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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions; Pacific Coast Roofers Pension Plan (the Plan), et al. [Notices] [10/21/1999]

Grant of Individual Exemptions; Pacific Coast Roofers Pension Plan (the Plan), et al. [10/21/1999]

[PDF Version]

Volume 64, Number 203, Page 56812-56814

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration
[Prohibited Transaction Exemption 99-42; Exemption Application No. D-
10671, et al.]

 
Grant of Individual Exemptions; Pacific Coast Roofers Pension 
Plan (the Plan), et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.


[[Page 56813]]


ACTION: Grant of individual exemptions.

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

Statutory Findings

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

    Pacific Coast Roofers Pension Plan (the Plan), Located in San 
Jose, California, [Prohibited Transaction Exemption 99-42; Exemption 
Application No. D-10671]

Exemption

    The restrictions of section 406(a)(1)(D) of the Act and the 
sanctions resulting from the application of section 4975 of the Code, 
by reason of section 4975(c)(1)(D) of the Code, shall not apply to the 
making of loans by certain banks (the Banks), under a loan program (the 
Program) providing for loans to Bank customers for residential and 
commercial re-roofing jobs that are performed by contributing employers 
to the Plan, pursuant to an arrangement in which the Plan will purchase 
certificates of deposit (the CDs) issued by the Banks, provided the 
following conditions are met:
    (a) Alan D. Biller and Associates, Inc., an independent investment 
manager with respect to the Plan's equities and fixed-income 
investments, determines on an on-going basis the appropriateness of the 
Plan's investment of up to 5% of the Plan's total assets in CDs, 
including CDs issued under the Program, with respect to the Plan's 
overall investment objectives and policy guidelines;
    (b) Turner Dale Associates, Inc. (TDA), an independent investment 
manager with respect to the Plan's assets involved in the Program, 
which is also independent of the Banks, acts on the Plan's behalf 
pursuant to a written Investment Management Agreement to determine on 
an on-going basis whether the Plan should make each particular 
investment in the CDs under the Program, and should continue or 
terminate participation in the Program;
    (c) TDA determines at least annually that the Banks participating 
in the Program are solvent institutions, based on analysis of all 
relevant information involving the Banks' financial status;
    (d) The requirements of section 408(b)(4) of the Act are satisfied 
if any Bank participating in the Program is a fiduciary or other party 
in interest with respect to the Plan (see 29 CFR 2550.408b-4);
    (e) The Plan's CDs will have a maturity date of at least one year 
from the date of issuance and will pay the maximum rates of interest 
provided by the Banks for CDs of the same size and maturity being 
purchased at the time of the transaction by customers of the Bank not 
participating in the Program;
    (f) The Banks offer CDs provided under the Program to other, 
unrelated customers in the ordinary course of business;
    (g) Interest rates on CDs under the Program, and the total net 
rates of return to the Plan, taking into consideration all expenses 
associated with the transaction, are at least comparable to or better 
than those rates which the Plan could obtain on similar fixed-income 
investments of similar risk and term at the time of each CD purchase;
    (h) No person who is a party in interest with respect to the Plan, 
including contributing employers, trustees and other plan fiduciaries, 
receives a loan under the Program;
    (i) The total outstanding amount of CDs purchased by the Plan from 
the Banks will not exceed 5% of the Plan's total assets at the time of 
any transaction;
    (j) No Plan trustee currently engages in any personal or business 
transactions with a Bank which will be involved in the Program, and if 
a trustee engages in such transactions in the future, the trustee shall 
recuse himself or herself with respect to any decision regarding the 
Program on behalf of the Plan;
    (k) The Plan's investment in CDs is not part of an agreement, 
arrangement or understanding designed to benefit any investment 
manager, other Plan fiduciary, or contributing employer, other than to 
the extent that residential or commercial re-roofing jobs will be 
performed by contributing employers to the Plan; and
    (l) If a customer defaults on a loan, the Bank has no claim 
against, or recourse to, the CDs or other assets of the Plan.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the notice of proposed exemption published on August 26, 1999 at 64 FR 
46725.

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

    Jonas Builders, Inc. Restated Profit Sharing Plan (the Plan), 
Located in Milwaukee, Wisconsin, [Prohibited Transaction Exemption 
99-43; Exemption Application No. D-10764]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, 
shall not apply to the sale of a certain building, which contains a 
warehouse and a single-family residence (collectively; the Building), 
by the Plan to Mr. Gerald Jonas, a party in interest with respect to 
the Plan, provided that the following conditions are satisfied:
    (a) All terms and conditions of the sale are at least as favorable 
to the Plan as those which the Plan could obtain in an arm's-length 
transaction with an unrelated party;

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    (b) The fair market value of the Building has been determined by an 
independent qualified appraiser;
    (c) The sale of the Building is a one-time transaction for cash;
    (d) The Plan does not pay any commissions, costs or other expenses 
in connection with the sale of the Building; and
    (e) The Plan receives an amount equal to the greater of either: (i) 
The original acquisition cost of the Building plus any improvement 
costs and real estate taxes that were incurred by the Plan from the 
date the Building was acquired by the Plan until the date of the sale 
(i.e., the total cost of $1,929,422.73, as of December 31, 1998); or 
(ii) the current fair market value of the Building, as established by 
an independent qualified appraiser at the time of the sale.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on August 26, 1999 at 64 FR 
46730.

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

General Information

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

    Signed at Washington, DC, this 19th day of October, 1999.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, Department of Labor.
[FR Doc. 99-27521 Filed 10-20-99; 8:45 am]
BILLING CODE 4510-29-P