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

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 97-49; Exemption Application No. D-

10310, et al.]

Grant of Individual Exemptions; Bricklayers and Allied Crafts,

Local No. 74 of DuPage County

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of Individual Exemptions.

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SUMMARY: This document contains exemptions issued by the Department of

Labor (the Department) from certain of the prohibited transaction

restrictions of the Employee Retirement Income Security Act of 1974

(the Act) and/or the Internal Revenue Code of 1986 (the Code).

Notices were published in the Federal Register of the pendency

before the Department of proposals to grant such exemptions. The

notices set forth a summary of facts and representations contained in

each application for exemption and referred interested persons to the

respective applications for a complete statement of the facts and

representations. The applications have been available for public

inspection at the Department in Washington, DC. The notices also

invited interested persons to submit comments on the requested

exemptions to the Department. In addition the notices stated that any

interested person might submit a written request that a public hearing

be held (where appropriate). The applicants have represented that they

have complied with the requirements of the notification to interested

persons. No public comments and no requests for a hearing, unless

otherwise stated, were received by the Department.

The notices of proposed exemption were issued and the exemptions

are being granted solely by the Department because, effective December

31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR

47713, October 17, 1978) transferred the authority of the Secretary of

the Treasury to issue exemptions of the type proposed to the Secretary

of Labor.

Statutory Findings

In accordance with section 408(a) of the Act and/or section

4975(c)(2) of the Code and the procedures set forth in 29 CFR part

2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon

the entire record, the Department makes the following findings:

(a) The exemptions are administratively feasible;

(b) They are in the interests of the plans and their participants

and beneficiaries; and

(c) They are protective of the rights of the participants and

beneficiaries of the plans.

Pension Fund of the Bricklayers and Allied Crafts, Local No. 74 of

DuPage County, Illinois, a/k/a Masons' and Plasterers', Local No. 74 of

DuPage County, Illinois (the Pension Plan) and Bricklayers and Allied

Craftsmen Local No. 74 Apprenticeship, Education and Training Trust

Fund (the Apprenticeship Plan; together, the Plans), Located in

Westmont, Illinois

[Prohibited Transaction Exemption 97-49; Exemption Application Nos. D-

10310 and L-10311]

Exemption

The restrictions of section 406(b)(2) of the Act shall not apply to

the sale of certain real property (the Property) by the Apprenticeship

Plan to the Pension Plan, provided the following conditions are

satisfied: (1) The sale is a one-time transaction for cash; (2) no

commissions or other expenses are paid by the Plans in connection with

the sale; (3) the purchase price for the Property represents its fair

market value as determined by a qualified, independent appraiser; and

(4) the Pension Plan's independent fiduciary and the Apprenticeship

Plan's trustees have reviewed the transaction and have determined that

the transaction is appropriate for each of the Plans and in the best

interest of the Plans' participants and beneficiaries.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on July 21, 1997 at 62 FR

39027.

FOR FURTHER INFORMATION CONTACT: Gary H. Lefkowitz of the Department,

telephone (202) 219-8881. (This is not a toll-free number.)

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

in Temple, Texas

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

10340]

Exemption

The restrictions of sections 406(a), 406 (b)(1) and (b)(2) of the

Act and the sanctions resulting from the application of section 4975

(a) and (b) of the Code, by reason of section 4975(c)(1) (A) through

(E) of the Code, shall not apply to the past sale (the Sale) by the

Plan of two parcels of unimproved real property located in Temple,

Texas and Goodyear, Arizona (the Properties) to McLane Company, Inc.

(McLane), the Plan sponsor and a party in interest with respect to the

Plan, provided that the following conditions were satisfied: (a) The

Sale was a one time transaction for a lump sum cash payment; (b) the

purchase prices were the fair market values of the Properties as of the

date of the Sale; (c) the Properties have been appraised by qualified

independent real estate appraisers; (d) a qualified, independent

fiduciary determined that the Sale was in the best interests of the

Plan; and (e) the Plan paid no commissions or other expenses relating

to the Sale.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on May 20, 1997 at 62 FR

27625.

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

Written Comments

The Department received no requests for a public hearing on the

proposed exemption. The Department received one written comment which

was submitted by Sarofim Realty Advisors (the Applicant). The

Applicant's comment, and the Department's response thereto, is

summarized below.

First, the Applicant requests that the words ``the IMA'' should be

inserted in the first sentence of Paragraph 7 of the Summary of Facts

and Representations (SFR) at page 27627 in lieu of the phrase

``Investment Management Agreement'' (as such words are set forth in

quotations). The Department concurs.

The third paragraph in Paragraph 9 of the SFR at page 27628 states:

McLane also represents that, if McLane had treated the excess of

the purchase price for the properties over their fair market values

as a Plan contribution in 1993, the resulting allocations would not

have violated the limitations of Internal Revenue Code section 415.

The Applicant requests that the paragraph be deleted in its

entirety and replaced by a new paragraph that provides as follows:

The Applicant represents that McLane's motives for consummating

the Sale were not relevant to the process employed by the Applicant

in evaluating whether or not, in the professional opinion of the

Applicant, it would be prudent and in the best interest of Plan

participants for the Applicant to direct the Trustee to consummate

the Sale. The Applicant further represents that in connection with

its negotiations with McLane, the Applicant sought and obtained for

the Plan what the Applicant determined was the highest possible

sales price for the

[[Page 48673]]

subject Properties. Such price, coupled with the Applicant's

determination that continued holding of the Properties would likely

result in further lost opportunities for the Plan to provide

enhanced benefits from alternative investments, resulted in the

Applicant's decision to direct the Trustee to consummate the Sale.

