UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________.
Commission File Number 0-7761
URBAN IMPROVEMENT FUND LIMITED 1973
(Exact name of registrant as specified in its charter)
California 95-6442510
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1201 Third Avenue, Suite 5400, Seattle, Washington 98101 3076
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code: (206) 622-9900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant as of December 31, 1996: No established market value.
PART I
Item 1. Business
(a) General Development of Business Urban Improvement Fund 1973,
a California limited partnership (the "Registrant"), was formed in 1973 for the
purpose of investing, through local real estate limited partnerships (LLP's), in
federally and state-assisted low and moderate income housing projects. Units of
Limited Partnership Interest were sold in a public offering to investors who
require tax shelter for income from other sources. The Registrant acquired
equity interests as a limited partner in twenty-six (26) such projects. Six
of these projects were sold through trustee's sales (foreclosures). Edgewood
II Associates' property was sold through a resyndication in 1984. The
Edgewood II Associates partnership is still in existence with a note
receivable for the sales proceeds of the property. The remaining nineteen
(19) properties are described in Item 2 hereof.
(b)Financial Information about Industry Segment The Registrant is engaged in
only one line of business.
(c) Narrative Description of Business The real estate business is highly
competitive. The Registrant competes with numerous established apartment
owners and real estate developers of low-income housing having greater
financial resources. There is additional risk of new construction occurring
in areas where the Registrant has invested in existing government-assisted
housing projects.
Moreover, the outlook for subsidized housing is not determinable, given existing
and proposed federal legislation.
(d)Financial information about foreign and domestic operations and export
sales. The Registrant's income is entirely dependent upon distributions
received from the limited partnerships in which it is a limited partner. An
investment in a government-assisted housing is subject to significant
regulations. These regulations limit, among other things, the amount of
return allowed on the initial equity investment, the manner in which such
properties may be sold, and the persons to whom such properties may be sold.
In 1987, fearing the loss of affordable housing units, Congress passed
emergency legislation which prohibited prepayment of all FHA insured Section
236 or Section 221(d)(3) mortgages. Congress passed additional legislation
in 1990 known as LIHPRHA (the Low Income Housing Preservation and Resident
Homeownership Act). However, by 1995, Congress had determined the program
was too expensive to continue. In March 1996, Congress changed the
compensation program, severely limited funding, and restored the property
owners' right to prepay the FHA mortgages and change the use of the
properties under legislation known as the Housing Opportunity Program
Extension Act of 1996. The General Partner of the Partnership has initiated
steps to ensure that the Local Limited Partnerships comply with the provisions
of LIHPRHA and subsequent legislation. See financial information in Item 6,
Selected Financial Data, in this report.
Item 2. Properties.
The Registrant owns equity interests as a Limited Partner in the following
real estate projects as of December 31, 1996:
No. of Units 1996
Residential/ Percent of
Project Name Type Commercial Occupancy
Antonia Manor
San Francisco, CA 221(d)(3) Rehab. 133/2 98%
Brighton Gardens
Brighton, MA MHFA New* 62 99%
First Bedford Pines Apts. I
Atlanta, Georgia 236 Rehab. 134 99%
Freedom Associates
Baltimore, MD 236 Rehab. 308 97%
Glenn Arms Associates
Washington, D.C. 236 Rehab. 55 100%
Hedin Associates
Washington, D.C. 236 Rehab. 48/2 97%
Himbola Manor Associates
Lafayette, LA 221(d)(3) New 136 99%
Maria Manor Associates
San Francisco, CA 221(d)(3) Rehab. 119/1 99%
Marlton Manor Associates
San Francisco, CA 221(d)(3) Rehab. 151/7 95%
Mystic Valley Associates
Medford, MA MHFA New* 466 97%
Ogo Associates of Los Arboles
Thousand Oaks, CA 236 New 43 99%
Ogo Associates of Mountclef
Thousand Oaks, CA 236 New 18 100%
RAP-UP II B
Roxbury, MA 236 Rehab. 51/4 99%
Sheridan Manor IV
Los Angeles, CA 236 Rehab. 48 95%
Sheridan Manor X
Los Angeles, CA 236 Rehab. 30 94%
The Alexander
San Francisco, CA 221(d)(3) Rehab. 179/1 97%
Wogo Associates of Carondelet (WOGO II)
Los Angeles, CA 236 Rehab. 124 93%
Wogo Associates of Fresno (Hotel California)
Fresno, CA 221(d)(3) Rehab. 219/12 80%
W Street Associates (Capital Manor)
Washington, D.C. 236 Rehab. 102 85%
*Developed under auspices of Massachusetts Housing Finance Agency.
Mortgage indebtedness associated with each project is shown in Schedule XI of
this report.
The following is a description of each of the above-listed properties:
ANTONIA MANOR consists of 133 residential units and 2 commercial units
located in downtown San Francisco, California. The project consists of a
nine-story rehabilitated structure.
Number of Units Type
133 Studio
2 Commercial
BRIGHTON GARDENS consists of 62 residential units located in Brighton,
Massachusetts. The project originally consisted of four new six-story
buildings. On December 9, 1979, a fire destroyed two of the four buildings of
the project containing 62 units. The insurance proceeds were used to reduce
the mortgage.
Number of Units Type
2 Studio
40 1 Bedroom
16 2 Bedroom
4 3 Bedroom
FIRST BEDFORD-PINE APARTMENTS I consists of 134 residential units located
in the northeastern area of Atlanta, Georgia. The project consists of thirteen
two-story rehabilitated buildings constructed of masonry and wood.
Number of Units Type
14 Efficiency
72 1 Bedroom
48 2 Bedroom
FREEDOM ASSOCIATES consists of 308 residential units located in the
northeastern section of Baltimore, Maryland. The project includes eighteen
two-story rehabilitated masonry and frame buildings.
