Project Analysis and Staff Recommendation National Underground Railroad Freedom Center-Memorandum of Understanding For Construction Reimbursement

Project Analysis and Staff Recommendation
National Underground Railroad Freedom Center- Memorandum of

Understanding for Construction Reimbursement
Commission Assessment Team: Tony Capaci, project manager
National Underground Railroad Freedom Center Cincinnati, Hamilton County

Project Sponsor Information
Sponsor: National Underground Railroad Freedom Center (“NURFC” or the “Sponsor”)
Type: Ohio nonprofit corporation since May 1995
Background: The Society states, “the mission of the National Underground Railroad Freedom
Center is to reveal stories about freedom's heroes, from the era of the
Underground Railroad to contemporary times, challenging and inspiring everyone
to take courageous steps for freedom today.”
Under NURFC’s current operating structure, sustainability is an issue.
NURFC is working with the federal government to establish a federal museum

and oversight commission to commemorate the ending of chattel slavery in the
United States. A discussion draft of this legislation was completed in October
2009. Preliminary terms include the “gifting” of the facility to the United States
government and the United States government, via an appointed board of
trustees, operating the facility in cooperation with the Secretary of the Interior and
other federal agencies. This legislation is not expected to be approved for at least
12 months.
According to NURFC officials, the plan would call for the existing bond debt to be
transferred to another yet-to-be established entity, unsecured, leaving the facility
debt-free (a condition of the federal transfer).
Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

1st Quarter 2010 Meeting Page 1 of 8
As this legislation progresses through the legislative process, Commission staff
will work with the Sponsor, bond counsel and our bond issuer to ensure the
state’s interests are protected. Because there are many details to be worked out,
Commission staff is recommending the Commission enter into a memorandum of
understanding with the Sponsor, which outlines the terms and conditions under
which the state capital funds would be paid, and that the Sponsor appear at a
future Commission meeting when the conditions are met.
At this time, the Commission is being asked to approve a Memorandum of

Understanding that will outline the conditions under which the current
appropriation of $850,000 would be paid out in the future.
Web Site: http://www.freedomcenter.org
Legal Agreements
Signatory: Donald Murphy, CEO
Reimbursement
Certification By: Benjamin Reece, CPA, finance director
Legislative History:
Appropriation Bill Appropriation G.A. Appropriation Comments

Name Number Date Amount
National Am. Sub. 6/24/2008 127 $850,000 Funding this project.
Underground H.B. 562
Railroad Freedom
Center
National Am. Sub. 12/28/2006 126 $2,000,000 Funded construction of the
Underground H.B. 699 freedom center.
Railroad Freedom
Center
NURFC H.B. 16 5/4/2005 126 $4,150,000 Funded construction of the
freedom center.
National H.B. 675 12/13/2002 124 $4,000,000 Funded construction of the
Underground freedom center.
Railroad Freedom
Center
National Am. Sub. 6/15/2000 123 $3,500,000 Funded construction of the
Railroad Freedom
Center
National Am. Sub. 3/18/1999 122 $500,000 Funded construction of the
Railroad Freedom
Center
Cincinnati Riverfront Am. H.B. 9/17/1996 121 $166,668 Architectural fees and
Development 748 continuing development
work on the freedom
center.
Cincinnati Riverfront Am. H.B. 9/17/1996 121 $333,332 Funded construction of the
Development 748 freedom center.
Total $15,500,000

Commission Actions This Meeting:
In resolution R-10-04, the Commission is asked to do the following: conditionally confirm the need for
the project, substantial regional support, and general building services; confirm the construction
administrator; conditionally approve the project and authorize expenditure of funds, pending certain
requirements; authorize the execution of a memorandum of understanding; and conditionally authorize
execution of other legal agreements.
Facility Information
Name: National Underground Railroad Freedom Center (the “Center” or the “Facility”)
Address: 50 E. Freedom Way

Cincinnati, Ohio 45202
301 Central Parkway, Heath, Ohio 43056
Owner: Sponsor
Type: Special interest museum
Culture Presented: Preservation and presentation of features of historical interest or significance
Managed By: Sponsor
Description: The Center consists of a 160,000-square-foot facility located on the Cincinnati

riverfront. Features of the facility include a museum, interactive story theaters,
computer networking to other Underground Railroad sites, arts and education
facilities, and a public forum space.
Historic
Designations: None
Project Information
Scope: The Freedom Center is a $117.7 million project, opened in August 2004, and
features three pavilions celebrating courage, cooperation, and perseverance.
The current appropriation will reimburse the Sponsor for construction expenses
previously incurred but not yet reimbursed (the “Project”).
Project Need
Financial Assessment
Commission staff analyzed the Sponsor’s financial statements, including the following:
x internally generated financial statements for year-to-date July 31, 2009 (“YTD09”);
x audited financial statements for fiscal-years-ending December 31, 2008, and 2007
("FYE08" and “FYE07”);
x five-year pro forma; and
x internally generated statements through October 31, 2009 (used solely to observe
whether the organization’s financial trends have changed; they have not).

