Notice2025-16057
Proposed Exemption for Certain Prohibited Transactions Involving Mid-America Carpenters Regional Council Apprentice and Training Fund (the Fund) Located in St. Louis, Missouri
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 22, 2025
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This proposed exemption would permit the sale by the Fund of real property to the Mid-America Carpenters Regional Council (the Sale). Without this exemption, the Sale would be prohibited by the Employee Retirement Income Security Act of 1974 (ERISA).
Full Text
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<title>Federal Register, Volume 90 Issue 161 (Friday, August 22, 2025)</title>
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[Federal Register Volume 90, Number 161 (Friday, August 22, 2025)]
[Notices]
[Pages 41125-41131]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-16057]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Exemption Application No. L-12103]
Proposed Exemption for Certain Prohibited Transactions Involving
Mid-America Carpenters Regional Council Apprentice and Training Fund
(the Fund) Located in St. Louis, Missouri
AGENCY: Employee Benefits Security Administration, Department of Labor.
ACTION: Notice of proposed exemption.
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SUMMARY: This proposed exemption would permit the sale by the Fund of
real property to the Mid-America Carpenters Regional Council (the
Sale). Without this exemption, the Sale would be prohibited by the
Employee Retirement Income Security Act of 1974 (ERISA).
DATES:
Exemption date: If granted, this exemption will be in effect as of
the date of publication in the Federal Register.
Comments due: Written comments and requests for a public hearing on
the proposed exemption must be received by the Department by October 6,
2025.
ADDRESSES: All written comments and requests for a hearing should be
submitted to the Employee Benefits Security Administration (EBSA),
Office of Exemption Determinations, Attention: Application No. L-12103:
<bullet> via email to <a href="/cdn-cgi/l/email-protection#5b3e76141e1f1b3f3437753c342d"><span class="__cf_email__" data-cfemail="52377f1d171612363d3e7c353d24">[email protected]</span></a>; or
<bullet> Electronically at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the
``Submit a Comment'' instructions.
Any such comments or requests should be sent by the end of the
scheduled comment period. The application for exemption and the
comments received will be available for public inspection in the Public
Disclosure Room of the Employee Benefits Security Administration, U.S.
Department of Labor, Room N-1515, 200 Constitution Avenue NW,
Washington, DC 20210 (202) 693-8673).
See SUPPLEMENTARY INFORMATION below for additional information
regarding comments.
FOR FURTHER INFORMATION CONTACT: Ms. Blessed Chuksorji-Keefe of the
Department at (202) 693-8567. (This is not a toll-free number).
SUPPLEMENTARY INFORMATION: Comments: Persons are encouraged to submit
all comments electronically and not to follow with paper copies.
Comments should state the nature of the person's interest in the
proposed exemption and how the person would be adversely affected by
the exemption, if granted. Any person who may be adversely affected by
an exemption can request a hearing on the exemption if their request
includes: (1) the name, address, telephone number, and email address of
the person making the request; (2) the nature of the person's interest
in the exemption, and the manner in which the person would be adversely
affected by the exemption; and (3) a statement of the issues to be
addressed and a general description of the evidence to be presented at
the hearing. The Department will grant a hearing request made in
accordance with the requirements above when it finds that a hearing is
necessary to fully explore material factual issues identified by the
requestor, and will publish a hearing notice in the Federal Register.
The Department may decline
[[Page 41126]]
to hold a hearing if it finds that: (1) the request for the hearing
does not meet the requirements above; (2) the only issues identified
for exploration at the hearing are matters of law; or (3) the factual
issues identified can be fully explored through the submission of
evidence in written (including electronic) form.
Warning: All comments received will be included in the public
record without change and may be made available online at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. The Department notes that it will include any
personal information provided in the public record and online, unless
the commenter claims that any of the information included is
confidential or the disclosure of such information is restricted by
statute. If you submit a comment, EBSA recommends that you include your
name and other contact information in the body of your comment, but DO
NOT submit information that you consider to be confidential, or
otherwise protected (such as a Social Security number or an unlisted
phone number) or confidential business information that you do not want
publicly disclosed. If EBSA cannot read your comment due to technical
difficulties and cannot contact you for clarification, EBSA might not
be able to consider your comment.
Additionally, the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website is an
``anonymous access'' system, which means EBSA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an email directly to EBSA without going
through <a href="https://www.regulations.gov">https://www.regulations.gov</a>, your email address will be
automatically captured and included as part of the comment that is
placed in the public record and made available on the internet.