Number of Units Type
61 1 Bedroom
186 2 Bedroom
61 3 Bedroom
GLENN ARMS ASSOCIATES consists of 55 residential units located in the
northeastern section of Washington, D.C. The project consists of two
rehabilitated brick buildings.
Number of Units Type
13 Efficiency
30 1 Bedroom
10 2 Bedroom
2 3 Bedroom
HEDIN ASSOCIATES consists of 48 residential units and 2 commercial units
located in the northeastern area of Washington, D.C. The project consists of a
five-story rehabilitated structure.
Number of Units Type
28 Efficiency
20 1 Bedroom
2 Commercial
HIMBOLA MANOR consists of 136 residential units located in Lafayette,
Louisiana. The project consists of eleven new two-story structures.
Number of Units Type
32 1 Bedroom
64 2 Bedroom
40 3 Bedroom
MARIA MANOR consists of 119 residential units and 1 commercial space
located in downtown San Francisco, California. The project consists of a
six-story rehabilitated structure.
Number of Units Type
119 Studio
1 Commercial
MARLTON MANOR ASSOCIATES consists of 151 residential units and 7
commercial spaces located in downtown San Francisco, California. The project
consists of a six-story rehabilitated building.
Number of Units Type
140 Studio
11 1 Bedroom
7 Commercial
MYSTIC VALLEY ASSOCIATES consists of 466 residential units located in
Medford, Massachusetts. The project consists of three fourteen-story buildings.
Number of Units Type
187 1 Bedroom
279 2 Bedroom
OGO ASSOCIATES OF LOS ARBOLES consists of 43 residential units located
in the City of Thousand Oaks in Ventura County, California. The project
consists of ten two-story buildings with wood and stucco exteriors.
Number of Units Type
25 2 Bedroom
18 3 Bedroom
OGO ASSOCIATES OF MOUNTCLEF consists of 18 residential units located in
the City of Thousand Oaks in Ventura County, California. The project consists
of three one and two-story structures with wood and stucco exteriors.
Number of Units Type
12 2 Bedroom
6 3 Bedroom
RAP UP II B consists of 51 residential units and 4 commercial units located in
the Highland Park section of Roxbury, Massachusetts, a suburb of Boston.
Number of Units Type
7 Efficiency
13 1 Bedroom
20 2 Bedroom
4 3 Bedroom
7 4 Bedroom
4 Commercial
SHERIDAN MANOR IV consists of 48 residential units located in the south
central section of Los Angeles, California. The project consists of ten
one and two-story rehabilitated buildings of wood and stucco construction.
Number of Units Type
18 Efficiency
27 1 Bedroom
3 2 Bedroom
SHERIDAN MANOR X consists of 30 residential units located in the south
central section of Los Angeles, California. The project consists of a
three-story rehabilitated structure with a wood and stucco exterior.
Number of Units Type
30 Efficiency
THE ALEXANDER consists of 179 residential units and 1 commercial unit
located in downtown San Francisco, California. The project consists of an
eleven-story rehabilitated building.
Number of Units Type
132 Studio
47 1 Bedroom
1 Commercial
WOGO ASSOCIATES OF CARONDELET (WOGO II) consists of 124 residential
units located in the south central section of Los Angeles, California. The
project includes eight one and two-story rehabilitated buildings.
Number of Units Type
94 Efficiency
30 1 Bedroom
WOGO ASSOCIATES OF FRESNO (HOTEL CALIFORNIA) consists of 219 residential
units and 12 commercial units located in downtown Fresno, California. The
structure is an eight-story rehabilitated brick and masonry building.
Number of Units Type
180 Efficiency
39 1 Bedroom
12 Commercial
W STREET ASSOCIATES (CAPITAL MANOR) consists of 102 residential units
located in the northeastern section of Washington, D.C. The project includes
three four-story rehabilitated structures.
Number of Units Type
2 Efficiency
55 1 Bedroom
38 2 Bedroom
7 3 Bedroom
The registrant sold its equity interest as a Limited Partner in the following
real estate project during the year ended December 31, 1984.
EDGEWOOD II ASSOCIATES consists of 258 residential units located in the
northeast area of Washington, D.C. The project consisted of a new eleven-story
building.
Number of Units Type
196 1 Bedroom
62 2 Bedroom
The property of Edgewood II Associates was sold during 1984. The sales price of
$8,270,146 was composed of a cash payment of $1,215,000, the assumption of
the underlying mortgage of $4,855,146 and an installment payment of $2,200,000
that is due on December 31, 1999 along with accrued interest. Urban 73's share
of the final installment is $1,650,000 with the balance due to the Local General
Partner. Interest accrues at nine and one-half percent per annum and is payable
on the anniversary date of the note to the extent of seventy-five percent of the
property's distributable cash flow, as defined.
Item 3. Legal Proceedings.
There are no material legal proceedings pending, at this time, other than
ordinary routine litigation incidental to the Partnership's business, including
the Local Limited Partnerships in which the Partnership is a Limited Partner.
Item 4. Submission of Matters to a Vote of Security Holders. No matters were
submitted during the fourth quarter of the fiscal year covered by this report to
a vote of security holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters.
(a) Market Information There is not a ready market for the transfer of
limited partnership interests. Limited partnership interests may be
transferred between individuals with the consent of the General Partner.
(b) Holders
Title of Name & Address of Amount and Nature of % of
Class Beneficial Owner Beneficial Ownership Class
General Partner Interfinancial Real 621 Units 100%
Interest Estate Management Co. ($621,316)
1201 Third Avenue, Suite 5400
Seattle, Washington 98101 3076
Limited Partner Robert C. Johnson, Jr. 800 Units 6.773%
Interest Lubbock, Texas ($800,000)
667 Other Limited Partners 11,011 Units
($11,011,000) 93.227%
100.000%
The Registrant has no officers or directors. Interfinancial Real Estate
Management Company, the General Partner of the Registrant, is a corporation.
