The North Carolina Attorney General will not approve a land-lease deal to help save the financially troubled Saint Augustine’s University.
In a letter written by Senior Deputy Attorney General Kunal Choksi to Saint Augustine’s University lawyer Theodore Edwards, Choksi requested more information before reconsidering a decision. Choksi wrote that the attorney general's office has "serious concerns" about the proposed deal.
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“First, to date, SAU has not provided sufficient documentation to support the proposal,” Choksi wrote in part. “Second, based on our review of the documents submitted thus far, we are concerned about SAU’s ability to continue to operate and fulfill its mission if this proposed lease agreement is finalized without substantive improvements.”
On Monday, WRAL News reached out to Saint Augustine’s University for reaction but did not hear back.
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.
As a nonprofit, the Saint Augustine’s University must follow certain protocols to set the deal in motion. State law requires a written notice to the North Carolina Attorney General’s Office before Saint Augustine’s can sell or lease all, or a majority, of its property.
Choksi’s letter raises several concerns about the deal, including the amount of school the money would get in cash compared to the value of the property. Choksi said the $70 million promised to Saint Augustine’s is nowhere near the $198 million its property is worth. The deal isn't dead.
"That large of a gap raises red flags about the defensibility of the deal," Choksi wrote. "Absent further information or justification from the parties, 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."
The attorney general’s office said it has asked multiple times for more information to help address its concerns, but the school hasn't supplied anything.
“Nothing has given us pause to suggest that the deal will not be finalized pending their approval,” according to a university statement provided earlier this month. “The AG’s Office has the lifeline of the university in its hands.”
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.
St. Augustine's sent WRAL News the following response:
Saint Augustine’s University (SAU) wishes to thank the North Carolina Attorney General’s Office for assisting the university in demonstrating financial sustainability. However, we are concerned about the process that led to the recent rejection of our proposed 50 Plus 1 Sports deal. We requested a meeting to address their concerns directly and collaboratively. Instead, the Attorney General’s Office met with Martin Eakes of Self-Help Credit Union, who once employed the former Attorney General-now Governor and currently employs one of the Governor’s closest relatives. Furthermore, our Board of Trustees previously rejected Self-Help’s proposal to SAU.
We are alarmed that the contents of the Attorney General’s letter to SAU mirror the comments in printed media spoken by Mr. Eakes from Self-Help Credit Union. Based on our correspondence with the Attorney General’s Office, our proposal was shared with Mr. Eakes without our consent before we received a response. Therefore, we suspect that the Attorney General’s Office used Mr. Eakes’ counsel and input to subsequently influence their decision. 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.
Despite these challenges, SAU remains committed to working collaboratively with the Attorney General’s Office. We believe transparency and open dialogue are essential in securing the funding for our university’s sustainability and growth. We encourage our community to stand together and demand accountability and fairness while navigating this critical juncture in the university’s history St. Augustine's 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.
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