Federal Register / Vol. 62, No. 68 / Wednesday, April 9, 1997 / Notices 17207

withdraw the authority to issue waivers

if: goals specified are not met for two

consecutive years; or the State grants

waivers for non-waivable provisions or

for provisions of other legislation not

subject to waiver.

2. Duration and Coverage. Work-Flex

authority may be granted for up to five

years. States granted such authority may

approve waivers requested from all

service delivery areas or substate areas

or from selected areas.

3. Notification of the Granting of

Waivers. States will be required to

submit reports on a semi-annual basis

concerning the administration of the

waiver authority and on the

accomplishments under this authority.

After one year, annual reporting will be

required. States shall notify the

appropriate ETA Regional

Administrator of the granting of a

waiver(s) semi-annually. This

notification shall include the area for

which the waiver is granted, the

provision of legislation and/or

regulation waived and the duration of

the waiver.

4. Federal Assistance. States are

encouraged to regularly consult with the

ETA Regional Office regarding any

matters in which the discussion and

assistance in the Work-Flex

administration would be useful.

Because Work-Flex is an important

demonstration program with

implications for future job training and

employment service delivery, it is

important that Work-Flex be tested to

ensure that appropriate accountability

can be maintained. ETA Regional staff

will be responsible for providing

information on Work-Flex

administration and implementation.

States granted Work-Flex authority are

strongly urged to work closely—on an

ongoing basis—with Regional Office

staff so that both the federal and State

partners are fully informed on the status

and issues under Work-Flex. States may

be asked to participate with ETA staff in

designing and conducting the planned

evaluation of the effectiveness of WorkFlex.

Dated: April 2, 1997.

Raymond J. Uhalde,

Acting Assistant Secretary of Labor.

[FR Doc. 97–8976 Filed 4–8–97; 8:45 am]

BILLING CODE 4510–30–M

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

[Prohibited Transaction Exemption 97–20;

Exemption Application No. D–10227 thru D–

10232, et al.]

Grant of Individual Exemptions; Real

Estate Equity Trust No. 1 (the Trust), et

al.

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Grant of Individual Exemptions.

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, D.C. 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.

Real Estate Equity Trust No. 1 (the

Trust), et al. Located in Cincinnati, OH

[Prohibited Transaction Exemption 97–20;

Exemption Application Nos. D–10227—D–

10232]

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 of the Code, by reason

of section 4975(c)(1)(A) through (E) of

the Code, shall not apply to the

purchase of units in the Trust by certain

multiemployer pension plans (the

Plans) that will enable State Street

Global Advisors, Inc. (SSGA), the

independent fiduciary for the Plans

investing in the Trust, to make initial

and subsequent equity investments on

behalf of the Trust, in the Cincinnati

Development Group Limited

Partnership (the Partnership), which

may result in a benefit inuring to Fifth

Third Bank (Fifth Third), the trustee of

the Trust and a party in interest with

respect to the Plans.

This exemption is subject to the

following conditions:

(a) Each Plan investing in the Trust

has total assets that are in excess of $50

million.

(b) No Plan that purchases units in the

Trust that will permit the Partnership

investment has, immediately following

the acquisition of such units, more than

5 percent of its assets invested therein.

(c) The decision to purchase units in

the Trust that will allow SSGA to make

the initial and any subsequent equity

contributions to the Partnership is made

by a Plan fiduciary (the Second

Fiduciary) which is independent of

Fifth Third and its affiliates and which

is not SSGA.

(d) As independent fiduciary for the

Trust, SSGA determines whether—

(1) It is in the best interests of the

Trust and the Plans participating therein

to make the initial and subsequent

investments in the Partnership;

(2) It is appropriate for the Trust to

assign, transfer, pledge or otherwise

encumber its interest in the Partnership

provided the Trust obtains written

consent from Cincinnati Development

Group, LLC (CDG);

(3) It is appropriate for the Trust to

withdraw as a limited partner from the

Partnership or to withdraw its capital

from such Partnership provided the

Trust obtains the written consent of

CDG;
17208 Federal Register / Vol. 62, No. 68 / Wednesday, April 9, 1997 / Notices

(4) It is appropriate for the Trust to

consent to the sale by CDG of

substantially all of the assets of the

Partnership or the transfer by CDG of its

interest in the Partnership to a third

party;

(5) It is appropriate for the Trust to

contribute to the Partnership the

amount necessary to complete

construction of the Fountain Square

West Project and to require that CDG

release control of the Partnership to an

entity designated by the Trust, if CDG

fails to provide for construction cost

overruns;

(6) It is appropriate for the Trust to

elect to continue the Partnership by

appointing a successor general partner.

(7) An entity designated by the Trust

to serve as general partner is appropriate

upon the occurrence of (d)(5) or (d)(6).

(e) At the time the Partnership

investment is made, the terms of the

transaction are at least as favorable to

each Plan participating in the Trust as

those obtainable in an arm’s length

transaction with an unrelated party.