(c) Dividends The Partnership paid a distribution of $223,794 in 1993 and
$198,928 in 1994. No distributions were paid during 1992, 1995 or 1996.
Item 6. Selected Financial Data
These statements do not include all disclosures required under generally
accepted
accounting principles; however, when read in conjunction with the related
financial
statements and notes thereto included under Item 8, the statements include all
generally accepted accounting principles disclosures for the last three years.
Year Ended December 31,
1996 1995 1994 1993 1992
Interest income $ 9,159 $ 19,449 $ 19,916 $ 30,766 $ 22,633
Operating expenses:
Professional fees 29,245 27,849 27,855 26,325 22,400
Management fees 88,387 92,017 115,297 69,392 79,714
Other expenses 11,272 2,318 2,204 8,275 1,311
Amortization of costs of
acquisition 10,099 9,452 8,639 8,639 9,333
139,003 131,636 153,995 112,631 112,758
Loss before equity in
income (loss) of Local
Limited Partnerships (129,844) (112,187) (134,079) (81,865) (90,125)
Equity in income Local
Limited Partnerships 1,305,678 1,190,208 684,090 776,514 436,327
Net income $1,175,834 $1,078,021 $ 550,011 $ 694,649 $ 346,202
Allocation of net income:
Net income allocated
to General Partner $ 58,792 $ 53,901 $ 27,501 $ 34,732 $ 17,309
Net income allocated
to Limited Partners 1,117,042 1,024,120 522,510 659,917 328,893
$1,175,834 $1,078,021 $ 550,011 $ 694,649 $ 346,202
Net financial reporting income
per units:
General partnership units
(621 units outstanding
allocated to General
Partner) $ 95 $ 87 $ 44 $ 56 $ 28
Limited Partnership units
(11,811 units outstanding
allocated to Limited
Partners) $ 95 $ 87 $ 44 $ 56 $ 28
Total assets $3,741,448 $2,521,670 $1,455,073 $1,063,575 $ 592,709
Long-term obligations $ -0- $ -0- $ -0- $ -0- $ -0-
Cash dividends $ -0- $ -0- $198,928 $223,794 $ -0-
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Partnership has followed the practice of investing available funds, not
used in the purchase of properties or in operations, into short-term
investments. Interest income resulted from such short-term investments. The
Partnership is dependent upon interest earned and the distributions and
repayment of advances from Local Limited Partnerships for cash flow. As
shown in the table below, the Partnership has received distributions in
recent years (including interest payments from the sale of Edgewood II).
This trend is expected to continue. The Partnership has advanced funds and
received repayments of such advances from selected partnerships. The General
Partner does not believe these net advances will significantly affect the
operations of the Partnership.
1996 1995 1994 1993 1992
Urban's share
of distribution $219,132 $172,610 $265,505 $151,258 $147,381
Advances (made to)
repaid by
Local Limited
Partnerships $(1,754) $ 762 $ (7,605) $(32,650) $ 37,254
Under the terms of the Limited Partnership Agreement, the Partnership is
required to pay the General Partner an annual management fee equal to
one-quarter of one percent of invested assets or $133,770. (The fee will not be
more than fifty percent of the Partnership's annual net cash flow as defined,
subject to an annual minimum of $60,000.) The Partnership recorded
management fee expense of $88,387, $92,017, $115,297, $69,392 and $79,714
during 1996, 1995, 1994, 1993 and 1992, respectively. The Partnership will also
pay the General Partner a liquidation fee for the sale of projects. The
liquidation fee is the lesser of (i) ten percent of the net proceeds to the
Partnership from the sale of a project(s) or (ii) one percent of the sales
price plus three percent of the net proceeds after deducting an amount
sufficient to pay long-term capital gains taxes. No part of such fee shall
accrue or be paid unless: (i) the Limited Partners' share of the proceeds has
been distributed to them, (ii) the Limited Partners shall have first received
an amount equal to their invested capital attributable to the project(s) sold,
and (iii) the Limited Partners have received an amount sufficient to pay
long-term capital gains taxes from the sale of the project(s), if any,
calculated at the maximum rate then in effect. Other operating expenses have
maintained a consistent level.
At December 31, 1996, the Partnership had investments in nineteen active real
estate limited partnerships as a Limited Partner. The Partnership carries such
investments on the equity method of accounting. The Partnership discontinues
recording losses for financial reporting purposes when its investment in a
particular Local Limited Partnership is reduced to zero, unless the Partnership
intends to commit additional funds to the Local Limited Partnership. The
equity in income of Local Limited Partnerships resulted from either Local
Limited Partnerships, whose investments have not been reduced to zero,
reporting income from operations or Local Limited Partnerships, whose
investments have been reduced to zero, who paid distributions or repaid an
advance. Additional advances to Local Limited Partnerships, after an
investment is reduced to zero, are recorded as losses. The real estate of
Edgewood II Associates was sold during 1984. The Partnership holds a note
receivable that accrues interest.
The components of the Partnerships' equity in net income of the Local Limited
Partnerships for 1996, 1995 and 1994 is summarized as follows:
For the Year Ended
December 31,
1996 1995 1994
Net repayment from (advances to)
Local Limited Partnerships with
zero investments:
Los Arboles $ 9,907 $ 17,071 $ (3,855)
Sheridan X (1,754) 4,368 -0-
Mountclef (3,102) (18,973) (3,750)
WOGO of Carondelet (6,694) (842) -0-
WOGO of Fresno (12,257) -0- -0-
W Street Associates (3,500) -0- -0-
Distributions received from Partnerships
with zero investments:
Mystic Valley 131,877 136,584 65,856
Sheridan X -0- 4,183 -0-
Income (loss) from Partnerships
with non-zero investments:
Alexander 350,632 322,680 230,387
Antonia Manor 221,936 143,633 46,268
Hedin House 47,695 12,778 69,557
Maria Manor 259,026 211,459 43,196
Marlton Manor 224,127 318,017 236,431
Sheridan IV 55,895 39,250 -0-
Glenn Arms 31,890 -0- -0-
Equity in income (loss) of
Local Limited Partnerships $1,305,678 $1,190,208 $ 684,090
Interest received from Edgewood II
included in interest income: $ -0- $ 15,462 $ 16,340
The actual combined losses of Local Limited Partnerships will generally
decrease as depreciation and interest decreases and the Partnerships achieve
stable operations. The distributions to the Partnership from Local Limited
Partnerships are the result of the profitable operations of these Partnerships.