Proposed Exemption
The Department is considering granting this exemption under the
authority of ERISA section 408(a), and in accordance with the
Department's exemption procedures regulation,\1\ because it has
tentatively determined that this proposed exemption is administratively
feasible, in the interests of the Fund and of its participants and
beneficiaries, and protective of the rights of both the Fund and the
participants and beneficiaries of the Fund. If the proposed exemption
is granted, the Fund will be permitted to sell 1.13 acres of improved
real property (the Parcel), which is a portion of a 5.67-acre parcel of
real property located at 8955 E. Terrace, Kansas City, Missouri (the
Real Property), to the Mid-America Carpenters Regional Council (MACRC).
The Fund purchased the Real Property in June 2014, and the Parcel
represents a portion of the Real Property.
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\1\ 29 CFR part 2570, subpart B (75 FR 66637, 66644, October 27,
2011). The Department's exemption procedures regulation was amended
at 89 FR 4662, on January 24, 2024, with an effective date of April
8, 2024. However, because the application was submitted on April 4,
2024, the procedures in effect as of that date govern.
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Benefits of the Exemption
As described in more detail below, the Department is proposing
relief based in part on the Fund's representation that the Sale will
permit the Fund to earn approximately $50,000 more in net value than
originally offered by the MACRC. Furthermore, in connection with the
application for an exemption, the Fund and the MACRC entered into a
lease requiring the MACRC to pay annual rent of approximately $250,000
per year (subject to 2% annual escalation) for the use of a building on
the Parcel, beginning on or around November 15, 2020 until the Sale is
completed, as well as certain back rent, interest, and penalty amounts
discussed in detail below.
Summary of Facts and Representations <SUP>2</SUP>
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\2\ The Summary of Facts and Representations is based on the
Applicant's representations provided in its exemption application
and does not reflect the factual findings or opinions of the
Department, unless indicated otherwise. The Department notes that
availability of this exemption is subject to the express condition
that the material facts and representations made by the Applicant in
Application L-12103 are true, complete, and accurately describe all
material terms of the transaction(s) covered by the exemption. If
there is any material change in a transaction covered by the
exemption, or in a material fact or representation described in the
application, the exemption may cease to be effective, with such
determination made at Department's sole discretion. See 29 CFR
2570.49.
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Parties to the Transaction
1. The Applicant is the Fund, which became the successor to the
Carpenters' Joint Training Fund of St. Louis (CJTF). The Fund assumed
all CJTF financial and operational responsibilities on January 1, 2024.
2. The Fund is a Taft-Hartley trust. As of December 31, 2024, 9,660
apprentices and journeymen participated in Fund programs. As of June
30, 2024, the Fund's most recent audit, the Fund held total assets of
$83,027,770 and net assets of $78,323,645.
3. The Fund sponsors the St. Louis-Kansas City Carpenters Regional
Training Fund (the Plan), which operates training and education
facilities throughout Missouri, Kansas, Illinois, and eastern Iowa for
apprentices and journeymen carpenters, millwrights, cabinet makers,
floorlayers, and workers in other trades or specialties.
4. The MACRC is the successor to the St. Louis-Kansas City
Carpenters Regional Council, a labor union affiliated with the United
Brotherhood of Carpenters and the Joiners of America covering
approximately 52,000 members located in Illinois, Missouri, Kansas and
Eastern Iowa. The MACRC's membership is comprised of cabinet makers,
concrete and drywall installers, general carpenters and joiners, and
members of several other trades. Members of the MACRC are eligible to
participate and do participate in the Fund.
5. The board of trustees of the Fund (the Board of Trustees)
consists of ten trustees appointed by contributing employers (Employer
Trustees) and ten trustees appointed by the MACRC (Union Trustees).
The Parcel
6. The Fund purchased the Real Property in 2014, for $2,195,000 to
expand the Plan's training and education programs. Subsequently, the
Board of Trustees directed and approved the renovation of the Real
Property, to create a 65,000 square foot training center for
approximately $8.26 million, which the Fund paid. The training center
opened in October 2015. The renovated facilities include office space,
a portion of which is currently leased by the Fund to the MACRC to
house the MACRC's Kansas City offices, under an operating lease
agreement between the Fund and the MACRC.