(f) Prior to investing in the

Partnership, Fifth Third provides SSGA

and the Second Fiduciary of each Plan

participating in the Trust with offering

materials disclosing all material facts

concerning the purpose, structure and

operation of the Partnership.

(g) Subsequent to investing in the

Partnership, the Trust and SSGA receive

the following ongoing information from

CDG:

(1) Within 120 days after the end of

the Partnership’s fiscal year, an

unaudited annual report containing—

(A) A balance sheet and statements of

income, Partners’ equity, changes in

financial position and cash flow for the

year then ended;

(B) A report of the activities of the

Partnership during the period covered

by the report; and

(C) An itemization of any fees or

payments made to CDG or any related

party or affiliate.

(2) Within 60 days of the end of each

year, an appraisal report, prepared by a

qualified, independent appraiser, of

each property held in the Partnership.

(3) Periodically (but not less

frequently than quarterly), operating

and development budgets of the

Partnership as well as unaudited

operations and financial reports.

(Information with respect to the

Partnership is disseminated by Fifth

Third to the Second Fiduciaries of Plans

investing in the Trust through annual

audited financial statements of the

Trust, prepared by independent,

certified public accountants and in

quarterly communications setting forth

Partnership financial data. SSGA will

also be given copies of this information.)

(h) As to each Plan participating in

the Trust, the total fees paid to Fifth

Third will constitute no more than

‘‘reasonable compensation’’ within the

meaning of section 408(b)(2) of the Act.

(i) Fifth Third maintains, for a period

of six years, the records necessary to

enable the persons described in

paragraph (j) to determine whether the

conditions of this exemption have been

met, except that—

(1) A prohibited transaction will not

be considered to have occurred if, due

to circumstances beyond the control of

Fifth Third and/or its affiliates, the

records are lost or destroyed prior to the

end of the six year period; and

(2) No party in interest other than

Fifth Third shall be subject to the civil

penalty that may be assessed under

section 502(i) of the Act, or to the taxes

imposed by section 4975 (a) and (b) of

the Code, if the records are not

maintained, or are not available for

examination as required below by

paragraph (j).

(j)(1) Except as provided in section

(i)(2) of this paragraph and

notwithstanding any provisions of

subsections (a)(2) and (b) of section 504

of the Act, the records referred to in

paragraph (i) are unconditionally

available at their customary location

during normal business hours by:

(A) Any duly authorized employee or

representative of the Department or the

Internal Revenue Service;

(B) Any fiduciary of a participating

Plan or any duly authorized

representative of such fiduciary;

(C) Any contributing employer to any

participating Plan or any duly

authorized employee representative of

such employer; and

(D) Any participant or beneficiary of

any participating Plan, or any duly

authorized representative of such

participant or beneficiary.

(j)(2) None of the persons described

above in paragraphs (j)(1)(B)–(j)(1)(D) of

this paragraph (j) are authorized to

examine the trade secrets of Fifth Third

or commercial or financial information

which is privileged or confidential.

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

December 17, 1996 at 61 FR 66314.

Written Comments

The Department received one written

comment with respect to the proposed

exemption and no requests for a public

hearing. The written comment was

submitted by the applicant, Fifth Third,

and is intended to clarify the notice of

proposed exemption in the following

areas:

(1) Role of the Independent Fiduciary.

Fifth Third notes that SSGA serves as

the independent fiduciary with respect

to investments by the Trust in the

Partnership. Because the Trust is a

limited partner in the Partnership and

many actions that may be undertaken by

the Trust would require the consent of

CDG, the general partner of the

Partnership, Fifth Third represents that

the opportunity for the Trust to act

unilaterally would be extremely rare. In

this regard, Fifth Third explains that the

operative and conditional language of

the proposal state that SSGA will make

the initial and any subsequent

investments in the Trust as well as

monitor the Trust on behalf of the

investing Plans. Although Fifth Third

represents that this language is not

inconsistent with the provisions of the

proposal, it asserts that it will remain

the Trustee of the Trust and that it will

not be replaced by SSGA.

In response, the Department notes

that SSGA has been appointed to serve

as the independent fiduciary for the

Trust with respect to the initial, and

possibly, future equity investments

made by the Trust to the Partnership. In

undertaking these duties, we further

note that SSGA is responsible for

monitoring and protecting the rights of

the Trust and the Plans investing

therein to the extent that any actions by

Fifth Third may impact adversely on the

Partnership. Because actions that may

be taken by Fifth Third could result in

a conflict of interest by reason of the

Trust’s investment, through the

Partnership, in the Fountain Square

West Project, we would expect that

SSGA will have a continuing role in

enforcing the rights of the Plans

investing in the Trust.

(2) Assets Required for Investment.

Footnote 5 of the proposed exemption

states, in relevant part, that if ‘‘less

than’’ $6.5 million in units are

subscribed for by the investing Plans,

the Trust will combine those proceeds

with its existing liquid assets to make

the $7 million investment in the

Partnership. Fifth Third wishes to

modify the language in the footnote by

clarifying that if ‘‘at least’’ $6.5 million

in units are subscribed for by the Plans,

the Trust will combine those proceeds

with existing assets to make the

investment in the Partnership.