Statement of Financial Position Summary
Increase Increase
YTD09 (Decrease) FYE08 (Decrease) FYE07
ASSETS:
Total Current Assets $ 4,431,282 $ (3,287,603) $ 7,718,885 $ (6,599,903) $ 14,318,788
Total Other Assets $ 6,522,591 $ (18,090,270) $ 24,612,861 $ (2,061,470) $ 26,674,331
Total Long-Term Assets $ 76,070,093 $ (2,413,368) $ 78,483,461 $ (4,233,014) $ 82,716,475
TOTAL ASSETS $ 87,023,966 $ (23,791,241) $ 110,815,207 $ (12,894,387) $ 123,709,594
LIABILITIES:
Total Current Liabilities $ 408,635 $ (667,621) $ 1,076,256 $ (308,808) $ 1,385,064
Total Long-Term Liabilities $ 27,000,000 $ (19,000,000) $ 46,000,000 $ (3,000,000) $ 49,000,000
TOTAL LIABILITIES $ 27,408,635 $ (19,667,621) $ 47,076,256 $ (3,308,808) $ 50,385,064
NET ASSETS:
Unrestricted $ 58,772,883 $ (3,790,355) $ 62,563,238 $ (9,142,202) $ 71,705,440
Temporarily Restricted $ 822,448 $ (333,265) $ 1,155,713 $ (443,377) $ 1,599,090
Permanently Restricted $ 20,000 $ - $ 20,000 $ - $ 20,000
TOTAL NET ASSETS $ 59,615,331 $ (4,103,620) $ 63,718,951 $ (9,585,579) $ 73,304,530
TOTAL LIABILITIES AND NET

ASSETS $ 87,023,966 $ (23,771,241) $ 110,795,207 $ (12,894,387) $ 123,689,594
Solvency:
An organization is solvent when assets are greater than liabilities. The Sponsor is solvent because net assets
are positive (YTD10 total assets are $87M; total liabilities are $27.4M).
Another gauge of solvency is whether or not the institution has sufficient net assets to pay off long-term debt.
The viability ratio (unrestricted net assets minus capital assets minus restricted endowments plus long-term
debt divided by total debt) measures one of the most basic determinants of clear financial health: the
availability of expendable net assets to cover debt should the institution need to settle its obligations as of the
Statement of Financial Position date. A ratio in the range of 1.25 to 2.0 indicates a strong creditworthy
institution.
YTD09 FYE08 FYE07
Viability Ratio 0.34:1 0.65:1 0.77:1
The viability ratio is below what is considered creditworthy due to $27M in bond debt and only $10M
in liquid assets (the book value of the building is $76M of total assets of $87M).
During YTD09 the sponsor liquidated $18M in investments and paid off $19M in bonds as part of a
negotiated settlement when the Sponsor failed to meet bank covenants (see the following Leverage section).
Liquidity:
Liquidity relates to availability of, access to or convertibility to cash. A test of liquidity is current ratio (current
assets divided by current liabilities), which indicates how many times over the entity can pay its current
liabilities with its current assets. (Note: Restricted current assets were not used to calculate the current ratio
because they generally are not available to service current liabilities. Including restricted current assets in the
calculation could have the effect of artificially inflating the current ratio.) A current ratio of greater than 1:1 is
considered acceptable.
YTD09 FYE08 FYE07
Current Ratio 10.8:1 7.2:1 10.3:1
The current ratio is high due to nearly $3.7M in pledges receivable which, per the Sponsor, are not restricted
and are available for operations once collected.
The Sponsor’s YTD09 working capital is $4M. Days of cash-on-hand (an indication of how many days an
organization can pay expenses if its revenue stream ceases) at 12, is significantly lower than the 30-day
norm.

The YTD09 cash balance is only $252K while current liabilities are $408K, causing a potential operational
cash flow problem.
Leverage:
Leverage is the degree to which a sponsor is borrowing money. A measure of leverage is debt ratio (debt
divided by total assets).
YTD09, the Sponsor’s total assets are $87M and total debts are $27M. The debt ratio, which indicates what
proportion of debt an organization has relative to its assets, is 31 percent. This means that for every $1.00 of
assets, the Sponsor has $0.31 in debt.
YTD09 FYE08 FYE07

Debt Ratio 31% 42% 40%
YTD09
Debt Ratio without building 271%
value included
The sponsor’s debt consists of:

x Bonds payable of $27M – adjusted rate demand revenue bonds, require sinking fund payments of
$10M per year from 2034-2038 (bear interest at variable market rate ranging from 0.2% to .7% in
2009).
Reimbursement agreements related to the letter of credit no longer require the Sponsor to make annual
principal reductions until the bond sinking fund payments start or the letter of credit agreements are
amended.
NURFC did not meet ongoing bank covenant requirements at either measurement (June 30 or December 31,
2008) and rather than call the letter of credit, the bank required the Sponsor to pay off $19M in local bond
debt by liquidating investments, and then the bank extended a revised letter of credit. The letter of credit
currently extends to July 2010, with prior instances of noncompliance waived.
Change in Net Assets:

Change in net assets examines changes over several years to see where an entity is headed.
Change in Net Assets Summary
Increase Increase
YTD09 (Decrease) FYE08 (Decrease) FYE07
Total Revenues $ 2,707,111 $ (5,078,615) $ 7,785,726 $ (11,831,340) $ 11,831,340
Total Expenses (net of depreciation) $ 4,642,718 $ (5,942,104) $ 10,584,822 $ (12,190,830) $ 12,190,830

