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Secretary of Labor Thomas E. Perez
Proposed Exemptions; Jack Mayesh Wholesale Florist, Inc. [Notices] [04/22/1998]

EBSA (Formerly PWBA) Federal Register Notice

Proposed Exemptions; Jack Mayesh Wholesale Florist, Inc. [04/22/1998]

[PDF Version]

Volume 63, Number 77, Page 19950-19954

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Application No. D-10524, et al.]

 
Proposed Exemptions; Jack Mayesh Wholesale Florist, Inc.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Notice of proposed exemptions.

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SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions from 
certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (the Act) and/or the Internal 
Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests

    All interested persons are invited to submit written comments or 
request for a hearing on the pending exemptions, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice. Comments and 
requests for a hearing should state: (1) The name, address, and 
telephone number of the person making the comment or request, and (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. A 
request for a hearing must also state the issues to be addressed and 
include a general description of the evidence to be presented at the 
hearing.

ADDRESSES: All written comments and request for a hearing (at least 
three copies) should be sent to the Pension and Welfare Benefits 
Administration, Office of Exemption Determinations, Room N-5649, U.S. 
Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 
20210. Attention: Application No. ______, stated in each Notice of 
Proposed Exemption. The applications for exemption and the comments 
received will be available for public inspection in the Public 
Documents Room of Pension and Welfare Benefits Administration, U.S. 
Department of Labor, Room N-5507, 200 Constitution Avenue, N.W., 
Washington, D.C. 20210.

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in 
applications filed pursuant to section 408(a) of the Act and/or section 
4975(c)(2) of the Code, and in accordance with procedures set forth in 
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 
of 1978 (43 FR 47713, October 17, 1978) transferred the authority of 
the Secretary of the Treasury to issue exemptions of the type requested 
to the Secretary of Labor. Therefore, these notices of proposed 
exemption are issued solely by the Department.
    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

Jack Mayesh Wholesale Florist, Inc., Profit Sharing Plan (the 
Plan), Located in Los Angeles, California

[Application No. D-10524]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption 
is granted, the restrictions of sections 406(a), 406 (b)(1) and (b)(2) 
of the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of 
the Code, shall not apply to the proposed sale by the Plan of certain 
unimproved real property (the Property) to Roy Dahlson, a party in 
interest with respect to the Plan, provided that the following 
conditions are satisfied: (1) the sale is a one-time transaction for 
cash; (2) the Plan pays no commissions nor other

[[Page 19951]]

expenses relating to the sale; and (3) the Plan receives an amount 
which is the greater of either (a) the fair market value of the 
Property as of the date of the sale, as determined by a qualified, 
independent appraiser, or (b) the original acquisition cost of the 
Property to the Plan, plus lost opportunity costs attributable to the 
Property.

Summary of Facts and Representations

    1. The Plan is a defined contribution plan sponsored by Jack Mayesh 
Wholesale Florist, Inc. (the Employer) and has approximately 58 
participants. Mr. Dahlson is an owner of the Employer and one of the 
trustees of the Plan. The assets of the Plan, and of the Money Purchase 
Plan also sponsored by the Employer, are held in a combined trust. As 
of December 31, 1996, the fair market value of the assets of both plans 
was $1,062,124.34.
    2. The Property consists of two adjoining parcels of unimproved 
real property located at Sunland Blvd., Los Angeles, California (mail 
address at 12901 Harding St., Sylmar, California). The two parcels are 
known as Parcel # 2544-010-002 (Lot 2) and Parcel # 2544-101-003 (Lot 
3). Lot 2 consists of an area of 37,900 sq. ft., while Lot 3 consists 
of an area of approximately 50,530 sq. ft. The other parcels adjacent 
to Lot 2 and Lot 3 are owned by persons unrelated to the Plan, the 
Employer, and Mr. Dahlson.
    3. The Property was acquired by the Plan from Shadow Hills 
Development Corp., an unrelated party, in March, 1993, for a total 
purchase price of $101,808. The purchase was paid by the Plan in four 
installments, as follows.

