Grant of Individual Exemptions; Collection Bureau Services

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 98-36; Exemption Application No. D-

10525, et al.]

Grant of Individual Exemptions; Collection Bureau Services

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, D.C. The notices also

invited interested persons to submit comments on the requested

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

interested person might submit a written request that a public hearing

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

have complied with the requirements of the notification to interested

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

otherwise stated, were received by the Department.

The notices of proposed exemption were issued and the exemptions

are being granted solely by the Department because, effective December

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

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

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

of Labor.

Statutory Findings

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

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

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

the entire record, the Department makes the following findings:

(a) The exemptions are administratively feasible;

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

and beneficiaries; and

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

beneficiaries of the plans.

Collection Bureau Services, Profit Sharing Plan and Trust (the

Plan), Located in Missoula, MT

[Prohibited Transaction Exemption 98-36; Exemption Application No. D-

10525]

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 (1) the proposed lease (the Lease) by the Plan of

certain improved real property (the Property) to Collection Bureau

Services (the Employer), a party in interest with respect to the Plan,

and (2) the possible purchase of the Property by the Employer in the

future, pursuant to the Employer's option to purchase the Property

under the Lease.

This exemption is subject to the following conditions:

[[Page 38854]]

(1) The Plan is represented for all purposes under the Lease by a

qualified, independent fiduciary;

(2) The terms and conditions of the Lease are at least as favorable

to the Plan as those the Plan could obtain in a comparable arm's length

transaction with an unrelated party;

(3) The rent paid to the Plan under the Lease is no less than the

fair market rental value of the Property, as established by a

qualified, independent appraiser;

(4) The rent is adjusted, at a minimum, every three years, based

upon an updated independent appraisal of the Property, but in no event

shall such adjustments result in the rent being less than the rental

amount for the Property existing for the preceding period;

(5) The Lease is triple net (with all expenses for maintenance,

taxes, and insurance to be borne by the Employer as the tenant);

(6) The independent fiduciary for the Plan (the I/F) reviews the

terms and conditions of the Lease on behalf of the Plan and determines

that the Lease is in the best interests of, and appropriate for, the

Plan;

(7) The I/F monitors and enforces compliance with all of the terms

and conditions of the Lease, and of this exemption, throughout the

duration of the Lease;

(8) The I/F expressly approves any improvements by the Employer to

the Property, any renewal of the Lease beyond the initial term, and any

sale of the Property to the Employer, pursuant to the Employer's option

to purchase the Property under the Lease;

(9) In the event that the Employer exercises its option to purchase

the Property under the Lease, the Employer pays the Plan an amount

which is the greater of either (a) the original acquisition cost of the

Property, plus holding expenses, or (b) the fair market value of the

Property, as of the date of the sale, as established by a qualified,

independent appraiser; and

(10) At all times throughout the duration of the Lease, the fair

market value of the Property represents no more than 25 percent of the

total 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 May 29, 1998 at 63 FR

29456.

FOR FURTHER INFORMATION CONTACT: Ms. Karin Weng of the Department,

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

McClain's R.V., Inc. 401(k) Profit Sharing Plan (the Plan), Located

in Lake Dallas, Texas

[Prohibited Transaction Exemption 98-37; Exemption Application No. D-

10583]

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 certain unimproved real property (the

Land) by the Plan to Larry McClain, the sole shareholder of McClain's

R.V. Inc., the sponsor of the Plan, and a party in interest with

respect to the Plan, provided that the following conditions are

satisfied:

(a) The sale will be a one-time cash transaction;

(b) The Plan will receive the greater of: (1) The original

acquisition cost of the Land plus the aggregate holding costs incurred

by the Plan; or (2) the current fair market value of the Land (plus an

appropriate premium related to the adjacency of the Land to other real

property owned by McClain's R.V. Inc.), as established by an

independent qualified appraiser at the time of the sale; and

(c) The Plan will pay no commissions or other expenses associated

with 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 18, 1998 at 63 FR

27330.

FOR FURTHER INFORMATION CONTACT: Ekaterina A. Uzlyan of the Department

at (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 accurately describes all material terms of the transaction

which is the subject of the exemption.

Signed at Washington, D.C., this 15th day of July, 1998.

Ivan Strasfeld,

Director of Exemption Determinations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 98-19233 Filed 7-17-98; 8:45 am]

BILLING CODE 4510-29-P