Liquidity
The Partnership is dependent upon distributions from its investments in Local
Limited Partnership for cash flow. The Partnership may not be able to generate
sufficient cash flow from operations or from distributions from its interests in
Local Limited Partnerships to pay future obligations as they become due without
additional financing or advances from the General Partner. The General Partner
is under no obligation to advance additional funds to the Partnership. The
General Partner, however, anticipates it will receive adequate distributions
from the Local Limited Partnerships to maintain operations.
Capital Resources
The General Partner believes that situations may arise where it would be
advantageous to the Partnership to exchange properties in a tax-free
transaction. The Partnership's basis in its properties has been reduced through
depreciation deductions and other losses to levels substantially below the
amount of debt secured by the Properties. Additionally, the rental
properties owned and operated by the Local Limited Partnerships have typically
computed depreciation for financial reporting purposes using the straight-line
method over the estimated economic useful life of the property. For income tax
reporting purposes, depreciation generally has been computed over the same or
shorter periods using accelerated methods. As a result, the carrying values of
the Partnership's investments in Local Limited Partnerships are substantially
greater for financial reporting purposes than for income tax reporting purposes.
Upon sale or other disposition of a property by the Local Limited Partnership,
the gain recognized by the Partnership for income tax reporting purposes may be
substantially greater than the gain recorded for financial reporting purposes.
Accordingly, if the Properties are sold, the Partners may recognize taxable
gain in excess of the cash available for distribution. If sale proceeds are
reinvested in a manner which permits the original sale to be treated as a
like-kind exchange, the Partners can defer this gain until the new property is
sold. Additionally, the Partnership will receive the benefit of any cash flow or
appreciation in value of the new property. If reinvestments were made, it is
likely that the acquired properties would be conventional, multi-family
residential projects. The Partnership has had inquiries about the sale or
exchange of properties in its portfolio, but no offers have been made.
The partnership has made no material commitments for capital expenditures.
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted in a separate section of this report.
Item 9. Change In and Disagreements with Accountants on Accounting and
Financial
Disclosure
There have been no disagreements on any matters of accounting principles or
practices of financial statement disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The General Partner of the Registrant is Interfinancial Real Estate
Management Company. The Registrant does not have directors as such. The
following is a listing of the Directors of the General Partner of the
Registrant. These Directors are elected to serve one-year terms and until
their successors are duly elected and qualified as directors.
Name Age Office
Paul H. Pfleger 61 Director/President
John M. Orehek 42 Director/Senior Vice President
(b) The General Partner of the Registrant is Interfinancial Real Estate
Management Company. The Registrant does not have executive officers as such.
The following is a listing of the executive officers of the General Partner of
the Registrant. These executive officers are elected to serve one-year terms
and will continue to serve until their successors are duly elected and
qualified as executive officers.
Name Age Office
Paul H. Pfleger 61 Chairman of the Board
John M. Orehek 42 Senior Vice President
Michael Fulbright 42 Secretary
(c) The Registrant has no employees.
(d) There are no family relationships between any directors or executive
officers.
(e) The principal occupation and employment of each of the executive
officers and directors of the General Partner are as follows:
Paul H. Pfleger, President/Director. Mr. Pfleger organized and was Chairman of
the Board of Security Properties Inc. (formerly Security Pacific, Inc.) from
1969 to the present, except for a period between 1984 and 1986. Farmers
Savings acquired Security Properties Inc. as a wholly-owned subsidiary during
1984 and sold the company back to the original owners during 1987. The major
line of business of Security Properties Inc. is the administration of previously
syndicated, subsidized multifamily residential real estate. Mr. Pfleger was
first elected an officer and director of the General Partner, Interfinancial
Real Estate Management Company, in July 1981 and has maintained his dual
status since that time.
Mr. Pfleger is the General Partner in more than 280 properties with
approximately 38,000 housing units throughout the United States.
John M. Orehek, Senior Vice President. Mr. Orehek is the Chief Executive
Officer and President of Security Properties Investment Inc. From 1982 to
1987, he was employed by Security Properties Inc. (SPI) as President of First
Columbia Corporation, its affiliated broker/dealer, and Senior Vice President
of SPI. From 1987 to 1991, when he rejoined SPI, he was President of Hallmark
Capital Partners, Ltd., a Seattle real estate development corporation. From
1979 to 1982 he was a member of the tax department in the Cleveland, Ohio and
Seattle, Washington offices of Arthur Andersen & Co., Certified Public
Accountants. He received a B.S. degree in Economics from Allegheny College,
Meadville, Pennsylvania and a law degree from Case Western Reserve University
School of Law. Mr. Orehek was first elected a director of the General Partner,
Interfinancial Real Estate Management Company, during 1992.
Michael Fulbright, Secretary. Mr. Fulbright is General Counsel for Security
Properties Inc. (SPI). He joined the Company in 1989 as Special Counsel
responsible for new development activities and sales and financing transactions
in the syndication portfolio. Prior to joining SPI, he was a partner at Tousley
Brain, a Seattle law firm that specializes in commercial real estate matters.
His practice there included representation of lenders, institutional investors
and commercial developers. He received a Masters of Business Administration
degree from Texas A&M and a law degree from the University of Washington. He
is a member of the Washington State Bar Association. Mr. Fulbright was first
elected an officer of the General Partner, Interfinancial Real Estate Management
Company, during 1994.
