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Project Analysis and Staff Recommendation National Underground Railroad Freedom Center

Commission Assessment Team: Tony Capaci, chief analyst and Amy Rice, chief project manager

National Underground Railroad Freedom Center

50 E. Freedom Way Cincinnati, Hamilton County

Facility and Project Sponsor Information
Executive Summary:

The National Underground Railroad Freedom Center (“Freedom Center,” “NURFC,” or “the Sponsor”) is a museum that explores a range of freedom issues. The center offers lessons and reflections on the struggle for freedom and features three pavilions celebrating courage, cooperation, and perseverance. The state appropriated $15.5M to the Freedom Center, which opened in August of 2004 on the Cincinnati riverfront. The Commission previously approved $14.65M of the funding, which has been reimbursed to the Sponsor. Under NURFC’s current operating structure, sustainability is an issue and the Sponsor is seeking approval of the $850K appropriation and release of a $462K escrow currently held by the Commission. On February 11, 2010, the Commission authorized a Memorandum of Understanding (MOU) spelling out the conditions under which full approval could be granted to the Freedom Center for the most recent appropriation of $850,000. The MOU contemplates that the Freedom Center will obtain Congressional approval to federalize the facility, and federal funding will be provided for a portion of the annual operating costs. NURFC’s vision is that the federal government will establish a federal museum and an 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 gifting the facility to the United States government and the United States government, via an appointed board of trustees, operating the facility in

Deleted: s

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cooperation with the Secretary of the Interior and other federal agencies. The federal legislation has not been approved, but the Freedom Center hopes it will be approved in 2011. Subsequent to the February 2010 Commission approval of the MOU, the Freedom Center has eliminated its debt, developed alternate plans for continuing its operations, and has offered to provide a guaranty to secure the $850K appropriation, as well as a guaranty in exchange for release of the $462K escrow. Commission staff recommends approval of the $850K appropriation, and the release of the $462K escrow, contingent on the Sponsor providing a guaranty for both the $850K appropriation and the $462K escrow, as well as a business plan outlining operational contingencies in the event federalization is delayed. Facility Overview: The Center consists of a 160,000-square-foot facility located on the Cincinnati riverfront that opened in 2004. 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. The Center is currently owned and operated by the Sponsor, an Ohio nonprofit corporation since 1995. Culture Presented: The preservation and presentation of features of historical interest or significance. Sponsor Background:

Deleted: anticipates

The Sponsor 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.”

Project Information
Scope: The current appropriation will reimburse the Sponsor for construction expenses previously incurred but not yet reimbursed (the “Project”). The Project consists of reimbursing $850,000 on an appropriation awarded in H.B. 562. In addition, the Sponsor is requesting return of the $462K in escrowed funds, in exchange for a guaranty in an equal amount.

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). On October 9, 2001, Substantial Regional Support was confirmed by the Commission in resolution R-01-26. Matching resources were again substantiated in November 2008. The following table is provided for informational purposes.

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Source Cash-on-Hand Funds Already Expended on Project Irrevocable Written Pledges In-Kind Contributions (up to 50%) Operating Endowment Private Contributions County Government City Government Federal Government Site Valuation Other Total Matching Resources Minimum Match

Amount $0 $0 $0 $0 $0 $34,000,000 $0 $4,500,000 $12,000,000 $0 $0 $50,500,000 $7,750,000

Funding Model
Old Funding State funding Cash on hand Private contributions County government City government Federal government Available funding sources Other (future investment income)1 Total funding sources $ 15,500,000 63,000,000 6,000,000 22,200,000 106,700,000 11,650,000 118,350,000 $ Adjustments $ (11,650,000) (11,650,000) $ New 15,500,000 63,000,000 6,000,000 22,200,000 106,700,000 106,700,000

$

$

Project Construction and soft costs2 Exhibits Fixtures/furnishings/equipment Pre-opening expenses (other) Project cost approved by Commission 2004/2005 Operating deficit (other) Total project budget

$

$

62,633,000 17,660,000 2,790,000 32,761,000 115,844,000 1,900,000 117,744,000

$

$

(30,095,954) $ (30,095,954) (30,095,954) $

32,537,046 17,660,000 2,790,000 32,761,000 85,748,046 1,900,000 87,648,046

1 2

Due to the bond settlement transaction, the future investment income projection was never realized

The original estimated construction cost of $62M shown above reflects the project cost used for past approvals however, the original construction cost per the audit was $78M and was adjusted to reflect the impairment charge. The current value of the building per the 12/31/09 audit is $32M after the impairment charge of $42M.

