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Ohio Cultural Facilities Commission National Underground Railroad Freedom Center1st Quarter 2011 Meeting Page 1 of 13

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 for 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 Sponsoris seeking approval of the $850K appropriation and release of a $462K escrowcurrently held by the Commission.

On February 11, 2010, the Commission authorized a Memorandum ofUnderstanding (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 aportion of the annual operating costs. NURFCs vision is that the federalgovernment will establish a federal museum and an oversight commission to

commemorate 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 in

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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 willbe 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, as well as a guaranty in exchange for release of the $462Kescrow. Commission staff recommends approval of the $850K appropriation, andthe release of the $462K escrow, contingent on the Sponsor providing a guarantyfor both the $850K appropriation and the $462K escrow, as well as a businessplan outlining operational contingencies in the event federalization 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 Railroad

sites, 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, SubstantialRegional Support was confirmed by the Commission in resolution R-01-26. Matching resources wereagain substantiated in November 2008. The following table is provided for informational purposes.

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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

Source

Cash-on-Hand

Funds Already Expended on Project

Funding Model

Old Adjustments New

Funding

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 - 6,000,000Federal 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 costs2 62,633,000$ (30,095,954)$ 32,537,046$Exhibits 17,660,000 - 17,660,000

Fixtures/furnishings/equipment 2,790,000 - 2,790,000Pre-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 - 1,900,000Total project budget 117,744,000$ (30,095,954)$ 87,648,046$

1Due to the bond settlement transaction, the future investment income projection was never realized

2The 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 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 Principles (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 (FYE09

and "FYE08")

four-year pro forma covering the periods from 2011 through 2014

Statement of Financial Position Summary

YTD10 % Change FYE09 % Change FYE08

ASSETS:

Current Assets

Unrestricted 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% 747,456$ -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: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 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 isconsidered acceptable.


Current 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


Total Revenues (net of capital income raised) $ 5,000,030 17.17% $ 4,267,276 -45.19% $ 7,785,726

Total 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/unrealized

gain/(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) on

Investments $ 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.

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Operating Pro Forma Summary

Revised - 01/14/2011

FYE11 FYE12 FYE13 FYE14

Total Revenues (net of capital income raised) $ 4,811,900 $ 4,198,000 $ 4,271,000 $ 4,419,000

Total 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)

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 $3M of annual operatingrevenue. The Sponsors projections indicate that federalization would result in a net annual operatingsurplus 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 FreedomCenters sustainability as if federalization will not occur and included for the Commissions review only theSponsors latest 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 theImpairment or Disposal of Long-LivedAssets. 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 sustainablewithout 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

2010 results. Also, projected total operating costs in 2012 are about half of actual total operating costs inFYE09.

Although the Commission staff is hopeful the sponsor will meet its objectives regarding the approved 2011and 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 staffs assessment regarding fundraising projections is the BoardSupport projection of $750K for FYE 2011, $880K for FYE 2012 and increased levels for the remainingyears. Such support by the Board indicates overall confidence in the business plan; however, Commissionstaffs reservations go beyond that which the board controls and are primarily due to the effect a downeconomy typically has on non profits: In order to reach and maintain projected fundraising levels, grants andcontributions from the federal government (Dept of Education), the city government, corporations, boardmembers and individuals would have to be realized. In a slow-growing or uncertain economy this may notbe possible to the extent the Freedom Center is projecting.

Although Commission staff based its recommendation on the most conservative projections, which do notinclude federalization, if federalization were to be approved it would result in the Facility being gifted to thefederal government (free and clear of any liens; i t is not yet clear what will be required regarding theCommissions property interest in the facility. The Commission has a leasehold interest, which was requiredunder the old Ohio Building Authority bonds.) Under the federalization scenario, the U.S. Governmentwould 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 receiveapproximately $3M/year in federal operating revenues on a permanent basis, enabling the Freedom Centerto generate operating surpluses starting at $1.5M and increasing slightly for each fiscal year end. Suchsurpluses would allow the Freedom Center to build its endowment. According to the Sponsor, SenatorSherrod Brown supports the legislation that was discussed in draft form in October of 2009, and theFreedom Center management is hopeful that the legislation will be passed. The Sponsor anticipates thatthe funds would be received in the [fourth] quarter of [calendar] 2011, if [it is] successful in getting thelanguage signed and passed prior to [September 30, 2011].