7. In August 2019, the MACRC approached the Fund to discuss the
sale of all or a portion of the Real Property to the MACRC. At a
special meeting of the Trustees held on September 25, 2019, the
Trustees discussed the potential sale to the MACRC and voted
unanimously to approve the sale in principle, obtain an appraisal of
the fair market value of the Real Property, and conduct a later vote to
approve the appraisal. Following additional discussions, the Fund and
the MACRC entered into a commercial real estate sales contract for the
sale of a 1.13-acre Parcel.
8. The Sale: The Fund seeks an exemption to permit a sale of the
Parcel to the MACRC. As discussed below, the MACRC constructed a health
and wellness center on the Parcel to provide medical benefits to its
members, including participants of the Fund who participate in the
Carpenters' Health & Welfare Trust Fund of St. Louis (the Welfare
Fund). The Fund wants to sell
[[Page 41127]]
the Parcel to the MACRC for additional cash which would be used to fund
the Plan's training programs and acquire vehicles for the purpose of
facilitating the training programs. A sale of the Parcel from the Fund
to the MACRC would constitute a prohibited transaction because of the
relationship between the parties, and therefore an exemption from the
prohibited transaction provisions of ERISA is required before the
transaction can proceed.
ERISA Prohibited Transaction Analysis
9. ERISA section 406(a)(1)(A) provides, in relevant part, that a
fiduciary with respect to a plan shall not cause the plan to engage in
a transaction, if he or she knows or should know that such transaction
constitutes a direct or indirect sale or exchange of any property
between a plan and a party in interest to the plan. The Fund and the
Plan are each an ``employee welfare benefit plan'' within the meaning
of ERISA section 3(1) and a ``multiemployer plan'' within the meaning
of ERISA section 3(37). ERISA section 3(14)(D) defines parties in
interest with respect to a plan to include, among others, the plan
fiduciary, a sponsoring employer of the plan, and an employee
organization whose members are covered by the plan. MACRC is an
``employee organization'' within the meaning of ERISA section 3(4), and
it is therefore a party in interest within the meaning of ERISA section
3(14)(D) with respect to the Fund. Therefore, the Fund's sale of the
Parcel to the MACRC would violate ERISA section 406(a)(1)(A).
10. ERISA section 406(b)(1) states that a plan fiduciary shall not
deal with the assets of the plan in his own interest or for his own
account. For purposes of ERISA, the Union Trustees are fiduciaries with
respect to the Fund. The Union Trustees were appointed by the MACRC and
receive salaries from the MACRC for their services as trustees;
therefore, they have an interest in the MACRC that would cause them to
violate ERISA Section 406(b)(1) if they exercised any of the authority
that makes them a fiduciary, in connection with the Sale. ERISA section
406(b)(2) states that a plan fiduciary shall not act in any transaction
involving the plan on behalf of a party whose interests are adverse to
the interests of the plan. The interests of the MACRC are adverse to
the interests of the Fund for purposes of the sale, because the MACRC
is the Fund's counterparty. Therefore, the Sale would violate ERISA
section 406(b)(2).
11. Although the Applicant states that the Union Trustees recused
themselves from the Fund's decision to sell the Parcel to the MACRC
since September 23, 2020, whether the Union Trustees effectively
recused themselves from all aspects of the Fund's decision making
regarding the Sale, so as to negate a violation of ERISA section
406(b)(1) and 406(b)(2), involves an inherently factual determination
that is beyond the scope of this proposed exemption.\3\ In connection
with this application, the Department cannot determine whether the
Union Trustees sufficiently recused themselves from engaging in the
deliberations regarding the Sale or whether they used their positions
to influence the Employer Trustees' decision to approve the Sale in
order to determine definitively that there was no violation of ERISA
section 406(b)(1) or 406(b)(2). To the extent the Union Trustees
exercised any authority, control, or responsibility that make them a
fiduciary to cause the Fund to engage in the Sale, they would have
violated ERISA section 406(b)(1) and (b)(2), because the Sale would
benefit the MACRC, an entity in which the Union Trustees have an
interest and would involve Union Trustees acting on behalf of both the
Fund and the MACRC.
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\3\ For example, their presence on the Board of Trustees,
particularly prior to their official ``recusal'' on September 23,
2020, may have influenced the Employer Trustees' willingness to
cause the Fund to sell the Parcel to the MACRC.