CHANGES IN NET ASSETS (Pre-Depreciation) $ (1,935,607) $ 863,489 $ (2,799,096) $ 359,490 $ (359,490)
Depreciation $ (2,463,200) $ 1,875,737 $ (4,338,937) $ 4,555,891 $ (4,555,891)
Realized/Unrealized Loss/Gain on Investments $ 275,189 $ 2,722,735 $ (2,447,546) $ (567,285) $ 567,285
CHANGES IN NET ASSETS (Post-Depreciation) $ (4,123,618) $ 5,461,961 $ (9,585,579) $ 4,348,096 $ (4,348,096)
A decline in revenues from FYE08 to FYE09 is due to decreases in government grants and admissions.
Average monthly grants and admissions at FYE08 was $649K; YTD09 average monthly grants and
admissions is $178K.

Significant unrealized losses in FYE08 ($2.4M) occurred. However, the prognostics for investment markets
are now more favorable and recouping a portion of the past unrealized losses is probable going forward. The
Sponsor is operating at pre- and post-depreciation losses. Individual contributions are down by over $1.2M.
Pro Forma Review:

A pro forma review is a projection showing anticipated expenses and revenues for the period.
Operating Pro Forma Summary
FYE09 FYE10 FYE11 FYE12 FYE13

Total Revenues $ 4,581,000 $ 4,555,000 $ 8,400,000 $ 8,543,000 $ 8,547,000
Total Expenses $ 6,298,000 $ 6,400,000 $ 7,880,000 $ 7,929,000 $ 7,978,000
Pre-Depreciation
Surplus (Deficit) $ (1,717,000) $ (1,845,000) $ 520,000 $ 614,000 $ 569,000
Investment Income $ (258,000) $ (86,800) $ (45,000) $ (64,000) $ (79,000)
Interest Expense $ 1,008,000 $ 937,000 $ 222,000 $ 217,000 $ 212,000
Post-Depreciation
Surplus (Deficit) $ (2,467,000) $ (2,695,200) $ 343,000 $ 461,000 $ 436,000
The Sponsor’s submitted pro forma assumes enactment of the proposed federal legislation to transfer title of
the facility to the federal government, as well as transferring the bulk of the bonds payable to a second entity.
The proposal calls for the bonds to be unsecured. In FYE11, revenues increase $4M to $8.4M due to
operating subsidies by the federal government, and interest expense decreases to $222K because bonds
payable have been transferred. The result is a projected pre-depreciation surplus in FYE11 and beyond. It is
clear that without the federal transfer and subsidies, the organization is not sustainable.
Although the Commission approved the Determination of Need on October 9, 2001, in resolution R-
01-26, the Sponsor’s financial condition has changed significantly for the worse since then. Prior to
the expenditure of these new state capital funds, the Sponsor must demonstrate a viable business
model. The Sponsor has indicated it plans to do so through federalization of the facility.
A review of the Sponsor’s solvency, liquidity, leverage, change in net assets and pro forma indicates it is
unlikely the Sponsor will be able to operate the Facility and present culture to the public over a sustained
period of time in accordance with Section 3383.07 of the ORC unless the proposed arrangement with the
federal government is put in place.
See Exhibit E for a summary of the Sponsor’s financial statements.
Regional Support
Matching Resources
The Sponsor demonstrated a minimum of non-state matching resources equal to at least 50 percent of
the total state funding of $15,500,000 (a minimum of $7,750,000). Matching resources were
substantiated in November 2008. On October 9, 2001, Substantial Regional Support was confirmed by
the Commission in resolution R-01-26. The following table is provided for informational purposes.

Source Amount
Cash-on-Hand $0
Funds Already Expended on Project $0
Irrevocable Written Pledges $0
In-Kind Contributions (up to 50%) $0
Operating Endowment $0
Private Contributions $34,000,000
County Government $0
City Government $4,500,000
Federal Government $12,000,000
Site Valuation $0
Other $0
Total Matching Resources $50,500,000
Minimum Match $7,750,000
Funding Model
Although on October 9, 2001, the Commission confirmed Substantial Regional Support in resolution
R-01-26, the Project is no longer Fully Funded. In order for the new state capital funds to be paid out,
the Sponsor must demonstrate that the Project is Fully Funded. Since the Sponsor did not meet bank
covenants in 2008, the bank required the Sponsor to sell $19M in investments to pay down the local
bond balance. The $7.75M unsubstantiated funds listed in the table below were the projected
investment income from these $19M in investments that were sold.
Source Amount Substantiation

State Funding $15,500,000
Cash-On-Hand $0
Private Contributions $63,000,000
County Government $0
City Government $6,000,000
Federal Government $22,200,000
Other (future investment $11,650,000 $7,750,000 not substantiated
income)
Total Funding Sources $106,700,000
Total Project Budget $117,744,000
Provision of General Building Services