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The Project is complete and was previously funded as indicated in the table above. However, two significant events have since transpired affecting the value of the Project. The first is that the consortium of banks settled $47M bond debt in exchange for $24M held in investments (a second position lien on the facility was held as collateral; the Sponsor states that the lien has been released) The second event is that, appurtenant to Generally Accepted Accounting Principles (“GAAP”) because the asset’s value is ‘impaired,’ management wrote down the carrying value of the facility from $78M to $32M at FYE09. Therefore, when analyzing the funding for the project, Commission staff reviewed a completed project valued at $32M, without any debt, and calculated that the project is fully funded.

Project Need
Commission staff analyzed the Sponsor’s financial statements, including the following: • internally generated financial statements for year-to-date September 30, 2010 ("YTD10") • audited financial statements for fiscal-years-ending December 31, 2009 and 2008 (“FYE09” and "FYE08") • four-year pro forma covering the periods from 2011 through 2014

Statement of Financial Position Summary
YTD10 ASSETS: Current Assets Unrestricted Restricted Long-Term Assets TOTAL ASSETS LIABILITIES: Total Current Liabilities Total Long-Term Liabilities TOTAL LIABILITIES NET ASSETS: Unrestricted Temporarily Restricted Permanently Restricted TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS $ 33,357,286 $ 954,643 $ 956,666 $ 35,268,595 $ 35,887,316 147.29% $ 27.72% $ 4683.33% $ 147.38% $ -14.29% $ 13,489,393 747,456 20,000 14,256,849 41,871,975 -78.44% $ -35.33% $ 0.00% $ -77.63% $ 62,563,238 1,155,713 20,000 63,738,951 $ $ $ 618,721 618,721 0.58% $ -100.00% $ -97.76% $ 615,126 27,000,000 27,615,126 -42.85% $ -41.30% $ -41.34% $ 1,076,256 46,000,000 47,076,256 $ $ 3,248,185 9.21% $ NC $ -16.09% $ -14.29% $ 2,974,206 38,897,769 41,871,975 -61.47% $ NC $ 7,718,885 % Change FYE09 % Change FYE08

$ 32,639,131 $ 35,887,316

-62.27% $ 103,096,322 -62.21% $ 110,815,207

-62.21% $ 110,815,207

Solvency: An organization is solvent when assets are greater than liabilities. The Sponsor is solvent because net assets are positive (YTD10 total assets are $35.9M; total liabilities are $0.6M). YTD10, the Sponsor had no debt; therefore, a viability ratio was not calculated. 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 are not used to calculate the current ratio

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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.
YTD10 % Change FYE09 % Change FYE08

Current Ratio

5.25

8.58%

4.84

-32.58%

7.17

The Sponsor’s YTD10 working capital is $2.7M). Days of cash-on-hand (an indication of how many days an organization can pay expenses if its revenue stream ceases) at 22 is lower than the 30-day norm. Leverage: Leverage is the degree to which a Sponsor is borrowing money. A measure of leverage is debt ratio (debt divided by total assets). YTD10, the Sponsor has no debt; therefore, a debt ratio is not calculated. Change in Net Assets: Change in net assets examines changes over several years to see where an entity is headed. The reader will note a ($42M) write down of the building in FYE09 due to GAAP reporting and a $24M Extraordinary Gain in YTD10 due to debt settlement. Operating Change in Net Assets Summary
YTD10 Total Revenues (net of capital income raised) $ 5,000,030 5,670,869 % Change 17.17% -30.48% $ $ FYE09 4,267,276 8,157,132 % Change -45.19% -22.94% $ $ FYE08 7,785,726 10,584,822

Total Expenses (net of capital expenses) $ OPERATING CHANGE IN NET ASSETS (predepreciation and pre-realized/unrealized gain/(loss) on investments) $ Impairment loss (FAS-144 adjustment) Extraordinary income (debt settlement) Realized/Unrealized Gain/(Loss) on Investments   Depreciation OPERATING CHANGE IN NET ASSETS (post-depreciation and postrealized/unrealized gain/(loss) on $ $ $ $

(670,839) 24,150,000 26,517 (2,494,182)

-82.75% $ NC $ -94.22% $ -35.23% $

(3,889,856) 458,825 (3,851,071)

38.97% $ NC $ NC $ P $ -11.24% $

(2,799,096) (2,447,546) (4,338,937)

-100.00% $ (42,200,000)

$

21,011,496

P $ (49,482,102)

416.21% $

(9,585,579)

Pro Forma Review: A pro forma review is a projection showing anticipated expenses and revenues for the period.

