22-65nurfc pasr 2011 02 08
TRANSCRIPT
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Project Analysis and Staff RecommendationNational Underground Railroad Freedom CenterCommission Assessment Team: Tony Capaci, chief analyst and Amy Rice, chief project manager
National Underground Railroad Freedom Center 50 E. Freedom WayCincinnati, Hamilton County
Facility and Project Sponsor Information
ExecutiveSummary: The National Underground Railroad Freedom Center (Freedom Center,
NURFC, or the Sponsor) is a museum that explores a range of freedomissues. The center offers lessons and reflections on the struggle for freedom andfeatures three pavilions celebrating courage, cooperation, and perseverance.
The state appropriated $15.5M to the Freedom Center, which opened in Augustof 2004 on the Cincinnati riverfront. The Commission previously approved$14.65M of the funding, which has been reimbursed to the Sponsor. UnderNURFCs current operating structure, sustainability is an issue and the sponsor isseeking approval of the $850K appropriation and release of a $462K escrowcurrently held by the Commission, in the event the Sponsor is unable to continueto operate the facility. The Sponsor is requesting return of the escrowed funds inexchange for a guaranty in an equal amount. The guaranty funds would be usedto heat, cool, secure and insure the facility until a new cultural organization usercould be identified, or the building sold to satisfy the Freedom Centers obligationto return to the Commission the amount of any outstanding unamortized portionof the state bonds.
On February 11, 2010, the Commission authorized a Memorandum of
Understanding (MOU) spelling out the conditions under which full approval couldbe granted to the Freedom Center for the most recent appropriation of $850,000.The MOU contemplates that the Freedom Center will obtain Congressionalapproval to federalize the facility, and federal funding will be provided for a
Deleted: .
Deleted: The Commission is holding in escapproximately $462K, provided by the Sponi
Deleted: In such an unfortunate event, theescrowed funds would be used to heat, cool,secure and insure the facility until a new cultorganization user could be identified
Deleted: .
Comment [dpw1]: Can we wrap this paraup with a summary recommendation at this poi
Comment [t2R1]: The last paragraph servthe summary. Kathy entered the verbiage in re
Comment [dpw3]: I think its more clear this as the unamortized portion of the state fun
Or the unamortized portion of the state investmComment [dpw4]: I think this flows bettefollowing the discussion of guaranty for the $8appropriation. The primary focus is project ap(and the discussion of this has been initiated viaMOU); the secondary item is the Escrow.
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portion of the annual operating costs. NURFCs vision is that the federalgovernment will establish a federal museum and an oversight commission tocommemorate the ending of chattel slavery in the United States. A discussiondraft of this legislation was completed in October 2009. Preliminary terms includegifting the facility to the United States government and the United Statesgovernment, via an appointed board of trustees, operating the facility incooperation with the Secretary of the Interior and other federal agencies. Thefederal legislation has not been approved, but the Freedom Center anticipates itwill be approved in 2011.
Subsequent to the February 2010 Commission approval of the MOU, theFreedom Center has eliminated its debt, developed alternate plans for continuingits operations, and has offered to provide a guaranty to secure the $850Kappropriation. Commission staff recommends approval of the $850Kappropriation, and the release of the $462K escrow contingent on the Sponsorproviding a guaranty for both the $850K appropriation and the $462K escrow as
well as a business plan outlining operational contingencies in the eventfederalization is delayed.
Facility Overview: The Center consists of a 160,000-square-foot facility located on the Cincinnatiriverfront that opened in 2004. Features of the facility include a museum,interactive story theaters, computer networking to other Underground Railroadsites, arts and education facilities, and a public forum space.
The Center is currently owned and operated by the Sponsor, an Ohio nonprofitcorporation since 1995.
Culture Presented: The preservation and presentation of features of historical interest or significance.
SponsorBackground: The Sponsor states, The mission of the National Underground Railroad
Freedom Center is to reveal stories about freedom's heroes, from the era of theUnderground Railroad to contemporary times, challenging and inspiring everyoneto take courageous steps for freedom today.
Project Information
Scope: The current appropriation will reimburse the Sponsor for construction expensespreviously incurred but not yet reimbursed (the Project). The Project consists ofreimbursing $850,000 on an appropriation awarded in H.B. 562. In addition, theSponsor is requesting return of the $462K in escrowed funds, in exchange for aguaranty in an equal amount.
