Proposed Exemption for Certain Prohibited Transaction Restrictions Involving the Electrical Insurance Trustees Insurance Fund and the Electrical Joint Apprenticeship and Training Trust (the Plans or the Applicants) Located in Alsip, IL, 15258-15265 [2021-05843]
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Federal Register / Vol. 86, No. 53 / Monday, March 22, 2021 / Notices
permitted, by . . . the jurisdiction in
which he practices . . . , to distribute,
dispense, . . . [or] administer . . . a
controlled substance in the course of
professional practice.’’ 21 U.S.C.
802(21). Second, in setting the
requirements for obtaining a
practitioner’s registration, Congress
directed that ‘‘[t]he Attorney General
shall register practitioners . . . if the
applicant is authorized to dispense . . .
controlled substances under the laws of
the State in which he practices.’’ 21
U.S.C. 823(f). Because Congress has
clearly mandated that a practitioner
possess state authority in order to be
deemed a practitioner under the CSA,
the DEA has held repeatedly that
revocation of a practitioner’s registration
is the appropriate sanction whenever he
is no longer authorized to dispense
controlled substances under the laws of
the state in which he practices. See, e.g.,
James L. Hooper, 76 FR at 71,371–72;
Sheran Arden Yeates, M.D., 71 FR
39,130, 39,131 (2006); Dominick A.
Ricci, M.D., 58 FR 51,104, 51,105 (1993);
Bobby Watts, M.D., 53 FR 11,919, 11,920
(1988); Frederick Marsh Blanton, 43 FR
at 27,617.
According to Mississippi statute,
‘‘except when dispensed directly by a
practitioner, other than a pharmacy, to
an ultimate user, no controlled
substance in Schedule II . . . may be
dispensed without the written valid
prescription of a practitioner,’’ and
‘‘except when dispensed directly by a
practitioner, other than a pharmacy, to
an ultimate user, a controlled substance
included in Schedule III or IV . . . shall
not be dispensed without a written or
oral valid prescription of a
practitioner.’’ Miss. Code Ann. § 41–29–
137(a)(1) and (b) (West 2020). Further,
‘‘a practitioner’’ is defined as ‘‘a
physician, dentist, veterinarian,
scientific investigator, optometrist . . .
or other person licensed, registered or
otherwise permitted to distribute,
dispense, conduct research with respect
to or to administer a controlled
substance in the course of professional
practice or research in this state.’’ Miss.
Code Ann. § 41–29–105(y)(1) (West
2020). Mississippi regulations define a
‘‘physician’’ to be ‘‘any person licensed
to practice medicine, osteopathic
medicine or podiatric medicine in the
state of Mississippi.’’ 30–2640 Miss.
Code R. § 1.2(C). The regulations further
state that ‘‘‘prescriptive authority’
means the legal authority of a
professional licensed to practice in the
state of Mississippi who prescribes
controlled substances and is registered
with the U.S. Drug Enforcement
Administration in compliance with
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Title 21 CFR, Part 1301 Food and
Drugs.’’ 30–2640 Miss. Code R. § 1.2(F).
Here, the undisputed evidence in the
record is that Respondent currently
lacks authority to practice medicine in
Mississippi. As already discussed, a
physician must be licensed to practice
medicine in order to have prescriptive
authority for a controlled substance in
Mississippi. Thus, because Respondent
lacks authority to practice medicine in
Mississippi and, therefore, is not
authorized to prescribe controlled
substances in Mississippi, Respondent
is not eligible to receive a DEA
registration. Accordingly, I will order
that Respondent’s application for a DEA
registration be denied.
Order
Pursuant to 28 CFR 0.100(b) and the
authority vested in me by 21 U.S.C.
823(f), I hereby order that the pending
application for a Certificate of
Registration, Control Number
H17068500C, submitted by Lawrence E.
Stewart, M.D., is denied, as well as any
other pending application of Lawrence
E. Stewart for additional registration in
Mississippi. This Order is effective
April 21, 2021.
D. Christopher Evans,
Acting Administrator.
[FR Doc. 2021–05845 Filed 3–19–21; 8:45 am]
Division, and should refer to United
States of America and State of Texas v.
San Antonio Water System, D.J. Ref. No.
90–5–1–1–09215. All comments must be
submitted no later than thirty (30) days
after the publication date of this notice.
Comments may be submitted either by
email or by mail:
To submit
comments:
Send them to:
By email .......
pubcomment-ees.enrd@
usdoj.gov.
Assistant Attorney General,
U.S. DOJ—ENRD, P.O.
Box 7611, Washington, DC
20044–7611.
By mail .........
During the public comment period,
the proposed Consent Decree may be
examined and downloaded at this
Justice Department website: https://
www.justice.gov/enrd/consent-decrees.
We will provide a paper copy of the
proposed Consent Decree upon written
request and payment of reproduction
costs. Please mail your request and
payment to: Consent Decree Library,
U.S. DOJ—ENRD, P.O. Box 7611,
Washington, DC 20044–7611.
Please enclose a check or money order
for $2.75 (25 cents per page
reproduction cost) payable to the United
States Treasury.
Kenneth Long,
Acting Assistant Section Chief,
Environmental Enforcement Section,
Environment and Natural Resources Division.
BILLING CODE 4410–09–P
DEPARTMENT OF JUSTICE
Notice of Lodging of Proposed
Consent Decree Under the Clean Water
Act
[FR Doc. 2021–05824 Filed 3–19–21; 8:45 am]
On March 11, 2021, the Department of
Justice lodged a proposed Modified
Consent Decree with the United States
District Court for the Western District of
Texas in the lawsuit entitled United
States of America and State of Texas v.
San Antonio Water System Civil Action
No. 5:13–cv–00666.
The original consent decree requires
the San Antonio Water System (SAWS)
to implement remedial measures,
including construction project, to
alleviate capacity constraints on the
SAWS sewer system. The proposed
Modified Consent Decree extends the
deadline for SAWS to complete two
sewer main replacement construction
projects by less than 10 months. There
are no other changes from the original
consent decree.
The publication of this notice opens
a period for public comment on the
proposed Modified Consent Decree.
Comments should be addressed to the
Assistant Attorney General,
Environment and Natural Resources
DEPARTMENT OF LABOR
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BILLING CODE 4410–15–P
Employee Benefits Security
Administration
[Exemption Application Nos. L–12000 & L–
12001]
Proposed Exemption for Certain
Prohibited Transaction Restrictions
Involving the Electrical Insurance
Trustees Insurance Fund and the
Electrical Joint Apprenticeship and
Training Trust (the Plans or the
Applicants) Located in Alsip, IL
Employee Benefits Security
Administration, Labor.
ACTION: Notice of proposed exemption.
AGENCY:
This document provides
notice of the pendency before the
Department of Labor (the Department) of
a proposed individual exemption from
certain of the prohibited transaction
restrictions of the Employee Retirement
Income Security Act of 1974 (ERISA or
SUMMARY:
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the Act) and/or the Internal Revenue
Code of 1986 (the Code).
DATES: If granted, the exemption will be
effective as of the date the grant notice
is published in the Federal Register.
Written comments and requests for a
public hearing on the proposed
exemption should be submitted to the
Department by May 6, 2021.
ADDRESSES: All written comments and
requests for a hearing should be sent to
the Employee Benefits Security
Administration (EBSA), Office of
Exemption Determinations, Attention:
Application Nos. L–12000 and L–12001
via email to e-OED@dol.gov or online
through the Federal eRulemaking Portal:
https://www.regulations.gov. Any such
comments or requests should be sent by
the end of the scheduled comment
period. The application for exemption
and the comments received will be
available for public inspection in the
Public Disclosure Room of the
Employee Benefits Security
Administration, U.S. Department of
Labor, Room N–1515, 200 Constitution
Avenue NW, Washington, DC 20210.
See SUPPLEMENTARY INFORMATION below
for additional information regarding
comments.
FURTHER INFORMATION CONTACT: Mr.
Joseph Brennan of the Department,
telephone (202) 693–8456. (This is not
a toll-free number.)
SUPPLEMENTARY INFORMATION:
Comments
In light of the current circumstances
surrounding the COVID–19 pandemic
caused by the novel coronavirus which
may result in disruption to the receipt
of comments by U.S. Mail or hand
delivery/courier, persons are
encouraged to submit all comments
electronically and not to follow with
paper copies. Comments should state
the nature of the person’s interest in the
proposed exemption and the manner in
which the person would be adversely
affected by the exemption, if granted.
Any person who may be adversely
affected by an exemption can request a
hearing on the exemption. A request for
a hearing must state: (1) The name,
address, telephone number, and email
address of the person making the
request; (2) the nature of the person’s
interest in the exemption and the
manner in which the person would be
adversely affected by the exemption;
and (3) a statement of the issues to be
addressed and a general description of
the evidence to be presented at the
hearing. The Department will grant a
request for a hearing made in
accordance with the requirements above
where a hearing is necessary to fully
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explore material factual issues
identified by the person requesting the
hearing. A notice of such hearing shall
be published by the Department in the
Federal Register. The Department may
decline to hold a hearing if: (1) The
request for the hearing does not meet
the requirements above; (2) the only
issues identified for exploration at the
hearing are matters of law; or (3) the
factual issues identified can be fully
explored through the submission of
evidence in written (including
electronic) form. WARNING: All
comments received will be included in
the public record without change and
may be made available online at https://
www.regulations.gov, including any
personal information provided, unless
the comment includes information
claimed to be confidential or other
information whose disclosure is
restricted by statute. If you submit a
comment, EBSA recommends that you
include your name and other contact
information in the body of your
comment, but DO NOT submit
information that you consider to be
confidential, or otherwise protected
(such as Social Security number or an
unlisted phone number) or confidential
business information that you do not
want publicly disclosed. However, if
EBSA cannot read your comment due to
technical difficulties and cannot contact
you for clarification, EBSA might not be
able to consider your comment.
Additionally, the https://
www.regulations.gov website is an
‘‘anonymous access’’ system, which
means EBSA will not know your
identity or contact information unless
you provide it in the body of your
comment. If you send an email directly
to EBSA without going through https://
www.regulations.gov, your email
address will be automatically captured
and included as part of the comment
that is placed in the public record and
made available on the internet.
Background
The Department is considering
granting an exemption under the
authority of 408(a) of the Act (or
ERISA), in accordance with the
procedures set forth in 29 CFR part
2570, subpart B (76 FR 46637, 66644,
October 27, 2011). If the exemption is
granted, the restrictions of sections
406(a)(1)(A), 406(a)(1)(D) and 406(b)(1)
and 406(b)(2) of the Act shall not apply
to: (a) The sale (the Sale) by the
Electrical Joint Apprenticeship and
Training Trust (the EJAT Trust) of 5.11
acres of unimproved real property to the
Electrical Insurance Trustees Insurance
Fund (the EIT Fund), a party in interest
with respect to the EJAT Trust; and (b)
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the EIT Fund’s granting of a right of first
offer (the Right of First Offer) to the
EJAT Trust, for the purchase back of the
Property by the EJAT Trust from the EIT
Fund, provided certain conditions are
met.1
Summary of Facts and
Representations 2
Background
1. The EIT Fund. The EIT Fund is a
multiemployer employee benefit plan
created pursuant to a collective
bargaining agreement between the
Electrical Contractors’ Association of
the City of Chicago (the ECA) and Local
Union 134, I.B.E.W. (Local 134). The
EIT Fund provides medical, dental,
vision, and other welfare benefits to
participants who are employees of
participating employers. The EIT Fund
is primarily funded by employer
contributions, retiree contributions, and
from participants electing COBRA
coverage. The EIT Fund is administered
by a joint board of trustees (the
Trustees) that is comprised of five
representatives of the ECA and five
representatives of Local 134 (the EIT
Fund Board). The EIT Fund Board has
ultimate and exclusive investment
discretion over the assets of the EIT
Fund. As of June 30, 2019, the EIT Fund
covered 10,666 participants and held
net assets totaling $523,878,790.