Although experienced in the provision of general building services at the Facility, the Sponsor has
marginal financial capacity to continue providing general building services at the Facility. In
anticipation of the Sponsor completing the proposed Facility transfer to the federal government,
Commission staff conditionally confirms the Sponsor continue to provide these services as permitted
by section 3383.07 of the ORC.
Conditions of Approval
Recommendation: The materials submitted by the Sponsor were reviewed and analyzed, and the
Commission project analyst, project managers, assistant director for project services, and executive
director recommend approval of Resolution R-10-04 with the following conditions:
x Federal legislation is enacted that provides for the federal government to be

responsible for the Facility and to provide sufficient operating subsidies to ensure

future operations of the Facility, satisfactory to the executive director of the
Commission in her sole discretion;
x The Sponsor provides to the Ohio Public Facilities Commission (the “OPFC”), the
Treasurer of State and the Commission an opinion of nationally recognized bond
counsel, acceptable to the Treasurer of State, and addressed to the OPFC, the
Treasurer of State and the Commission, stating that the financing structure, ownership
and/or operational/management structure will not a) adversely affect the validity of the
state-issued tax-exempt bonds; and b) will not adversely affect the exclusion of the
interest on the state-issued tax-exempt bonds from the gross income of the holders of
the state-issued tax-exempt bonds for federal income tax purposes;
x The new financing structure, ownership and/or operational/management structure for

the project and sponsor organization is acceptable to the Commission executive
director, in her sole discretion;
x In recognition that the Project is no longer Fully Funded, the escrow funds on deposit
in the Commission’s capital donations fund will remain in escrow until the state bonds
are retired. “Fully Funded” means that funds have been raised for the total costs of the
Project including all hard costs, soft costs and start-up costs and, the operating
endowment for the Project. “Raised” means receipt of written pledges from
creditworthy entities, written funding commitments from governmental entities, written
guarantees from creditworthy entities (in a form approved by the Ohio Attorney
General’s Office), cash receipts or any combination of the foregoing, all as determined
in the sole discretion of the executive director of the Commission; and
x The Sponsor provides the Commission with status reports each calendar quarter,
within thirty days of the quarter ending, beginning the second quarter of 2010, until
such time as the federal legislation is enacted. Depending on the contents of these
reports, the Commission may reconsider its approval should the financing structure,
ownership and/or operational management structures prove unacceptable to the
OPFC, the Treasurer of State and/or the Commission.
Project Manger Project Manager
Assistant Director for Project Services Executive Director

EXHIBIT E
National Underground Railroad Freedom Center, Inc.

Internally generated financial statements for year-to-date July 31, 2009 ("YTD09") and audited financial statements for fiscal-years-ending December 31,
2008, and 2007 ("FYE08" and "FYE07").
Statement of Financial Position Information:
YTD09 % Change FYE08 % Change FYE07

Assets
Current Assets:
Cash and Cash Equivalents $ 252,551 -89.43% $ 2,389,945 -51.31% $ 4,908,058
Government Receivable $ - -100.00% $ 488,424 -76.11% $ 2,044,673
Accounts Receivable $ 223,643 179.92% $ 79,896 70.19% $ 46,945
Pledges Receivable $ 3,765,191 -17.39% $ 4,557,580 -35.46% $ 7,062,155
Gift Shop Inventories $ 122,588 -9.68% $ 135,731 -20.35% $ 170,402
Prepaid Expenses (See Note 1 ) $ 67,309 0.00% $ 67,309 -22.24% $ 86,555
Total Current Assets $ 4,431,282 -42.59% $ 7,718,885 -46.09% $ 14,318,788
Other Assets
Other Assets $ 603,096 7.49% $ 561,074 -4.92% $ 590,119
Investments $ 5,919,495 -74.89% $ 23,577,212 -9.54% $ 26,064,212
Assets Limited As To Use (restricted) $ - -100.00% $ 474,575 2272.88% $ 20,000
Total Other Assets $ 6,522,591 -73.50% $ 24,612,861 -7.73% $ 26,674,331
Long-Term Assets:
Museum Facility. Net $ 76,070,093 -3.08% $ 78,483,461 -5.12% $ 82,716,475
Historical Collections $ - 0.00% $ - 0.00% $ -
Total Long-Term Assets: $ 76,070,093 -3.08% $ 78,483,461 -5.12% $ 82,716,475
Total Assets $ 87,023,966 -21.47% $ 110,815,207 -10.42% $ 123,709,594
Liabilities
Current Liabilities:
Accounts Payable $ 140,212 -39.43% $ 231,472 -33.96% $ 350,516
Accrued Liabilities $ 137,545 -48.87% $ 269,017 20.02% $ 224,150
Interest Payable $ 67,856 -80.69% $ 351,400 -10.40% $ 392,201
Deferred Revenue $ 63,022 -71.91% $ 224,367 -46.35% $ 418,197
Total Current Liabilities $ 408,635 -62.03% $ 1,076,256 -22.30% $ 1,385,064
Long-Term Liabilities
Tax Exempt Bonds Payable $ 27,000,000 -41.30% $ 46,000,000 -6.12% $ 49,000,000
Total Long-Term Liabilities $ 27,000,000 -41.30% $ 46,000,000 -6.12% $ 49,000,000
Total Liabilities $ 27,408,635 -41.78% $ 47,076,256 -6.57% $ 50,385,064
Net Assets
Unrestricted $ 58,772,883 -6.06% $ 62,563,238 -12.75% 71,705,440
Temporarily Restricted $ 822,448 -28.84% $ 1,155,713 -27.73% 1,599,090
Permanently Restricted $ 20,000 0.00% $ 20,000 0.00% 20,000
Total Net Assets $ 59,615,331 -6.47% $ 63,738,951 -13.07% $ 73,324,530
Total Liabilities and Net Assets $ 87,023,966 -21.47% $ 110,815,207 -10.42% $ 123,709,594
Note: 1) Prepaid expenses 2009 amount estimated using 2008 for purposes of determining the "Other Assets" amount where prepaid expenses were includ
Exhibit E 1 of 2
EXHIBIT E
Statement of Activity Information:
YTD09 % Change FYE08 % Change FYE07