Regional Support
Matching ResourcesThe Sponsor demonstrated a minimum of non-state matching resources equal to at least 50 percent ofthe total state funding of $15,500,000 (a minimum of $7,750,000) . On October 9, 2001, Substantial
Deleted: the $850K
Deleted: and
Deleted: Matching resources weresubstantiated in November 2008.
Comment [dpw5]: If the Commission mafinding in 2001, the substantiation/verification
2008 should follow the discussion of the originfinding. Given that it happened well after theCommission finding, I think it is important to sas a follow-up verification (which, of course, it
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Regional Support was confirmed by the Commission in resolution R-01-26. Matching resources weresubstantiated in November 2008. The following table is provided for informational purposes.
Amount$0
$0
$0
$0
$0
$34,000,000
$0
$4,500,000
$12,000,000
$0
$0
$50,500,000
$7,750,000
Federal Government
Site Valuation
Other
Total Matching Resources
Minimum Match
Irrevocable Written Pledges
In-Kind Contributions (up to 50%)
Operating Endowment
Private Contributions
County Government
City Government
SourceCash-on-Hand
Funds Already Expended on Project
Funding Model
Old Adjustments NewFunding
State funding 15,500,000$ -$ 15,500,000$Cash on hand - - - Private contributions 63,000,000 - 63,000,000 County government - - - City government 6,000,000 - 6,000,000 Federal government 22,200,000 - 22,200,000
Available funding sources 106,700,000 - 106,700,000 Other (future investment income) 1 11,650,000 (11,650,000) -
Total funding sources 118,350,000$ (11,650,000)$ 106,700,000$
Project Construction and soft costs 2 62,633,000$ (30,095,954)$ 32,537,046$Exhibits 17,660,000 - 17,660,000 Fixtures/furnishings/equipment 2,790,000 - 2,790,000 Pre-opening expenses (other) 32,761,000 - 32,761,000
Project cost approved by Commission 115,844,000 (30,095,954) 85,748,046 2004/2005 Operating def icit (other) 1,900,000 - 1,900,000
Total project budget 117,744,000$ (30,095,954)$ 87,648,046$
1
Due to the bond settlement transaction, the future investment income projection was never realized 2 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.
Comment [dpw6]: If the Commission mafinding in 2001, the substantiation/verification2008 should follow the discussion of the originfinding. Given that it happened well after theCommission finding, I think it is important to sas a follow-up verification (which, of course, it
Comment [dpw7]: In recent PASRs, we eliminated lines with a zero for simplicity.
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The Project is complete and was previously funded as indicated in the table above. However, twosignificant events have since transpired affecting the value of the Project. The first is that theconsortium of banks settled $47M bond debt in exchange for $24M held in investments (a secondposition 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 Principals GAAP, becausethe assets 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 acompleted project valued at $32M , without any debt, and calculated that the project is fully funded.
Project Need
Commission staff analyzed the Sponsors financial statements, including the following: internally generated financial statements for year-to-date September 30, 2010 ("YTD10")
audited financial statements for fiscal-years-ending December 31, 2009 and 2008 (FYE09and "FYE08") four -year pro forma covering the periods from 2011 through 2014
Statement of Financial Position Summary
YTD10 % Change FYE09 % Change FYE08ASSETS:
Current AssetsUnrestricted 3,248,185$ 9 .21% 2,974,206$ -61.47% 7,718,885$Restricted -$ NC -$ NC -$
Long-Term Assets 32,639,131$ -16.09% 38,897,769$ -62.27% 103,096,322$TOTAL ASSETS 35,887,316$ -14.29% 41,871,975$ -62.21% 110,815,207$
LIABILITIES:
Total Current Liabilities 618,721$ 0.58% 615,126$ -42.85% 1,076,256$Total Long-Term Liabilities -$ -100.00% 27,000,000$ -41.30% 46,000,000$
TOTAL LIABILITIES 618,721$ -97.76% 27,615,126$ -41.34% 47,076,256$
NET ASSETS:Unrestricted 33,357,286$ 147.29% 13,489,393$ -78.44% 62,563,238$Temporarily Restricted 954,643$ 27. 72% 747,4 56$ -35.33% 1,155,713$Permanently Restricted 956,666$ 4683.33% 20,000$ 0.00% 20,000$
TOTAL NET ASSETS 35,268,595$ 147.38% 14,256,849$ -77.63% 63,738,951$
TOTAL LIABILITIES AND NET ASSETS 35,887,316$ -14.29% 41,871,975$ -62.21% 110,815,207$
Solvency:An organization is solvent when assets are greater than liabilities. The Sponsor is solvent because net assetsare 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:
Comment [dpw8]: Im assuming that thenarrative follows the table to maintain paginatiits possible to have the narrative precede the taitll flow a little better (but not a big deal)
Comment [t9R8]: Yes, pagination was achallenge so if you do not mind I would like toit.