Although the Department has no objection to the new paragraph

suggested by the Applicant, the Department continues to believe that

the original language of the third paragraph in Paragraph 9 of the SFR

is relevant to the issues addressed in the proposed exemption.

Finally, the Applicant requests that the Department modify the

first sentence in Paragraph 10 of the SFR at page 27628. The Department

does not object to this requested revision and amends the sentence to

provide as follows:

In summary, the Applicant represents that it now understands

that the Department is of the view that the conditions of PTE 84-14

may not have been satisfied with respect to the Sale.

The Department has considered the entire record, including the

comments submitted by the Applicant, and has determined to grant the

exemption as amended in response to the Applicant's comments.

FOR FURTHER INFORMATION CONTACT: Wendy McColough of the Department,

telephone (202) 219-8971. (This is not a toll-free number.)

H. Weiss & Company, Incorporated Defined Benefit Pension Plan (The

Plan), Located in New York, New York

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

Exemption

The restrictions of sections 406(a), 406(b)(1), and 406(b)(2) of

the Act and the sanctions resulting from the application of section

4975 of the Code, by reason of section 4975(c)(1) (A) through (E) of

the Code shall not apply to the sale by the Plan of a certain

condominium unit (the Property) located in New York, New York, to Hanna

Weiss, a party in interest with respect to the Plan, provided that the

following conditions are satisfied:

(A) All terms of the transaction are at least as favorable to the

Plan as those which the Plan could obtain in an arm's-length

transaction with an unrelated party

(B) The sale is a one-time transaction for cash

(C) The Plan pays no commissions nor other expenses relating to the

sale

(D) The purchase price is the greater of: (1) The fair market value

of the Property as determined by a qualified, independent appraiser, or

(2) the original acquisition price *;

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* The original acquisition cost is determined as follows:

(original purchase price + aggregate real estate taxes + aggregate

condominium association fees)--aggregate rental income = original

acquisition cost.

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(E) Before the transaction is consummated, the Plan has received

rental payments of no less than the Property's fair market rental value

for each month of the Plan's ownership of the Property during which it

was occupied by Hanna Weiss, a party in interest with respect to the

Plan; and

(F) Within 60 days of the publication in the Federal Register of

this Notice, Weiss makes final payment to the Internal Revenue Service

of any remaining unpaid excise taxes which are applicable under section

4975(a) of the Code by reason of the Plan's rental of the Property to a

party in interest.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption refer to

the Notice of Proposed Exemption published on July 21, 1997 at 62 FR

39028.

FOR FURTHER INFORMATION CONTACT: Janet L. Schmidt of the Department,

telephone (202) 219-8883 (This is not a toll-free number.)

Smart Chevrolet Co. Employees' Profit Sharing Retirement Plan (the

Plan), Located in Pine Bluff, Arkansas

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

10445]

Exemption

The restrictions of sections 406(a), 406(b)(1) and 406(b)(2) of the

Act and the sanctions resulting from the application of section 4975 of

the Code, by reason of sections 4975(c)(1) (A) through (E) of the Code

shall not apply to: (1) The secured loans (the Loans) by the Plan to

Motors Finance Company (Motors), a party in interest with respect to

the Plan, and (2) the guaranty of such Loans (the Guaranty) by the

individual partners of Motors; provided that the following conditions

are met: (a) The terms and conditions of the Loans are at least as

favorable as those which the Plan could have received in similar

transactions with an unrelated third party; (b) an independent

fiduciary negotiates, reviews, approves, and monitors the Loans and the

Guaranty under the terms and conditions, as set forth in paragraph # 6

of the notice of proposed exemption; and (c) the balance of all Loans

will at no time exceed 15% of the assets of the Plan.

For a more complete statement of the facts and representations

supporting the Department's decision to grant this exemption, refer to

the notice of proposed exemption published on July 11, 1997 at 62 FR

37307.

Temporary Nature of Exemption

The exemption is temporary and will expire five (5) years after the

date of the grant. However, the exemption will extend until the

maturity of any of the 90 day Loans made within the 5 year period.

FOR FURTHER INFORMATION CONTACT: Mr. Gary H. Lefkowitz of the

Department, telephone (202) 219-8881. (This is not a toll free number.)

General Information

The attention of interested persons is directed to the following:

(1) The fact that a transaction is the subject of an exemption

under section 408(a) of the Act and/or section 4975(c)(2) of the Code

does not relieve a fiduciary or other party in interest or disqualified

person from certain other provisions to which the exemption does not

apply and the general fiduciary responsibility provisions of section

404 of the Act, which among other things require a fiduciary to

discharge his duties respecting the plan solely in the interest of the

participants and beneficiaries of the plan and in a prudent fashion in

accordance with section 404(a)(1)(B) of the Act; nor does it affect the

requirement of section 401(a) of the Code that the plan must operate

for the exclusive benefit of the employees of the employer maintaining

the plan and their beneficiaries

(2) These exemptions are supplemental to and not in derogation of,

any other provisions of the Act and/or the Code, including statutory or

administrative exemptions and transactional rules. Furthermore, the

fact that a transaction is subject to an administrative or statutory

exemption is not dispositive of whether the transaction is in fact a

prohibited transaction; and

(3) The availability of these exemptions is subject to the express

condition that the material facts and representations contained in each

application accurately describes all material terms of the transaction

which is the subject of the exemption.

Signed at Washington, DC, this 10th day of September, 1997.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, Department of Labor.

[FR Doc. 97-24462 Filed 9-15-97; 8:45 am]

BILLING CODE 4510-29-P