Revenues
Contributions
Foundations and Organizations $ 1,250,860 -41.87% $ 2,152,000 7.93% $ 1,993,820
Individuals $ 16,406 -99.23% $ 2,131,065 -20.00% $ 2,663,671
Corporations $ 45,207 -87.05% $ 348,993 -60.05% $ 873,500
Time Discounts $ 112,653 161.98% $ 43,000 -74.71% $ 170,000
Allowance for Doubtful Accounts $ - -100.00% $ 33,600 -772.00% $ (5,000)
Government Grants $ 552,815 -61.74% $ 1,444,708 -57.26% $ 3,380,035
Admissions $ 352,043 -46.95% $ 663,544 -21.41% $ 844,286
Earned Revenues $ 238,129 -59.27% $ 584,642 -10.64% $ 654,263
Donated Services and In-Kind Gifts $ 123,938 -64.48% $ 348,890 646.99% $ 46,706
Special Events $ 9,363 -51.07% $ 19,136 -98.11% $ 1,011,651
Other Income $ 5,697 -64.72% $ 16,148 -91.86% $ 198,408
Net Assets Released From Restrictions $ - 0.00% $ - 0.00% $ -
Total Revenues and Support $ 2,707,111 -65.23% $ 7,785,726 -34.19% $ 11,831,340
Expenses
Museum Programs $ 866,428 -72.11% $ 3,107,028 -27.48% $ 4,284,281
Administrative and General $ 1,641,589 -30.24% $ 2,353,061 35.92% $ 1,731,222
Fundraising, Developments, and Communications $ 1,169,619 -17.20% $ 1,412,517 -49.58% $ 2,801,597
Other Programs $ 142,012 -89.01% $ 1,292,082 53.05% $ 844,231
Interest Expense $ 729,132 -66.03% $ 2,146,243 -13.56% $ 2,482,793
In-Kind Expenses $ 93,938 -65.70% $ 273,891 486.42% $ 46,706
Depreciation $ 2,463,200 -43.23% $ 4,338,937 -4.76% $ 4,555,891
Depreciation $ (2,463,200) -43.23% $ (4,338,937) -4.76% $ (4,555,891)
Total Expenses (net of depreciation) $ 4,642,718 -56.14% $ 10,584,822 -13.17% $ 12,190,830
Change in Net Assets Pre-Depreciation & Pre-

Realized/Unrealized Gain/Loss $ (1,935,607) -30.85% $ (2,799,096) 678.63% $ (359,490)
Depreciation $ (2,463,200) -43.23% $ (4,338,937) -4.76% $ (4,555,891)
Realized/Unrealized Loss/Gain on Investments $ 275,189 -111.24% $ (2,447,546) -531.45% $ 567,285
Change in Net Assets Post-Depreciation & Post-
Realized/Unrealized Gain/Loss $ (4,123,618) -56.98% $ (9,585,579) 120.45% $ (4,348,096)
Net Assets at the Beginning of Year $ 63,738,951 -13.07% $ 73,324,530 -5.60% $ 77,672,626
Net Assets at the End of Year $ 59,615,333 -6.47% $ 63,738,951 -13.07% $ 73,324,530
Ratios
Current Ratio 10.8 51.20% 7.2 -30.63% 10.3
Working Capital $ 4,022,647 -39.44% $ 6,642,629 -48.64% $ 12,933,724
Days of Cash-On-Hand 12 -86.01% 82 -43.92% 147
Debt Ratio 31% -25.26% 42% 4.80% 40%
Viability Ratio 0.34 -47.78% 0.65 -15.72% 0.77
Exhibit E 2 of 2
Project Registration Form
Project Detail Form
NOTE: The Project Application and related

materials have been prepared and
submitted by the Local Project
Sponsor to initiate the Commission
staff assessment of the project and
to aid the Commission in determining
the Need for the project.