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Prior Applications and Prohibited Use of the Parcel
12. First EXPRO Application. On June 26, 2020, the Fund filed an
application for authorization for approval of the Sale (the Initial
EXPRO Application) \4\ under the expedited procedures of Prohibited
Transaction Exemption 96-62, as amended (the EXPRO Procedures). At the
request of the Department, the Fund withdrew the Initial EXPRO
Application on August 25, 2020, to engage the services of an
independent fiduciary to review and approve the terms of the sale of
the Parcel to the MACRC.
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\4\ Submission No. E-00826.
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13. Second EXPRO Application. The Fund submitted a second
application for authorization on April 5, 2021, again under the EXPRO
Procedures. The second EXPRO application included a written report
submitted by an independent fiduciary, Prudent Fiduciary Services, LLC
(PFS), who was tasked with reviewing and approving the terms of the
Parcel sale to the MACRC.\5\ The report submitted by PFS noted that, on
or around November 15, 2020, the MACRC accessed the Parcel and
commenced construction of the health and wellness center building on
the Parcel without compensating the Fund. Due to the ERISA fiduciary
and prohibited transaction issues caused by the MACRC's access and use
of the Parcel, the Department did not approve the second EXPRO
Application.
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\5\ As described in further detail below, PFS was ultimately
replaced by Gallagher Fiduciary Advisors, LLC in connection with the
current application for exemptive relief.
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14. Exemption Application No. L-12068. The second EXPRO application
was converted to a standard individual exemption application and
designated Exemption Application No. L-12068, on February 2, 2022. By
letter dated March 11, 2022, the Department informed the Applicant that
it had tentatively determined not to propose the requested exemption
based on: (A) the MACRC's past and continuing construction activities
on the Parcel; and (B) the Fund's failure to submit with the
application an updated appraisal report and an updated independent
fiduciary report from PFS. On April 27, 2022, the Fund supplemented its
application with an updated appraisal report from a qualified
independent appraiser and an updated report from PFS. The updated
fiduciary report from PFS provided the following statement: ``[w]e
found that the most significant development since the [o]riginal
[r]eport has been the progress of construction activities on the
subject property. It is our understanding that construction has been
completed, and the planned wellness center is ready to operate.''
15. The Fund and the Department held a tentative denial conference
on May 4, 2022 and, following subsequent discussions, the Department,
the Fund, and the MACRC agreed in May 2023 that: (A) the Fund would
withdraw Exemption Application No. L-12068; (B) the MACRC would enter
into a settlement agreement with the Employee Benefits Security
Administration's Office of Enforcement to address the MACRC's access to
and use of the Parcel under ERISA section 502(i); (C) the Fund would
engage the services of a new independent fiduciary to review the terms
of the Sale and determine the ``amount involved'' for purposes of
correcting the MACRC's access to and use of the Parcel under ERISA
section 502(i); and (D) once the prior steps had been completed, the
Fund would submit a new exemption application to the Department for
prospective relief for the sale of the Parcel to the MACRC at an
appraised fair market value that takes into consideration the value of
the
[[Page 41128]]
completed wellness center building on the Parcel.
16. The Employer Trustees selected Gallagher Fiduciary Advisors,
LLC (Gallagher) to act as the new independent fiduciary for the Fund.
Gallagher is a registered investment adviser with no relationship with
the Fund or the MACRC, except as the Fund's independent fiduciary with
respect to the Sale. Gallagher's fee for its services as independent
fiduciary for the Fund will be less than 2% of its annual revenues for
Gallagher's prior income tax year.
The Settlement Agreement and Ground Lease
17. The MACRC and the Department entered into a Settlement
Agreement on January 31, 2024 (the Settlement Agreement). Among other
things, the Settlement Agreement required the Fund and the MACRC to
enter into a lease, whereby the MACRC would pay the Fund: ground rent
for its past use of the Parcel from November 15, 2020 (the date that
the MACRC first accessed the Parcel) to January 31, 2024 (the Ground
Rent); and office rent for its use of the wellness center beginning on
February 1, 2024 (the Office Rent).\6\
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\6\ Thereafter, members of the MACRC were able to access and
utilize the building.
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18. Gallagher hired Newmark Valuation & Advisory (Newmark) to
determine these rental rates.\7\ Newmark provided an appraisal report,
dated November 29, 2023 (the Appraisal Report), which set the Ground
Rent at $50,666 and the Office Rent at $252,125 per year, subject to
annual escalations of two percent.
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\7\ Gallagher also intended to rely on Newmark's appraisal to
determine the market value of the Parcel for purposes of the Sale.