------------------------------------------------------------------------
                      Date of payment                        Amount paid
------------------------------------------------------------------------
1. March 12, 1993..........................................   $25,000.00
2. August 27, 1993.........................................     6,808.38
3. March 5, 1994...........................................    20,000.00
4. September 14, 1994......................................    50,000.00
                                                            ------------
                                                              101,808.38
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    The applicant represents that all expenses relating to the Property 
since its acquisition by the Plan, including taxes, insurance, and 
fees, have been paid by Mr. Dahlson. However, the applicant states that 
the Property has not been leased to, nor used by, any party in interest 
with respect to the Plan, at any time since its acquisition by the 
Plan. The Property has produced no income for the Plan.<SUP>1</SUP>
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    \1\ The Department expresses no opinion herein as to whether the 
acquisition and holding of the Property by the Plan violated any of 
the provisions of Part 4 of Title I in the Act. However, the 
Department notes that section 404(a) of the Act requires, among 
other things, that a plan fiduciary act prudently and solely in the 
interest of the plan and its participants and beneficiaries when 
making investment decisions on behalf of the plan.
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    4. The applicant has obtained two appraisals of the Property by 
qualified, independent appraisers, both certified in the State of 
California. The first appraiser, William G. Dyess, relying on the 
market approach to valuation, concluded that the fair market value of 
the Property (both parcels combined) was $44,000, as of June 8, 1997 
(the Dyess Appraisal). The second appraiser, Terry T. Komatsu, of 
Suburban Appraisal Service, also relying on the market approach, 
estimated that the fair market value of the Property (both parcels 
combined) was $30,000, as of July 7, 1997 (the Komatsu Appraisal).
    Each appraiser examined three recent sales of comparable properties 
in the local real estate area in making his determination of the fair 
market value of the Property. The zoning of the Property is Ra-1&K--
Residential/agricultural. The Dyess Appraisal noted that Lot 2, which 
has street frontage on Sunland Blvd., is land that rises up sharply 
from the street and has value only to an adjoining lot. The Komatsu 
Appraisal noted that Lot 3 has no street frontage or other direct 
access from the street except through other parcels. Thus, by itself, 
it would have no apparent value unless vehicular ingress/egress 
easements could be obtained from adjoining parcels.
    5. The applicant represents that the Plan has attempted to sell the 
Property on the open market for several years, without success. Mr. 
Dahlson therefore proposes to purchase the Property from the Plan for 
an amount which is the greater of either (a) the fair market value of 
the Property as of the date of the sale, based on an updated 
independent appraisal, or (b) the original acquisition cost of the 
Property to the Plan, plus lost opportunity costs attributable to the 
Property. Since the Property has declined in value, based on the 
conclusions of the Dyess Appraisal and the Komatsu Appraisal, Mr. 
Dahlson will pay the Plan the latter amount.
    Specifically, Mr. Dahlson will pay the Plan a total purchase price 
of $145,922.64, which amount includes the Plan's original acquisition 
cost of $101,803.38, as well as lost opportunity costs calculated at a 
rate of 9%, compounded annually, or $44,114.27. As stated above, the 
Plan paid for the Property in four installments, and the appropriate 
purchase price to be paid by Mr. Dahlson was determined as follows.

----------------------------------------------------------------------------------------------------------------
                                                                                     Interest                   
                                                                                    compounded                  
                         Date of payment                          Amount paid      annually at                  
                                                                                    9% through                  
                                                                                     4/30/98                    
----------------------------------------------------------------------------------------------------------------
March 12, 1993..................................................   $25,000.00       $13,898.34                  
August 27, 1993.................................................     6,808.38         3,378.84                  
March 5, 1994...................................................    20,000.00         8,443.37                  
September 14, 1994..............................................    50,000.00        18,393.72                  
                                                                   101,808.38   +    44,114.27   =   $145,922.64
----------------------------------------------------------------------------------------------------------------

    The Plan will pay no commissions nor other expenses relating to the 
sale.
    The applicant represents that the exemption will be in the best 
interests of the Plan because Mr. Dahlson is willing to pay more than 
the Plan could receive for the Property on the open market based on the 
current fair market value of the Property. In addition, the sale will 
convert a non-income producing, illiquid asset that continues to 
decline in value into more liquid assets that will achieve a higher 
rate of return for the Plan. All costs relating to this exemption 
application are being borne by the Employer.
    6. In summary, the applicant represents that the proposed 
transaction satisfies the statutory criteria for an exemption under 
section 408(a) of the Act for the following reasons: (1) the sale will 
be a one-time transaction for cash; (2) the Plan will pay no 
commissions nor other expenses relating to the sale; (3) the Plan will 
receive an amount which is the greater