2. The EJAT Trust. The EJAT Trust is
a multiemployer benefit plan created
pursuant to a collective bargaining
agreement between the ECA and Local
134. The EJAT Trust provides training
in electrical and other skills in the
electrical construction industry through
an apprenticeship program that consists
of classroom instruction and on-the-job
training. The EJAT Trust currently
operates a training facility located at
6201 West 115th Street, Alsip, Illinois
(the EJAT Trust Training Facility),
where full-time classroom instruction is
provided to approximately 325 EJAT
Trust apprentices at any given time. The
EJAT Trust is financed by participating
employer contributions and
administered by a Board of Trustees
comprised of ECA and Local 134
representatives. The EJAT Trust is a taxexempt educational labor organization
under section 501(c)(5) of the Code. As
of May 31, 2019, the EJAT Trust covered
1 As noted below, although this proposed
exemption, if granted, would permit the granting of
the Right of First Offer, any sale back of the
Property by the EIT Fund to the EJAT Trust would
constitute a prohibited transaction that is outside
the scope of this exemption.
2 The Summary of Facts and Representations is
based on the Applicants’ representations, and does
not reflect factual findings or opinions of the
Department, unless indicated otherwise.
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6,815 participants and held $41,634,000
in total assets.
The EJAT Trust employees and
apprentices are eligible to participate in
the EIT Fund and the Related Plans after
meeting certain eligibility requirements.
As a result, an estimated 95% of EJAT
Trust apprentices, at any given time, are
also participants in the EIT Fund and
the Related Plans. Additionally,
although the EIT Fund Board and EJAT
Trust Board are distinct entities, they
share one common member. The
Applicants represent that this common
board member will recuse himself from
all aspects of the decision-making
process relating to the Sale transaction
described herein.
3. The EIT Fund Current Lease. The
EIT Fund currently leases office space
located at 221 North LaSalle Street in
Chicago, Illinois from an unrelated third
party (the EIT Lease). The EIT Fund
shares its current office space,
equipment and staff with eight other
related employee benefit plans
administered by the Electrical Insurance
Trustees (the Related Plans).3 Expenses,
which are shared by the EIT Fund and
the Related Plans, are initially paid by
one of the Related Plans and then
allocated between the EIT Fund and the
Related Plans based upon an estimate of
time spent, space utilized, and costs
incurred. This allocation of expenses
between the EIT Fund and the Related
Plans is based on a formula that is
reviewed biannually and adjusted, as
necessary, by the auditor of the EIT
Fund and the Related Plans. The EIT
Fund’s share of these allocated expenses
was $2,994,430 and $2,884,618 for the
years ended June 30, 2019 and 2018,
respectively. The EIT Fund Lease,
which was originally set to expire on
September 30, 2020, has been extended
for eight months to May 31, 2021.
4. EIT Fund Relocation Study. The
EIT Fund has determined that monthly
lease payments under the EIT Lease are
high, and that a future extension of the
EIT Lease beyond May 31, 2021 would
come with a higher rate that would be
cost prohibitive to the EIT Fund and the
Related Plans. In 2016, the EIT Fund’s
Board began to consider alternatives to
3 The Related Plans include: (a) The Electrical
Contractors’ Association of the City of Chicago and
Local Union 134 I.B.E.W. Joint Pension Trust of
Chicago Plan No. 2; (b) the Electrical Contractors’
Association of the City of Chicago and Local Union
134 I.B.E.W. Joint Pension Trust of Chicago Plan
No. 5; (c) the Electrical Insurance Trustees
Insurance Fund for Communication Employers; (d)
the Electrical Insurance Trustees Insurance Fund
for Other Participating Employers; (e) the Electrical
Insurance Trustees Supplemental Unemployment
Benefit Plan; (f) the Electrical Insurance Trustees
Supplemental Unemployment Benefit Plan for
Communication Participants; and (g) the Electrical
Insurance Trustees Employees’ Retirement Plan.
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the EIT Lease, including a possible
relocation of the EIT Fund and the
Related Plans. The EIT Fund Board also
began to consider a possible expansion
of future EIT Fund office space to
include an on-site medical clinic as an
additional benefit to participants and
beneficiaries, and as a means of saving
on healthcare costs. In 2016, the EIT
Fund’s Board engaged Savills Studley
(Savills), a commercial real estate
advisory firm and unrelated party with
respect to the Plans, to explore the
feasibility of these options.
In February 2016, Savills issued an
office space scenario analysis of office
rental space in the downtown Chicago
business district, which included the
projected costs and expansion
opportunities conducive to an on-site
medical clinic. Based on Savills’
analysis, the EIT Board concluded that
the future cost of renting office space in
downtown Chicago would be
exceedingly expensive, offer limited
opportunity for expansion, and be
inconvenient and expensive to
participants and beneficiaries. In April
2018, Savills conducted a follow-up
study assessing possible buildings for
sale in the area. Savills concluded that
available buildings for sale in the area
did not meet the EIT Fund’s needs and
that purchasing an existing building
would be expensive because of the
extensive work that would be required
to customize any existing space to the
EIT Fund’s specific and unique needs
for offices, as well as an onsite medical
clinic.
The Property and the Proposed
Transaction
5. The Property. The subject Property
consists of an unimproved 5.105 acre
parcel of land, that is a portion of a
23.66 acre parcel, located at as 6201 W
115th Street, Alsip, Illinois 60803 (the
Whole Parcel). The EJAT Trust acquired
the Whole Parcel in 1992, for
$1,704,385.18, from an unrelated third
party for the purpose of utilizing the
building on the premises as the EJAT
Training Facility. The Whole Parcel is
subject to financing through Standard
Bank and Trust Company, a third party
financial institution that is unrelated to
the EJAT Trust and the EIT Fund. At
present, the Whole Parcel remains
subject to a mortgage but, as a condition
of the proposed Sale, the Property will
be transferred to the EIT Fund free and
clear from all liens and encumbrances.
6. The Purchase Agreement. If this
proposed exemption is granted, the EIT
Fund will pay a cash price of $710,000
to acquire the Property from the EJAT
Trust. The acquisition price was
negotiated and agreed to by the
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qualified independent fiduciary for the
EIT Fund (the EIT Fund Independent
Fiduciary) and the qualified
independent fiduciary for the EJAT
Trust (the EJAT Trust Independent
Fiduciary). As described in further
detail below, this price was based on
two, separate independent appraisals
performed on the Property, with
adjustments thereafter made for certain
costs that the EIT Fund will incur in
connection with the Sale, including the
cost to construct an access road and
necessary utilities, including water,
electricity, and waste disposal.
In connection with the proposed
transaction, the Plans will enter into a
Real Estate Purchase Agreement (the
Purchase Agreement) that will govern
the terms of the Sale. The Purchase
Agreement provides that the EIT Fund
is not obligated to close on the Sale
unless, by the Closing Date, the EIT
Fund has obtained all development
approvals required to construct the EIT
Fund Facility and the access road,
including approval by the Village of
Aslip of the proposed design of the EIT
Fund Facility, and approval for the
construction of an easement access road
necessary to make the Property
accessible to W 115th Street.
The Purchase Agreement also
provides that the EIT Fund Independent
Fiduciary may exercise the EIT Fund’s
absolute unconditional right to
terminate the Sale through the end of an
‘‘inspection period,’’ which ends 60
days after the Department’s publication
of a notice granting this exemption.
Thereafter, until the closing of the Sale,
the Purchase Agreement provides the
EIT Fund with an absolute right to
terminate the Sale if the EIT Fund is
unable to obtain the development
approvals necessary to construct the EIT
Fund Facility and access road.
7. Construction of the Facility for the
EIT Fund. After acquiring the Property,
the EIT Fund intends to construct an
approximately 17,000 square foot, onestory facility consisting of office space
and an onsite medical clinic that will be
used by the EIT Fund and the Related
Plans (the EIT Fund Facility).4 The EIT
Fund also intends to build an access
road to connect the Property to W 115th
Street. The EIT Fund estimates that the
total cost to construct the EIT Fund
Facility and the access road will be
$10,248,350.
4 The Applicant’s represent that the use of the
Property by the EIT Fund and the Related Plans will
adhere to the requirements of PTEs 76–1 and 77–
10. Further, the exemptive relief provided herein is
conditioned upon the EIT Fund and the Related
Plans adhering to the terms of PTEs 76–1 and 77–
10.
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8. Easement and Construction of
Public Road. Under the Purchase
Agreement, the Boards of the EIT Fund
and EJAT Trust are contractually bound
to an easement agreement (the Easement
Agreement), which provides terms and
conditions governing the use,
maintenance, and cost-sharing with
respect to an easement for vehicular
access to and from the Property. Under
the Easement Agreement, the EIT Fund
will bear the cost of constructing and
maintaining the access road easement.
The parties have adjusted the purchase
price of the Property to account for the
anticipated costs that the EIT Fund will
incur in constructing the access road,
and the necessary utilities, including
water, electricity, and waste disposal.
9. The Right of First Offer. The
Purchase Agreement provides the EJAT
Trust with a right of first offer (the Right
of First Offer). Pursuant to the Right of
First Offer, in the event that the EIT
Fund desires to sell the Property, the
EIT Fund must first provide notice to
the EJAT Trust of its intent to do so (the
Notice to Sell). Following its receipt of
the Notice to Sell, the EJAT Trust will
have 14 days to inform the EIT Fund
that it will exercise its Right of First
Offer (the Notice to Exercise). The EJAT
Trust’s failure to provide the Notice to
Exercise within 14 days will be
considered a rejection of the EJAT
Trust’s Right of First Offer. Then, the
EIT Fund will be free to sell the
Property to an unrelated, third party
buyer. If the EJAT Trust does provide its
Notice to Exercise in a timely manner,
the EIT Fund and the EJAT Trust will
have 21 days to use commercially
reasonable and good faith efforts to
enter into a Purchase and Sale
Agreement. If the EIT Fund and the
EJAT Trust cannot mutually agree upon
a purchase price within this 21 day
negotiation period, then the Right of
First Offer will expire.
The Department notes that the EJAT
Trust’s re-purchase of the Property
would constitute a prohibited
transaction that is outside the scope of
this exemption. If the EJAT Trust seeks
to re-purchase the Property, the parties
may submit an exemption application,
and the Department will assess the
merits of the proposed transaction.
The Independent Fiduciaries
10. Independent Fiduciary: EJAT
Trust. The EJAT Trust retained
Shumaker, Loop & Kendrick LLP of
Toledo, OH (Shumaker or the EJAT
Trust Independent Fiduciary) to serve as
an Independent Fiduciary to the EJAT
Trust with respect to the Sale.
Shumaker represents that the duties and
obligations as the EJAT Trust
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Independent Fiduciary are being carried
out by Scott D. Newsom and Beth M.
Eckel. Shumaker represents that Mr.
Newsom has over 20 years of experience
in employee benefits law and ERISA,
primarily representing multiemployer
benefit plans in all aspects of their
maintenance and the fulfillment of
fiduciary obligations. Shumaker further
represents that Ms. Eckel has 10 years
of experience as a real estate attorney
focused on commercial real estate and
financing matters.
Shumaker states that it understands,
acknowledges, and accepts its duties
and responsibilities under ERISA in
acting as the EJAT Trust Independent
Fiduciary, and that it does not have any
past or ongoing relationship with the
EJAT Trust. Shumaker also states that
the total revenue received from the
EJAT Trust in connection with its
engagement as Independent Fiduciary
with respect to the Sale is less than
0.02% of Shumaker’s gross revenue for
the 2019 income tax year.