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19. The Fund and the MACRC entered into a lease agreement (the
Lease Agreement) on January 31, 2023, pursuant to which the MACRC will
lease the Parcel (including the wellness center and any other buildings
on the Parcel) from the Fund in exchange for: (1) a one-time payment of
past-due rent plus interest and penalties in an amount equal to
$50,666; and (2) the payment of $252,125 per year subject to annual
escalations of two percent per year.\8\ The commercial market rental
amount, which takes into account the close proximity of the wellness
center property to the MACRC, was determined by Newmark and approved by
Gallagher. Gallagher determined that the lease terms are commercially
reasonable. The lease terminates upon the earlier of the date that the
Parcel is sold or either party terminates the lease agreement pursuant
to its terms.
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\8\ As described above, the past due rent, plus interest and
penalties were determined by Gallagher based on an appraisal by
Newmark and were paid in connection with the Settlement Agreement.
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Re-Submission of Application
20. In April 2024, the Fund re-submitted its application for an
exemption. In its resubmission, the Fund stated that, if the exemption
is granted, the MACRC will pay the estimated value of both the Parcel
and the wellness center ($3.4 million) to the Fund and the MACRC will
receive a credit for the $3.18 million that the MACRC spent on
construction costs, resulting in approximately $220,000 of net proceeds
being received by the Fund at closing. If this exemption is granted,
the fair market value of the Parcel will be updated by an independent
appraiser on the date of the sale, and the Fund will receive the
greater of such price or $220,000.
21. The Fund remains represented by Gallagher in connection with
the Sale. In this regard, Gallagher is required to: review all relevant
materials to evaluate the Sale; review and modify (as needed) the Sale
agreement and related documents; prepare a report describing its review
and determinations with respect to the Sale; advise the Employer
Trustees regarding its review of the Sale; respond in writing to the
Department with respect to the application and with respect to comments
to the proposed exemption; make a final determination on behalf of the
Fund whether to approve the sale of the Parcel to the MACRC; and ensure
that the Fund receives all rent due under the terms of the lease, and
receives the fair market value of the Parcel as agreed upon under the
terms of the purchase and sale agreement.
Gallagher's Fiduciary Report
22. In support of its exemption request, the Applicant submitted a
fiduciary report issued by Gallagher dated March 8, 2024 (the Gallagher
Report). In making its conclusions, Gallagher performed a review of:
(A) the First and Second EXPRO Applications, and Exemption Application
No. L-12068; (B) the Form 990 for the Fund as of December 31, 2022; (C)
the Appraisal Report; (D) prior appraisals of the Parcel obtained by
the Fund in connection with the prior exemption applications; and (E)
the prior purchase and sale agreement between the Fund and the MACRC
for the Sale. Gallagher also conducted an in-person visit to the Real
Property in September 2023 (and intends to re-visit the Real Property
if the Sale is approved by the Department); and held discussions with
legal counsel for the Fund.
23. Gallagher states that the Sale is in the interest of the Fund
and its participants, because:
<bullet> the Fund will be compensated at the fair market value of
the Parcel's underlying land, at $220,000, plus rent payments for the
period November 15, 2020 to closing, including penalties and interest
on back rent (which it has already received).
<bullet> the MACRC has been caused to pay market office space rent
of $252,125 per year as determined by the Newmark appraisal, which took
into account the close proximity of the MACRC to the Wellness Center,
to the Fund until such time that the Wellness Center Property is either
sold to the MACRC with the permission of the Department and Gallagher,
or the lease is terminated.
<bullet> the Fund's members will enjoy ready access to the Wellness
Center, in a system that has already worked successfully at another the
MACRC wellness facility.
<bullet> neither the Fund's staff nor its participants are expected
to be burdened by parking limitations as a result of the sale, as the
remaining acreage after the sale is expected to provide ample parking
for Fund staff and participants.
<bullet> the MACRC is a ready and willing purchaser for the
wellness center, and there will be no additional sales expenses or
timing delays that would be inherent in a sale to an unconflicted third
party, as the time to market the Parcel to a third party could be up
nine months and would necessitate additional marketing, brokerage and
closing costs to the Fund.
24. Gallagher notes that the value of the Parcel, net of the value
of the completed wellness center building, was determined by Newmark to
be $220,000, which is $50,000 more than the original offer that the
MACRC made to the Fund. Gallagher notes further that Newmark
appropriately considered the close proximity of the MACRC (the
interested buyer) to the wellness center and that the MACRC built the
Wellness Center on property it didn't own, used appropriate
methodologies and assumptions to make its determination, and applied
those methodologies and assumptions correctly to its valuation of the
Parcel.