[[Page 19952]]

of either (a) the fair market value of the Property as of the date of 
the sale, as determined by a qualified, independent appraiser, or (b) 
the original acquisition cost of the Property to the Plan, plus lost 
opportunity costs attributable to the Property; and (4) the sale will 
divest the Plan of a non-income producing, illiquid asset that 
continues to decline in value and will allow the Plan to reinvest the 
sale proceeds in assets that will achieve a higher rate of return.
For Further Information Contact: Ms. Karin Weng of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

James E. Jordan, Sr. Individual Retirement Account (the IRA) 
Located in Phoenix, Arizona

[Application No. D-10550]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 4975(c)(2) of the Code and in accordance with the 
procedures set forth in 29 C.F.R. Part 2570, Subpart B (55 FR 32836, 
32847, August 10, 1990.) If the exemption is granted, the sanctions 
resulting from the application of section 4975 of the Code, by reason 
of section 4975(c)(1)(A) through (E) of the Code, shall not apply to 
the proposed cash purchase by the IRA of a certain promissory note 
issued by unrelated parties (the Martin Note) which is secured by a 
first mortgage on certain residential property (the Property) from the 
James E. Jordan Revocable Trust Agreement (the Trust), a disqualified 
person with respect to the IRA; <SUP>2</SUP> provided that the 
following conditions are met:
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    \2\ Pursuant to CFR 2510.3-2(d), the Department has no 
jurisdiction with respect to the IRA under Title I of the Act. 
However, there is jurisdiction under Title II of the Act pursuant to 
section 4975 of the Code.
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    1. The purchase of the Martin Note will be a one-time cash 
transaction;
    2. The IRA will pay no commissions or other expenses associated 
with the purchase;
    3. The amount paid by the IRA for the Martin Note will be the 
lesser of (i) $63,108.97, which is the current fair market value of the 
Martin Note as determined by an independent, qualified appraiser, or 
(ii) the fair market value of the Martin Note, as determined at the 
time of the purchase by an independent, qualified appraiser;
    4. Both the amount paid by the IRA for the Martin Note and the 
outstanding principal balance on such Note will involve less than 25% 
of the IRA's total assets;
    5. Mr. Jordan, as the sole participant of the IRA, will be the only 
individual affected by the proposed transaction; and
    6. On the date the IRA purchases the Martin Note from the Trust, 
the IRA will be named as loss payee under the homeowners insurance 
policy on the Property.