As Independent Fiduciary to the EJAT
Trust, Shumaker must prudently: (a)
Represent the EJAT Trust’s interests for
all purposes with respect to the Sale; (b)
determine that the Sale is in the
interests of, and protective of, the EJAT
Trust and its participants and
beneficiaries; (c) review and approve the
terms and conditions of the Sale; (d)
engage a qualified independent
appraiser (the EJAT Trust Independent
Appraiser) for the purpose of valuing
the Property in connection with the
Sale, and ensure the independence of
the appraiser; (e) review the
independent appraisal report completed
by the EJAT Trust Independent
Appraiser (the EJAT Trust Independent
Appraisal Report) to confirm that the
underlying methodology is reasonable
and accurate and that the valuation of
the Property has been reasonably
derived; (f) ensure that the EJAT
Independent Appraiser renders an
updated fair market valuation of the
Property as of the date of the Sale; (g)
determine whether it is prudent for the
EJAT Trust to proceed with the Sale;
and (h) ensure that it has not and will
not enter into any agreement or
instrument that violates section 410 of
ERISA or section 2509.75–4 of the
Department’s regulations.5 Additionally,
not later than 90 days after the Sale is
completed, Shumaker must submit a
5 Section 410 of ERISA provides, in part, that
‘‘except as provided in sections 405(b)(1) and
405(d) of ERISA, any provision in an agreement or
instrument which purports to relieve a fiduciary
from responsibility or liability for any
responsibility, obligation, or duty under this part
[meaning section 410(a) of ERISA] shall be void as
against public policy.’’
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written statement to the Department
documenting how the Sale has met all
of the requirements of this exemption.
11. Independent Fiduciary: EIT Fund.
The EIT Fund has retained the Wagner
Law Group (Wagner or the EIT Fund
Independent Fiduciary) to serve as an
Independent Fiduciary to the EIT Fund
with respect to the Sale. Wagner has
served as the appointed independent
fiduciary for various entities. Stephen
Wilkes, Susan Rees, and Roberta
Watson, all of whom are employed by
Wagner, have agreed to undertake the
duties of the EIT Fund Independent
Fiduciary with respect to the Sale.
Wagner states that it understands,
acknowledges, and accepts its duties
and responsibilities under ERISA in
acting as the EIT Fund Independent
Fiduciary, and that it does not have any
past or ongoing relationship with the
EIT Fund. Wagner also states that the
percentage of its current revenue that is
derived from any party in interest
involved in the Sale is 0.55%.
As the EIT Fund Independent
Fiduciary, Wagner must prudently: (a)
Represent the EIT Fund’s interests for
all purposes with respect to the Sale; (b)
determine that the Sale is in the
interests of, and protective of, the EIT
Fund and its participants and
beneficiaries; (c) review and approve the
terms and conditions of the Sale; (d)
engage a qualified independent
appraiser (the EIT Independent
Appraiser) for the purpose of valuing
the Property in connection with the
Sale, and ensure the independence of
the appraiser; (e) review the
independent appraisal report completed
by the EIT Fund Independent Appraiser
(the EIT Fund Independent Appraisal
Report) to confirm that the underlying
methodology is reasonable and accurate
and that the valuation of the Property
has been reasonably derived; (f) ensure
that the EIT Fund Independent
Appraiser renders an updated fair
market valuation of the Property as of
the date of the Sale; (g) determine
whether it is prudent for the EIT Fund
to proceed with the Sale; and (h) ensure
that it has not and will not enter into
any agreement or instrument that
violates section 410 of ERISA or section
2509.75–4 of the Department’s
regulations. Additionally, not later than
90 days after the Sale is completed,
Wagner must submit a written statement
to the Department documenting that the
Sale has met all of the requirements of
this exemption.
The Independent Appraisers
12. Independent Appraiser: EJAT
Trust. In its role as the EJAT Trust
Independent Fiduciary, Shumaker
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retained Realty Value Consultants, Inc.
of Berwyn, Illinois (Realty or the EJAT
Trust Independent Appraiser) to assess
the fair market value of the Property.
With respect to this engagement,
Elizabeth A. Ritzenthaler and John H.
Urubek undertook the specific duties
required of Realty as the EJAT Trust
Independent Appraiser. Ms.
Ritzenthaler is a Certified General Real
Estate Appraiser in the State of Illinois
with over 25 years of experience in
commercial and industrial real estate
appraisal and consulting. Mr. Urubek is
a Certified General Real Estate
Appraiser in the State of Illinois with
over 40 years of experience in real estate
appraisal and consulting.
Realty states that its fee for appraisal
services provided in connection with
the Sale represents less than 0.5% of its
annual revenues for 2014 and 2015.
Realty represents that it has no present
or prospective interest in the Property,
that it has no personal interest with
respect to the parties involved in the
Sale, and that its engagement as EJAT
Independent Appraiser is not contingent
upon developing or reporting
predetermined results. Realty further
represents that the compensation it
receives as the EJAT Trust Independent
Appraiser is not contingent upon
reporting a predetermined value, a
direction in value that favors the cause
of the client, the amount of the value
opinion, the attainment of a stipulated
result, or the occurrence of a subsequent
event directly related to the intended
use of the appraisal.
Using the Sales Comparison
Approach to valuation, Realty valued
the Property at $725,000, as of February
14, 2020. In preparing the EJAT Trust
Independent Appraisal Report, Realty
represents that it physically inspected
the Property and researched appropriate
market data, and that its appraisal was
conducted in full conformity with
professional appraisal standards and
USPAP.
13. Independent Appraiser: EIT Fund.
In its role as the EIT Fund Independent
Fiduciary, Wagner engaged Colliers
International Valuation & Advisory
Services, LLC (Colliers or the EIT Fund
Independent Appraiser) to assess the
fair market value of the Property for the
purposes of the Sale. With respect to
this engagement, Cathrine
Chimhandamba and Nancy S. Meyers of
Colliers undertook the specific duties
required as the EIT Fund Independent
Appraiser. Ms. Chimhandamba is a
Certified General Real Estate Appraiser
in the State of Illinois and a Valuation
Specialist with experience in the
valuation of commercial properties. Ms.
Myers is a Certified General Real Estate
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Appraiser in the State of Illinois and
serves as the Managing Director for
Colliers International Valuation &
Advisory Services in Chicago, Illinois.
Colliers represents that it has no
present or prospective interest in the
Property, and no personal interest with
respect to the parties involved. Colliers
further represents that it is not biased
with respect to the Property or to the
parties involved with this assignment,
and that its engagement and
compensation was not contingent upon
developing or reporting predetermined
results. Colliers represents that its fee
for appraisal services provided in
connection with the Sale represents less
than 0.5% of its annual revenues for
2014 and 2015.
Colliers states that it conducted an onsite physical inspection of the Property
and analyzed regional and local area
economic profiles including
employment, population, household
income, and real estate trends. Colliers
represents that it assessed the general
quality and condition, and emerging
development trends for the real estate
market. Colliers further represents that
it conducted a Highest and Best Use
analysis and considered legal,
locational, physical and financial
feasibility characteristics of the
Property. Colliers states that it
confirmed and analyzed financial
features of the Property, including
potential entitlement issues, and tax and
assessment records. Colliers represents
that its selection of valuation methods
was based on the identifications
required in USPAP relating to the
intended use, intended users, definition
and date of value, relevant property
characteristics and assignment
conditions. On July 15, 2020, Colliers
completed an addendum to its appraisal
report (the Addendum) in which it
waived its rights under a liability cap
that was previously included in its
engagement agreement with the EIT
Fund. In the Addendum, Collier
affirmed that the value of the Property
is at least $710,000, and that its
appraisal was prepared in full
conformity with professional appraisal
standards and USPAP.
14. Determining the Sale Price for the
Property. During negotiations, the
Independent Fiduciaries represent that
they considered certain additional
factors that affected the appropriate Sale
price for the Property. In this regard, the
Independent Fiduciaries considered the
fact that the EIT Fund would be bearing
the expense of developing and
maintaining the vehicular and utility
access to the Property, and that the EIT
Fund would incur extra costs associated
with obtaining building plans necessary
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to avoid disruption of the protected
wetlands area on the Property. The
Independent Fiduciaries also represent
that they considered the fact that the
EIT Fund’s development of the Property
represents enhanced value for the EJAT
Trust Property, and that the EJAT Trust
participants will enjoy the ease and
accessibility of an integrated campus
arrangement in which they will have
access to the EIT Fund offices, and a
possible on-site medical clinic.
The Independent Fiduciary Reports
15. Independent Fiduciary Report:
EJAT Trust. In the Independent
Fiduciary Report for the EJAT Trust,
Shumaker concludes that the Sale at a
price of $710,000 would be in the best
interests of, and protective of, the EJAT
Trust and its participants and
beneficiaries. Shumaker also concludes
that the terms and conditions of the Sale
are at least as favorable to the EJAT
Trust as those it could have obtained in
an arm’s length transaction with an
unrelated and independent party.
Shumaker states that the proximity of
the Property to the EJAT Trust Training
Facility will allow for the creation of an
electrical industry campus which will
benefit the EJAT Trust’s participants
and beneficiaries. In this regard, EJAT
Trust participants will benefit from the
ease and accessibility of a campus
arrangement in which they will have
access to the EIT Fund offices, and a
possible on-site medical clinic, while
pursuing their training and education.
Shumaker notes that presently the EIT
Fund offices are located in downtown
Chicago, which imposes inconvenience
and unnecessary costs on the EJAT
Trust participants and beneficiaries.
Shumaker states that the Fund will
receive $710,000 for the Property, which
in Shumaker’s judgement represents
that the transaction is as favorable to the
EJAT Trust as the transaction that
would have occurred in an arm’s length
transaction between independent and
unrelated parties, each of whom had full
knowledge of the relevant facts and
were under no compulsion to buy or
sell. Shumaker further states that the
Sale presents an opportunity for the
EJAT Trust to diversify its assets
through the sale of an unused parcel of
real estate for cash. Shumaker notes that
the Property is a nonworking asset, and
that the EJAT Trust does not consider it
to be a long-term investment or strategic
reserve necessary for future expansion.
Shumaker states that the Sale provides
the EJAT Trust with the ability to use
the cash proceeds from the Sale to
enhance the value of the EJAT Trust
Training Facility, for the benefit of the
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participants and beneficiaries of the
EJAT Trust.
Shumaker notes that because the
Property is zoned for general
manufacturing and processing activities,
the marketing of the Property to
unrelated buyers for an unknown
purpose may be detrimental to the value
of the Whole Parcel, and may interfere
with the EJAT Trust’s use and
enjoyment of the Whole Parcel in the
future.
Shumaker states that, to further
ensure the protection of the EJAT Trust
and its participants and beneficiaries, it
will continue to monitor the Sale,
enforce the final terms of the Sale, and
take whatever actions are necessary to
protect the interests of the EJAT Trust’s
participants and beneficiaries through
the closing of the Sale.
Finally, as a condition of the
exemption, Shumaker may not enter
into, and has not entered into, any
agreement, arrangement or
understanding in connection with the
Sale that indemnifies Shumaker, in
whole or in part, or waives any liability
for negligence by Shumaker or for
failing to adhere to state or federal law.
In addition, Realty may not enter into,
and has not entered into, any agreement,
arrangement or understanding in
connection with the Sale that
indemnifies Realty, in whole or in part,
or waives any liability for negligence by
Realty or for failure to adhere to
professional appraisal standards.
16. Independent Fiduciary Report: EIT
Fund. In the EIT Fund Independent
Fiduciary Report, Wagner concludes
that a Sale at the price of $710,000
would be in the best interests of, and
protective of, the EIT Fund and the EIT
Fund participants and beneficiaries.
Wagner represents that it considered
many factors in its analysis, including
the EIT Fund’s financial position, the
acquisition and development costs
associated with the Sale, and the
benefits to the EIT Fund of purchasing
the Property and constructing the EIT
Fund Facility as opposed to entering
into a commercial lease of existing
property with an unrelated party.
Wagner represents that it reviewed all
the particulars of the Property,
including: (a) The appraisals; (b) the
location and characteristics of the
Property; (c) the existing zoning of the
Property; (d) the need for, and expense
of, an easement; and (e) environmental
concerns associated with the Property,
including the presence of wetlands.
Wagner states that the Property
functionally meets the EIT Fund’s
needs, as it is large enough to construct
an EIT Fund Office with sufficient space
for a Board Room, conference room,
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large reception areas, and an onsite
medical clinic. Wagner further states
that the Property is accessible for a
significant number of EIT Fund
participants and beneficiaries. In this
regard, Wagner notes that the EIT Fund
conducted a proximity analysis in
October of 2019 which found that over
42% of current EIT Fund participants
and beneficiaries live within a 15-mile
radius of the Property.