Item 11. Executive Compensation
(a) The Registrant does not pay any salary or other remuneration to the
officers of the General Partner of the Registrant.
(b) The Registrant has no plan or arrangement to pay any salary or other
remuneration to the officers in the future.
(c) There are no options, warrants, rights or any other such remuneration
available to the General Partner of the Registrant.
(d) The Registrant will not pay any salary or other remuneration to the
directors of the General Partner of the Registrant.
(e) There are no retirement benefit plans or other remuneration that would
result from the resignation, retirement, termination or any other change in
control of any officer or director of the General Partner of the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
(b) Holders
Title of Name & Address of Amount and Nature of % of
Class Beneficial Owner Beneficial Ownership Class
General Partner Interfinancial Real 621 Units 100%
Interest Estate Management Co ($621,316)
1201 Third Avenue, Suite 5400
Seattle, Washington 98101 3076
(b) No officers or directors of the general partner of the registrant own a
Partnership interest.
(c) No change in control of the registrant is anticipated.
Item 13. Certain Relationships and Related Transactions
(a) There are no transactions in which the directors or officers of the
General Partner or security holder of the registrant have a material interest.
(b) There are no transactions in which the directors of the General Partner
have a material interest.
(c) There is no indebtedness of the management of the General Partner of
the registrant to the registrant.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) 1.Financial Statements:
Report of independent certified public accountants.
Balance Sheets at December 31, 1996 and 1995.
Statements of Income for the years ended December 31, 1996, 1995 and
1994.
Statements of Changes in Partners' Capital for the years ended December
31, 1996, 1995 and 1994.
Statements of Cash Flows for the years ended December 31, 1996, 1995
and 1994.
Notes to Financial Statements.
(a) 2.Financial Statement Schedules:
IV Indebtedness of and to Related Parties
XI Real Estate and Accumulated Depreciation and Amortization of
Local Limited Partnerships.
All other schedules are omitted because they are not applicable or the
required information is included in the financial statements or the
notes thereto.
FINANCIAL STATEMENTS OF UNCONSOLIDATED SUBSIDIARIES
FIFTY PERCENT OWNED PERSONS OR OTHER UNCONSOLIDATED
PERSONS
ACCOUNTED FOR ON THE EQUITY METHOD
Separate financial statements of the nineteen limited partnerships
accounted for on the equity method have been omitted because combined
financial statements are included in Note 4 to the financial
statements.
(a) 3. Exhibits
1.A. Form of proposed Selling Brokers' Agreement,
incorporated by reference from Registration
Statement on Form S-11 filed March, 1973.
3.A. Amended Certificate and Agreement of Limited
Partnership, incorporated by reference from
Registration Statement on Form S-11 filed
March, 1973.
3.B. Amendment to Certificate of Limited
Partnership, incorporated by reference from
Registration Statement on Form S-11 filed
March, 1973.
3.C. Amendment to Certificate of Limited
Partnership. Incorporated by reference from
proxy statement filed September 18, 1991.
4.A. Subscription agreement for use prior to
effective date of Registration Statement,
incorporated by reference from Registration
Statement on Form S-11 filed March, 1973.
4.B. Application form to subscribe for Units,
incorporated by reference from Registration
Statement on Form S-11 filed March, 1973.
5.A. Opinion and Consent of Counsel, incorporated by
reference from Registration Statement on Form
S-11 filed March, 1973.
8.A. Opinion and Consent of Tax Counsel,
incorporated by reference from Registration
Statement on Form S-11 filed March, 1973.
8.B-1 Tax Ruling from the Internal Revenue Service
dated August 8, 1973, incorporated by reference
from Post-Effective Amendment No. 1 to
Registration Statement on Form S-11 filed
September, 1973.
10.A. Copy of Agreement between Registrant, the
General Partner and Income-Equities Corporation
with respect to certain commitments made on
behalf of the Registrant, incorporated by
reference from Registration Statement on Form S-
11 filed September, 1973.
10.B. Copy of Management Agreement between the
Registrant and Income-Equities Corporation
incorporated by reference from Registration
Statement on Form S-11 filed March, 1973.
10.C. Second Amendment to the Limited Partnership
Agreement and Certificate of Antonia Manor, a
limited partnership, incorporated by reference
from Form 8-K filed April, 1975.
10.D. Second Amendment to the Limited Partnership
Agreement and Certificate of The Alexander, a
limited partnership, incorporated by reference
from Form 8-K filed April 1975.
10.E. Second Amendment to the Limited Partnership
Agreement and Certificate of Marlton Manor
Associates, a limited partnership, incorporated
by reference from Form 8-K filed April 1975.
10.F. Second Amendment to the Limited Partnership
Agreement and Certificate of Maria Manor, a
limited partnership, incorporated by reference
from Form 8-K filed April 1975.
10.G. First Amendment to the Limited Partnership
Agreement and Certificate of Sheridan Manor IV,
a limited partnership, incorporated by reference
from Form 8-K filed April 1975.
10.H. First Amendment to the Limited Partnership
Agreement and Certificate of Glen Arms
Associates, a limited partnership, incorporated
by reference from Form 8-K filed April 1975.
10.I. Second Amendment to the Limited Partnership
Agreement and Certificate of Sheridan Manor X,
a limited partnership, incorporated by reference
from Form 8-K filed April 1975.
10.J. Agreement of Purchase and Sale of Partnership
Interests and Agreement for Investment in
Limited Partnership dated August 30, 1984 among
Edgewood II Associates, Mid-City Financial
Corporation, the Registrant and Real Estate
Associates VII, incorporated by Reference from
Form 8-K filed June 1990.
10.K. First Amendment to Agreement of Purchase and
Sale of Partnership Interests and Agreement for
Investment in Limited Partnership dated August
31, 1984, incorporated by reference.