Summary of Facts and Representations

    1. The IRA is a self-directed individual retirement account. The 
current custodian for the IRA is Fidelity National Bank located in 
Atlanta, Georgia. James E. Jordan, Sr. (Mr. Jordan) is the sole 
participant, a fiduciary and the owner of the IRA. As of January 31, 
1998, the fair market value of the IRA's assets was $324,240.87. Thus, 
the proposed purchase of the Martin Note would involve approximately 19 
percent (19%) of the IRA's assets.
    Both the amount paid by the IRA for the Martin Note and the 
outstanding principal balance on such Note will involve less than 25% 
of the IRA's total assets.
    2. The Trust is the Jordan Revocable Trust Agreement dated August 
18, 1993.<SUP>3</SUP> The trustees of the Trust are Mr. Jordan and 
Sheree G. D'Amico. Mr. Jordan is also the grantor and the primary 
beneficial owner of the Trust. The Trust was created by Mr. Jordan as a 
will substitute for the purpose of implementing Mr. Jordan's estate 
plan. During his lifetime, Mr. Jordan is the primary beneficiary, and 
after his death, the beneficiaries will be Sheree G. D'Amico, Lori D. 
Jordan, James E. Jordan Jr. and Jay Jordan. The Trust is considered a 
disqualified person, as defined in section 4975(e)(2) of the Code, due 
to Mr. Jordan's relationship to both the IRA and the Trust.<SUP>4</SUP>
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    \3\ The Trust is not an employee benefit plan or other plan 
subject to the provisions of the Act or the Code.
    \4\ In this regard, section 4975(e)(2)(G) of the Code states, in 
relevant part, that a ``disqualified person'' includes a trust of 
which (or in which) 50 percent or more of the beneficial interest of 
such trust is owned, or held by, a person who is a fiduciary of a 
plan.
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    3. The Martin Note is currently between the Trust, as the original 
lender, and John William Martin and Andreina Martin (the Martins), as 
the original borrowers. The Martin Note and the accompanying mortgage 
were created as seller financing when Mr. Jordan sold an investment 
property to the Martins to be used as their primary residence. It is 
represented that the Martins have no other relationship to Mr. Jordan, 
the Trust and the IRA.
    4. The Martin Note was appraised March 12, 1998, by F. Gregory 
Rhodes (Mr. Rhodes), an independent qualified appraiser with the 
Valuation Advisory Group, Inc. (the Appraisal) in Atlanta, Georgia. The 
Appraisal stated that the original amount of the Martin Note, dated 
December 28, 1994, was $66,000. The Martin Note has a fixed interest 
rate of 8.75% per annum until maturity. The Martin Note has a 30-year 
term and is scheduled to mature in December, 2024. However, the Martin 
Note is subject to prepayment by the Martins prior to maturity. The 
terms of the Martin Note call for monthly payments of principal and 
interest, beginning January 29, 1995, equal to $519.23, with a final 
payment of $268.89 at maturity.
    The Martin Note is secured by a first mortgage on a residence 
located in Volusia County, Florida (the Property). A recent appraisal 
of the Property was performed by Michael F. Beckman (Mr. Beckman) of 
Family Realty of Central Florida, Inc., which stated that the value of 
the Property is between $72,000 and $74,000. In determining the fair 
market value of the Martin Note, Mr. Rhodes reviewed Mr. Beckman's 
appraisal of the Property. Mr. Rhodes states that this appraisal of the 
Property indicates that the outstanding principal amount of the Martin 
Note is adequately secured by the Property.
    5. With respect to the fair market value of the Martin Note, the 
Appraisal considered the following factors:
    (a) The Martin Note is secured by a first mortgage on the Property;
    (b) appraisal of the underlying property indicates that the Martin 
Note is adequately secured;
    (c) from the 1994 execution of the Martin Note, it appears that all 
payments have been made in accordance with the terms of such Note; and
    (d) there is a lack of marketability for the Martin Note.
    The Appraisal states that because no organized market exists for an 
instrument of this sort, a typical buyer of the Martin Note would 
demand a rate of return in excess of what would be available for fixed 
income securities of comparable duration in the public marketplace at 
the time of the transaction. Therefore, the Appraisal applies an 
appropriate discount rate to the remaining stream of payments of 
principal and interest on the Martin Note to arrive at a required yield 
of 8.86% per annum to account for the inherent lack of marketability of 
the Martin Note. Therefore, based on this analysis, the Appraisal 
concluded that the fair market value of the Martin Note was 
approximately $63,108.97 as of March 12, 1998.

[[Page 19953]]

    6. The applicant represents that the proposed transaction presents 
a desirable investment opportunity for the IRA. For reasons discussed 
above, the appraiser discounts (the Discount) the Martin Note. This 
Discount of the Note in effect produces an enhanced yield to the IRA. 
The transaction will be a one-time cash purchase by the IRA. The amount 
paid by the IRA for the Martin Note will be the lesser of (i) 
$63,108.97, which is the current fair market value of the Martin Note 
as determined by an independent, qualified appraiser, or (ii) the fair 
market value of the Martin Note, as determined at the time of the 
purchase by an independent, qualified appraiser. The IRA will not bear 
any commissions or expenses associated with the transaction.
    In addition, the applicant represents that the acquisition of the 
Martin Note will be consistent with the liquidity needs and investment 
objectives of the IRA, which is currently heavily invested in equities. 
The interests of the IRA will be protected because the Note is 
adequately secured by the first mortgage on the Property. In a letter 
of February 12, 1998, Fidelity National Bank, the IRA custodian, stated 
that it would retain the Property as an IRA asset in the event the IRA 
forecloses on the Property. Furthermore, the applicant states that on 
the date the IRA purchases the Martin Note, the IRA will be named as 
the loss payee under the homeowners insurance policy on the Property. 
Thus, if the IRA becomes the owner of the Property, the IRA's 
investment interests will be protected in the event that payments are 
made to the loss payee on this insurance policy.
    7. In summary, the applicant represents that the transaction 
satisfies the statutory criteria of section 4975(c)(2) of the Code 
because:
    a. The purchase of the Martin Note will be a one-time cash 
transaction;
    b. The IRA will pay no commissions or other expenses associated 
with the purchase;
    c. The amount paid by the IRA for the Martin Note will be the 
lesser of (i) $63,108.97, which is the current fair market value of the 
Martin Note as determined by an independent, qualified appraiser, or 
(ii) the fair market value of the Martin Note, as determined at the 
time of the purchase by an independent, qualified appraiser;
    d. Both the amount paid by the IRA for the Martin Note and the 
outstanding principal balance on such Note will involve less than 25% 
of the IRA's total assets;
    e. On the date the IRA purchases the Martin Note, the IRA will be 
named as loss payee under the homeowners insurance policy on the 
Property; and
    f. Mr. Jordan, as the sole participant of the IRA, will be the only 
individual affected by the proposed transaction.