Wagner states that relocating the EIT
Fund’s office to the Property is costeffective and creates synergy by
establishing a campus of related services
for EIT Fund participants. In this regard,
Wagner notes that an estimated 95% of
apprentices in the EJAT Trust, at any
given time, are also participants in the
EIT Fund and the Related Plans. In
addition, Wagner states that locating the
EIT Fund Office on the Property would
promote the visibility and publicity of
the EIT Fund Office’s services, as well
as the EJAT Trust’s training programs.
Wagner further notes that the Property
is sufficient in size to provide ample
free parking for EIT Fund employees
and EIT Fund participants and
beneficiaries, and is conveniently
located close to major highways.
With respect to the Property, Wagner
states that, the location adjacent to the
EJAT Trust Training Facility will
provide enhanced value for the EIT
Fund’s participants and beneficiaries.
Wagner further states that the suburban
location of the Property will be
convenient for the participants and
beneficiaries of the EIT Fund, as well as
the EIT Fund staff, who will benefit
from affordable housing available in
close proximity to the Property. In
addition, Wagner states that the EIT
Fund’s purchase of the Property and
construction of the EIT Fund Facility
will further the EIT Fund’s longterm
goals of stabilizing its expenses with an
updated, modernized, and fully-owned
facility, and expanding its service
offerings to include the medical clinic.
Wagner represents that it reviewed
the methodology used by the
Independent Appraiser to ensure that
the methodology adhered to sound
principles of valuation. Wagner states
that it reached its conclusion as to an
appropriate purchase price for the
Property based, not on a mechanical
mathematical averaging process, but by
relying upon a strong framework to
determine a purchase price that
represents a prudent judgment as to a
fair market value that is in the best
interest of the EIT Fund participants,
given the intended use of the Property
and the value of the transaction to the
EIT Fund. In reliance on this analysis,
Wagner affirms that the Sale is at least
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15263
as favorable to the EIT Fund as the
transaction that would have occurred in
an arm’s length transaction between
independent and unrelated parties, each
of whom had full knowledge of the
relevant facts and neither of whom was
under any compulsion to buy or sell.
Wagner also considered the financial
condition of the EIT Fund in its
analysis. In this regard, Wagner notes
that, as of June 30, 2018, the EIT Fund’s
financial position included assets
totaling $456,536,340, which represents
a 9% increase over the previous year.
Wagner states that the $710,000
purchase price will involve 0.16% of
the Fund’s total assets, and that the
$10,248,350 to construct the EIT Fund
Facility and access road will involve
about 2.24% of the EIT Fund’s total
assets. Thus, according to Wagner, the
total cost to the EIT Fund with respect
to the Sale will involve about 2.40% of
the EIT Fund’s total assets.
In addition, Wagner represents that
the EIT Fund will not require a loan or
other financing to acquire the Property
and construct the EIT Fund Facility and
access road. Wagner notes that the EIT
Fund has represented that it will be able
to meet its obligations to pay benefits
under the Fund and will not need to
obtain financing to support its
acquisition of the Property. Wagner
concludes that the purchase of the
Property and construction of the EIT
Fund Facility is in the best interest of
the EIT Fund participants and will not
negatively affect the EIT Fund’s overall
financial health.
Moreover, Wagner notes that the EIT
Fund, its engineers, design consultants,
and professional advisors have met with
the Village of Alsip regarding the
purchase of the Property, the
subdivision and easement, the Fund’s
intended use of the Property, and
various necessary zoning, building, and
easement construction permits.
According to the EIT Fund
representatives, all indications from the
Village of Alsip are that development
approvals will be granted once the EIT
Fund’s formal applications are filed.
Wagner states that, to further ensure
the protection of the EIT Fund and its
participants and beneficiaries, it will
continue to monitor the process, enforce
the final terms of the Sale, and take
whatever actions are necessary to
protect the interests of the EIT Fund
participants and beneficiaries up to and
coincident with the closing date of the
Sale.
Finally, Wagner may not enter into,
and has not entered into, any agreement,
arrangement or understanding in
connection with the Sale that
indemnifies Wagner, in whole or in
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part, or waives any liability for
negligence by Wagner or for failing to
adhere to state or federal law. In
addition, Colliers may not enter into,
and has not entered into, any agreement,
arrangement or understanding in
connection with the Sale that
indemnifies Colliers, in whole or in
part, or waives any liability for
negligence by Colliers or for failing to
adhere to state or federal law.
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The EIT Fund’s Environmental Study of
Property
17. Phase I Environmental Study. To
further examine the appropriateness of
the Property as a site for the EIT Fund
Facility, the EIT Fund engaged Pioneer
Engineering & Environmental Services,
LLC of Chicago, Illinois (Pioneer) to
conduct a Phase I Environmental Site
Assessment of the Property. On October
18, 2019, Pioneer completed its
assessment (the Environmental
Assessment) which revealed no
evidence of any Recognized
Environmental Conditions in
connection with the Property. Pioneer
will update its Environmental
Assessment of the Property prior to the
Closing Date of the Sale.
Exemptive Relief
18. Exemptive Relief Requested and
Analysis. Section 406(a)(1)(A) of the Act
prohibits a plan fiduciary from causing
a plan to engage in a transaction if the
fiduciary knows or should know that
such transaction constitutes a direct or
indirect sale of any property between a
plan and a party in interest. The EJAT
Trust Board and the EIT Fund Board are
fiduciaries under section 3(14)(A) of the
Act. The EIT Fund is a party in interest
with respect to the EJAT Trust under
section 3(14)(C) of the Act because it is
an employer whose employees
participate in the EIT Fund. Therefore,
the Sale would violate section
406(a)(1)(A) of the Act.
In addition, section 406(a)(1)(D) of the
Act prohibits a plan fiduciary from
causing a plan to engage in a transaction
if the fiduciary knows or should know
that such transaction constitutes a direct
or indirect transfer to, or use by or for
the benefit of, a party in interest, of the
income or assets of the plan. The EJAT
Trust’s sale of the Property to the EIT
Fund, and the EIT Fund’s corresponding
purchase of the Property from the EJAT
Trust, and the granting of the right of
first offer, constitute a prohibited
transfer of assets (i.e., the exchange of
the Property for cash between the Plans)
in violation of section 406(a)(1)(D) of the
Act.
Section 406(b)(1) of the Act prohibits
a plan fiduciary from dealing with the
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assets of the plan in his or her own
interest or for his or her own account.
Section 406(b)(2) of the Act prohibits a
plan fiduciary, in his or her individual
or in any other capacity, from acting in
any transaction involving the plan on
behalf of a party whose interests are
adverse to the interests of the plan or
the interests of the plan’s participants or
beneficiaries.
The EJAT Trust Board and the EIT
Fund Board share one trustee, Mr.
Donald Finn, who is the business
manager and financial secretary with
respect to the Local 134. Mr. Finn will
recuse himself with respect to the
transactions described in this proposal.
However, in the Department’s view, Mr.
Finn remains in a position of influence
with respect to the Local 134 Trustees.
The EJAT Trust Board and the EIT Fund
Board may be deemed as engaging in a
prohibited act of self-dealing in
violation of section 406(b)(1) of the Act
with respect to the Sale and the granting
of the right of first offer. In addition,
each Board may have divided loyalties
regarding the Sale and the granting of
the right of first offer, in violation of
section 406(b)(2) of the Act.
Statutory Findings
19. ‘‘Administratively Feasible.’’ The
Department has tentatively determined
that the Sale is administratively feasible
because it is a one-time transaction for
cash overseen Independent Fiduciaries.
Furthermore, Independent Fiduciaries
will represent the interests of the Plans
for all purposes with respect to the Sale,
and ensure that the Property is sold for
fair market value.
20. ‘‘In the Interests of.’’ The
Department has tentatively determined
that the proposed exemption is in the
interest of each Plan. With regard to the
EIT Fund, relocating the EIT Fund’s
office to the Property may stabilize the
EIT Fund’s expenses and create
synergies by establishing a campus of
related services between the EIT Fund
and EJAT Trust. With regard to the EJAT
Trust, the Sale presents an opportunity
for the EJAT Trust to diversity its assets
through the sale of an unused parcel of
real estate. The Sale will allow the EJAT
Trust to use the cash to enhance the
value of the EJAT Trust Training
Facility for the benefit of the
participants and beneficiaries of the
EJAT Trust.
21. ‘‘Protective of.’’ The Department
has tentatively determined that the
proposed exemption is protective of the
rights of the Plans’ participants and
beneficiaries. In this regard, an
Independent Fiduciary will represent its
respective Plans for all purposes with
respect to the Sale. Among other things,
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the Independent Fiduciaries will review
and confirm that the methodologies
used by the Independent Appraisers
adhere to sound principles of valuation,
and affirm that the terms of the Sale are
at least as favorable as would be
obtainable in an arm’s length
transaction with unrelated and
independent parties, each of whom who
had full knowledge of the relevant facts,
and neither of whom was under any
compulsion to buy or sell.
Notice to Interested Persons
Those persons who may be interested
in the publication in the Federal
Register of the notice of proposed
exemption (the Notice) include
participants and beneficiaries of the
EJAT Trust and participants and
beneficiaries of the EIT Fund. The
Applicants will provide notification to
interested persons by electronic mail,
and first-class mail within fifteen (15)
calendar days of the date of the
publication of the Notice in the Federal
Register. The mailing will contain a
copy of the Notice, as it appears in the
Federal Register on the date of
publication, plus a copy of the
Supplemental Statement, as required,
pursuant to 29 CFR 2570.43(b)(2), which
will advise the interested persons of
their right to comment and to request a
hearing.
The Department must receive all
written comments and requests for a
hearing no later than forty-five (45) days
from the date of the publication of the
Notice in the Federal Register.
All comments will be made available
to the public.
Warning: Do not include any
personally identifiable information
(such as name, address, or other contact
information) or confidential business
information that you do not want
publicly disclosed. All comments may
be posted on the internet and can be
retrieved by most internet search
engines.
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 of the Act and/or the Code,
including any prohibited transaction
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
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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) Before an exemption may be
granted under section 408(a) of the Act
and/or section 4975(c)(2) of the Code,
the Department must find that the
exemption is administratively feasible,
in the interests of the plan and of its
participants and beneficiaries, and
protective of the rights of participants
and beneficiaries of the plan;
(3) The proposed exemption, if
granted, will be supplemental to, and
not in derogation of, any other
provisions of the Act and/or the Code,
including statutory or administrative
exemptions and transitional 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
(4) The proposed exemption, if
granted, will be subject to the express
condition that the material facts and
representations contained in each
application are true and complete, and
that each application accurately
describes all material terms of the
transaction which is the subject of the
exemption.
Proposed Exemption
Section I. Proposed Transactions
If the proposed exemption is granted,
the restrictions of sections 406(a)(1)(A)
and (D), and 406(b)(1) and (b)(2) of the
Act shall not apply to: (a) the sale (the
Sale) by the Electrical Joint
Apprenticeship and Training Trust (the
EJAT Trust) of 5.11 acres of unimproved
real property to the Electrical Insurance
Trustees Insurance Fund (the EIT Fund),
a party in interest with respect to the
EJAT Trust; and (b) the EIT Fund’s
granting of a right of first offer (the Right
of First Offer) to the EJAT Trust, for the
purchase back of the Property by the
EJAT Trust from the EIT Fund, provided
the conditions in Section II are met.
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Section II. Conditions
(a) The Sale is a one-time transaction
for cash;
(b) The terms and conditions of the
Sale are at least as favorable to the EJAT
Trust and the EIT Fund as the terms and
conditions they would have received in
an arm’s length transaction between
unrelated and independent parties, each
of whom had full knowledge of the
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relevant facts, and neither of whom
were under any compulsion to buy or
sell;
(c) The EJAT Trust Independent
Fiduciary prudently:
(1) Represents the EJAT Trust’s
interests for all purposes with respect to
the Sale;
(2) Determines that the Sale is in the
interest of, and protective of, the EJAT
Trust and the participants of the EJAT
Trust;
(3) Reviews and approves the terms
and conditions of the Sale;
(4) Engaged the EJAT Trust
Independent Appraiser and ensured the
Appraiser’s independence;
(5) Reviews the EJAT Independent
Appraisal Report, confirms that the
underlying methodology is reasonable
and accurate, and confirms that the
valuation of the Property was
reasonably derived;
(6) Ensures that the EJAT Trust
Independent Appraiser renders an
updated fair market valuation of the
Property as of the date of the Sale;
(7) Determines whether it is prudent
for the EJAT Trust to proceed with the
Sale; and
(8) Ensures that it has not and will not
enter into any agreement or instrument
that violates section 410 of ERISA.