10.L. Second Amendment to Agreement of Purchase and
Sale of Partnership Interests and Agreement for
Investment in Limited Partnership dated August
31, 1984, incorporated by reference.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last quarter of 1996.
(c)Exhibits:
Form 12b-25
(d)Financial Statement Schedules:
IV Indebtedness of and to Related Parties
XI Real Estate and Accumulated Depreciation and Amortization of Local
Limited Partnerships.
All other schedules are omitted because they are not applicable or the
required information is included in the financial statements or the notes
thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed, on its
behalf by the undersigned, thereunto duly authorized.
(REGISTRANT) URBAN IMPROVEMENT FUND LIMITED 1973
BY: INTERFINANCIAL REAL ESTATE MANAGEMENT COMPANY
Date: 08-25-97
By: Paul H. Pfleger
President
Interfinancial Real Estate Management Company
Date: 08-25-97
By: John M. Orehek
Senior Vice President
Interfinancial Real Estate Management Company
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Date: 08-25-97
By: Paul H. Pfleger, Director
Interfinancial Real Estate Management Company
Date: 08-25-97
By: John M. Orehek, Director
Interfinancial Real Estate Management Company.
URBAN IMPROVEMENT FUND LIMITED 1973
SEATTLE, WASHINGTON
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2) AND ITEM 14(d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED December 31, 1996
URBAN IMPROVEMENT FUND LIMITED 1973
(A Limited Partnership)
Form 10-K Items 14(a)(1) and (2)
Form 10-K Item 14(d)
INDEX TO FINANCIAL STATEMENTS
The following financial statements of Urban Improvement Fund Limited 1973 are
included in Item 8, Item 14(a)(1)
Independent auditors' report . . . . . . . . . . . . . . . . . . F-3
Balance sheets at December 31, 1996 and 1995 . . . . . . . . . . F-4
Statements of income
for the years ended December 31, 1996, 1995 and 1994. . . . . F-5
Statements of changes in partners' capital
for the years ended December 31, 1996, 1995 and 1994. . . . . F-6
Statements of cash flows
for the years ended December 31, 1996, 1995 and 1994. . . . . F-7
Notes to financial statements. . . . . . . . . . . . . . . . . . F-8
The following financial statement schedules of Urban Improvement
Fund Limited 1973 are included in Item 14(a)(2) and 14(d):
IV. Indebtedness of and to Related Parties. . . . . . . . . . .F-24
XI. Real Estate and Accumulated Depreciation of
Local Limited Partnerships. . . . . . . . . . . . . . . .F-25
All other schedules are omitted because they are not applicable or required
information is shown in the financial statements or notes thereto.
FINANCIAL STATEMENTS OF UNCONSOLIDATED SUBSIDIARIES
FIFTY PERCENT OWNED PERSONS OR OTHER UNCONSOLIDATED
PERSONS ACCOUNTED FOR ON THE EQUITY METHOD
Separate financial statements of the nineteen limited partnerships accounted for
on the equity method have been omitted because combined financial statements are
included in Note 4 to the financial statements.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Partners
Urban Improvement Fund Limited 1973
We have audited the accompanying balance sheets of Urban Improvement Fund
Limited 1973 (a Limited Partnership), as of December 31, 1996 and 1995, and
the related statements of income, changes in partners' capital and cash flows
for the years ended December 31, 1996, 1995 and 1994, and the related schedules
listed in Item 14(a)(2) of the annual report on Form 10-K of Urban Improvement
Fund Limited 1973 for the years ended December 31, 1996, 1995 and 1994.
These financial statements and financial statement schedules are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
five of Urban Improvement Fund Limited 1973's investments in local limited
partnerships whose combined financial statements are included in Note 4. These
statements were audited by other auditors whose reports have been furnished to
us, and our opinion, to the extent it relates to the amounts included for these
local limited partnership investments, is based solely on the reports of the
other auditors. Urban Improvement Fund Limited 1973's investment in these
Partnerships were reduced to zero at December 31, 1996 and 1995.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Urban Improvement Fund Limited 1973 as of December 31,
1996 and 1995, and the results of its operations and its cash flows for the
years ended December 31, 1996, 1995 and 1994, in conformity with generally
accepted accounting principles. In addition, in our opinion, based upon our
audits and the report of other auditors, the financial statement schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
required therein.
Atlanta, Georgia
June 4, 1997
URBAN IMPROVEMENT FUND LIMITED 1973
(A Limited Partnership)
BALANCE SHEETS
ASSTS
December 31,
1996 1995
Cash and cash equivalents $ 271,692 $ 130,115
Investments in and advances to Local
Limited Partnerships accounted for on
the equity method Note 4
(Schedules IV and XI) 3,469,756 2,391,555
$3,741,448 $2,521,670
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 556 $ -0-
Distribution payable 1,634 1,634
Management fee payable (Schedule IV) 90,510 47,122
92,700 48,756
Partners' capital Note 2
General Partner 621 Partnership units
authorized, issued and outstanding 182,416 123,624
Limited partners 11,811 Partnership units
authorized, issued and outstanding 3,466,332 2,349,290
3,648,748 2,472,914
Commitments and contingent liabilities
Notes 3 and 5 $3,741,448 $2,521,670
The Notes to Financial Statements are an integral part of these Statements.