25. Gallagher opined that, if the MACRC was not permitted to
purchase the Parcel, Fund participants would not be afforded the
benefits that the wellness center is expected to provide, and the Fund
would more than likely need to market the Parcel to an unconflicted
third party (since owning
[[Page 41129]]
and maintaining the building as landlord does not coincide with the
purpose of the Fund, which is to provide training to Union members).
The Fund would be responsible, as owner of the building and seller, for
standard closing costs and fees that are commonly negotiated to be paid
between uninterested parties. Gallagher noted that the MACRC will be
responsible for all recording fees and closing costs with regard to the
Sale, all of the due diligence such as the appraisal and other costs
necessary for the Sale, as well as any real estate transfer taxes.
Further, Gallagher noted that the Fund would likely have to pay a
brokerage fee to market the wellness center property and would be
subject to any delays and market conditions necessary for such a sale.
Gallagher noted that, to its knowledge, there are no other interested
buyers for the Parcel, thus the time to market the Parcel to a third
party could be up to nine months.
26. Gallagher noted in its report that the MACRC had provided proof
that it paid the required back rent, interest and penalties due under
the Lease Agreement, the security deposit due under the lease, and its
first and second month's rent.
Statutory Findings
The Department has tentatively made the following required findings
under ERISA section 408(a) with respect to the proposed exemption:
27. In the Interest of the Fund and its Participants. The
Department has tentatively determined that an exemption for the Sale is
in the interest of the Fund and its participants because the Fund will
receive the greater of the fair market value of the Parcel, or
$220,000.\9\ The fair market value of the Parcel that the Fund will
receive in the Sale is $50,000 more than the original offer from the
MACRC. Furthermore, absent the exemption, the Independent Fiduciary and
the MACRC likely would not have negotiated for the payment of annual
rent of $250,000 (with a yearly escalation) until the date of closing
of the Sale.
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\9\ The purchase price of the Parcel paid by the MACRC to the
Fund will be $3,400,000 based on the appraised value of the Parcel,
and a credit for the costs that the MACRC incurred in constructing
the improvements will be given to the MACRC in the amount of
$3,180,000. Thus, the net purchase price will be $220,000.
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28. Protective of the Rights of the Participants of the Fund. The
Department has tentatively determined that an exemption for the Sale is
protective of the rights of the participants and beneficiaries of the
Fund. The exemption would be conditioned upon the MACRC's compliance
with its obligations under the Settlement Agreement and the Lease
Agreement.\10\ The Sale must be a one-time transaction for cash,
overseen in all material respects by a qualified independent fiduciary
who solely represents the Fund. The Union Trustees must have recused
themselves from any discussion and approval of the Sale since September
23, 2020. Further, the fair market value of the Parcel must be
established by a qualified independent appraiser who has undertaken its
obligations without contractual indemnification provisions.\11\
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\10\ Gallagher represents in its report that the MACRC paid the
required back rent, interest and penalties under the Lease Agreement
to the Fund and paid the required ERISA 502(i) penalty to the
Department. The MACRC also provided proof of payment of the security
deposit under the lease and its first two months' rent.
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29. Administratively Feasible. The Department has tentatively
determined that an exemption for the Sale is administratively feasible,
because, among other things, the Sale would be a one-time transaction
overseen by a qualified independent fiduciary responsible for ensuring
that, among other things, each condition of the exemption has been met.
Further, the Sale will end the entanglement of the Fund with the MACRC
regarding the leasing of the Parcel and resolve the issues covered in
the Settlement Agreement.
Notice to Interested Persons
Notice of the proposed exemption will be provided by the Fund to
all Interested Persons within fifteen (15) days of the publication of
the notice of proposed exemption in the Federal Register, by first
class U.S. mail to the last known address of all such individuals. The
notice will contain a copy of the notice of proposed exemption, as
published in the Federal Register, and a supplemental statement, as
required pursuant to 29 CFR 2570.43(a)(2). The supplemental statement
will inform interested persons of their right to comment on and to
request a hearing with respect to the pending exemption. All written
comments and/or requests for a hearing must be received by the
Department within forty-five (45) days of the date of publication of
this proposed exemption in the Federal Register. All comments will be
made available to the public.