(d) The EIT Fund Independent
Fiduciary prudently:
(1) Represents the EIT Fund’s
interests for all purposes with respect to
the Sale;
(2) Determines that the Sale is in the
interest of, and protective of, the EIT
Fund and the participants of the EIT
Fund;
(3) Reviews and approves the terms
and conditions of the Sale;
(4) Engaged the EIT Fund
Independent Appraiser for the Sale and
ensured the Appraiser’s Independence;
(5) Reviews the EIT Fund
Independent Appraisal Report, confirms
that the underlying methodology is
reasonable and accurate, and confirms
that the valuation of the Property was
reasonably derived;
(6) Ensures that the EIT Fund
Independent Appraiser renders an
updated fair market valuation of the
Property as of the date of the Sale;
(7) Determines whether it is prudent
for the EIT Fund to proceed with the
Sale; and
(8) Ensures that it has not and will not
enter into any agreement or instrument
that violates section 410 of ERISA.
(e) The Sale is not part of an
agreement, arrangement, or
understanding designed to benefit any
party other than the EJAT Trust and the
EIT Fund;
(f) Any use of the Property by the EIT
Fund and the Related Plans that is
PO 00000
Frm 00083
Fmt 4703
Sfmt 9990
15265
described in PTEs 76–1 and 77–10
complies with the conditions of those
exemptions;
(g) Not later than 90 days after the
Sale is completed, the EJAT Trust
Independent Fiduciary and the EIT
Fund Independent Fiduciary each
submit a written statement to the
Department documenting that the Sale
has met all of the requirements of this
the exemption;
(h) The EIT Fund Independent
Fiduciary may not enter, and has not
entered, into any agreement,
arrangement or understanding regarding
the Sale that indemnifies the EIT Fund
Independent Fiduciary, in whole or in
part, or waives any liability for
negligence or for violation of state or
federal law by the EIT Fund
Independent Fiduciary;
(i) The Independent Appraiser
selected by the EIT Fund Independent
Fiduciary may not enter, and has not
entered, into any agreement,
arrangement or understanding regarding
the Sale that indemnifies the EIT Fund
Independent Appraiser, in whole or in
part, or waives any liability for
negligence or for any violation of state
or federal law by the Independent
Appraiser;
(j) The EJAT Trust Independent
Fiduciary may not enter, and has not
entered, into any agreement,
arrangement or understanding regarding
the Sale that indemnifies the EJAT Trust
Independent Fiduciary, in whole or in
part, or waives any liability for
negligence or for any violation of state
or federal law by the EJAT Trust
Independent Fiduciary;
(k) The Independent Appraiser that is
selected by the EJAT Trust Independent
Fiduciary may not enter, and has not
entered, into any agreement,
arrangement or understanding regarding
the Sale that indemnifies the
Independent Appraiser, in whole or in
part, for negligence or for any violation
of state or federal law by the
Independent Appraiser; and
(l) The EJAT Trust may not repurchase the Property from the EIT
Fund absent an individual exemption
granted by the Department.
Effective Date: If granted, the
exemption will be effective as of the
date the grant notice is published in the
Federal Register.
Signed at Washington, DC, this 15th day of
March 2021.
Christopher Motta,
Chief, Division of Individual Exemptions,
Office of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department Of Labor.
[FR Doc. 2021–05843 Filed 3–19–21; 8:45 am]
BILLING CODE 4510–29–P
E:\FR\FM\22MRN1.SGM
22MRN1
]]>Agencies
[Federal Register Volume 86, Number 53 (Monday, March 22, 2021)]
[Notices]
[Pages 15258-15265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05843]
=======================================================================
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Exemption Application Nos. L-12000 & L-12001]
Proposed Exemption for Certain Prohibited Transaction
Restrictions Involving the Electrical Insurance Trustees Insurance Fund
and the Electrical Joint Apprenticeship and Training Trust (the Plans
or the Applicants) Located in Alsip, IL
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of proposed exemption.
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SUMMARY: This document provides notice of the pendency before the
Department of Labor (the Department) of a proposed individual exemption
from certain of the prohibited transaction restrictions of the Employee
Retirement Income Security Act of 1974 (ERISA or
[[Page 15259]]
the Act) and/or the Internal Revenue Code of 1986 (the Code).
DATES: If granted, the exemption will be effective as of the date the
grant notice is published in the Federal Register. Written comments and
requests for a public hearing on the proposed exemption should be
submitted to the Department by May 6, 2021.
ADDRESSES: All written comments and requests for a hearing should be
sent to the Employee Benefits Security Administration (EBSA), Office of
Exemption Determinations, Attention: Application Nos. L-12000 and L-
12001 via email to [email protected] or online through the Federal
eRulemaking Portal: https://www.regulations.gov. Any such comments or
requests should be sent by the end of the scheduled comment period. The
application for exemption and the comments received will be available
for public inspection in the Public Disclosure Room of the Employee
Benefits Security Administration, U.S. Department of Labor, Room N-
1515, 200 Constitution Avenue NW, Washington, DC 20210. See
SUPPLEMENTARY INFORMATION below for additional information regarding
comments.
FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department,
telephone (202) 693-8456. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION:
Comments
In light of the current circumstances surrounding the COVID-19
pandemic caused by the novel coronavirus which may result in disruption
to the receipt of comments by U.S. Mail or hand delivery/courier,
persons are encouraged to submit all comments electronically and not to
follow with paper copies. Comments should state the nature of the
person's interest in the proposed exemption and the manner in which the
person would be adversely affected by the exemption, if granted. Any
person who may be adversely affected by an exemption can request a
hearing on the exemption. A request for a hearing must state: (1) The
name, address, telephone number, and email address of the person making
the request; (2) the nature of the person's interest in the exemption
and the manner in which the person would be adversely affected by the
exemption; and (3) a statement of the issues to be addressed and a
general description of the evidence to be presented at the hearing. The
Department will grant a request for a hearing made in accordance with
the requirements above where a hearing is necessary to fully explore
material factual issues identified by the person requesting the
hearing. A notice of such hearing shall be published by the Department
in the Federal Register. The Department may decline to hold a hearing
if: (1) The request for the hearing does not meet the requirements
above; (2) the only issues identified for exploration at the hearing
are matters of law; or (3) the factual issues identified can be fully
explored through the submission of evidence in written (including
electronic) form. WARNING: All comments received will be included in
the public record without change and may be made available online at
https://www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
confidential or other information whose disclosure is restricted by
statute. If you submit a comment, EBSA recommends that you include your
name and other contact information in the body of your comment, but DO
NOT submit information that you consider to be confidential, or
otherwise protected (such as Social Security number or an unlisted
phone number) or confidential business information that you do not want
publicly disclosed. However, if EBSA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EBSA
might not be able to consider your comment. Additionally, the https://www.regulations.gov website is an ``anonymous access'' system, which
means EBSA will not know your identity or contact information unless
you provide it in the body of your comment. If you send an email
directly to EBSA without going through https://www.regulations.gov, your
email address will be automatically captured and included as part of
the comment that is placed in the public record and made available on
the internet.
Background
The Department is considering granting an exemption under the
authority of 408(a) of the Act (or ERISA), in accordance with the
procedures set forth in 29 CFR part 2570, subpart B (76 FR 46637,
66644, October 27, 2011). If the exemption is granted, the restrictions
of sections 406(a)(1)(A), 406(a)(1)(D) and 406(b)(1) and 406(b)(2) of
the Act shall not apply to: (a) The sale (the Sale) by the Electrical
Joint Apprenticeship and Training Trust (the EJAT Trust) of 5.11 acres
of unimproved real property to the Electrical Insurance Trustees
Insurance Fund (the EIT Fund), a party in interest with respect to the
EJAT Trust; and (b) the EIT Fund's granting of a right of first offer
(the Right of First Offer) to the EJAT Trust, for the purchase back of
the Property by the EJAT Trust from the EIT Fund, provided certain
conditions are met.\1\
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\1\ As noted below, although this proposed exemption, if
granted, would permit the granting of the Right of First Offer, any
sale back of the Property by the EIT Fund to the EJAT Trust would
constitute a prohibited transaction that is outside the scope of
this exemption.
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Summary of Facts and Representations \2\
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\2\ The Summary of Facts and Representations is based on the
Applicants' representations, and does not reflect factual findings
or opinions of the Department, unless indicated otherwise.
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Background
1. The EIT Fund. The EIT Fund is a multiemployer employee benefit
plan created pursuant to a collective bargaining agreement between the
Electrical Contractors' Association of the City of Chicago (the ECA)
and Local Union 134, I.B.E.W. (Local 134). The EIT Fund provides
medical, dental, vision, and other welfare benefits to participants who
are employees of participating employers. The EIT Fund is primarily
funded by employer contributions, retiree contributions, and from
participants electing COBRA coverage. The EIT Fund is administered by a
joint board of trustees (the Trustees) that is comprised of five
representatives of the ECA and five representatives of Local 134 (the
EIT Fund Board). The EIT Fund Board has ultimate and exclusive
investment discretion over the assets of the EIT Fund. As of June 30,
2019, the EIT Fund covered 10,666 participants and held net assets
totaling $523,878,790.
2. The EJAT Trust. The EJAT Trust is a multiemployer benefit plan
created pursuant to a collective bargaining agreement between the ECA
and Local 134. The EJAT Trust provides training in electrical and other
skills in the electrical construction industry through an
apprenticeship program that consists of classroom instruction and on-
the-job training. The EJAT Trust currently operates a training facility
located at 6201 West 115th Street, Alsip, Illinois (the EJAT Trust
Training Facility), where full-time classroom instruction is provided
to approximately 325 EJAT Trust apprentices at any given time. The EJAT
Trust is financed by participating employer contributions and
administered by a Board of Trustees comprised of ECA and Local 134
representatives. The EJAT Trust is a tax-exempt educational labor
organization under section 501(c)(5) of the Code. As of May 31, 2019,
the EJAT Trust covered
[[Page 15260]]
6,815 participants and held $41,634,000 in total assets.
The EJAT Trust employees and apprentices are eligible to
participate in the EIT Fund and the Related Plans after meeting certain
eligibility requirements. As a result, an estimated 95% of EJAT Trust
apprentices, at any given time, are also participants in the EIT Fund
and the Related Plans. Additionally, although the EIT Fund Board and
EJAT Trust Board are distinct entities, they share one common member.
The Applicants represent that this common board member will recuse
himself from all aspects of the decision-making process relating to the
Sale transaction described herein.
3. The EIT Fund Current Lease. The EIT Fund currently leases office
space located at 221 North LaSalle Street in Chicago, Illinois from an
unrelated third party (the EIT Lease). The EIT Fund shares its current
office space, equipment and staff with eight other related employee
benefit plans administered by the Electrical Insurance Trustees (the
Related Plans).\3\ Expenses, which are shared by the EIT Fund and the
Related Plans, are initially paid by one of the Related Plans and then
allocated between the EIT Fund and the Related Plans based upon an
estimate of time spent, space utilized, and costs incurred. This
allocation of expenses between the EIT Fund and the Related Plans is
based on a formula that is reviewed biannually and adjusted, as
necessary, by the auditor of the EIT Fund and the Related Plans. The
EIT Fund's share of these allocated expenses was $2,994,430 and
$2,884,618 for the years ended June 30, 2019 and 2018, respectively.
The EIT Fund Lease, which was originally set to expire on September 30,
2020, has been extended for eight months to May 31, 2021.