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Resolution

RESOLUTION NO. R-10-04
OHIO CULTURAL FACILITIES COMMISSION
February 11, 2010
A RESOLUTION CONDITIONALLY CONFIRMING THAT THERE IS A

NEED FOR THE PROJECT RELATED TO THE NATIONAL
UNDERGROUND RAILROAD FREEDOM CENTER AND
CONDITIONALLY CONFIRMING THAT THERE IS SUBSTANTIAL
REGIONAL SUPPORT FOR THE PROJECT, CONFIRMING THE
CONSTRUCTION ADMINISTRATOR, CONDITIONALLY CONFIRMING
PROVISION OF GENERAL BUILDING SERVICES, CONDITIONALLY
CONFIRMING THE PROJECT AND AUTHORIZING THE
EXPENDITURE OF FUNDS, AUTHORIZING THE EXECUTION OF A
MEMORANDUM OF UNDERSTANDING, CONDITIONALLY
AUTHORIZING A CAPITAL EXPENDITURE REIMBURSEMENT
AGREEMENT AND ADDENDUMS TO THE MANAGEMENT
AGREEMENT, THE CULTURAL PROJECT USE AGREEMENT AND
THE LEASE AND THE TAKING OF CERTAIN OTHER ACTIONS.
WHEREAS, the Ohio General Assembly (the “General Assembly”) established the Ohio
Cultural Facilities Commission (the “Commission”) under Chapter 3383 of the Ohio
Revised Code (the “Act”) to engage in and provide for the development, performance,
and presentation or making available of culture to the public, including the provision,
operation and management of Ohio cultural facilities, as defined in the Act;
WHEREAS, pursuant to Section 3383.07(D) of the Act, the General Assembly required
that state funds, including the proceeds of state bonds, not be spent on the construction
of any Ohio cultural facility until (i) the Commission has determined that there is a need
for the cultural project and the Ohio cultural facility related to the project in the region of
the state for which the Ohio cultural facility is proposed to be located, and (ii) provision
has been made, by agreement or otherwise, satisfactory to the Commission, as an
indication of substantial regional support for that Ohio cultural facility, for local
contributions amounting to not less than fifty (50) percent of the total state funding for the
cultural project and the Commission has established guidelines for such evaluation and
determinations;
WHEREAS, the Ohio Building Authority issued State of Ohio Arts Facilities Bonds, dated
February 15, 2003 (the "2003 Bonds" and, together with any other bonds issued for the
purpose of paying the costs of Ohio cultural facilities, the "State Bonds") to finance the
State's portion of the cost of construction of the National Underground Railroad Freedom
Center (the Center);
WHEREAS, on August 31, 2005, the Treasurer of the State of Ohio (the "Treasurer")
issued the State of Ohio Cultural and Sports Capital Facilities Bonds, Series 2005A and
on December 14, 2006, issued the State of Ohio Cultural and Sports Facilities Bonds,
Series 2006A for the purpose of paying the costs to finance the state's portion of the cost
of construction of Ohio cultural facilities, including the state's portion of the cost of
construction of the National Underground Railroad Freedom Center (the "Project” or the
“Facility”);
WHEREAS, the General Assembly previously appropriated an aggregate amount of

$500,000 in General Revenue;
WHEREAS, pursuant to prior Commission resolutions, the Commission determined that

there was a need for the Project and that regional support existed for the Project,
approved that the National Underground Railroad Freedom Center, Inc. (the "Project
Sponsor") be permitted to act as construction administrator on the Project, confirmed
that the Project Sponsor shall provide general building services, in accordance with
Section 3383.07(C) of the Act and approved expenditure of funds, subject to certain
conditions. These conditions of prior Commission resolutions were met to the
satisfaction of the Commission and the total of $14,150,000 of the appropriated funds
were expended for the Project;
WHEREAS, the Project Sponsor and the Commission are parties to a lease agreement
entered into on March 25, 2003, and amended from time to time (the "Lease
Agreement"), a Management Agreement dated March 25, 2003, and amended from time
to time (the "Management Agreement"), and a Cooperative Use Agreement, in order to
facilitate the use of Treasurer of State bonds for the various facility improvements, all of
which are still in effect;
WHEREAS, the 127th General Assembly in Am. Sub. H.B. 562 appropriated bond funds
in the amount of $850,000 in ALI C371H2 and the Project Sponsor proposes to utilize
the appropriation for further reimbursement of costs associated with the Project;
WHEREAS, the Ohio General Assembly has authorized the Treasurer of State to issue
bonds for the purpose of funding Ohio Cultural and Sports Facility projects, including the
Project, which issuance the Treasurer of State has or will undertake;
WHEREAS, the Commission has reviewed a project application form submitted by the
Project Sponsor and Commission staff recommendation and has also heard and
considered oral presentations made at the Commission meeting held on the date of this
resolution;
WHEREAS, the federal government may enact legislation that would provide for the
federal government to own and provide for the operation of the Facility as a national
museum, and this arrangement would be beneficial to the provision of culture to the
public in this state and the nation; and
WHEREAS, new legal agreements amongst the various parties will be required in order
to accomplish the foregoing and the Commission wishes to state its intentions to support
such beneficial arrangements.
NOW, THEREFORE, BE IT RESOLVED:
Section 1. Confirmation of Need. In accordance with Section 3383.07(D)(1) of the Act,

the Commission hereby conditionally confirms that there is a need for the Project in the
region of the state where the Project is located, subject to Section 5, (i), (ii), and (iii)
below.
Section 2. Confirmation of Substantial Regional Support. In accordance with Section