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Operating Pro Forma Summary
Revised - 01/14/2011 FYE11 Total Revenues (net of capital income raised) Total Expenses (net of capital expenses) Pre-Depreciation Surplus/(Deficit) Depreciation Post-Depreciation Surplus/(Deficit) $ $ $ $ $ 4,811,900 FYE12 $ 4,198,000 5,411 $ $ FYE13 4,271,000 8,000 FYE14 $ 4,419,000 $ 84,000

(5,132,416) $ (4,192,589) $ (320,516) $ (3,325,576) $ (3,325,576) $ (3,646,092) $ (3,320,165) $

(4,263,000) $ (4,335,000) (3,325,576) $ (3,325,576) (3,317,576) $ (3,241,576)

In assessing the Freedom Center’s sustainability, Commission staff reviewed the impact of several events that occurred over the last several years, and which affect the Freedom Center’s current financial position. Arguably, the most significant event was: The consortium of banks that previously held the debt for the Freedom Center has exchanged $47M in local bond debt for approximately $24M the Freedom Center was holding in investments. The difference between the amount owed and the amount paid is shown as extraordinary revenue. This is a one-time gain and is not operating revenue. The net result of the bond settlement is an extraordinary gain of approximately $24M in YTD10 and the elimination of interest expense and bank fees going forward. The Freedom Center is actively asking Congress to pass legislation whereby the Freedom Center would be gifted to the Federal Government and the Federal Government would contribute $3M of annual operating revenue . The Sponsor’s projections indicate that federalization would result in a net annual operating surplus of approximately $1.5M, assuming their other fundraising activities meet the goals specified. However, due to the uncertainty of such legislation passing, Commission staff analyzed the Freedom Center’s sustainability as if federalization will not occur and included for the Commission’s review only the Sponsor’s latest pro forma, which does not assume federalization. Also material to the Freedom Center’s financial position is the adjustment of the carrying value of the building on the FYE09 financial statement. The previous building balance of $78M in FYE08 was written down to $32M in FYE 09 as a result of FAS 144, the GAAP pronouncement applicable to Accounting for the Impairment or Disposal of Long-Lived Assets. The $42M write down increased the FYE 09 deficit to ($49M). Additionally, the Freedom Center continues to operate at a deficit, as is evidenced by a pre-depreciation, pre-extraordinary gain operating deficit of ($670K) at YTD10, a pre-depreciation deficit of ($3.9M) at FYE09, and operating deficits in previous years. However, the Freedom Center’s Executive Committee has approved a new budget and business plan for FYE 2011 and FYE 2012 and although the pro forma indicates a pre-depreciation deficit of ($320K) for FYE11, in FYE12-FYE14 small pre-depreciation surpluses are projected. This business model, which forecasts how the Freedom Center might become sustainable without federalization, relies on further operating cost cuts and maintaining elevated levels of private support (as compared to FYE 09) in FYE 2011 and FYE 2012. Actual results of private support increased from 2009 to YTD10 by substantial margins, approximately 160% at YTD 10 (nine months of actual activity) and this increased level of private support is projected to drop in 2011 and rise again in 2012 to approximately the 2010 results. Also, projected total operating costs in 2012 are about half of actual total operating costs in FYE09. Although the Commission staff is hopeful the sponsor will meet its objectives regarding the approved 2011 and 2012 budgets and cash flows from the Freedom Center Executive Committee, Commission staff has its