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\3\ The Related Plans include: (a) The Electrical Contractors'
Association of the City of Chicago and Local Union 134 I.B.E.W.
Joint Pension Trust of Chicago Plan No. 2; (b) the Electrical
Contractors' Association of the City of Chicago and Local Union 134
I.B.E.W. Joint Pension Trust of Chicago Plan No. 5; (c) the
Electrical Insurance Trustees Insurance Fund for Communication
Employers; (d) the Electrical Insurance Trustees Insurance Fund for
Other Participating Employers; (e) the Electrical Insurance Trustees
Supplemental Unemployment Benefit Plan; (f) the Electrical Insurance
Trustees Supplemental Unemployment Benefit Plan for Communication
Participants; and (g) the Electrical Insurance Trustees Employees'
Retirement Plan.
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4. EIT Fund Relocation Study. The EIT Fund has determined that
monthly lease payments under the EIT Lease are high, and that a future
extension of the EIT Lease beyond May 31, 2021 would come with a higher
rate that would be cost prohibitive to the EIT Fund and the Related
Plans. In 2016, the EIT Fund's Board began to consider alternatives to
the EIT Lease, including a possible relocation of the EIT Fund and the
Related Plans. The EIT Fund Board also began to consider a possible
expansion of future EIT Fund office space to include an on-site medical
clinic as an additional benefit to participants and beneficiaries, and
as a means of saving on healthcare costs. In 2016, the EIT Fund's Board
engaged Savills Studley (Savills), a commercial real estate advisory
firm and unrelated party with respect to the Plans, to explore the
feasibility of these options.
In February 2016, Savills issued an office space scenario analysis
of office rental space in the downtown Chicago business district, which
included the projected costs and expansion opportunities conducive to
an on-site medical clinic. Based on Savills' analysis, the EIT Board
concluded that the future cost of renting office space in downtown
Chicago would be exceedingly expensive, offer limited opportunity for
expansion, and be inconvenient and expensive to participants and
beneficiaries. In April 2018, Savills conducted a follow-up study
assessing possible buildings for sale in the area. Savills concluded
that available buildings for sale in the area did not meet the EIT
Fund's needs and that purchasing an existing building would be
expensive because of the extensive work that would be required to
customize any existing space to the EIT Fund's specific and unique
needs for offices, as well as an onsite medical clinic.
The Property and the Proposed Transaction
5. The Property. The subject Property consists of an unimproved
5.105 acre parcel of land, that is a portion of a 23.66 acre parcel,
located at as 6201 W 115th Street, Alsip, Illinois 60803 (the Whole
Parcel). The EJAT Trust acquired the Whole Parcel in 1992, for
$1,704,385.18, from an unrelated third party for the purpose of
utilizing the building on the premises as the EJAT Training Facility.
The Whole Parcel is subject to financing through Standard Bank and
Trust Company, a third party financial institution that is unrelated to
the EJAT Trust and the EIT Fund. At present, the Whole Parcel remains
subject to a mortgage but, as a condition of the proposed Sale, the
Property will be transferred to the EIT Fund free and clear from all
liens and encumbrances.
6. The Purchase Agreement. If this proposed exemption is granted,
the EIT Fund will pay a cash price of $710,000 to acquire the Property
from the EJAT Trust. The acquisition price was negotiated and agreed to
by the qualified independent fiduciary for the EIT Fund (the EIT Fund
Independent Fiduciary) and the qualified independent fiduciary for the
EJAT Trust (the EJAT Trust Independent Fiduciary). As described in
further detail below, this price was based on two, separate independent
appraisals performed on the Property, with adjustments thereafter made
for certain costs that the EIT Fund will incur in connection with the
Sale, including the cost to construct an access road and necessary
utilities, including water, electricity, and waste disposal.
In connection with the proposed transaction, the Plans will enter
into a Real Estate Purchase Agreement (the Purchase Agreement) that
will govern the terms of the Sale. The Purchase Agreement provides that
the EIT Fund is not obligated to close on the Sale unless, by the
Closing Date, the EIT Fund has obtained all development approvals
required to construct the EIT Fund Facility and the access road,
including approval by the Village of Aslip of the proposed design of
the EIT Fund Facility, and approval for the construction of an easement
access road necessary to make the Property accessible to W 115th
Street.
The Purchase Agreement also provides that the EIT Fund Independent
Fiduciary may exercise the EIT Fund's absolute unconditional right to
terminate the Sale through the end of an ``inspection period,'' which
ends 60 days after the Department's publication of a notice granting
this exemption. Thereafter, until the closing of the Sale, the Purchase
Agreement provides the EIT Fund with an absolute right to terminate the
Sale if the EIT Fund is unable to obtain the development approvals
necessary to construct the EIT Fund Facility and access road.
7. Construction of the Facility for the EIT Fund. After acquiring
the Property, the EIT Fund intends to construct an approximately 17,000
square foot, one-story facility consisting of office space and an
onsite medical clinic that will be used by the EIT Fund and the Related
Plans (the EIT Fund Facility).\4\ The EIT Fund also intends to build an
access road to connect the Property to W 115th Street. The EIT Fund
estimates that the total cost to construct the EIT Fund Facility and
the access road will be $10,248,350.
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\4\ The Applicant's represent that the use of the Property by
the EIT Fund and the Related Plans will adhere to the requirements
of PTEs 76-1 and 77-10. Further, the exemptive relief provided
herein is conditioned upon the EIT Fund and the Related Plans
adhering to the terms of PTEs 76-1 and 77-10.
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[[Page 15261]]
8. Easement and Construction of Public Road. Under the Purchase
Agreement, the Boards of the EIT Fund and EJAT Trust are contractually
bound to an easement agreement (the Easement Agreement), which provides
terms and conditions governing the use, maintenance, and cost-sharing
with respect to an easement for vehicular access to and from the
Property. Under the Easement Agreement, the EIT Fund will bear the cost
of constructing and maintaining the access road easement. The parties
have adjusted the purchase price of the Property to account for the
anticipated costs that the EIT Fund will incur in constructing the
access road, and the necessary utilities, including water, electricity,
and waste disposal.
9. The Right of First Offer. The Purchase Agreement provides the
EJAT Trust with a right of first offer (the Right of First Offer).
Pursuant to the Right of First Offer, in the event that the EIT Fund
desires to sell the Property, the EIT Fund must first provide notice to
the EJAT Trust of its intent to do so (the Notice to Sell). Following
its receipt of the Notice to Sell, the EJAT Trust will have 14 days to
inform the EIT Fund that it will exercise its Right of First Offer (the
Notice to Exercise). The EJAT Trust's failure to provide the Notice to
Exercise within 14 days will be considered a rejection of the EJAT
Trust's Right of First Offer. Then, the EIT Fund will be free to sell
the Property to an unrelated, third party buyer. If the EJAT Trust does
provide its Notice to Exercise in a timely manner, the EIT Fund and the
EJAT Trust will have 21 days to use commercially reasonable and good
faith efforts to enter into a Purchase and Sale Agreement. If the EIT
Fund and the EJAT Trust cannot mutually agree upon a purchase price
within this 21 day negotiation period, then the Right of First Offer
will expire.
The Department notes that the EJAT Trust's re-purchase of the
Property would constitute a prohibited transaction that is outside the
scope of this exemption. If the EJAT Trust seeks to re-purchase the
Property, the parties may submit an exemption application, and the
Department will assess the merits of the proposed transaction.
The Independent Fiduciaries
10. Independent Fiduciary: EJAT Trust. The EJAT Trust retained
Shumaker, Loop & Kendrick LLP of Toledo, OH (Shumaker or the EJAT Trust
Independent Fiduciary) to serve as an Independent Fiduciary to the EJAT
Trust with respect to the Sale. Shumaker represents that the duties and
obligations as the EJAT Trust Independent Fiduciary are being carried
out by Scott D. Newsom and Beth M. Eckel. Shumaker represents that Mr.
Newsom has over 20 years of experience in employee benefits law and
ERISA, primarily representing multiemployer benefit plans in all
aspects of their maintenance and the fulfillment of fiduciary
obligations. Shumaker further represents that Ms. Eckel has 10 years of
experience as a real estate attorney focused on commercial real estate
and financing matters.
Shumaker states that it understands, acknowledges, and accepts its
duties and responsibilities under ERISA in acting as the EJAT Trust
Independent Fiduciary, and that it does not have any past or ongoing
relationship with the EJAT Trust. Shumaker also states that the total
revenue received from the EJAT Trust in connection with its engagement
as Independent Fiduciary with respect to the Sale is less than 0.02% of
Shumaker's gross revenue for the 2019 income tax year.
As Independent Fiduciary to the EJAT Trust, Shumaker must
prudently: (a) Represent the EJAT Trust's interests for all purposes
with respect to the Sale; (b) determine that the Sale is in the
interests of, and protective of, the EJAT Trust and its participants
and beneficiaries; (c) review and approve the terms and conditions of
the Sale; (d) engage a qualified independent appraiser (the EJAT Trust
Independent Appraiser) for the purpose of valuing the Property in
connection with the Sale, and ensure the independence of the appraiser;
(e) review the independent appraisal report completed by the EJAT Trust
Independent Appraiser (the EJAT Trust Independent Appraisal Report) to
confirm that the underlying methodology is reasonable and accurate and
that the valuation of the Property has been reasonably derived; (f)
ensure that the EJAT Independent Appraiser renders an updated fair
market valuation of the Property as of the date of the Sale; (g)
determine whether it is prudent for the EJAT Trust to proceed with the
Sale; and (h) ensure that it has not and will not enter into any
agreement or instrument that violates section 410 of ERISA or section
2509.75-4 of the Department's regulations.\5\ Additionally, not later
than 90 days after the Sale is completed, Shumaker must submit a
written statement to the Department documenting how the Sale has met
all of the requirements of this exemption.
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\5\ Section 410 of ERISA provides, in part, that ``except as
provided in sections 405(b)(1) and 405(d) of ERISA, any provision in
an agreement or instrument which purports to relieve a fiduciary
from responsibility or liability for any responsibility, obligation,
or duty under this part [meaning section 410(a) of ERISA] shall be
void as against public policy.''
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11. Independent Fiduciary: EIT Fund. The EIT Fund has retained the
Wagner Law Group (Wagner or the EIT Fund Independent Fiduciary) to
serve as an Independent Fiduciary to the EIT Fund with respect to the
Sale. Wagner has served as the appointed independent fiduciary for
various entities. Stephen Wilkes, Susan Rees, and Roberta Watson, all
of whom are employed by Wagner, have agreed to undertake the duties of
the EIT Fund Independent Fiduciary with respect to the Sale.
Wagner states that it understands, acknowledges, and accepts its
duties and responsibilities under ERISA in acting as the EIT Fund
Independent Fiduciary, and that it does not have any past or ongoing
relationship with the EIT Fund. Wagner also states that the percentage
of its current revenue that is derived from any party in interest
involved in the Sale is 0.55%.
As the EIT Fund Independent Fiduciary, Wagner must prudently: (a)
Represent the EIT Fund's interests for all purposes with respect to the
Sale; (b) determine that the Sale is in the interests of, and
protective of, the EIT Fund and its participants and beneficiaries; (c)
review and approve the terms and conditions of the Sale; (d) engage a
qualified independent appraiser (the EIT Independent Appraiser) for the
purpose of valuing the Property in connection with the Sale, and ensure
the independence of the appraiser; (e) review the independent appraisal
report completed by the EIT Fund Independent Appraiser (the EIT Fund
Independent Appraisal Report) to confirm that the underlying
methodology is reasonable and accurate and that the valuation of the
Property has been reasonably derived; (f) ensure that the EIT Fund
Independent Appraiser renders an updated fair market valuation of the
Property as of the date of the Sale; (g) determine whether it is
prudent for the EIT Fund to proceed with the Sale; and (h) ensure that
it has not and will not enter into any agreement or instrument that
violates section 410 of ERISA or section 2509.75-4 of the Department's
regulations. Additionally, not later than 90 days after the Sale is
completed, Wagner must submit a written statement to the Department
documenting that the Sale has met all of the requirements of this
exemption.