Even if the effort to secure federalization is successful, there remains a challenge in meeting operating cashflow needs until such time as the federal funds are received. A review of the liquidity position calls intoquestion 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 fourthquarter 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 $462Kescrow in February of 2011. Each cash flow projection indicates positive cash balances throughout 2011and 2012 if financial projections are met and the state funds and escrow are disbursed.

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Proportion of Revenue

Revenue Category FYE09 YTD10 2011 Est 2012 Est 2013 Est 2014 EstPrivate 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 303.0 305.0 308.0 311.0

Corporations 625.0 705.0 720.0 730.0Trust/Foundations/Charities 650.0 948.0 963.0 973.0MLK 38.9 20.0 20.0 125.0

IFCA, net 150.0Total Private Support 1,159.3 3,083.8 2,366.9 3,008.0 2,911.0 3,089.0

Year-over-year change 166% -23% 27% -3% 6%

Government

Department of Education 275.0 50.0 200.0 150.0OCFC 850.0 0.0

City of Cincinnati 300.0 100.0 100.0 100.0Total Government 1,182.4 744.4 1,425.0 150.0 300.0 250.0

Year-over-year change -37% 91% -89% 100% -17%

Earned Income

Admissions 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 43.0

Caf 15.0 20.0 15.0 15.0Total 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 Costs 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 Expenses 8,157.1 5 ,670.9 5,162.4 4 ,252.6 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 cut 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 bono.

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 Freedom

Centers 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

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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 fundraisinglevels necessary to create the projected positive cash balances.

In formulating its recommendation, the Commission staff observes that if federalization is not successful theFreedom Center must achieve elevated fundraising levels while further reducing payroll and other operatingcosts. Because operating costs have been cut drastically in years past, they may not realistically be cutmuch further. Nationally-recognized bond council created an amortization schedule for the outstandingprincipal related to the Freedom Center. A schedule of the outstanding unamortized state bonds wasincluded as an appendix in the Second Amendment to the Base Lease dated July 1, 2008. According to thisschedule, the dollar amount of outstanding bonds allocated to the Freedom Center is $6.6M as of February2011 out of an original balance of $14.7M. The outstanding bonds will be paid off by the state over the nextnine years. The unamortized balance of the state bonds decreases by approximately $1M per year for thenext several years. Therefore, the states exposure decreases rather substantially each of the next severalyears. These calculations do not include the $850K currently being considered for approval by theCommission 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 stopoperating in 2011 or 2012. Therefore, the alternative of not approving the $850K in state funds or the $462Kin escrow funds, and thereby exacerbating a very difficult financial position, may lead to closure of theFreedom 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 benecessary to keep the Freedom Center open while they continue to pursue federalization or theimplementation of their new business plan. Since these two amounts would be guaranteed under theFreedom Centers proposal, release of these funds does not increase the risk to the State.

Because the states exposure regarding the unamortized amount of the bonds decreases substantially overthe next several years, risk to the state is reduced if the Commissions actions assist the Freedom Center incontinuing its operations. Accordingly, Commission staff recommends the approval of the $850K Projectand return of the $462K escrow; however, Commission staff recommends making these approvals undercertain conditions in order to mitigate any additional risk. Commission staff recommends the Commissionapprove the Project contingent on a filing of a security agreement covering all assets including cash and

receivables (in addition to the first lien position currently held on the facility) and the execution of a oneguaranty in an amount equal to the proposed project approval for the release of the most recentappropriation of $850,000 and a second guarantee securing the release of $462K currently held in escrow.John and Frances Pepper have agreed to sign the guaranties. Mr. Pepper is a founding board member ofthe Freedom Center and Chairman-emeritus of Proctor & Gamble. Such a These guaranties would ensurethe Commission is not placing the new state funds and the currently held escrow funds at risk; in addition,this contingent approval reduces the states risk associated with state funds previously paid out because theFreedom 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 toprovide programming in the building, or 2) utilize the states first lien position and sell the facility (recentlywritten down to $32M by the auditors) to repay the unamortized bonds or 3) if sufficient non facility assetsexist, exercise the states rights as stipulated by the aforementioned security agreement or 4) a combinationof items #2 and #3.