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reservations as to whether fundraising levels can continue to be maintained and operating costs reduced further. Noteworthy to the Commission staff’s assessment regarding fundraising projections is the Board Support projection of $750K for FYE 2011, $880K for FYE 2012 and increased levels for the remaining years. Such support by the Board indicates overall confidence in the business plan; however, Commission staff’s reservations go beyond that which the board controls and are primarily due to the effect a down economy typically has on non profits: In order to reach and maintain projected fundraising levels, grants and contributions from the federal government (Dept of Education), the city government, corporations, board members and individuals would have to be realized. In a slow-growing or uncertain economy this may not be possible to the extent the Freedom Center is projecting. Although Commission staff based its recommendation on the most conservative projections, which do not include federalization, if federalization were to be approved it would result in the Facility being gifted to the federal government (free and clear of any liens; it is not yet clear what will be required regarding the Commission’s property interest in the facility. The Commission has a leasehold interest, which was required under the “old” Ohio Building Authority bonds.) Under the federalization scenario, the U.S. Government would operate the museum commemorating the ending of chattel slavery in the United States. According to the Sponsor, if federalization takes place, the Freedom Center expects to receive approximately $3M/year in federal operating revenues on a permanent basis, enabling the Freedom Center to generate operating surpluses starting at $1.5M and increasing slightly for each fiscal year end. According to the Sponsor, Senator Sherrod Brown supports the legislation that was discussed in draft form in October of 2009, and the Freedom Center management is hopeful that the legislation will be passed. The Sponsor anticipates “that the funds would be received in the [fourth] quarter of [calendar] 2011, if [it is] successful in getting the language signed and passed prior to [September 30, 2011].” Even if the effort to secure federalization is successful, there remains a challenge in meeting operating cash flow needs until such time as the federal funds are received. A review of the liquidity position calls into question the ability of the Freedom Center to meet its obligations in the first quarter of 2011 and beyond. Commission staff requested and reviewed a Sponsor-prepared cash flow schedule that starts in the fourth quarter of 2010 and ends at the fourth quarter 2011 and another cash flow for fiscal year 2012. The cash flows exclude federalization funds and assume Commission funding of $850K and the return of the $462K escrow in February of 2011. Each cash flow projection indicates positive cash balances throughout 2011 and 2012 if financial projections are met and the state funds and escrow are disbursed.

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Revenue Category Private Support Government Earned Other Total

FYE09 21% 22% 57% 0% 100%

Proportion of Revenue YTD10 2011 Est 2012 Est 2013 Est 2014 Est 62% 49% 71% 67% 69% 15% 29% 4% 7% 6% 23% 20% 23% 23% 23% 0% 1% 2% 3% 3% 100% 100% 100% 100% 100%

Proportion of Revenue
80% 60% 40% 20% 0% FYE09 YTD10 2011 Est 2012 Est 2013 Est 2014 Est Private Support Government Earned Other

($ Thousands) Operating Revenues Private Support Board Support Individuals Corporations Trust/Foundations/Charities MLK IFCA, net Total Private Support Year-over-year change Government Department of Education OCFC City of Cincinnati Total Government Year-over-year change Earned Income Admissions Facility Rental Retail Membership Café Total Earned Income Year-over-year change Other Income Year-over-year change Total Revenues Year-over-year change Expenses Total Personnel Costs Total Non-personnel Costs Total Expenses Year-over-year change NET SURPLUS/(DEFICIT)

FYE09

Trends in Operating Results YTD10 2011 Est 2012 Est 2013 Est

2014 Est

750.0 303.0 625.0 650.0 38.9 1,159.3 3,083.8 166% 2,366.9 -23%

880.0 305.0 705.0 948.0 20.0 150.0 3,008.0 27%

900.0 308.0 720.0 963.0 20.0 2,911.0 -3%

950.0 311.0 730.0 973.0 125.0 3,089.0 6%

Revenue ($000)
6,000.0 5,000.0 4,000.0 3,000.0 Total Earned Income Total Government Total Private Support

1,182.4

744.4 -37%

275.0 850.0 300.0 1,425.0 91%

50.0 0.0 100.0 150.0 -89%

200.0 100.0 300.0 100%

150.0 100.0 250.0 -17%

2,000.0 1,000.0 0.0

3,107.9

1,171.9 -62%

595.0 190.0 140.0 40.0 15.0 980.0 -16% 70.0

600.0 200.0 140.0 40.0 20.0 1,000.0 2% 100.0 43% 4,258.0 -12%

619.0 198.0 146.0 42.0 15.0 1,020.0 2% 115.0 15% 4,346.0 2%

631.0 202.0 149.0 43.0 15.0 1,040.0 2% 130.0 13% 4,509.0 4%

Expenses ($000)
9,000.0 8,000.0 7,000.0 6,000.0 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 0.0 Total Non-personnel Costs Total Personnel Costs

NC 5,449.7 5,000.0 -8%

NC 4,841.9 -3%

4,078.6 4,078.6 8,157.1

2,835.4 2,835.4 5,670.9 -30% (670.8)

2,453.2 2,709.2 5,162.4 -9% (320.5)

