Freedom Center script: 

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Slide one 

The National Underground Railroad Freedom Center is a  $117-million project on the banks of the

Ohio River in Cincinnati, which opened in August 2004 and features three pavilions celebrating
courage, cooperation and perseverance.. Using the Underground Railroad as a lens to explore
a range of freedom issues, the center offers lessons and reflections on the struggle for freedom.
The state’s appropriations which have been previously disbursed total $14.65M

Slide two:

The Freedom Center was before the Commission on 2/11/2010 and obtained approval of a
MOU regarding a $850,000 appropriation provided for in HB 562. The MOU was contingent on
the Freedom Center obtaining Congressional approval to federalize the facility, which would
contribute approximately $3M/yr in operating funds. Due to the uncertainty of the Federal
budget the Freedom Center is making alternate plans to become sustainable without the federal
legislation. Such plans would require the release of the $850K in appropriated funds and
$462K of funds currently held in escrow by the Commission. The Freedom Center has provided
board approved budgets for FYE 2011 and 2012 and a proforma through 2014 which indicate
the Freedom Center may become sustainable without Federal legislation.

Slide three

Significant events of the last two years which have been reported on since the 2010 MOU and
which affect the Freedom Center’s current financial condition include:

1) Write down of the building from $78M to $32M. The $46M write down was recorded in
the audit for FYE09 in compliance with FAS 144 regarding Impairment of Buildings.
2) Bond settlement whereby the consortium of banks exchanged $47M in bond debt
for $24M held in investments by the Freedom Center. The net result was an
extraordinary gain of approximately $24M recorded in YTD 10.

Slide four

In formulating its recommendation to approve both the release of the $850K appropriation and
the release of $462K currently held in escrow staff analyzed the board approved budgets, cash
flows and proforma (excluding federalization) and deliberated between themselves on the
likelihood the Freedom Center will be sustainable . While staff is hopeful and cautiously
optimistic the projections will come to fruition we believe the projected fundraising goals will
most likely be realized under a growing economy. If the economy were to stagnate or constrict
(as we saw in 2008) staff believes the projected fundraising, which includes funds from local
government, the DOE, Corporations, and individuals may be difficult to achieve. However, the
exposure to state regarding the unamortized amount of the bonds decreases by approximately
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$1M/ year for the next several years and the ability of the Freedom Center to continue as an
entity over the next several years has the potential to greatly reduce the Commission exposure.
Staff makes its recommendation based on the premise that with guaranties from Mr. John
Pepper on the $850K appropriation and the release of the $462K escrow the state is in no
worse a position than it is if were not to provide the funds and by providing the funding thereby
enabling the Freedom Center to better achieve its projections is markedly in a better position
each year the Freedom Center continues to operate. In the event the Freedom Center was to
cease operations the state would exercise their first lien to satisfy the unamortized amount of
the bonds or secure another cultural organization to operate the facility.