-campus property owned by the university. 

In a December interview with WRAL News, interim president Marcus Burgess said the university would work alongside the firm to create a master plan for its facilities and property. Burgess said the master plan is in the planning phases.

"Hopefully, with a master plan, that we would build and work alongside with 50-Plus-1, we would determine what's the best use of that space," Burgess said previously. "It may be rehabilitation. It may be just to complete, be completely torn down, but we will make sure that the Master Plan dictates that, versus one or two people having decision making on that."

Also, Burgess said the 50 Plus 1 deal will help eliminate “almost all” of the university’s debt, including a $7 million loan with high interest.

Saint Augustine’s said the $70 million is structured in two components: A $60 million initial payment upon execution of the agreement, which the university says will "retire" all of its existing debts. It includes lines from the IRS and the Department of Education. It also includes $10 million for operating revenue until June 30, 2025.

The second $10 million payment is due 60 days after the initial payment.

Revenue generated from the proposed development will be split:

· For the first 10 years: 50 Plus 1 keeps 65% of the revenue and Saint Augustine’s keeps 35% of the revenue

· From year 10 and onwards: 50 Plus 1 keeps 60% of the revenue and Saint Augustine’s keeps 40% of the revenue

“We believe in the mission and vision of Saint Augustine’s University and are committed to working collaboratively to ensure its success,” said Monti Valrie, Managing Partner of 50 Plus 1 Sports, in a news release. “The approval of this deal is essential to sustain the university and enrich its community.”

WRAL called Valrie multiple times and left a voicemail. He did not return our calls.

Saint Augustine’s said the 50 Plus 1 Sports deal is not just a significant initiative but a crucial one that will enable it to bolster its financial infrastructure while continuing to serve the university’s diverse student population. Its approval is paramount to SAU’s financial stability and long-term sustainability.