2,085.2 2,167.4 4,252.6 -18% 5.4

2,127.0 2,211.0 4,338.0 2% 8.0

2,170.0 2,255.0 4,425.0 2% 84.0

(2,707.4)

In reviewing the projected cash flow, Commission staff notes that projected operating cash outflows are significantly less than recent actual operating costs shown in the prior year audit and the YTD financial statements. The projected decreases are due to planned cuts in expenses for fundraising and professional lobbying. In response to inquiries as to how projected fundraising cash inflows will be achieved when cutting fundraising expenses, the Sponsor responded that they hired a new director of development, which should enable the Freedom Center to cut fundraising costs while achieving their fundraising goals. The Sponsor’s response regarding the impact of cutting professional lobbying expenditures before federalization is secured was to clarify that the lobbyist will not stop working, but will be working pro bono. In order to achieve the positive cash balances anticipated in the projected cash flow, fundraising cash inflows must continue to be realized at a level which has only recently been accomplished, as indicated by the year to date financials, but which is substantially higher than years past. In evaluating the Freedom Center’s ability to achieve the fundraising cash inflow, Commission staff notes the Freedom Center and its new director of development must contend with a challenging environment for fundraising, including an uncertain economy, possible donor fatigue, and the effect the write down of the building may have on potential donor enthusiasm. Also, the fundraising outlook may be influenced positively by certain factors

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including the effect the debt settlement has on donor perspective as well as the prospect of federalization. Commission staff concludes that there remain formidable uncertainties regarding achieving the fundraising levels necessary to create the projected positive cash balances. In formulating its recommendation, the Commission staff observes that if federalization is not successful the Freedom Center must achieve elevated fundraising levels while further reducing payroll and other operating costs. Because operating costs have been cut drastically in years past, they may not realistically be cut much further. Nationally-recognized bond council created an amortization schedule for the outstanding principal related to the Freedom Center. A schedule of the outstanding unamortized state bonds was included as an appendix in the Second Amendment to the Base Lease dated July 1, 2008. According to this schedule, the dollar amount of outstanding bonds allocated to the Freedom Center is $6.6M as of February 2011 out of an original balance of $14.7M. The outstanding bonds will be paid off by the state over the next 9 years. The unamortized balance of the state bonds decreases by approximately $1M per year for the next several years. Therefore, the state’s exposure decreases rather substantially each of the next several years. These calculations do not include the $850K currently being considered for approval by the Commission because this new $850K would be guaranteed to be returned if the Freedom Center fails to continue operations. Commission staff evaluates the risk to the state as ‘high’ if the Sponsor were to stop operating in 2011 or 2012. Therefore, the alternative of not approving the $850K in state funds or the $462K in escrow funds, and thereby exacerbating a very difficult financial position, may lead to closure of the Freedom Center before federalization can be approved or the new business plan can be implemented. Approval for release of the $850K state appropriation and return of the $462K escrow appears to be necessary to keep the Freedom Center open while they continue to pursue federalization or the implementation of their new business plan. Since these two amounts would be guaranteed under the Freedom Center’s proposal, release of these funds does not increase the risk to the State. Because the state’s exposure regarding the unamortized amount of the bonds decreases substantially over the next several years, risk to the state is reduced if the Commission’s actions assist the Freedom Center in continuing its operations. Accordingly, Commission staff recommends the approval of the $850K Project and return of the $462K escrow; however, Commission staff recommends making these approvals under certain conditions in order to mitigate any additional risk. Commission staff recommends the Commission approve the Project contingent on execution of a guaranty in an amount equal to the proposed project approval for the release of the most recent appropriation of $850,000. John and Frances Pepper have agreed to sign the guaranty. Mr. Pepper is a founding board member of the Freedom Center and Chairmanemeritus of Proctor & Gamble. Such a guaranty would ensure the Commission is not placing the new state funds at risk; in addition, this contingent approval reduces the state’s risk associated with state funds previously paid out because the Freedom Center will have time to continue to seek federalization or another long term operating strategy. Should the Freedom Center cease operations before the unamortized amount of bonds decreases to zero, the state would either 1) identify a new non-profit or local government cultural or educational organization to provide programming in the building, or 2) utilize the state’s first lien position and sell the facility (recently written down to $32M by the auditors) to repay the unamortized bonds. The Commission holds approximately $462K in an escrow fund for a “management transition” in the event the Freedom Center is unable to continue to operate. The Sponsor is requesting return of the $462K in escrowed funds, in exchange for a second guaranty, signed by John and Frances Pepper. The guaranty would be called in if the Freedom Center defaults under its legal agreements with the Commission and the guaranty funds would be used to pay costs of heating, cooling, insuring, and securing the building until such time as another appropriate organization could be identified to operate the building. Commission staff notes that return of the $462K in escrowed funds in exchange for a guaranty places the Commission in a position equitable to the current position, so long as the guaranty provides that the guaranty amount account for the accrual of interest, approximately equal to the earnings that would be accrued were the escrowed funds to remain in the state treasury.