Warning: If you submit a comment, EBSA recommends that you include
your name and other contact information in the body of your comment,
but DO NOT submit information that you consider to be confidential, or
otherwise protected (such as Social Security number or an unlisted
phone number) or confidential business information that you do not want
publicly disclosed. All comments may be posted on the internet and can
be retrieved by most internet search engines.
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under ERISA section 408(a) does not relieve a fiduciary or other party
in interest from certain other provisions of ERISA, including any
prohibited transaction provisions to which the exemption does not apply
and the general fiduciary responsibility provisions of ERISA section
404, which, among other things, require a fiduciary to discharge their
duties respecting the plan solely in the interest of the participants
and beneficiaries of the plan in accordance with ERISA section
404(a)(1), and in a prudent fashion in accordance with ERISA section
404(a)(1)(B);
(2) Before an exemption may be granted under ERISA section 408(a),
the Department must find that the exemption is administratively
feasible, in the interests of the plan and of its participants and
beneficiaries, and protective of the rights of participants and
beneficiaries of the plan;
(3) The proposed exemption, if granted, will be supplemental to,
and not in derogation of, any other provisions of ERISA, including
statutory or administrative exemptions and transitional rules.
Furthermore, the fact that a transaction is subject to an
administrative or statutory exemption is not dispositive of whether the
transaction is in fact a prohibited transaction; and
(4) The proposed exemption, if granted, will be subject to the
express condition that the material facts and representations contained
in each application are true and complete at all times, and that each
application accurately describes all material terms of the transaction
which is the subject of the exemption.
Proposed Exemption
The Department is considering granting an exemption under the
authority of ERISA section 408(a) and in accordance with the procedures
set forth in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October
27, 2011). If the proposed exemption is granted, the restrictions of
ERISA sections 406(a)(1)(A), 406(b)(1), and 406(b)(2),
[[Page 41130]]
shall not apply to the sale of the 1.13 acre portion of improved real
property located at 8955 E. Terrace, Kansas City, Missouri (the Parcel)
by the Mid-America Carpenters Regional Council Apprentice and Training
Fund (the Fund) to the Mid-America Carpenters Regional Council (the
MACRC) (the Sale), provided the following conditions are satisfied at
all times:
(a) The MACRC complied with all applicable obligations under the
``Settlement and Agreement to Pay ERISA Section 502(i) Amount Involved
and Penalty Amount'' entered into between the MACRC and the Department,
effective January 31, 2024 (the Settlement); and the MACRC paid all
back rent, penalties, and interest due to the Fund under the terms of
the Lease Agreement dated January 31, 2024 between the MACRC and the
Fund (the Lease) for the period of time that the MACRC improperly
accessed the Parcel and commenced construction of the building on the
Parcel, from November 15, 2020 through January 31, 2024, the date of
the Settlement Agreement.
(b) The MACRC complies with all terms of the Lease, and any
violation of or failure to comply with any term of the Lease is
corrected as soon as reasonably possible upon discovery.
(c) The Sale is a one-time transaction for cash that must close
within ninety (90) days of the issuance of the final exemption.
(d) At the time of the Sale, the Fund receives the greater of (1)
$220,000; or (2) the fair market value of the Parcel as established by
an independent appraiser in an updated appraisal of such Parcel on the
date of the Sale. The independent appraiser must meet the Department's
definition of a ``qualified independent appraiser'' under the
Department's Exemption Procedure in 29 CFR 2570.31(i) and, at all
times: the qualified independent appraiser must not have entered into,
and must not enter into, any agreement, arrangement, or understanding
that includes any provision that provides for the direct or indirect
indemnification or reimbursement of the qualified independent appraiser
by the Fund, the MACRC, or any other party for any failure to adhere to
its contractual obligations or to state or Federal laws applicable to
the qualified independent appraiser's work; or that waives any rights,
claims or remedies of the Fund or its participants and beneficiaries
under ERISA or other Federal and state laws against the qualified
independent appraiser with respect to the Sale.
(e) The Fund pays no fees, commissions, or other expenses
associated with the Sale.
(f) The terms and conditions of the Sale are at least as favorable
to the Fund as those obtainable in an arm's length transaction with an
unrelated third party.
(g) The trustees appointed by the MACRC (the Union Trustees)
recused themselves, and continue to recuse themselves, from any
involvement in the decision-making process with respect to the Fund's
decision to enter into the Sale, since September 23, 2020.