The Commission holds approximately $462K in an escrow fund for a management transition in the eventthe Freedom Center is unable to continue to operate. The Sponsor is requesting return of the $462K inescrowed funds, in exchange for a second guaranty, signed by John and Frances Pepper. The guarantywould be called in if the Freedom Center defaults under its legal agreements with the Commission and theguaranty funds would be used to pay costs of heating, cooling, insuring, and securing the building until such

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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 positionequitable to the current position, so long as the guaranty provides that the guaranty amount account for theaccrual of interest, plus increases or decreases determined by the periodic review of estimated costsinvolved with a closed down facility covering a period of six months,.

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 hindered, 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 or

modification of the Commissions 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 thatwithout federalization it is marginally likely the Sponsor will be able to operate the Facility and present cultureto 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 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 confirms the Sponsor continue to provide theseservices as permitted by section 3383.07 of the ORC.

Deleted:

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1) The Sponsor provides a guaranty by John and Frances Pepper in

conformance 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, plus increases determined by the periodic review of estimated costsinvolved with a closed down facility covering a period of six months;

3) The Sponsor provides a Security Agreement defining as collateral all tangibleand intangible assets including cash and receivables.

4) The legal agreements for this project are amended to require that prior tofederalization, the Sponsor provides to the Ohio Public Facilities Commission

(the OPFC), the Treasurer of State and the Commission an opinion ofnationally recognized bond counsel, acceptable to the Treasurer of State, andaddressed to the OPFC, the Treasurer of State and the Commission, statingthat the financing structure, ownership and/or operational/managementstructure will not a) adversely affect the validity of the state-issued tax-exemptbonds; and b) will not adversely affect the exclusion of the interest on thestate-issued tax-exempt bonds from the gross income of the holders of thestate-issued tax-exempt bonds for federal income tax purposes;

5) The legal agreements for this project are amended to require that prior tofederalization, 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

6) 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, subject to certain conditions; and authorize theexecution of legal agreements.

Chief Analyst Chief Project Manager

Executive Director

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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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Funded construction of the freedom center.

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Cincinnati RiverfrontDevelopment

Am. H.B.748

9/17/1996 121 $166,668 Architectual fees andcontinuing development

work on the freedomcenter.












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AppropriationName

BillNumber

AppropriationDate

G.A. AppropriationAmount

Comments

National

UndergroundRailroad Freedom

Center

Am. Sub.

H.B. 562

6/24/2008 127 $850,000 Funding this project.

8/7/2019 22-80NURFC PASR 2011 02 08

15/15

NationalUnderground

Railroad FreedomCenter

Am. Sub.H.B. 699

12/28/2006 126 $2,000,000 Funded construction of thefreedom center.

NURFC H.B. 16 5/4/2005 126 $4,150,000 Funded construction of thefreedom center.

NationalUnderground


H.B. 675 12/13/2002 124 $4,000,000 Funded construction of thefreedom center.

NationalUnderground


Am. Sub.H.B. 640

6/15/2000 123 $3,500,000 Funded construction of thefreedom center.

NationalUnderground


Am. Sub.H.B. 850

3/18/1999 122 $500,000 Funded construction of thefreedom center.


Am. H.B.748

9/17/1996 121 $166,668 Architectual fees andcontinuing development

work on the freedomcenter.


Am. H.B.748

9/17/1996 121 $333,332 Funded construction of thefreedom center.

Total $15,500,000

22-80nurfc pasr 2011 02 08

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