Notice to Interested Persons

    Because Mr. Jordan is the sole participant of the IRA, it has been 
determined that there is no need to distribute this notice of proposed 
exemption to interested persons. Comments and requests for a hearing 
are due 30 days from the date of publication of this notice in the 
Federal Register.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department 
at (202) 219-8883. (This is not a toll-free number.)

Pipefitters Local Union No. 537 Pension Fund (the Plan) Located in 
Boston, Massachusetts

[Application No. D-10577]

Proposed Exemption

    The Department of Labor is considering granting an exemption under 
the authority of section 408(a) of the Act and section 4975(c)(2) of 
the Code and in accordance with the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, 32847, August 10, 1990). If the exemption 
is granted, the restrictions of sections 406(a) and 406(b)(1) and 
(b)(2) of the Act and the sanctions resulting from the application of 
section 4975 of the Code, by reason of section 4975(c)(1)(A) through 
(E) of the Code, shall not apply to the sale (the Sale) of certain real 
property (the Property) to the Plan by Local Union 537 (the Union) of 
the United Association of Journeymen and Apprentices of the Plumbing 
and Pipefitting Industry of the United States and Canada, a party in 
interest with respect to the Plan; provided the following conditions 
are satisfied:
    (A) The terms and conditions of the transaction are no less 
favorable to the Plan than those which the Plan would receive in an 
arm's-length transaction with an unrelated party;
    (B) The Sale is a one-time transaction for cash;
    (C) The Plan incurs no expenses from the Sale;
    (D) The Plan pays as consideration for the Property no more than 
the fair market value of the Property as determined by a qualified, 
independent appraiser on the date of the Sale; and
    (E) The independent fiduciary for the Plan will undertake to 
monitor and enforce the terms of the proposed exemption, if granted.

Summary of Facts and Representations

    1. Two employer associations represent the contributing employers 
to the Plan and serve as their collective bargaining agents with the 
Union. These two associations are the Air Conditioning and 
Refrigeration Contractors of Boston, Inc. (ARCA) and the New England 
Mechanical Contractors Association, Inc. (NEMCA). ARCA represents 
employers in eastern Massachusetts and surrounding areas who erect, 
install, and service all types of food cases, refrigeration, and air 
conditioning equipment. NEMCA represents employers throughout most of 
New England who erect, service, and install and maintain all types of 
heating, pipe laying, piping, refrigeration and air conditioning 
systems and equipment.
    The Union is the sole collective bargaining agency for employees 
covered by applicable collective bargaining agreements who are employed 
by members of ARCA and NEMCA.
    2. The Plan is a jointly administered Taft-Hartley trust fund 
established pursuant section 302(c)(5) of the Labor Management 
Relations Act that maintains a defined benefit plan which is intended 
to qualify under section 401(a) of the Code. The Plan is for employees 
covered by collective bargaining agreements between the participating 
employers and the Union, and for certain employees of the Plan and the 
Union.
    The Plan is administered by a six member Board of Trustees (the 
Trustees) of whom three members are appointed by the two employers' 
associations, ARCA and NEMCA, and three members are appointed by the 
Union. The Trustees of the Plan, who have investment discretion over 
the assets of the Plan, are represented by the applicant to include 
Messrs. Leo Reed, Charles L. Grinnell, and Ron Ledoux, who were 
appointed by the employers associations and Messrs. Michael Benullo, 
President of the Union, Robert O'Toole, Business Manager of the Union, 
and Thomas MacKay, Business for the Union, who are appointed by the 
Union.
    The applicant represents that, as of January 30, 1998, the Plan had 
approximately total assets of $237,300,000, and approximately 1990 
participants.
    3. The Property is a condominium unit, designated as Unit 1, 
consisting of 2,536 square feet of floor area located in the lower 
(basement) level of a two story office building, with a non-exclusive 
right to use parking spaces at the site location. The Property is 47.5 
percent of