Deleted: p
Comment [dpw10]: Capitalize defined te
Comment [dpw11]: Id spell out (even thits likely that most readers know this)
Comment [dpw12]: I prefer to standardiacronyms to be FY## or FY#### for consiacross all projects, but no big deal. I do think tthis definition of the timeframe included in the really valuable.
Comment [t13]: Our standard on all the phave out include FYE
Deleted: ive
Comment [dpw14]: Covering what perio
Comment [dpw15]: I have not reviewed numbers; I trust CB/TC more than my eye on twill, however, continue to review these sectiongeneral flow and continuity.
Comment [dpw16]: Since current liabilit
does not contain the current portion of long-terdebt (as in the past), this must simply be AccouPayable. Is this worth noting for clarity, or amthinking too much?
Comment [t17]: This is consistent with hohave handled other no debt projects
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Liquidity relates to availability of, access to or convertibility to cash. A test of liquidity is current ratio (currentassets divided by current liabilities), which indicates how many times over the entity can pay its currentliabilities with its current assets . (Note: Restricted current assets are n ot 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 isconsidered acceptable.
YTD10 % Change FYE09 % Change FYE08Current Ratio 5.25 8.58% 4.84 -32.58% 7.17
The Sponsors YTD10 working capital is $2.7M). Days of cash-on-hand (an indication of how many days anorganization 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 (debtdivided 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 readerwill note a ($42M) write down of the building in FYE09 due to GAAP reporting and a $24M ExtraordinaryGain in YTD10 due to debt settlement.
Operating Change in Net Assets Summary
YTD10 % Change FYE09 % Change FYE08
Total Revenues (net of capital income raised) $ 5,000,030 17.17% $ 4,267,276 -45.19% $ 7,785,726Total Expenses (net of capital expenses) $ 5,670,869 -30.48% $ 8,157,132 -22.94% $ 10,584,822OPERATING CHANGE IN NET ASSETS (pre-depreciation and pre-realized/unrealizedgain/(loss) on investments) $ (670,839) -82.75% $ (3,889,856) 38.97% $ (2,799,096)
Impairment loss (FAS-144 adjustment) $ - -100.00% $ (42,200,000) NC $ -Extraordinary income (debt settlement) $ 24,150,000 NC $ - NC $ -
Realized/Unrealized Gain/(Loss) onInvestments $ 26,517 -94.22% $ 458,825 P $ (2,447,546) Depreciation $ (2,494,182) -35.23% $ (3,851,071) -11.24% $ (4,338,937)OPERATING CHANGE IN NET ASSETS(post-depreciation and post-realized/unrealized gain/(loss) on $ 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.
Deleted: were n
Comment [dpw18]: Since there are no recurrent assets, Id either remove this Note or chit to a more general instructional are not use
Deleted: sponsor
Comment [dpw19]: There is such a hugechange from FY09 to FY10 that it seems to waa brief synopsis of why / what this means); forexample, the +21M is a -$3M when you excludextraordinary income. This is better than in thebut do we want to say more about this?
Comment [dpw20]: Is the P in % Chanintentional or a typo?
Comment [t21R20]: Intentional (it meanpositive; i.e. going from a negative to a positiv
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Operating Pro Forma SummaryRevised - 01/14/2011
FYE11 FYE12 FYE13 FYE14
Total Revenues (net of capital income raised) $ 4,811,900 $ 4,198,000 $ 4,271,000 $ 4,419,000Total Expenses (net of capital expenses) $ (5,132,416) $ (4,192,589) $ (4,263,000) $ (4,335,000)Pre-Depreciation Surplus/(Deficit) $ (320,516) $ 5,411 $ 8,000 $ 84,000
Depreciation $ (3,325,576) $ (3,325,576) $ (3,325,576) $ (3,325,576)Post-Depreciation Surplus/(Deficit) $ (3,646,092) $ (3,320,165) $ (3,317,576) $ (3,241,576) Sp
onsor
In assessing the Freedom Centers sustainability , Commission staff reviewed the impact of several eventsthat occurred over the last several years , and which affect the Freedom Centers current financial position.Arguably, the most significant event was: The consortium of banks that previously held the debt for theFreedom Center has exchanged $47M in local bond debt for approximately $24M the Freedom Center washolding in investments. The difference between the amount owed and the amount paid is shown asextraordinary revenue. This is a one-time gain and is not operating revenue. The net result of the bondsettlement is an extraordinary gain of approximately $24M in YTD10 and the elimination of interest expenseand bank fees going forward .