URBAN IMPROVEMENT FUND LIMITED 1973
(A Limited Partnership)
STATEMENTS OF INCOME
Year ended December 31,
1996 1995 1994
Interest income $ 9,159 $ 19,449 $ 19,916
Expenses:
Professional fees 29,245 27,849 27,855
Management fees Note 3 88,387 92,017 115,297
Other expenses 11,272 2,318 2,204
Amortization of costs of
acquisition 10,099 9,452 8,639
139,003 131,636 153,995
Loss before equity in income
of Local Limited Partnerships (129,844) (112,187) (134,079)
Equity in income of Local
Limited Partnerships Note 4 1,305,678 1,190,208 684,090
Net income $1,175,834 $1,078,021 $550,011
Allocation of net income:
Net income allocated to
General Partner $ 58,792 $ 53,901 $ 27,501
Net income allocated to
Limited Partners 1,117,042 1,024,120 522,510
$1,175,834 $1,078,021 $550,011
Net financial reporting income
per units:
General partnership units
(621 units outstanding allocated
to General Partner) $ 95 $ 87 $ 44
Limited partnership units
(11,811 units outstanding
allocated to Limited Partners) $ 95 $ 87 $ 44
The Notes to Financial Statements are an integral part of these Statements.
URBAN IMPROVEMENT FUND LIMITED 1973
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
General Limited
Partner Partners Total
Partners' capital at January 1, 1994 $ 52,168 $ 991,642 $1,043,810
Net income 1994 27,501 522,510 550,011
Distributions (9,946) (188,982) (198,928)
Partners' capital at December 31, 1994 69,723 1,325,170 1,394,893
Net income 1995 53,901 1,024,120 1,078,021
Partners' capital at December 31, 1995 123,624 2,349,290 2,472,914
Net income 1996 58,792 1,117,042 1,175,834
Partners' capital at December 31, 1996 $ 182,416 $3,466,332 $3,648,748
The Notes to Financial Statements are an integral part of these Statements.
URBAN IMPROVEMENT FUND LIMITED 1973
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
Year ended December 31,
1996 1995 1994
Net income $ 1,175,834 $ 1,078,021 $ 550,011
Adjustments to reconcile net income to
net cash used by operating activities:
Amortization of costs of acquisition 10,099 9,452 8,639
Equity in income of local limited
partnerships (1,305,678) (1,190,208) (684,090)
Increase (decrease) in management
fee payable and accounts payable 43,944 (8,174) 38,043
(1,251,635) (1,188,930) (637,408)
Net cash used by operating
activities (75,801) (110,909) (87,397)
CASH FLOWS FROM INVESTING ACTIVITIES:
Current year distributions 219,132 172,609 265,505
Net advances repaid by (paid to) local
limited partnerships (1,754) 762 (7,605)
Net cash provided by investing
activities 217,378 173,371 257,900
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid -0- -0- (198,928)
Increase (decrease) in distribution
payable -0- (3,248) 2,370
Net cash used by financing
activities -0- (3,248) (196,558)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 141,577 59,214 (26,055)
CASH BALANCE AT BEGINNING
OF YEAR 130,115 70,901 96,956
CASH BALANCE AT END OF YEAR $271,692 $130,115 $70,901
The Notes to Financial Statements are an integral part of these statements.
Note 1 Organization and Accounting Policies
Organization
Urban Improvement Fund Limited 1973 (the Partnership) was formed under the
California Uniform Limited Partnership Act on February 2, 1973, for the
principal purpose of investing in other limited partnerships (Local Limited
Partnerships), which own federal and state-assisted housing projects. The
Partnership issued 11,811 units of limited partnership interest pursuant to a
public offering of such units which terminated in October 1973. The General
Partner, Interfinancial Real Estate Management Company, invested $621,316.
The Urban Improvement Fund Limited 1973 prospectus, dated June 27, 1973,
specified that the General Partner has approximately a five percent interest in
profits, losses and special allocations, and the limited partners will share the
remainder of the interest in profits, losses and special allocations in
proportion to their respective units of limited partnership interests.
Investment in and Advances to Local Limited Partnerships
As of December 31, 1996, the Partnership has investments in nineteen active real
estate limited partnerships (Local Limited Partnerships) which are accounted for
on the equity method (Notes 4 and 5). The investment account represents the
sum of the capital investments, advances and unamortized cost of acquisition
less the Partnership's share in losses since the date of acquisition. The
Partnership discontinues recognizing losses and amortizing cost of acquisition
when the investment in a particular Local Limited Partnership is reduced to
zero, unless the Partnership intends to commit additional funds to the Local
Limited Partnership. Repayment of advances and cash distributions by the Local
Limited Partnerships, after the Partnership investment has been reduced to zero,
are recognized as income by the Partnership in the year received. Additional
advances to a Local Limited Partnership, after an investment is reduced to zero,
are recognized as losses. Initial and rent-up fees paid by the Partnership to
the General Partner, deducted when paid for income tax purposes, are capitalized
as costs of acquisition of the Local Limited Partnerships for financial
reporting purposes. These costs and other costs of acquisition are amortized
using the straight-line method over the useful lives (forty years) of the Local
Limited Partnership's properties. Amortization is discontinued when the
investment is reduced to zero.
The Partnership has an investment in one limited partnership that sold its real
estate during 1984 (Note 5). This partnership, Edgewood II Associates, holds a
note receivable for a portion of the sales proceeds.
The Partnerships' equity in income of the Local Limited Partnerships is
summarized as follows:
For the Year Ended
December 31,
1996 1995 1994
Net repayment from (advances to) Local
Limited Partnerships with zero
investments: $ (17,400) $ 762 $ (7,605)
Distributions received from Local Limited
Partnerships with zero investments: 131,877 140,767 65,856
Income from Local Limited Partnerships
with non-zero investments: 1,191,201 1,048,679 625,839
Equity in income of Local Limited
Partnerships $1,305,678 $1,190,208 $ 684,090
Significant accounting policies followed by the Local Limited Partnerships are
summarized in Note 4.
Taxes on Income
No provision for taxes on income has been recorded, since all taxable income or
loss of the Partnership is allocated to the partners for inclusion in their
respective tax returns.
Fair Value of Financial Instruments and Use of Estimates
The Partnership estimates that the aggregate fair value of all financial
instruments at December 31, 1996 does not differ materially from the
aggregate carrying values of its financial instruments recorded in the balance
sheet. These estimates are not necessarily indicative of the amounts that the
Partnership could realize in a current market exchange. The preparation of
financial statements requires the use of estimates and assumptions. Actual
results could differ from those estimates.