(h) Gallagher Advisory Services, LLC (Gallagher), or another
``qualified independent fiduciary'' as defined under 29 CFR 2570.31(j)
(the Independent Fiduciary) is retained to act as the Independent
Fiduciary on behalf of the Fund for all purposes in connection with the
Sale and the Lease, and at all times: the Independent Fiduciary must
not have entered into, and must not enter into, any agreement,
arrangement, or understanding that includes any provision that provides
for the direct or indirect indemnification or reimbursement of such
Independent Fiduciary by the Fund, the MACRC, or other party for any
failure to adhere to its contractual obligations or to state or Federal
laws applicable to the Independent Fiduciary's work; or that waives any
rights, claims, or remedies of the Fund under ERISA, state, or Federal
law against the Independent Fiduciary with respect to the Sale.
(i) The Independent Fiduciary must represent the Fund and its
participants and beneficiaries for all purposes in connection with the
Sale and the Lease in accordance with its fiduciary duties under ERISA
section 404, including taking the following actions:
(1) review relevant materials to evaluate the Sale and determine
whether it is in the best interest of the Fund to proceed with the
Sale;
(2) determine whether to rely upon the appraisal report used to
determine the fair market value of the Parcel for all purposes in
connection with the Sale, and review and approve the methodology used
in such appraisal in order to determine that the appropriate
methodology is applied by the independent appraiser in determining the
fair market value of the Parcel on the date of the Sale;
(3) review, negotiate, and modify (as needed) the Sale agreement
and related documents;
(4) prepare a report in connection with the application of the
exemption request describing the Independent Fiduciary's review and
determinations with respect to the Sale, including whether the Sale is
in the best interest of the Fund and its participants and
beneficiaries;
(5) make a final determination on behalf of the Fund whether to
approve the Sale;
(6) ensure that the Fund receives the fair market value of the
Parcel as agreed upon under the terms of the purchase and sale
agreement; and that the remaining terms of the purchase and sale
agreement and any related instruments are complied with; and
(7) ensure that the MACRC has complied with and continues to comply
with all applicable terms of the Lease, including that the Fund
receives all rent due to it under the terms of the Lease.
(j) The Independent Fiduciary must prepare an ``After Closing
Report'' for the Employer Trustees of the Fund and the Department,
which must be delivered to both parties within 60 days of the closing
of the sale of the Parcel. The report must describe the extent to which
the conditions of the exemption have been complied with by the parties,
the reasons for any non-compliance, and the steps that the Independent
Fiduciary took on behalf of the Fund to enforce the rights of the Fund
in respect to such non-compliance. The report should describe the
documents reviewed or other steps taken in order for the Independent
Fiduciary to make its determinations.
(k) The Fund's Trustees and the Independent Fiduciary maintain for
a period of six (6) years from the date of any transaction related to
the Sale, in a manner that is convenient and accessible for audit and
examination, the records necessary to enable the persons described in
paragraph (l)(1) below to determine whether conditions of this
exemption, if granted, have been met, except that (i) a prohibited
transaction will not be considered to have occurred if, due to
circumstances beyond the control of the Fund's trustees and/or the
Independent Fiduciary, the records are lost or destroyed prior to the
end of the six-year period, and (ii) no party in interest other than
the Fund's trustees or the Independent Fiduciary shall be subject to
the civil penalty that may be assessed under ERISA section 502(i) if
the records are not maintained, or are not available for examination.
(l) (1) Notwithstanding any provisions of sections (a)(2) and (b)
of ERISA Section 504, the records referred to in paragraph (k) above
shall be unconditionally available at their customary location during
normal business hours to: (i) any duly authorized employee or
representative of the Department or the Internal Revenue Service; (ii)
the Fund's trustees or any duly authorized representative of the Fund's
trustees; (iii) the
[[Page 41131]]
Independent Fiduciary or any duly authorized representative of the
Independent Fiduciary; (iv) any participant or beneficiary of the Fund,
or any duly authorized representative of such participant or
beneficiary; and (2) should the MACRC or any party refuse to disclose
information to a person on the basis that such information is exempt
from disclosure, such party shall provide a written notice advising
that person of the reasons for the refusal and that the Department may
request such information by the close of the thirtieth (30th) day
following the request.
(m) All the material facts and representations set forth in the
Proposed Exemption's Summary of Facts and Representations are true and
accurate at all times.
Exemption Date: If granted, this exemption will be in effect as of
the date of publication in the Federal Register.
Signed at Washington, DC, this 19th day of August 2025.
Christopher Motta,
Acting Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2025-16057 Filed 8-21-25; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on August 22, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.