The Freedom Center is actively asking Congress to pass legislation whereby the Freedom Center would begifted to the Federal Government and the Federal Government would contribute $3 M of operating revenuefor the continued operations for each fiscal year. Per a review of the Sponsor s projections federalization would result in a net 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 staffanalyzed the Freedom Centers sustainability as if federalization will not occur and included for theCommissions review only the Sponsor s pro forma which does not assume federalization .
Also material to the Freedom Centers financial position is the adjustment of the carrying value of thebuilding on the FYE09 financial statement. The previous building balance of $78M in FYE08 was writtendown 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 Centers Executive Committee hasapproved a new budget and business plan for FYE 2011 and FYE 2012 and although the pro formaindicates a pre-depreciation deficit of ($320K) for FYE11 in FYE12-FYE14 small pre -depreciation surplusesare 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 2009to YTD10 by substantial margins, approximately 160% at YTD 10 (nine months of actual activity) and thisincreased level of private support is projected to drop in 2011 and rise again in 2012 to approximately the
Deleted:
Comment [CB22]: LPS provided updated
forma on 01/14/11: it does not includefederalization. These can be deleted.
Deleted: Footnote: According to the sponsor
Comment [dpw23]: Look out for this stra/ word.
Deleted: , if legislation approving federalizis passed prior to September 30, 2011, $3M wbe remitted by the federal government to theFreedom Center immediately. For purposes the pro forma, Commission staff reported thefederalization income on the accrual basis anrecognized only three-twelfths of the projectremittance in FYE11.
Deleted: which
Deleted: hasDeleted: ve
Deleted:
Deleted: must be
Deleted: lobbying
Comment [dpw24]: Per fiscal year?
Deleted: S
Deleted: sponsor
Comment [dpw25]: Id probably eliminaone of b/c its explained in the next sentence
Deleted: Federalizationederalization wo
Deleted: only
Deleted: sponsorponsors pro-forma
Deleted: account forDeleted: Federalization
Deleted: , for the Commission review
Comment [dpw26]: What is the impact mforward? Were now in discussion of forecastiit seems relevant.
Formatted: Font: 11 pt
Comment [dpw27]: Do we know what thend projection is?
Comment [t28R27]: No, at this point weknow the fye 10 projection, nurfc does not wancommit to it although we should have unaudite
Deleted: loss
Deleted: , and the Sponsor-prepared pro fo
Comment [dpw29]: For clarity, Id state
Deleted: s exceeding ($1.8M) for the out
Deleted:
Deleted: indicates orecasts how the
Deleted:
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Proportion of Revenue
R ev en ue Ca te go ry F YE 09 Y TD 10 20 11 Es t 2 01 2 Es t 2 013 E st 2 01 4 Es tPrivate Support 21% 62% 49% 71% 67% 69%Government 22% 15% 29% 4% 7% 6%Earned 57% 23% 20% 23% 23% 23%Other 0% 0% 1% 2% 3% 3%
Total 100% 100% 100% 100% 100% 100%
Trends in Operating Results($ Thousands) FYE09 YTD10 2011 Est 2012 Est 2013 Est 2014 Est
Operating RevenuesPrivate Support
Board Support 750.0 880.0 900.0 950.0Individuals 303.0 305.0 308.0 311.0Corporations 625.0 705.0 720.0 730.0Trust/Foundations/Charities 650.0 948.0 963.0 973.0MLK 38.9 20.0 20.0 125.0IFCA, net 150.0
Total Private Support 1,159.3 3,083.8 2,366.9 3,008.0 2,911.0 3,089.0Year-over-year change 166% -23% 27% -3% 6%
Government
Department of Education 275.0 50.0 200.0 150.0OCFC 850.0 0.0City of Cincinnati 300.0 100.0 100.0 100.0
Total Government 1,182.4 744.4 1,425.0 150.0 300.0 250.0Year-over-year change -37% 91% -89% 100% -17%
Earned IncomeAdmissions 595.0 600.0 619.0 631.0Facility Rental 190.0 200.0 198.0 202.0Retail 140.0 140.0 146.0 149.0Membership 40.0 40.0 42.0 43.0Caf 15.0 20.0 15.0 15.0
Total Earned Income 3 ,107 .9 1 ,171 .9 980 .0 1 ,000 .0 1 ,020 .0 1 ,040 .0Year-over-year change -62% -16% 2% 2% 2%
Other Income 70.0 100.0 115.0 130.0Year-over-year change NC NC 43% 15% 13%
