[Federal Register Volume 62, Number 179 (Tuesday, September 16, 1997)]
[Notices]
[Pages 48672-48673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24462]



[[Page 48672]]

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 97-49; Exemption Application No. D-
10310, et al.]


Grant of Individual Exemptions; Bricklayers and Allied Crafts, 
Local No. 74 of DuPage County

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
    Notices were published in the Federal Register of the pendency 
before the Department of proposals to grant such exemptions. The 
notices set forth a summary of facts and representations contained in 
each application for exemption and referred interested persons to the 
respective applications for a complete statement of the facts and 
representations. The applications have been available for public 
inspection at the Department in Washington, DC. The notices also 
invited interested persons to submit comments on the requested 
exemptions to the Department. In addition the notices stated that any 
interested person might submit a written request that a public hearing 
be held (where appropriate). The applicants have represented that they 
have complied with the requirements of the notification to interested 
persons. No public comments and no requests for a hearing, unless 
otherwise stated, were received by the Department.
    The notices of proposed exemption were issued and the exemptions 
are being granted solely by the Department because, effective December 
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 
47713, October 17, 1978) transferred the authority of the Secretary of 
the Treasury to issue exemptions of the type proposed to the Secretary 
of Labor.

Statutory Findings

    In accordance with section 408(a) of the Act and/or section 
4975(c)(2) of the Code and the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon 
the entire record, the Department makes the following findings:
    (a) The exemptions are administratively feasible;
    (b) They are in the interests of the plans and their participants 
and beneficiaries; and
    (c) They are protective of the rights of the participants and 
beneficiaries of the plans.

Pension Fund of the Bricklayers and Allied Crafts, Local No. 74 of 
DuPage County, Illinois, a/k/a Masons' and Plasterers', Local No. 74 of 
DuPage County, Illinois (the Pension Plan) and Bricklayers and Allied 
Craftsmen Local No. 74 Apprenticeship, Education and Training Trust 
Fund (the Apprenticeship Plan; together, the Plans), Located in 
Westmont, Illinois

[Prohibited Transaction Exemption 97-49; Exemption Application Nos. D-
10310 and L-10311]

Exemption

    The restrictions of section 406(b)(2) of the Act shall not apply to 
the sale of certain real property (the Property) by the Apprenticeship 
Plan to the Pension Plan, provided the following conditions are 
satisfied: (1) The sale is a one-time transaction for cash; (2) no 
commissions or other expenses are paid by the Plans in connection with 
the sale; (3) the purchase price for the Property represents its fair 
market value as determined by a qualified, independent appraiser; and 
(4) the Pension Plan's independent fiduciary and the Apprenticeship 
Plan's trustees have reviewed the transaction and have determined that 
the transaction is appropriate for each of the Plans and in the best 
interest of the Plans' participants and beneficiaries.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on July 21, 1997 at 62 FR 
39027.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

McLane Company, Inc. Profit Sharing Plan and Trust (the Plan), Located 
in Temple, Texas

[Prohibited Transaction Exemption 97-50; Exemption Application No. D-
10340]

Exemption

    The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 
(a) and (b) of the Code, by reason of section 4975(c)(1) (A) through 
(E) of the Code, shall not apply to the past sale (the Sale) by the 
Plan of two parcels of unimproved real property located in Temple, 
Texas and Goodyear, Arizona (the Properties) to McLane Company, Inc. 
(McLane), the Plan sponsor and a party in interest with respect to the 
Plan, provided that the following conditions were satisfied: (a) The 
Sale was a one time transaction for a lump sum cash payment; (b) the 
purchase prices were the fair market values of the Properties as of the 
date of the Sale; (c) the Properties have been appraised by qualified 
independent real estate appraisers; (d) a qualified, independent 
fiduciary determined that the Sale was in the best interests of the 
Plan; and (e) the Plan paid no commissions or other expenses relating 
to the Sale.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on May 20, 1997 at 62 FR 
27625.

EFFECTIVE DATE: The effective date of this exemption is April 21, 1993.

Written Comments

    The Department received no requests for a public hearing on the 
proposed exemption. The Department received one written comment which 
was submitted by Sarofim Realty Advisors (the Applicant). The 
Applicant's comment, and the Department's response thereto, is 
summarized below.
    First, the Applicant requests that the words ``the IMA'' should be 
inserted in the first sentence of Paragraph 7 of the Summary of Facts 
and Representations (SFR) at page 27627 in lieu of the phrase 
``Investment Management Agreement'' (as such words are set forth in 
quotations). The Department concurs.
    The third paragraph in Paragraph 9 of the SFR at page 27628 states:

    McLane also represents that, if McLane had treated the excess of 
the purchase price for the properties over their fair market values 
as a Plan contribution in 1993, the resulting allocations would not 
have violated the limitations of Internal Revenue Code section 415.

