Professional Documents
Culture Documents
22-18nurfc Pasr 2011 02 08
22-18nurfc Pasr 2011 02 08
The Center is owned and operated by the Sponsor, an Ohio nonprofit corporation Deleted: as
since 1995.
Culture Presented: The preservation and presentation of features of historical interest or significance.
Sponsor
Background: The Sponsor states, “The mission of the National Underground Railroad
Freedom Center is to reveal stories about freedom's heroes, from the era of the
Underground Railroad to contemporary times, challenging and inspiring everyone
to take courageous steps for freedom today.”
Project Information
Scope: The current appropriation will reimburse the Sponsor for construction expenses Deleted: The Freedom Center facility
previously incurred but not yet reimbursed (the “Project”). The project consists of Deleted: has recently been written down to a
reimbursing $850,000 on an appropriation awarded in H,B. 562 and release of a portion value of $32M at FYE09. It was
of the approximately $462,000 of escrow monies held under prior agreements with the Deleted: opened in August 2004,
Commission.. As described further in the financial section of this report, the value of the Deleted: and features three pavilions
facility has recently been written down to $32M (from $78M) at FYE09. celebrating courage, cooperation, and
perseverance.
Deleted:
Regional Support
Deleted: the original base lease
Deleted: XX
Matching Resources
The Sponsor demonstrated a minimum of non-state matching resources equal to at least 50 percent of
the total state funding of $15,500,000 (a minimum of $7,750,000). Matching resources were
substantiated in November 2008. On October 9, 2001, Substantial Regional Support was confirmed by
the Commission in resolution R-01-26. The following table is provided for informational purposes.
Funding Model
Source Amount Substantiation Comment [kf3]: Will need to add some notes to
explain how they arrived at full funding and refer to
State Funding $15,500,000 the recent changes noted later in our analysis.
Cash-On-Hand $0
Private Contributions $63,000,000
County Government $0
City Government $6,000,000
Federal Government $22,200,000
Other (future investment $11,650,000 $7,750,000 not substantiated
income)
Total Funding Sources $106,700,000
Total Project Budget $117,744,000
“The Project” is complete and was previously funded as is indicated by the table above. However, two Formatted: Left
significant events have since transpired affecting the value of the project. The first is that the
consortium of banks settled $47M bond debt (which the facility was held as collateral) in exchange for
$24M held in investments. The second event is that appurtenant to GAAP when an asset’s value is
‘impaired’ management wrote down the carrying value of the facility from $78M to $32M at FYE09.
Project Need
Financial Assessment
• 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")
• Five-year pro forma
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 assets
are positive (YTD10 total assets are $35.9M; total liabilities are $0.6M).
YTD10, the Sponsor had no debt; therefore, a viability ratio was not calculated.
Liquidity:
Liquidity relates to availability of, access to or convertibility to cash. A test of liquidity is current ratio (current
assets divided by current liabilities), which indicates how many times over the entity can pay its current
liabilities with its current assets. (Note: Restricted current assets were not used to calculate the current ratio
because they generally are not available to service current liabilities. Including restricted current assets in the
The Sponsor’s YTD10 working capital is $2.7M). Days of cash-on-hand (an indication of how many days an
organization can pay expenses if its revenue stream ceases) at 22 is lower than the 30-day norm.
Leverage:
Leverage is the degree to which a sponsor is borrowing money. A measure of leverage is debt ratio (debt
divided by total assets).
YTD10, the Sponsor has no debt; therefore, a debt ratio is not calculated.
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% $ 10,584,822
OPERATING 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)
Total Revenues (net of capital income raised) $ 3,816,900 $ 3,870,000 $ 4,523,000 $ 4,627,000 $ 4,731,000
Federalization Revenue $ 750,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Total Expenses (net of capital expenses) $ 5,665,400 $ 5,722,000 $ 5,779,000 $ 5,837,000 $ 5,896,000
Pre-Depreciation Surplus/(Deficit) $ (1,098,500) $ 1,148,000 $ 1,744,000 $ 1,790,000 $ 1,835,000
Depreciation $ (3,325,576) $ (3,325,576) $ (3,325,576) $ (3,325,576) $ (3,325,576)
Post-Depreciation Surplus/(Deficit) $ (4,424,076) $ (2,177,576) $ (1,581,576) $ (1,535,576) $ (1,490,576)
Total Revenues (net of capital income raised) $ 3,613,900 $ 3,364,000 $ 3,964,000 $ 4,015,000 $ 4,066,000
Federalization Revenue $ 750,000 $ 3,000,000 $ 3,000,000 $ 3,000,000 $ 3,000,000
Total Expenses (net of capital expenses) $ 5,665,400 $ 5,722,000 $ 5,779,000 $ 5,837,000 $ 5,896,000
Pre-Depreciation Surplus/(Deficit) $ (1,301,500) $ 642,000 $ 1,185,000 $ 1,178,000 $ 1,170,000
Depreciation $ (3,325,576) $ (3,325,576) $ (3,325,576) $ (3,325,576) $ (3,325,576)
Post-Depreciation Surplus/(Deficit) $ (4,627,076) $ (2,683,576) $ (2,140,576) $ (2,147,576) $ (2,155,576)
Footnote: According to the sponsor, if federalization is passed prior to September 30, 2011 $3M will be remitted by the federal government to the Formatted: Font: 8 pt
Freedom Center immediately. For purposes of the pro forma staff reported the federalization income on the accrual basis and recognized only
three/twelfths in FYE11 of the projected remittance. Formatted: Font: 8 pt
Formatted: Font: 8 pt
The Commission staff believes the Freedom Center is in danger of not continuing as a going concern. Comment [kf4]: Did the Auditor’s make this
Accordingly, the consortium of banks that previously held the debt for the Freedom Center have exchanged statement or is it our staff opinion? Identify whose
$47M in local bond debt for approximately $24M the Freedom Center was holding in investments. The net opinion this is.