Total Revenues 5,449.7 5,000.0 4,841.9 4,258.0 4,346.0 4,509.0Year-over-year change -8% -3% -12% 2% 4%
ExpensesTotal Personnel Cos ts 4 ,078 .6 2 ,835 .4 2 ,453 .2 2 ,085 .2 2 ,127.0 2 ,170 .0Total Non-personnel Costs 4,078.6 2,835.4 2,709.2 2,167.4 2,211.0 2,255.0
Tota l E xp en se s 8, 15 7. 1 5 ,67 0. 9 5, 16 2. 4 4 ,2 52. 6 4, 338 .0 4, 425 .0Year-over-year change -30% -9% - 18% 2% 2%
NET SURPLUS/(DEFICI T) (2,707.4) (670.8) ( 320.5) 5.4 8.0 84.0
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
Revenue ($000)
Total Earned Income
Total Government
Total Private Support
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
8,000.0
9,000.0
Expenses ($000)
Total Non-personnelCosts
Total Personnel Costs
0%
20%
40%
60%
80%
FYE09 YTD10 2011Est
2012Est
2013Est
2014Est
Proportion of Revenue
Private Support
Government
Earned
Other
In reviewing the projected cash flow, Commission staff notes that projected operating cash outflows aresignificantly less than recent actual operating costs shown in the prior year audit and the YTD financialstatements. The projected decreases are due to planned cuts in expenses for fundraising and professionallobbying. In response to inquiries as to how projected fundraising cash inflows will be achieved whencutting fundraising expenses, the Sponsor responded that they hired a new director of development, whichshould enable the Freedom Center to cu t fundraising costs while achieving their fundraising goals. TheSponsors response regarding the impact of cutting professional lobbying expenditures before federalizationis secured was to clarify that the lobbyist will not stop working, but will be working pro b ono.
In order to achieve the positive cash balances anticipated in the projected cash flow, fundraising cashinflows must continue to be realized at a level which has only recently been accomplished, as indicated bythe year to date financials, but which is substantially higher than years past. In evaluating the FreedomCenters ability to achieve the fundraising cash inflow, Commission staff notes the Freedom Center and itsnew director of development must contend with a challenging environment for fundraising, including anuncertain economy, possible donor fatigue, and the effect the write down of the building may have onpotential donor enthusiasm. Also, the fundraising outlook may be influenced positively by certain factors
Comment [dpw43]: planned cuts?
Deleted: expenses
Deleted: sponsor
Comment [dpw44]: There must be somefundraising metrics out there that must be helpfsubstantiating or refuting their claim.
Deleted: :
Comment [dpw45]: , reducing thefundraising expenses by
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Finally, noteworthy for the Commissions deliberations regarding the Freedom Center, is the apparentFederal requirement that the Facility be free of al l liens in order for federalization to take place. As weunderstand it, this criterion would require the Commission to release its property interest in the facility at thepoint in time when the federal government takes ownership and commits to providing operating funds. TheCommission may be prohibited, by the bond documents pertaining to the bond money which funded theoriginal appropriations, from releasing its property interest in the facility. Therefore, Commission staff isrecommending the Sponsor be required to provide an opinion from nationally -recognized bond counsel onthis subject prior to federalization and prior to the Commission releasing or subordinating its propertyinterest. As stated previously, it appears that the lower risk alternative at this point in time is to approve therelease of the state funds in exchange for a guaranty in an equal amount. The issue of the release of theCommissions first lien position on the facility is a decision for a future point in time.
A review of the Sponsors solvency, liquidity, leverage, change in net assets and pro forma indicates it ismarginally likely the Sponsor will be able to operate the Facility and present culture to the public over asustained period of time in accordance with Section 3383.07 of the ORC.
See Exhibit E for a summary of the Sponsors financial statements.