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Finally, noteworthy for the Commission’s deliberations regarding the Freedom Center, is the apparent Federal requirement that the Facility be free of all liens in order for federalization to take place. As we understand it, this criterion would require the Commission to release its property interest in the facility at the point in time when the federal government takes ownership and commits to providing operating funds. The Commission may be prohibited, by the bond documents pertaining to the bond money which funded the original appropriations, from releasing its property interest in the facility. Therefore, Commission staff is recommending the Sponsor be required to provide an opinion from nationally-recognized bond counsel on this subject prior to federalization and prior to the Commission releasing or subordinating its property interest. As stated previously, it appears that the lower risk alternative at this point in time is to approve the release of the state funds in exchange for a guaranty in an equal amount. The issue of the release of the Commission’s first lien position on the facility is a decision for a future point in time. A review of the Sponsor’s solvency, liquidity, leverage, change in net assets and pro forma indicates that without federalization it is marginally likely 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.
See Exhibit E for a summary of the Sponsor’s financial statements.

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 or fully implementing its new business plan, Commission staff confirms the Sponsor continue to provide these services as permitted by section 3383.07 of the ORC.

Approval of the Project and Authorization of the Expenditure of Funds
Appropriation History: 
Appropriation Name National Underground Railroad Freedom Center Bill Number Am. Sub. H.B. 562 Appropriation Date 6/24/2008 G.A. 127 Appropriation Amount $850,000 Comments Funding this project.

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National Underground Railroad Freedom Center NURFC National Underground Railroad Freedom Center National Underground Railroad Freedom Center National Underground Railroad Freedom Center Cincinnati Riverfront Development

Am. Sub. H.B. 699

12/28/2006

126

$2,000,000

Funded construction of the freedom center.

H.B. 16 H.B. 675

5/4/2005 12/13/2002

126 124

$4,150,000 $4,000,000

Funded construction of the freedom center. Funded construction of the freedom center.

Am. Sub. H.B. 640

6/15/2000

123

$3,500,000

Funded construction of the freedom center.

Am. Sub. H.B. 850

3/18/1999

122

$500,000

Funded construction of the freedom center.

Am. H.B. 748

9/17/1996

121

$166,668

Cincinnati Riverfront Development

Am. H.B. 748

9/17/1996

121 Total

$333,332 $15,500,000

Architectural fees and continuing development work on the freedom center. Funded construction of the freedom center.

Recommendation: The materials submitted by the Sponsor were reviewed and analyzed, and the Commission chief financial analyst, chief project manager, and executive director recommend approval of Resolution R-11-06, the approval of the Project, authorization of the expenditure of funds and return of the escrowed funds, subject to the following conditions: 1) The Sponsor provides a guaranty by John and Frances Pepper in conformance with the Commission’s standard form guaranty document, guaranteeing the $850,000 appropriation; 2) The Sponsor provides a guaranty by John and Frances Pepper in conformance with the Commission’s standard form guaranty document, guaranteeing an amount equal to the current amount held in escrow plus the amount of interest that would be earned were the funds invested in the state treasury; 3) The legal agreements for this project are amended to require that prior to federalization, 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;

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4) The legal agreements for this project are amended to require that prior to federalization, the new financing structure, ownership and/or operational/management structure for the project and Sponsor organization is approved as acceptable to the Commission Secretary-Treasurer, in his/her sole discretion; and 5) Provide evidence that the bank lien on the facility has been released. Commission Actions This Meeting: In Resolution R-11-06, the Commission is asked to do the following: confirm need for Project; confirm substantial regional support; confirm the provision of general building services; approve the project and authorize the expenditure of funds and return of the escrow,subject to certain conditions; and authorize the execution of legal agreements.

Chief Analyst

Chief Project Manager

Executive Director

Exhibits □ □ □ □ A Provision of Culture B Detailed Project Budget C Facility Project Info D Project Team Resumes and qualifications E Financial Statements □ F Evidence of Local Match

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