result of the bond settlement is an extraordinary gain of approximately $24M in YTD10. Deleted: e
Comment [t5R4]: It is our opinion however you
Also material to the Freedom Center’s financial position is the adjustment of the carrying value of the raise a good point.. if NURFC were to have a
building on the FYE09 financial statement. The previous building balance of $78M in FYE08 was written 12/31/10 audit there is a good chance (in my
opinion) they would not get an unqualified “clean”
down to $32M in FYE 09 as a result of FAS 144, the GAAP pronouncement applicable to Accounting for the opinion. They may get a qualified opinion based on
Impairment or Disposal of Long-Lived Assets. going concern issues. I think it would be
unreasonable to require a 12/31/10 audit before the
February meeting but we may want to consider
Additionally, the Freedom Center continues to operate at a deficit, as is evidenced by a pre-depreciation, requiring the freedom center get from their auditiors
pre-extraordinary gain, operating deficit of ($670K) at YTD10, a pre-depreciation loss of ($3.9M) at FYE09, a a special management report attesting the going
concern issue prior to the February meeting.???let
operating deficits in previous years, and the Sponsor-prepared pro forma indicating pre-Federalization me know your thoughts.
losses exceeding ($1.8M) for the out years.
Comment [kf6]: Need TC & CB assistance to
understand this
Federalization is the prospect that the Facility will be gifted to the Federal Government (free and clear of any
liens), and the U.S. Government will use the Freedom Center to operate a museum commemorating the
ending of chattel slavery in the United States.
Deleted: F
According to the sponsor, if federalization takes place, the Freedom Center expects to receive Deleted: should
approximately $3M/year in operating revenues on a permanent basis, enabling the Freedom Center to Deleted: opening
generate operating surpluses starting at $1.15M for each twelve month period beginning with October 1, Deleted: beginning
2011, the start of the next Federal fiscal year. Therefore, when reviewing the Freedom Center’s
Deleted: considers
sustainability staff heavily weighed the probability for successful federalization of the Freedom Center.
Deleted: of a
According to the Sponsor, the most updated information currently available indicates that Senator Sherrod
Brown is backing the legislation that was discussed in draft form in October of 2009, and the Freedom Deleted: F
Center management is optimistic that the legislation will be passed. The Sponsor anticipates “that the funds Deleted: we
would be received in the [fourth] quarter of 2011, if [it is] successful in getting the language signed and Deleted: have
Although experienced in the provision of general building services at the Facility, the Sponsor has
marginal financial capacity to continue providing general building services at the Facility. In
anticipation of the Sponsor completing the proposed Facility transfer to the federal government,
Commission staff conditionally confirms the Sponsor continue to provide these services as permitted
by section 3383.07 of the ORC.
Appropriation History:
Appropriation Bill Appropriation G.A. Appropriation Comments
Name Number Date Amount
National Am. Sub. 6/24/2008 127 $850,000 Funding this project.
Underground H.B. 562
Railroad Freedom
Center
National Am. Sub. 12/28/2006 126 $2,000,000 Funded construction of the
Underground H.B. 699 freedom center.
Railroad Freedom
Center
NURFC H.B. 16 5/4/2005 126 $4,150,000 Funded construction of the
freedom center.
National H.B. 675 12/13/2002 124 $4,000,000 Funded construction of the
Underground freedom center.
Railroad Freedom
Center
Recommendation: The materials submitted by the Sponsor were reviewed and analyzed, and the
Commission Chief Analyst, Chief Project Manager, and Executive Director recommend approval of Deleted: project a
Resolution R-10-17, the approval of the Project and authorization of the expenditure of funds, under the Deleted: p
following conditions: Deleted: m
• Guarnatee be provided by John Pepper acceptable to the Executive Director at her sole
Deleted: s
discretion guaranteeing the $850,000 appropriation
• A Guarantee be provided by John Pepper acceptable to the Executive Director at her sole Deleted: e
Executive Director
Exhibits
□ E Financial Statements
However, if the Commission were to approve the funds and Federalization did not come to fruition, the
Commission would be responsible for placing those additional funds at risk.
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However, if the Commission were to approve the funds and Federalization did not come to fruition, the
Commission would be responsible for placing those additional funds at risk.
Page 7: [7] Deleted Kathy Fox 11/21/2010 8:18:00 PM
However, if the Commission were to approve the funds and Federalization did not come to fruition, the
Commission would be responsible for placing those additional funds at risk.
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