Provision of General Building Services
Although experienced in the provision of general building services at the Facility, the Sponsor hasmarginal financial capacity to continue providing general building services at the Facility. Inanticipation of the Sponsor completing the proposed Facility transfer to the federal government or fullyimplementing its new business plan, Commission staff co nditionally confirms the Sponsor continue toprovide 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
NameBill
NumberAppropriation
DateG.A. Appropriation
AmountComments
NationalUnderground
Railroad FreedomCenter
Am. Sub.H.B. 562
6/24/2008 127 $850,000 Funding this project.
Deleted: first lien position on
Deleted:
Deleted: issue
Deleted:
Comment [dpw59]: It seems like we shoadapt this wrap-up more to the analysis above. describe the likelihood of success if no federalias well as the li kelihood if federalization happe
Deleted: ,
Comment [dpw60]: What does this meanEither the Commission confirms or they confirhappens. What is X, and can it happen before texecution of legal agreements for the new $850Alternatively, the condition could require additdocumentation of payment to vendors, or somecheck-in if we this that would be beneficial (anenforceable).
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National
UndergroundRailroad FreedomCenter
Am. Sub.
H.B. 699
12/28/2006 126 $2,000,000 Funded construction of the
freedom center.
NURFC H.B. 16 5/4/2005 126 $4,150,000 Funded construction of thefreedom center.
NationalUnderground
Railroad FreedomCenter
H.B. 675 12/13/2002 124 $4,000,000 Funded construction of thefreedom center.
NationalUnderground
Railroad FreedomCenter
Am. Sub.H.B. 640
6/15/2000 123 $3,500,000 Funded construction of thefreedom center.
NationalUnderground
Railroad Freedom
Center
Am. Sub.H.B. 850
3/18/1999 122 $500,000 Funded construction of thefreedom center.
Cincinnati RiverfrontDevelopment
Am. H.B.748
9/17/1996 121 $166,668 Architectural fees andcontinuing development
work on the freedomcenter.
Cincinnati RiverfrontDevelopment
Am. H.B.748
9/17/1996 121 $333,332 Funded construction of thefreedom center.
Total $15,500,000
Recommendation: The materials submitted by the Sponsor were reviewed and analyzed, and theCommission chief financial analyst, chief project manager, and executive director recommend approval ofResolution R-11-06, the approval of the Project , authorization of the expenditure of funds and return of theescrowed funds, subject to the following conditions:
1) The Sponsor provides a guaranty by John and Frances Pepper inconformance with the Commissions standard form guaranty document,guaranteeing the $850,000 appropriation;
2) The Sponsor provides a guaranty by John and Frances Pepper inconformance with the Commissions standard form guaranty document,guaranteeing an amount equal to the current amount held in escrow plus theamount of interest that would be earned were the funds invested in the statetreasury;
3) Prior to federalization , the Sponsor provides to the Ohio Public FacilitiesCommission (the OPFC), the Treasurer of State and the Commission anopinion of nationally recognized bond counsel, acceptable to the Treasurer ofState, and addressed to the OPFC, the Treasurer of State and theCommission, stating that the financing structure, ownership and/oroperational/management structure will not a) adversely affect the validity ofthe state-issued tax-exempt bonds; and b) will not adversely affect theexclusion of the interest on the state-issued tax-exempt bonds from the grossincome of the holders of the state-issued tax-exempt bonds for federalincome tax purposes;
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Comment [kf61]: Add to Resolution
Deleted: The Sponsor provides a business plan,approved by the Freedom Center board of
directors, addressing the necessary steps theFreedom Center will have to undertake in ordto meet the potential needs should the Sponsprepared projected cash flow positive balancnot be met;
Comment [jd62]: TC & KF to revisit on
Comment [kf63]: Need to revisit given reprovided info?
Comment [dpw64]: We should consult con the impact of making this approval conditioon things we want them to do at a point in timewill likely be well beyond when we disburse thfunds. What is the remedy if they fail to / chooto do this?
Also, we need to be careful not to imply theCommissions approval of the transfer of propeconditioned on these two items (#3 and #4) alonmight we need something else in the future? Tagreements require the Commissions approvalthem to transfer property, and typically, theagreements require that the approval of such trashall not be unreasonably withheld. It seems tothat in this case, it may be very reasonable towithhold approval pending the review (and a vothe entire Commission. Counsel may want torecommend a specific course for reviewing andapproving NURFCs request to transfer propertwhich would then impact how we need to writeconditions.