[[Page 19954]]

the total condominium area in the office building, and the remaining 
condominium area in the office building, designated as Unit 2, is 
occupied and used by the Union, the owner of the office building since 
December 17, 1996. The office building has approximately 6,560 square 
feet of gross building area situated on a 21,090 square foot parcel of 
land located at 35 Travis Street, Boston (Allston), Massachusetts.
    The Property was appraised by Peter L. Lane, Certified Gen. R. E. 
Appraiser, with the Robert P. Wood & Co., Inc., located in Milton, 
Massachusetts, who determined that the Property had a fair market value 
of $151,000, as of November 28, 1997.
    4. The Union proposes to sell the Property to the Plan for cash in 
a one-time transaction with no expenses incurred by the Plan. The 
applicant represents that the Union will receive, as consideration from 
the Sale, no more than the fair market value of the Property as 
determined on the date of the Sale by a qualified, independent 
appraiser.
    The Plan is prompted to take this action because of the need for an 
improved location and increased office space and storage facilities 
that will provide more and better facilities than its current location 
of 1,400 square feet floor area on the fourth floor of an office 
building located in an undesirable neighborhood. The applicant 
represents that the current location of the Plan's offices fails to 
provide parking facilities, accessibility for handicapped persons, and 
lacks cleanliness and security.
    The applicant represents that the Trustees for the Plan have 
determined that the proposed acquisition of the Property will be in the 
best interests of the Plan and the rights of its participants and 
beneficiaries will be protected because the Property will provide the 
Plan with a desirable combination of improved and increased office and 
storage facilities, handicapped accessibility, on-site parking space, 
increased security, and a proximity to major thoroughfares and public 
transportation. Also, the applicant represents that the Property will 
provide the Plan and its participants and beneficiaries with a close 
proximity to the offices of the Union, and thus facilitate the 
processing of applications for benefits from the Plan, minimizing 
inconveniences to participants and beneficiaries and personnel of the 
Plan and enhancing administrative efficiencies. <SUP>5</SUP>
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    \5\ The applicant represents that it is contemplated that the 
Pipefitters Local Union No. 537 Health and Welfare Fund and the 
Pipefitters Local Union No. 537 Deferred Income Annuity Fund will 
occupy a portion of the Property; and these two Funds will share 
space and reimburse the Plan for reasonable costs and expenses in 
accordance PTE 76-1 and PTE 77-10 (41 FR 12740, March 26, 1976 and 
42 FR 33918, respectively). The Department expresses no opinion 
herein as to whether or not the occupancy of a portion of the 
Property by the two Funds as described satisfies the terms and 
conditions of PTE 76-1 and PTE 77-10.
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    The applicant also represents that compliance with the terms and 
conditions of the requested exemption will be monitored and enforced by 
an independent fiduciary, Edward K. Wadsworth, MAI, president of The 
Boston Valuation Group, Inc. located in Weymouth, Massachusetts. Mr. 
Wadsworth represents that he has extensive experience in the field of 
market, financial, and real estate analysis, serving as a leader of 
professional organizations in these fields and serving as a qualified 
expert witness in a number of court proceedings. In addition, Mr. 
Wadsworth represents that he is on the teaching faculty of the 
Appraisal Institute and has instructed courses in the Standards of 
Professional Practice and Income Capitalization.
    Mr. Wadsworth represents that the proposed Sale is in the best 
interests of the Plan and is protective of the rights of the 
participants and beneficiaries of the Plan; and that he has the power, 
authority, and responsibility to take the necessary action in the 
proposed transaction so that the Plan will not pay more than the fair 
market value as determined by the independent appraiser, Peter L. Lane 
of Robert Wood & Co., Inc., on the date of the Sale.
    5. In summary, the applicant represents that the proposed 
transaction satisfies the criteria of section 408(a) of the Act because 
(a) the Sale is a one-time transaction for cash; (b) the Plan will not 
incur any expenses from the transaction; (c) the Plan will pay no more 
than the fair market value of the Property as determined on the date of 
the Sale by a qualified, independent appraiser; and (d) the proposed 
transaction will be monitored and enforced by a qualified, independent 
fiduciary.

    For Further Information Contact: Mr. C. E. Beaver of the 
Department, telephone (202) 219-8881. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest of 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 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 exemptions, 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 exemptions, 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.

    Signed at Washington, DC, this 17th day of April 1998.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 98-10692 Filed 4-21-98; 8:45 am]
BILLING CODE 4510-29-P