3383.07(D)(2) of the Act, the Commission hereby conditionally confirms that, as an
indication of substantial regional support for the Project, provision has been made and
evidence presented to its satisfaction that local contributions will amount to not less than
fifty (50) percent of the total state funding for the project and conditionally confirms that
such anticipated contributions, together with the state funds, will result in full funding for
the Project, subject to Section 5, (i), (ii), and (iii) below.
Section 3. Confirmation of the Construction Administrator. The Commission hereby

accepts the recommendation of the Executive Director and independently confirms that
2
the Project Sponsor be permitted to act as construction administrator on the Project in
accordance with Section 3383.07(A) of the Act.
Section 4. Confirmation of the Provision of General Building Services. The Commission

hereby conditionally confirms that the Project Sponsor shall provide general building
services, in accordance with Section 3383.07(C) of the Act, subject to Section 5, (i), (ii),
and (iii) below.
Section 5. Approval of the Project and Authorization of the Expenditure of Funds. In

accordance with Section 3383.07 of the Act, the Commission hereby conditionally
approves the Project and authorizes the expenditure of funds in an amount not to
exceed $850,000 subject to the following conditions:
(i) Federal legislation is enacted that provides for the federal

government to be responsible for the Facility and to provide
sufficient operating subsidies to ensure future operations of the
Facility, satisfactory to the Executive Director of the Commission
in her sole discretion;
(ii) The Project Sponsor provides to the OPFC, the Treasurer of State
and the Commission an opinion of nationally recognized bond
counsel, acceptable to the Treasurer of State, and addressed to
the OPFC, the Treasurer of State and the Commission, stating
that the financing structure, ownership and/or
operational/management structure will not a) adversely affect the
validity of the state-issued tax-exempt bonds; and b) will not
adversely affect the exclusion of the interest on the state-issued
tax-exempt bonds from the gross income of the holders of the
state-issued tax-exempt bonds for federal income tax purposes;
(iii) The new financing structure, ownership and/or

operational/management structure for the Project and the Project
Sponsor is acceptable to the Commission Executive Director, in
her sole discretion;
(iv) the Project Sponsor provides the Commission staff with a

certification that information contained in documents submitted to
Commission staff is true and accurate to the best of the Project
Sponsor’s knowledge and belief, that this certification extends to
future submissions, and acknowledging the receipt of this
resolution and the conditions set forth herein;
(v) the Project Sponsor provides the Commission with evidence

satisfactory to the Executive Director of the Commission that it is
an eligible 501(c)(3) corporation in good standing with the Internal
Revenue Service;
(vi) the Project Sponsor provides the Commission with evidence

in good standing with the Attorney General’s Office, Charitable
Law Section;
3
(vii) the Project Sponsor provides the Commission with evidence
in good standing with the Secretary of State’s Office;
(viii) a search of the Auditor of State database established pursuant to

Section 9.24 of the Ohio Revised Code concludes that the Project
Sponsor has no unresolved findings for recovery;
(ix) the Project Sponsor provides the Commission staff with copies of
the construction bids, consultants’ contracts and construction
contracts;
(x) in recognition that the Project is no longer Fully Funded, the

escrow funds on deposit in the Commission’s capital donations
fund will remain in escrow until such time as the project becomes
Fully Funded. “Fully Funded” means that funds have been raised
for the total costs of the Project including all hard costs, soft costs
and start-up costs and, the operating endowment for the Project.
“Raised” means receipt of written pledges from creditworthy
entities, written funding commitments from governmental entities,
written guarantees from creditworthy entities (in a form approved
by the Ohio Attorney General’s Office), cash receipts or any
combination of the foregoing, all as determined in the sole
discretion of the Executive Director of the Commission;
(xi) the Project Sponsor provides the Commission staff with complete,
accurate and updated documentation of material changes in
project costs, project scope or other relevant information affecting
the organization or the Project;
(xii) the Project Sponsor and the Commission execute a Memorandum

of Understanding on or before the Commission's third quarter
2010 meeting;
(xiii) the Project Sponsor and the Commission execute a Capital

Expenditure Reimbursement Agreement, and addendums to the
Cultural Use Agreement, the Management Agreement and the
Lease and any other documents that may be required;
(xiv) the Project Sponsor has provided the Commission staff with a
copy of its resolution or ordinance authorizing its execution of a
Memorandum of Understanding and whatever legal agreements
are needed to carry out the intentions of this Resolution and the
federal legislation, and any other required documents;
(xv) the Attorney General has reviewed and approved the document(s)
as to form, as appropriate;
(xvi) the Controlling Board or the Director of the Office of Budget and
Management, as required by law, approves and certifies the
release and availability of funds;
4
(xvii) the Project Sponsor provides the Commission with a signed
Declaration Regarding Material Assistance/Nonassistance to a
Terrorist Organization (DMA) pursuant to Senate Bill 9 of the 126th
General Assembly; and
(xviii) The Sponsor provides the Commission with status reports each
calendar quarter, within thirty days of the quarter ending,
beginning the second quarter of 2010, until such time as the
federal legislation is enacted. Depending on the contents of these
reports, the Commission may reconsider its approval should the
financing structure, ownership and/or operational management
structures prove unacceptable to the OPFC, the Treasurer of
State and/or the Commission.
Section 6. Authorization of Execution of a Memorandum of Understanding and whatever

other legal agreements are needed to carry out the intentions of this Resolution and the
federal legislation. The Chairman or the Executive Director of this Commission be, and
hereby is, authorized and directed to execute and deliver, or cause to be executed and
delivered, whatever legal agreements are needed to carry out the intentions of this
Resolution and the federal legislation in the name and on behalf of the Commission, as
the Chairman or Executive Director deems necessary or appropriate to carry out the
intent of the foregoing resolution. The execution of such agreements by the Chairman or
the Executive Director shall be conclusive evidence of the exercise of the discretionary
authority conferred herein.
Section 7. Authorization of Execution of a Capital Expenditure Reimbursement