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Ohio Cultural Facilities Commission National Underground Railroad Freedom Center1st Quarter 2011 Meeting Page 12 of 12
4) Prior to federalization, the new financing structure, ownership and/oroperational/management structure for the project and Sponsor organization isapproved as acceptable to the Commission Secretary-Treasurer, in his/hersole 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; confirmsubstantial regional support; confirm the provision of general building services; approve the project andauthorize the expenditure of funds and return of the escrow , pending certain requirements; and authorize theexecution 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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Comment [dpw65]: We dont contemplahappens if federalization doesnt happen or doehappen by a certain point in time. At some poithey need to trigger Plan B what is that point what do we want to know/see/aprove?
Comment [kf66]: Add to Resolution
Comment [dpw67]: Subject to certainconditions
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Page 6: [1] Deleted Chris Bruner 1/ 18/ 2011 8:02:00 AM
Page 6: [1] Deleted Chris Bruner 1/ 18/ 2011 8:02:00 AM
Page 6: [2] Deleted Chris Bruner 1/ 19/ 2011 1:03:00 PM
FederalizationPage 6: [2] Deleted Chris Bruner 1/ 19/ 2011 1:03:00 PM
Federalization
Page 6: [3] Deleted Chris Bruner 1/ 19/ 2011 1:04:00 PM
sponsorPage 6: [3] Deleted Chris Bruner 1/ 19/ 2011 1:04:00 PM
sponsorPage 6: [4] Comment [t28R27] tonyc 1/ 20/2011 2:32:00 PM
No, at this point we do not know the fye 10 projection, nurfc does not want to commit to it although we should haveunaudited FYE 10 numbers next week. However, Kathy does not want to hold up the pasr for it. (i agree; even if nurfc breaks even it will not change our recommendation)
Page 6: [5] Deleted tonyc 1/ 18/ 2011 9:11:00 AM
, and the Sponsor-prepared pro forma indicating pre-federalization losse [dpw1]
Page 6: [6] Comment [dpw29] davew 1/ 20/2011 11:25:00 AMFor clarity, Id state the FY11 deficit first, then explain the projected surpluses coming in the out years.
Page 6: [7] Deleted tonyc 1/ 18/ 2011 9:07:00 AM
s exceeding ($1.8M) for the out years.Page 6: [8] Deleted Kathy Fox 1/ 19/ 2011 6:38:00 PM
indicatesPage 6: [8] Deleted Kathy Fox 1/ 19/ 2011 6:38:00 PM
indicatesPage 7: [9] Comment [dpw30] davew 1/ 20/2011 11:40:00 AM
It seems incongruent to say were cautiously optimistic about the budgets, but have reservations about the two key
components of the forecast. It seems like we need to restate the sentence to carry a singular message.Page 7: [10] Comment [dpw31] davew 1/ 20/2011 11:46:00 AM
This discussion shifts from concerns re.- board participation to concerns re.- all fundraising.
Page 7: [11] Comment [dpw32] davew 1/ 20/2011 11:46:00 AM
See the agency writing style guide re.- capitalization.
Page 7: [12] Deleted tonyc 1/ 18/ 2011 9:14:00 AM
It appears that the Freedom Center is in danger of not continuing is a going concern unlessfederalization is realized or an extraordinary set ofPage 7: [13] Comment [kf33] Kathy Fox 1/14/ 2011 7:14:00 PM
TC/CB evaluate accuracy of this sentence based upon new business plan
Page 7: [14] Comment [dpw34] davew 1/ 20/2011 11:55:00 AMEverything above this point seems to discuss projectsions without federalization, and below make note of significantim acts of federalization and then cash flow. Is it worth creatin headin s to hel the reader ste throu h the
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Page 7: [15] Comment [t35R34] tonyc 1/ 20/ 2011 2:57:00 PM
I am not sure if headings will do the trick however i added the first sentence in the paragraph which i think shouldclarify the transition from not considering federalization to considering it.
Page 7: [16] Deleted tonyc 1/ 20/ 2011 3:35:00 PM
for each twelve month period [dpw2]beginning with October 1, 2011, the start of the next Federal fiscalyearPage 7: [17] Deleted tonyc 1/ 18/ 2011 1:13:00 PM
until federalization is anticipated to take place in October of 2011 [kf3], at which time the FreedomCenter would possibly receive $3M in federal funding. [kf4]Page 7: [18] Comment [kf40] Kathy Fox 1/14/ 2011 7:14:00 PM
Need to update based upon new cash flow and business plan
Page 7: [19] Comment [kf41] Kathy Fox 1/14/ 2011 7:14:00 PM
This phrase may no longer be relevant
Page 7: [20] Comment [dpw42] davew 1/ 20/2011 11:56:00 AM
And the state dollars are disbursed right?