    The Applicant requests that the paragraph be deleted in its 
entirety and replaced by a new paragraph that provides as follows:

    The Applicant represents that McLane's motives for consummating 
the Sale were not relevant to the process employed by the Applicant 
in evaluating whether or not, in the professional opinion of the 
Applicant, it would be prudent and in the best interest of Plan 
participants for the Applicant to direct the Trustee to consummate 
the Sale. The Applicant further represents that in connection with 
its negotiations with McLane, the Applicant sought and obtained for 
the Plan what the Applicant determined was the highest possible 
sales price for the

[[Page 48673]]

subject Properties. Such price, coupled with the Applicant's 
determination that continued holding of the Properties would likely 
result in further lost opportunities for the Plan to provide 
enhanced benefits from alternative investments, resulted in the 
Applicant's decision to direct the Trustee to consummate the Sale.

    Although the Department has no objection to the new paragraph 
suggested by the Applicant, the Department continues to believe that 
the original language of the third paragraph in Paragraph 9 of the SFR 
is relevant to the issues addressed in the proposed exemption.
    Finally, the Applicant requests that the Department modify the 
first sentence in Paragraph 10 of the SFR at page 27628. The Department 
does not object to this requested revision and amends the sentence to 
provide as follows:

    In summary, the Applicant represents that it now understands 
that the Department is of the view that the conditions of PTE 84-14 
may not have been satisfied with respect to the Sale.

    The Department has considered the entire record, including the 
comments submitted by the Applicant, and has determined to grant the 
exemption as amended in response to the Applicant's comments.

FOR FURTHER INFORMATION CONTACT: Wendy McColough of the Department, 
telephone (202) 219-8971. (This is not a toll-free number.)

H. Weiss & Company, Incorporated Defined Benefit Pension Plan (The 
Plan), Located in New York, New York

[Prohibited Transaction Exemption 97-51; Application No. D-10402]

Exemption

    The restrictions of sections 406(a), 406(b)(1), and 406(b)(2) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of 
the Code shall not apply to the sale by the Plan of a certain 
condominium unit (the Property) located in New York, New York, to Hanna 
Weiss, a party in interest with respect to the Plan, provided that the 
following conditions are satisfied:
    (A) All terms of the transaction are at least as favorable to the 
Plan as those which the Plan could obtain in an arm's-length 
transaction with an unrelated party
    (B) The sale is a one-time transaction for cash
    (C) The Plan pays no commissions nor other expenses relating to the 
sale
    (D) The purchase price is the greater of: (1) The fair market value 
of the Property as determined by a qualified, independent appraiser, or 
(2) the original acquisition price *;
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    * The original acquisition cost is determined as follows: 
(original purchase price + aggregate real estate taxes + aggregate 
condominium association fees)--aggregate rental income = original 
acquisition cost.
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    (E) Before the transaction is consummated, the Plan has received 
rental payments of no less than the Property's fair market rental value 
for each month of the Plan's ownership of the Property during which it 
was occupied by Hanna Weiss, a party in interest with respect to the 
Plan; and
    (F) Within 60 days of the publication in the Federal Register of 
this Notice, Weiss makes final payment to the Internal Revenue Service 
of any remaining unpaid excise taxes which are applicable under section 
4975(a) of the Code by reason of the Plan's rental of the Property to a 
party in interest.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice of Proposed Exemption published on July 21, 1997 at 62 FR 
39028.

FOR FURTHER INFORMATION CONTACT: Janet L. Schmidt of the Department, 
telephone (202) 219-8883 (This is not a toll-free number.)

Smart Chevrolet Co. Employees' Profit Sharing Retirement Plan (the 
Plan), Located in Pine Bluff, Arkansas

[Prohibited Transaction Exemption 97-52; Exemption Application No. D-
10445]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of sections 4975(c)(1) (A) through (E) of the Code 
shall not apply to: (1) The secured loans (the Loans) by the Plan to 
Motors Finance Company (Motors), a party in interest with respect to 
the Plan, and (2) the guaranty of such Loans (the Guaranty) by the 
individual partners of Motors; provided that the following conditions 
are met: (a) The terms and conditions of the Loans are at least as 
favorable as those which the Plan could have received in similar 
transactions with an unrelated third party; (b) an independent 
fiduciary negotiates, reviews, approves, and monitors the Loans and the 
Guaranty under the terms and conditions, as set forth in paragraph # 6 
of the notice of proposed exemption; and (c) the balance of all Loans 
will at no time exceed 15% of the assets of the Plan.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on July 11, 1997 at 62 FR 
37307.

Temporary Nature of Exemption

    The exemption is temporary and will expire five (5) years after the 
date of the grant. However, the exemption will extend until the 
maturity of any of the 90 day Loans made within the 5 year period.

FOR FURTHER INFORMATION CONTACT: Mr. Gary H. Lefkowitz of the 
Department, telephone (202) 219-8881. (This is not a toll free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemption does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries
    (2) These exemptions are supplemental to and not in derogation of, 
any other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of these exemptions is subject to the express 
condition that the material facts and representations contained in each 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 10th day of September, 1997.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 97-24462 Filed 9-15-97; 8:45 am]
BILLING CODE 4510-29-P