Agreement and addendums to the Management Agreement, the Lease, Cultural Project
Use Agreement and whatever other legal agreements are needed to carry out the
intentions of this Resolution and the federal legislation. The Chairman or the Executive
Director of this Commission be, and hereby is, conditionally authorized and directed to
execute and deliver, or cause to be executed and delivered, whatever legal agreements
are needed to carry out the intentions of this Resolution and the federal legislation in the
name and on behalf of the Commission, as the Chairman or Executive Director deems
necessary or appropriate to carry out the intent of the foregoing resolution. The
execution of such agreements by the Chairman or the Executive Director shall be
conclusive evidence of the exercise of the discretionary authority conferred herein.
Section 8. Authorization of Execution of Other Documents, Taking Other Actions. The

Chairman or the Executive Director of this Commission be, and hereby is, conditionally
authorized and directed to execute and deliver, or cause to be executed and delivered,
all such documents, agreements, instruments or certifications, or to do, or cause to be
done, all such acts and things, in the name and on behalf of the Commission, as the
Chairman or the Executive Director may deem necessary or appropriate to carry out the
intent of the foregoing resolution. The taking of such action or the execution of any such
agreements by the Chairman or the Executive Director shall be conclusive evidence of
the exercise of the discretionary authority conferred herein.
Section 9. Other Matters. The Project Sponsor shall keep the Commission staff
informed in writing and by presentation at a future Commission meeting, if requested by
the Commission or its Executive Director, of any matters financial, organizational, or
otherwise that will have any impact on the construction of the Project and/or operation of
the cultural facility.
Section 10. Open Meeting. All formal actions of this Commission concerning and
relating to the adoption of this resolution were taken and adopted in an open meeting of
5
this Commission, and all deliberations of this Commission that resulted in those formal
actions were in meetings open to the public, and in compliance with all legal
requirements including Ohio Revised Code Section 121.22.
IN WITNESS WHEREOF, the undersigned hereby certifies that the foregoing Resolution
was duly adopted at a meeting held on February 11, 2010, by the members of the Ohio
Cultural Facilities Commission.
______________________________
Craig A. Marshall, CPA, Secretary/Treasurer

Project Analysis and Staff Recommendation National Underground Railroad Freedom Center-Memorandum of Understanding For Construction Reimbursement

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Project Analysis and Staff Recommendation

National Underground Railroad Freedom Center- Memorandum of

National Underground Railroad Freedom Center Cincinnati, Hamilton County

Type: Ohio nonprofit corporation since May 1995

Under NURFC’s current operating structure, sustainability is an issue.

NURFC is working with the federal government to establish a federal museum

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

At this time, the Commission is being asked to approve a Memorandum of

Web Site: http://www.freedomcenter.org

Appropriation Bill Appropriation G.A. Appropriation Comments

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

Address: 50 E. Freedom Way

Type: Special interest museum

Culture Presented: Preservation and presentation of features of historical interest or significance

Managed By: Sponsor

Description: The Center consists of a 160,000-square-foot facility located on the Cincinnati

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

TOTAL LIABILITIES AND NET

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

YTD09 FYE08 FYE07

The sponsor’s debt consists of:

Change in Net Assets:

Change in Net Assets Summary

Total Revenues $ 2,707,111 $ (5,078,615) $ 7,785,726 $ (11,831,340) $ 11,831,340

Total Expenses (net of depreciation) $ 4,642,718 $ (5,942,104) $ 10,584,822 $ (12,190,830) $ 12,190,830

CHANGES IN NET ASSETS (Post-Depreciation) $ (4,123,618) $ 5,461,961 $ (9,585,579) $ 4,348,096 $ (4,348,096)

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

Pro Forma Review:

Operating Pro Forma Summary

FYE09 FYE10 FYE11 FYE12 FYE13

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

Source Amount Substantiation

Provision of General Building Services

x Federal legislation is enacted that provides for the federal government to be

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

x The new financing structure, ownership and/or operational/management structure for

Project Manger Project Manager

Assistant Director for Project Services Executive Director

Ohio Cultural Facilities Commission National Underground Railroad Freedom Center

National Underground Railroad Freedom Center, Inc.

YTD09 % Change FYE08 % Change FYE07

Total Assets $ 87,023,966 -21.47% $ 110,815,207 -10.42% $ 123,709,594

Total Liabilities $ 27,408,635 -41.78% $ 47,076,256 -6.57% $ 50,385,064

Statement of Activity Information:

YTD09 % Change FYE08 % Change FYE07

Change in Net Assets Pre-Depreciation & Pre-

NOTE: The Project Application and related

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