(3) Rents under the Lease with the

City of Cincinnati (the City Lease). Fifth

Third notes that a portion of Footnote 7

of the proposal indicates that no gross

rents in excess of $3 million for any year

are projected during the initial 10 years
Federal Register / Vol. 62, No. 68 / Wednesday, April 9, 1997 / Notices 17209

of the Fountain Square West Project.

Fifth Third wishes to emphasize that no

gross rents in excess of $3 million are

actually projected for any year during

the initial term of the Fountain Square

West Project. Fifth Third also points out

that the issue of gross rents in excess of

$3 million is relevant because such

rents would result in additional

payments being made to the City of

Cincinnati under the City Lease.

Thus, after giving full consideration to

the entire record, including the written

comment, the Department has made the

aforementioned changes to the proposed

exemption. In addition, the Department

has decided to grant the exemption

subject to the clarifications described

above. The comment letter has been

included as part of the public record of

the exemption application. The

complete application file, as well as all

supplemental submissions received by

the Department, is made available for

public inspection in the Public

Documents Room of the Pension and

Welfare Benefits Administration, Room

N–5638, U.S. Department of Labor, 200

Constitution Avenue, NW, Washington,

DC 20210.

FOR FURTHER INFORMATION CONTACT: Ms.

Jan D. Broady of the Department,

telephone (202) 219–8881. (This is not

a toll-free number.)

Orders Distributing Co., Inc. Profit

Sharing Plan and 401(k) Retirement

Savings Plan (the Plan) Located in

Greenville, South Carolina

[Prohibited Transaction Exemption 97–21;

Exemption Application No. D–10341]

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 of the Code, by reason

of section 4975(c)(1)(A) through (E) of

the Code, shall not apply to the past sale

by the Plan of certain units of limited

partnership interests (the Units) to

Orders Distributing Co., Inc. (the

Employer), a party in interest with

respect to the Plan, provided that the

following conditions are satisfied: (1)

The terms of the sale were at least as

favorable to the Plan as those the Plan

could have obtained in a comparable

arm’s length transaction with an

unrelated party; (2) the sale was a onetime transaction for cash; (3) the Plan

paid no commissions nor other

expenses relating to the sale; (4) the

Plan received an amount no less than

the fair market value of the Units as of

the date of the sale, as determined by an

independent appraisal; and (5) within

30 days of publication in the Federal

Register of the notice of the grant of this

exemption, the Employer makes an

additional cash contribution to the Plan

to make up for opportunity costs

attributable to the Units.

EFFECTIVE DATE: The exemption is

effective as of January 1, 1995.

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

January 31, 1997 at 62 FR 4802.

FOR FURTHER INFORMATION CONTACT: Ms.

Karin Weng 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 exemptions

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 are true and complete and

accurately describe all material terms of

the transaction which is the subject of

the exemption. In the case of continuing

exemption transactions, if any of the

material facts or representations

described in the application change

after the exemption is granted, the

exemption will cease to apply as of the

date of such change. In the event of any

such change, application for a new

exemption may be made to the

Department.

Signed at Washington, D.C., this 3rd day of

April, 1997.

Ivan Strasfeld,

Director of Exemption Determinations,

Pension and Welfare Benefits Administration,

Department of Labor

[FR Doc. 97–8972 Filed 4–8–97; 8:45 am]

BILLING CODE 4510–29–P

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

[Application No. D–10345, et al.]

Proposed Exemptions; Washington

National Retirement Plan et al.

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Notice of proposed exemptions.

SUMMARY: This document contains

notices of pendency before the

Department of Labor (the Department) of

proposed exemptions from certain of the

prohibited transaction restriction of the

Employee Retirement Income Security

Act of 1974 (the Act) and/or the Internal

Revenue Code of 1986 (the Code).

Written Comments and Hearing

Requests

Unless otherwise stated in the Notice

of Proposed Exemption, all interested

persons are invited to submit written

comments, and with respect to

exemptions involving the fiduciary

prohibitions of section 406(b) of the Act,

requests for hearing within 45 days from

the date of publication of this Federal

Register Notice. Comments and request

for a hearing should state: (1) The name,

address, and telephone number of the

person making the comment or request,

and (2) number of the person making

the comment or request, and (3) the

nature of the person’s interest in the

exemption and the manner in which the

person would be adversely affected by

the exemption. A request for a hearing

must also state the issues to be

addressed and include a general

description of the evidence to be

presented at the hearing. A request for

a hearing must also state the issues to

be addressed and include a general

description of the evidence to be

presented at the hearing.

ADDRESSES: All written comments and

request for a hearing (at least three

copies) should be sent to the Pension

and Welfare Benefits Administration,

Office of Exemption Determinations,

Room N–5649, U.S. Department of

Labor, 200 Constitution Avenue, NW.,

Washington, DC 20210. Attention:

Application No. stated in each Notice of