The Independent Appraisers
12. Independent Appraiser: EJAT Trust. In its role as the EJAT
Trust Independent Fiduciary, Shumaker
[[Page 15262]]
retained Realty Value Consultants, Inc. of Berwyn, Illinois (Realty or
the EJAT Trust Independent Appraiser) to assess the fair market value
of the Property. With respect to this engagement, Elizabeth A.
Ritzenthaler and John H. Urubek undertook the specific duties required
of Realty as the EJAT Trust Independent Appraiser. Ms. Ritzenthaler is
a Certified General Real Estate Appraiser in the State of Illinois with
over 25 years of experience in commercial and industrial real estate
appraisal and consulting. Mr. Urubek is a Certified General Real Estate
Appraiser in the State of Illinois with over 40 years of experience in
real estate appraisal and consulting.
Realty states that its fee for appraisal services provided in
connection with the Sale represents less than 0.5% of its annual
revenues for 2014 and 2015. Realty represents that it has no present or
prospective interest in the Property, that it has no personal interest
with respect to the parties involved in the Sale, and that its
engagement as EJAT Independent Appraiser is not contingent upon
developing or reporting predetermined results. Realty further
represents that the compensation it receives as the EJAT Trust
Independent Appraiser is not contingent upon reporting a predetermined
value, a direction in value that favors the cause of the client, the
amount of the value opinion, the attainment of a stipulated result, or
the occurrence of a subsequent event directly related to the intended
use of the appraisal.
Using the Sales Comparison Approach to valuation, Realty valued the
Property at $725,000, as of February 14, 2020. In preparing the EJAT
Trust Independent Appraisal Report, Realty represents that it
physically inspected the Property and researched appropriate market
data, and that its appraisal was conducted in full conformity with
professional appraisal standards and USPAP.
13. Independent Appraiser: EIT Fund. In its role as the EIT Fund
Independent Fiduciary, Wagner engaged Colliers International Valuation
& Advisory Services, LLC (Colliers or the EIT Fund Independent
Appraiser) to assess the fair market value of the Property for the
purposes of the Sale. With respect to this engagement, Cathrine
Chimhandamba and Nancy S. Meyers of Colliers undertook the specific
duties required as the EIT Fund Independent Appraiser. Ms. Chimhandamba
is a Certified General Real Estate Appraiser in the State of Illinois
and a Valuation Specialist with experience in the valuation of
commercial properties. Ms. Myers is a Certified General Real Estate
Appraiser in the State of Illinois and serves as the Managing Director
for Colliers International Valuation & Advisory Services in Chicago,
Illinois.
Colliers represents that it has no present or prospective interest
in the Property, and no personal interest with respect to the parties
involved. Colliers further represents that it is not biased with
respect to the Property or to the parties involved with this
assignment, and that its engagement and compensation was not contingent
upon developing or reporting predetermined results. Colliers represents
that its fee for appraisal services provided in connection with the
Sale represents less than 0.5% of its annual revenues for 2014 and
2015.
Colliers states that it conducted an on-site physical inspection of
the Property and analyzed regional and local area economic profiles
including employment, population, household income, and real estate
trends. Colliers represents that it assessed the general quality and
condition, and emerging development trends for the real estate market.
Colliers further represents that it conducted a Highest and Best Use
analysis and considered legal, locational, physical and financial
feasibility characteristics of the Property. Colliers states that it
confirmed and analyzed financial features of the Property, including
potential entitlement issues, and tax and assessment records. Colliers
represents that its selection of valuation methods was based on the
identifications required in USPAP relating to the intended use,
intended users, definition and date of value, relevant property
characteristics and assignment conditions. On July 15, 2020, Colliers
completed an addendum to its appraisal report (the Addendum) in which
it waived its rights under a liability cap that was previously included
in its engagement agreement with the EIT Fund. In the Addendum, Collier
affirmed that the value of the Property is at least $710,000, and that
its appraisal was prepared in full conformity with professional
appraisal standards and USPAP.
14. Determining the Sale Price for the Property. During
negotiations, the Independent Fiduciaries represent that they
considered certain additional factors that affected the appropriate
Sale price for the Property. In this regard, the Independent
Fiduciaries considered the fact that the EIT Fund would be bearing the
expense of developing and maintaining the vehicular and utility access
to the Property, and that the EIT Fund would incur extra costs
associated with obtaining building plans necessary to avoid disruption
of the protected wetlands area on the Property. The Independent
Fiduciaries also represent that they considered the fact that the EIT
Fund's development of the Property represents enhanced value for the
EJAT Trust Property, and that the EJAT Trust participants will enjoy
the ease and accessibility of an integrated campus arrangement in which
they will have access to the EIT Fund offices, and a possible on-site
medical clinic.
The Independent Fiduciary Reports
15. Independent Fiduciary Report: EJAT Trust. In the Independent
Fiduciary Report for the EJAT Trust, Shumaker concludes that the Sale
at a price of $710,000 would be in the best interests of, and
protective of, the EJAT Trust and its participants and beneficiaries.
Shumaker also concludes that the terms and conditions of the Sale are
at least as favorable to the EJAT Trust as those it could have obtained
in an arm's length transaction with an unrelated and independent party.
Shumaker states that the proximity of the Property to the EJAT
Trust Training Facility will allow for the creation of an electrical
industry campus which will benefit the EJAT Trust's participants and
beneficiaries. In this regard, EJAT Trust participants will benefit
from the ease and accessibility of a campus arrangement in which they
will have access to the EIT Fund offices, and a possible on-site
medical clinic, while pursuing their training and education. Shumaker
notes that presently the EIT Fund offices are located in downtown
Chicago, which imposes inconvenience and unnecessary costs on the EJAT
Trust participants and beneficiaries.
Shumaker states that the Fund will receive $710,000 for the
Property, which in Shumaker's judgement represents that the transaction
is as favorable to the EJAT Trust as the transaction that would have
occurred in an arm's length transaction between independent and
unrelated parties, each of whom had full knowledge of the relevant
facts and were under no compulsion to buy or sell. Shumaker further
states that the Sale presents an opportunity for the EJAT Trust to
diversify its assets through the sale of an unused parcel of real
estate for cash. Shumaker notes that the Property is a nonworking
asset, and that the EJAT Trust does not consider it to be a long-term
investment or strategic reserve necessary for future expansion.
Shumaker states that the Sale provides the EJAT Trust with the ability
to use the cash proceeds from the Sale to enhance the value of the EJAT
Trust Training Facility, for the benefit of the
[[Page 15263]]
participants and beneficiaries of the EJAT Trust.
Shumaker notes that because the Property is zoned for general
manufacturing and processing activities, the marketing of the Property
to unrelated buyers for an unknown purpose may be detrimental to the
value of the Whole Parcel, and may interfere with the EJAT Trust's use
and enjoyment of the Whole Parcel in the future.
Shumaker states that, to further ensure the protection of the EJAT
Trust and its participants and beneficiaries, it will continue to
monitor the Sale, enforce the final terms of the Sale, and take
whatever actions are necessary to protect the interests of the EJAT
Trust's participants and beneficiaries through the closing of the Sale.
Finally, as a condition of the exemption, Shumaker may not enter
into, and has not entered into, any agreement, arrangement or
understanding in connection with the Sale that indemnifies Shumaker, in
whole or in part, or waives any liability for negligence by Shumaker or
for failing to adhere to state or federal law. In addition, Realty may
not enter into, and has not entered into, any agreement, arrangement or
understanding in connection with the Sale that indemnifies Realty, in
whole or in part, or waives any liability for negligence by Realty or
for failure to adhere to professional appraisal standards.
16. Independent Fiduciary Report: EIT Fund. In the EIT Fund
Independent Fiduciary Report, Wagner concludes that a Sale at the price
of $710,000 would be in the best interests of, and protective of, the
EIT Fund and the EIT Fund participants and beneficiaries. Wagner
represents that it considered many factors in its analysis, including
the EIT Fund's financial position, the acquisition and development
costs associated with the Sale, and the benefits to the EIT Fund of
purchasing the Property and constructing the EIT Fund Facility as
opposed to entering into a commercial lease of existing property with
an unrelated party. Wagner represents that it reviewed all the
particulars of the Property, including: (a) The appraisals; (b) the
location and characteristics of the Property; (c) the existing zoning
of the Property; (d) the need for, and expense of, an easement; and (e)
environmental concerns associated with the Property, including the
presence of wetlands.
Wagner states that the Property functionally meets the EIT Fund's
needs, as it is large enough to construct an EIT Fund Office with
sufficient space for a Board Room, conference room, large reception
areas, and an onsite medical clinic. Wagner further states that the
Property is accessible for a significant number of EIT Fund
participants and beneficiaries. In this regard, Wagner notes that the
EIT Fund conducted a proximity analysis in October of 2019 which found
that over 42% of current EIT Fund participants and beneficiaries live
within a 15-mile radius of the Property.
Wagner states that relocating the EIT Fund's office to the Property
is cost-effective and creates synergy by establishing a campus of
related services for EIT Fund participants. In this regard, Wagner
notes that an estimated 95% of apprentices in the EJAT Trust, at any
given time, are also participants in the EIT Fund and the Related
Plans. In addition, Wagner states that locating the EIT Fund Office on
the Property would promote the visibility and publicity of the EIT Fund
Office's services, as well as the EJAT Trust's training programs.
Wagner further notes that the Property is sufficient in size to provide
ample free parking for EIT Fund employees and EIT Fund participants and
beneficiaries, and is conveniently located close to major highways.
With respect to the Property, Wagner states that, the location
adjacent to the EJAT Trust Training Facility will provide enhanced
value for the EIT Fund's participants and beneficiaries. Wagner further
states that the suburban location of the Property will be convenient
for the participants and beneficiaries of the EIT Fund, as well as the
EIT Fund staff, who will benefit from affordable housing available in
close proximity to the Property. In addition, Wagner states that the
EIT Fund's purchase of the Property and construction of the EIT Fund
Facility will further the EIT Fund's longterm goals of stabilizing its
expenses with an updated, modernized, and fully-owned facility, and
expanding its service offerings to include the medical clinic.
Wagner represents that it reviewed the methodology used by the
Independent Appraiser to ensure that the methodology adhered to sound
principles of valuation. Wagner states that it reached its conclusion
as to an appropriate purchase price for the Property based, not on a
mechanical mathematical averaging process, but by relying upon a strong
framework to determine a purchase price that represents a prudent
judgment as to a fair market value that is in the best interest of the
EIT Fund participants, given the intended use of the Property and the
value of the transaction to the EIT Fund. In reliance on this analysis,
Wagner affirms that the Sale is at least as favorable to the EIT Fund
as the transaction that would have occurred in an arm's length
transaction between independent and unrelated parties, each of whom had
full knowledge of the relevant facts and neither of whom was under any
compulsion to buy or sell.
Wagner also considered the financial condition of the EIT Fund in
its analysis. In this regard, Wagner notes that, as of June 30, 2018,
the EIT Fund's financial position included assets totaling
$456,536,340, which represents a 9% increase over the previous year.
Wagner states that the $710,000 purchase price will involve 0.16% of
the Fund's total assets, and that the $10,248,350 to construct the EIT
Fund Facility and access road will involve about 2.24% of the EIT
Fund's total assets. Thus, according to Wagner, the total cost to the
EIT Fund with respect to the Sale will involve about 2.40% of the EIT
Fund's total assets.
In addition, Wagner represents that the EIT Fund will not require a
loan or other financing to acquire the Property and construct the EIT
Fund Facility and access road. Wagner notes that the EIT Fund has
represented that it will be able to meet its obligations to pay
benefits under the Fund and will not need to obtain financing to
support its acquisition of the Property. Wagner concludes that the
purchase of the Property and construction of the EIT Fund Facility is
in the best interest of the EIT Fund participants and will not
negatively affect the EIT Fund's overall financial health.
Moreover, Wagner notes that the EIT Fund, its engineers, design
consultants, and professional advisors have met with the Village of
Alsip regarding the purchase of the Property, the subdivision and
easement, the Fund's intended use of the Property, and various
necessary zoning, building, and easement construction permits.