Page 9: [21] Deleted tonyc 1/ 18/ 2011 1:16:00 PM
only one alternative is available to potentially enable fulfillment of the overall goal that the FreedomCenter facility continue to operatePage 9: [22] Deleted Chris Bruner 1/ 19/ 2011 1:03:00 PM
FederalizationPage 9: [22] Deleted Chris Bruner 1/ 19/ 2011 1:03:00 PM
FederalizationPage 9: [22] Deleted Chris Bruner 1/ 19/ 2011 1:03:00 PM
FederalizationPage 9: [23] Deleted tonyc 1/ 18/ 2011 1:18:00 PM
and because operating revenues have historically been insufficient to cover costs, it appears that themost promising alternative is federalization as contemplated by the SponsorPage 9: [24] Comment [dpw46] davew 1/ 20/2011 12:08:00 PM
Do we mean the outstanding unamortized bonds used to fund the state investment? Or to fund the state share of the project?Page 9: [25] Deleted Chris Bruner 1/ 19/ 2011 1:42:00 PM
Commission staff calculatedPage 9: [25] Deleted Chris Bruner 1/ 19/ 2011 1:42:00 PM
Commission staff calculatedPage 9: [26] Deleted Chris Bruner 1/ 19/ 2011 1:43:00 PM
OctoberPage 9: [26] Deleted Chris Bruner 1/ 19/ 2011 1:43:00 PM
OctoberPage 9: [27] Deleted davew 1/ 20/ 2011 12:12:00 PM
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Page 9: [27] Deleted davew 1/ 20/ 2011 12:12:00 PM
Page 9: [28] Comment [dpw47] davew 1/ 20/2011 12:10:00 PM
6.6M divided by 9 is 733K I think rounding to $1M is too broad
Page 9: [29] Comment [t48R47] tonyc 1/ 20/ 2011 3:41:00 PM
It is $1M for the next several years(4-5 years) and after that it drops down to several hundred thousant and then acouple of hundred thousand. so every year nurfc makes it over the the next 4-5 the remaining balance decreasesapprox $1M a year which lessens our exposure considerably.
Page 9: [30] Deleted Kathy Fox 1/ 19/ 2011 6:48:00 PM
,000Page 9: [30] Deleted Kathy Fox 1/ 19/ 2011 6:48:00 PM
,000Page 9: [31] Deleted tonyc 1/ 19/ 2011 12:39:00 PM
ProjectPage 9: [31] Deleted tonyc 1/ 19/ 2011 12:39:00 PM
ProjectPage 9: [32] Comment [kf52] Kathy Fox 1/14/ 2011 7:14:00 PM
Discuss w/ KF rewriting this paragraph
Page 9: [33] Comment [kf53] Kathy Fox 1/14/ 2011 7:14:00 PMCB/TC to redraft based upon new business plan CB to review 1/17/11.
Page 9: [34] Deleted Kathy Fox 1/ 19/ 2011 6:50:00 PM
it behooves the Commission toPage 9: [34] Deleted Kathy Fox 1/ 19/ 2011 6:50:00 PM
it behooves the Commission toPage 9: [34] Deleted Kathy Fox 1/ 19/ 2011 6:50:00 PM
it behooves the Commission toPage 9: [34] Deleted Kathy Fox 1/ 19/ 2011 6:50:00 PM
it behooves the Commission to
Page 9: [35] Deleted Kathy Fox 1/ 19/ 2011 6:51:00 PM
pPage 9: [35] Deleted Kathy Fox 1/ 19/ 2011 6:51:00 PM
pPage 9: [35] Deleted Kathy Fox 1/ 19/ 2011 6:51:00 PM
pPage 9: [36] Comment [dpw54] davew 1/ 20/2011 12:14:00 PM
making these approvals under certain conditions
Page 9: [37] Comment [dpw55] davew 1/ 20/2011 12:14:00 PM
this seems strong: can we use the concept of mitigating risk instead of eliminating?
Page 9: [38] Comment [dpw56] davew 1/ 20/2011 12:15:00 PM
Proposed project approval for the release of the most recent appropriation of $850,000
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