According to the EIT Fund representatives, all indications from the
Village of Alsip are that development approvals will be granted once
the EIT Fund's formal applications are filed.
Wagner states that, to further ensure the protection of the EIT
Fund and its participants and beneficiaries, it will continue to
monitor the process, enforce the final terms of the Sale, and take
whatever actions are necessary to protect the interests of the EIT Fund
participants and beneficiaries up to and coincident with the closing
date of the Sale.
Finally, Wagner may not enter into, and has not entered into, any
agreement, arrangement or understanding in connection with the Sale
that indemnifies Wagner, in whole or in
[[Page 15264]]
part, or waives any liability for negligence by Wagner or for failing
to adhere to state or federal law. In addition, Colliers may not enter
into, and has not entered into, any agreement, arrangement or
understanding in connection with the Sale that indemnifies Colliers, in
whole or in part, or waives any liability for negligence by Colliers or
for failing to adhere to state or federal law.
The EIT Fund's Environmental Study of Property
17. Phase I Environmental Study. To further examine the
appropriateness of the Property as a site for the EIT Fund Facility,
the EIT Fund engaged Pioneer Engineering & Environmental Services, LLC
of Chicago, Illinois (Pioneer) to conduct a Phase I Environmental Site
Assessment of the Property. On October 18, 2019, Pioneer completed its
assessment (the Environmental Assessment) which revealed no evidence of
any Recognized Environmental Conditions in connection with the
Property. Pioneer will update its Environmental Assessment of the
Property prior to the Closing Date of the Sale.
Exemptive Relief
18. Exemptive Relief Requested and Analysis. Section 406(a)(1)(A)
of the Act prohibits a plan fiduciary from causing a plan to engage in
a transaction if the fiduciary knows or should know that such
transaction constitutes a direct or indirect sale of any property
between a plan and a party in interest. The EJAT Trust Board and the
EIT Fund Board are fiduciaries under section 3(14)(A) of the Act. The
EIT Fund is a party in interest with respect to the EJAT Trust under
section 3(14)(C) of the Act because it is an employer whose employees
participate in the EIT Fund. Therefore, the Sale would violate section
406(a)(1)(A) of the Act.
In addition, section 406(a)(1)(D) of the Act prohibits a plan
fiduciary from causing a plan to engage in a transaction if the
fiduciary knows or should know that such transaction constitutes a
direct or indirect transfer to, or use by or for the benefit of, a
party in interest, of the income or assets of the plan. The EJAT
Trust's sale of the Property to the EIT Fund, and the EIT Fund's
corresponding purchase of the Property from the EJAT Trust, and the
granting of the right of first offer, constitute a prohibited transfer
of assets (i.e., the exchange of the Property for cash between the
Plans) in violation of section 406(a)(1)(D) of the Act.
Section 406(b)(1) of the Act prohibits a plan fiduciary from
dealing with the assets of the plan in his or her own interest or for
his or her own account. Section 406(b)(2) of the Act prohibits a plan
fiduciary, in his or her individual or in any other capacity, from
acting in any transaction involving the plan on behalf of a party whose
interests are adverse to the interests of the plan or the interests of
the plan's participants or beneficiaries.
The EJAT Trust Board and the EIT Fund Board share one trustee, Mr.
Donald Finn, who is the business manager and financial secretary with
respect to the Local 134. Mr. Finn will recuse himself with respect to
the transactions described in this proposal. However, in the
Department's view, Mr. Finn remains in a position of influence with
respect to the Local 134 Trustees. The EJAT Trust Board and the EIT
Fund Board may be deemed as engaging in a prohibited act of self-
dealing in violation of section 406(b)(1) of the Act with respect to
the Sale and the granting of the right of first offer. In addition,
each Board may have divided loyalties regarding the Sale and the
granting of the right of first offer, in violation of section 406(b)(2)
of the Act.
Statutory Findings
19. ``Administratively Feasible.'' The Department has tentatively
determined that the Sale is administratively feasible because it is a
one-time transaction for cash overseen Independent Fiduciaries.
Furthermore, Independent Fiduciaries will represent the interests of
the Plans for all purposes with respect to the Sale, and ensure that
the Property is sold for fair market value.
20. ``In the Interests of.'' The Department has tentatively
determined that the proposed exemption is in the interest of each Plan.
With regard to the EIT Fund, relocating the EIT Fund's office to the
Property may stabilize the EIT Fund's expenses and create synergies by
establishing a campus of related services between the EIT Fund and EJAT
Trust. With regard to the EJAT Trust, the Sale presents an opportunity
for the EJAT Trust to diversity its assets through the sale of an
unused parcel of real estate. The Sale will allow the EJAT Trust to use
the cash to enhance the value of the EJAT Trust Training Facility for
the benefit of the participants and beneficiaries of the EJAT Trust.
21. ``Protective of.'' The Department has tentatively determined
that the proposed exemption is protective of the rights of the Plans'
participants and beneficiaries. In this regard, an Independent
Fiduciary will represent its respective Plans for all purposes with
respect to the Sale. Among other things, the Independent Fiduciaries
will review and confirm that the methodologies used by the Independent
Appraisers adhere to sound principles of valuation, and affirm that the
terms of the Sale are at least as favorable as would be obtainable in
an arm's length transaction with unrelated and independent parties,
each of whom who had full knowledge of the relevant facts, and neither
of whom was under any compulsion to buy or sell.
Notice to Interested Persons
Those persons who may be interested in the publication in the
Federal Register of the notice of proposed exemption (the Notice)
include participants and beneficiaries of the EJAT Trust and
participants and beneficiaries of the EIT Fund. The Applicants will
provide notification to interested persons by electronic mail, and
first-class mail within fifteen (15) calendar days of the date of the
publication of the Notice in the Federal Register. The mailing will
contain a copy of the Notice, as it appears in the Federal Register on
the date of publication, plus a copy of the Supplemental Statement, as
required, pursuant to 29 CFR 2570.43(b)(2), which will advise the
interested persons of their right to comment and to request a hearing.
The Department must receive all written comments and requests for a
hearing no later than forty-five (45) days from the date of the
publication of the Notice in the Federal Register.
All comments will be made available to the public.
Warning: Do not include any personally identifiable information
(such as name, address, or other contact information) or confidential
business information that you do not want publicly disclosed. All
comments may be posted on the internet and can be retrieved by most
internet search engines.
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 of the Act and/or the Code,
including any prohibited transaction 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
[[Page 15265]]
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) Before an exemption may be granted under section 408(a) of the
Act and/or section 4975(c)(2) of the Code, the Department must find
that the exemption is administratively feasible, in the interests of
the plan and of its participants and beneficiaries, and protective of
the rights of participants and beneficiaries of the plan;
(3) The proposed exemption, if granted, will be supplemental to,
and not in derogation of, any other provisions of the Act and/or the
Code, including statutory or administrative exemptions and transitional
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
(4) The proposed exemption, if granted, will be subject to the
express condition that the material facts and representations contained
in each application are true and complete, and that each application
accurately describes all material terms of the transaction which is the
subject of the exemption.
Proposed Exemption
Section I. Proposed Transactions
If the proposed exemption is granted, the restrictions of sections
406(a)(1)(A) and (D), and 406(b)(1) and (b)(2) of the Act shall not
apply to: (a) the sale (the Sale) by the Electrical Joint
Apprenticeship and Training Trust (the EJAT Trust) of 5.11 acres of
unimproved real property to the Electrical Insurance Trustees Insurance
Fund (the EIT Fund), a party in interest with respect to the EJAT
Trust; and (b) the EIT Fund's granting of a right of first offer (the
Right of First Offer) to the EJAT Trust, for the purchase back of the
Property by the EJAT Trust from the EIT Fund, provided the conditions
in Section II are met.
Section II. Conditions
(a) The Sale is a one-time transaction for cash;
(b) The terms and conditions of the Sale are at least as favorable
to the EJAT Trust and the EIT Fund as the terms and conditions they
would have received in an arm's length transaction between unrelated
and independent parties, each of whom had full knowledge of the
relevant facts, and neither of whom were under any compulsion to buy or
sell;
(c) The EJAT Trust Independent Fiduciary prudently:
(1) Represents the EJAT Trust's interests for all purposes with
respect to the Sale;
(2) Determines that the Sale is in the interest of, and protective
of, the EJAT Trust and the participants of the EJAT Trust;
(3) Reviews and approves the terms and conditions of the Sale;
(4) Engaged the EJAT Trust Independent Appraiser and ensured the
Appraiser's independence;
(5) Reviews the EJAT Independent Appraisal Report, confirms that
the underlying methodology is reasonable and accurate, and confirms
that the valuation of the Property was reasonably derived;
(6) Ensures that the EJAT Trust Independent Appraiser renders an
updated fair market valuation of the Property as of the date of the
Sale;
(7) Determines whether it is prudent for the EJAT Trust to proceed
with the Sale; and
(8) Ensures that it has not and will not enter into any agreement
or instrument that violates section 410 of ERISA.
(d) The EIT Fund Independent Fiduciary prudently:
(1) Represents the EIT Fund's interests for all purposes with
respect to the Sale;
(2) Determines that the Sale is in the interest of, and protective
of, the EIT Fund and the participants of the EIT Fund;
(3) Reviews and approves the terms and conditions of the Sale;
(4) Engaged the EIT Fund Independent Appraiser for the Sale and
ensured the Appraiser's Independence;
(5) Reviews the EIT Fund Independent Appraisal Report, confirms
that the underlying methodology is reasonable and accurate, and
confirms that the valuation of the Property was reasonably derived;
(6) Ensures that the EIT Fund Independent Appraiser renders an
updated fair market valuation of the Property as of the date of the
Sale;
(7) Determines whether it is prudent for the EIT Fund to proceed
with the Sale; and
(8) Ensures that it has not and will not enter into any agreement
or instrument that violates section 410 of ERISA.
(e) The Sale is not part of an agreement, arrangement, or
understanding designed to benefit any party other than the EJAT Trust
and the EIT Fund;
(f) Any use of the Property by the EIT Fund and the Related Plans
that is described in PTEs 76-1 and 77-10 complies with the conditions
of those exemptions;
(g) Not later than 90 days after the Sale is completed, the EJAT
Trust Independent Fiduciary and the EIT Fund Independent Fiduciary each
submit a written statement to the Department documenting that the Sale
has met all of the requirements of this the exemption;
(h) The EIT Fund Independent Fiduciary may not enter, and has not
entered, into any agreement, arrangement or understanding regarding the
Sale that indemnifies the EIT Fund Independent Fiduciary, in whole or
in part, or waives any liability for negligence or for violation of
state or federal law by the EIT Fund Independent Fiduciary;
(i) The Independent Appraiser selected by the EIT Fund Independent
Fiduciary may not enter, and has not entered, into any agreement,
arrangement or understanding regarding the Sale that indemnifies the
EIT Fund Independent Appraiser, in whole or in part, or waives any
liability for negligence or for any violation of state or federal law
by the Independent Appraiser;
(j) The EJAT Trust Independent Fiduciary may not enter, and has not
entered, into any agreement, arrangement or understanding regarding the
Sale that indemnifies the EJAT Trust Independent Fiduciary, in whole or
in part, or waives any liability for negligence or for any violation of
state or federal law by the EJAT Trust Independent Fiduciary;
(k) The Independent Appraiser that is selected by the EJAT Trust
Independent Fiduciary may not enter, and has not entered, into any
agreement, arrangement or understanding regarding the Sale that
indemnifies the Independent Appraiser, in whole or in part, for
negligence or for any violation of state or federal law by the
Independent Appraiser; and
(l) The EJAT Trust may not re-purchase the Property from the EIT
Fund absent an individual exemption granted by the Department.
Effective Date: If granted, the exemption will be effective as of
the date the grant notice is published in the Federal Register.
Signed at Washington, DC, this 15th day of March 2021.
Christopher Motta,
Chief, Division of Individual Exemptions, Office of Exemption
Determinations, Employee Benefits Security Administration, U.S.
Department Of Labor.
[FR Doc. 2021-05843 Filed 3-19-21; 8:45 am]
BILLING CODE 4510-29-P