Cash Equivalents
Marketable securities that are highly liquid and have maturities of three
months or less at the date of purchase are classified as cash equivalents.
Note 2 Reconciliation Between Net Income and Partners' Capital (Deficit)
of the Partnership For Financial Reporting Purposes and Income
Tax Purposes
A reconciliation of the Partnership's net income for financial reporting
purposes and the Partnership's net income for income tax reporting purposes
follows:
For the Year Ended December 31,
1996 1995 1994
Net income for financial reporting
purposes $1,175,834 $1,078,021 $ 550,011
Amortization of initial and rent-up fees
and other costs of acquisition capital-
ized for financial reporting purposes
and previously deducted for income tax
reporting purposes 10,099 9,452 8,639
Equity in income of Local Limited
Partnerships for income tax reporting
purposes in excess of that recognized
under the equity method for financial
reporting purposes. 1,024,353 1,108,707 1,757,166
Other accrual adjustments 44,161 (23,744) 26,200
Net income as reported on the federal
income tax return $2,254,447 $2,172,436 $2,342,016
A reconciliation of the partners' capital for financial reporting purposes and
the partners' capital (deficit) for income tax purposes follows:
Year Ended December 31,
1996 1995 1994
Partners' capital for financial
reporting purposes $ 3,648,748 $ 2,472,914 $ 1,394,893
Commissions and offering expenses
capitalized for income tax pur-
poses and charged to capital for
financial reporting purposes 1,250,836 1,255,630 1,250,836
Unamortized portion of initial and
rent-up fees and other costs of
acquisition capitalized for finan-
cial reporting purposes and prev-
iously deducted for income tax
reporting purposes (996,369) (986,918) (996,369)
Equity in cumulative losses of
Local Limited Partnerships for
income tax purposes, in excess
of losses for financial reporting
purposes (13,655,264) (14,703,961) (15,797,179)
Other accrual adjustments 91,283 47,122 55,379
Partners' capital (deficit) as
reported on the federal income
tax return $ (9,660,766) $(11,915,213) $(14,092,440)
The Partnership has received a ruling from the Internal Revenue Service that the
basis of the limited partners' interests in the Partnership will include the
Partnership's allocable share of basis resulting from mortgage debt of the Local
Limited Partnerships under Section 752 of the Internal Revenue Code.
For tax purposes, the Partnership uses the accrual method of accounting. The
Partnership deducted initial and rent-up fees when paid and takes into account
its share of tax losses of the Local Limited Partnerships. The Local Limited
Partnerships use the accrual method of accounting for tax purposes and, during
the construction years of 1972 through 1975, deducted property taxes, interest
and other carrying costs during construction as well as substantial amounts of
payments to the respective general partners for various services rendered and
costs incurred by the general partners of the Local Limited Partnerships.
Note 3 Management of Urban Improvement Fund Limited 1973
Under the terms of the Limited Partnership Agreement, the Partnership is
required to pay the General Partner an annual management fee equal to
one-quarter of one percent of invested assets or $133,770. (The fee will
not be more than fifty percent of the Partnership's annual net cash flow as
defined, subject to an annual minimum of $60,000.) The Partnership recorded
management fee expense of $88,387 during 1996, $92,017 during 1995 and $115,297
during 1994. The Partnership will also pay the General Partner a liquidation
fee for the sale of projects. The liquidation fee is the lesser of (i) ten
percent of the net proceeds to the Partnership from the sale of a project(s)
or (ii) one percent of the sales price plus three percent of the net proceeds
after deducting an amount sufficient to pay long-term capital gains taxes.
No part of such fee shall accrue or be paid unless: (i) the Limited Partners'
share of the proceeds has been distributed to them, (ii) the Limited Partners
shall have first received an amount equal to their invested capital attributable
to the project(s) sold, and (iii) the Limited Partners have received an amount
sufficient to pay long-term capital gains taxes from the sale of the project(s),
if any, calculated at the maximum rate then in effect.
The General Partner of the partnership is a corporation which Paul H. Pfleger
has a majority interest. Partnership Services, Inc. (PSI), another corporation
in which Paul H. Pfleger is a majority shareholder, has contracted with the
General Partner and the Partnership to provide certain management and other
services to any projects in which the Partnership has an interest. No fees
were paid to PSI during 1996, 1995 or 1994. In addition, as shown in the
following table, PSI has become the General Partner in fourteen of the Local
Limited Partnerships in which the Partnership has investments:
Date PSI Became
Local Limited Partnerships General Partner
Antonia Manor April 1975
Glenn Arms Associates April 1975
Hedin House Associates December 1978
Himbola Manor January 1980
Maria Manor April 1975
Marlton Manor Associates April 1975
OGO Associates of Los Arboles August 1976
OGO Associates of Mountclef August 1976
Sheridan Manor IV March 1975
Sheridan Manor X March 1975
The Alexander April 1975
WOGO Associates of Carondelet August 1976
WOGO Associates of Fresno August 1976
W Street Associates December 1977
Note 4 Investments in and Advances to Local Limited Partnerships Accounted
for on the Equity Method
The Partnership has seventy-seven percent to ninety-nine percent interests in
profits and losses of the nineteen Local Limited Partnerships accounted for on
the equity method. Investments in these Local Limited Partnerships were made in
installments based typically on the stages of completion and/or occupancy.
Investments in and advances to the Local Limited Partnerships, accounted for on
the equity method, are as follows:
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1996:
Antonia Manor $145,612 $479,786 $ 625,398
Brighton Gardens
Apartments (Note 5) 370,000 (1,463,164) (1,093,164)
First Bedford-Pine Apts., Ltd. 275,485 (1,726,357) (1,450,872)
Freedom Associates (Note 5) 514,000 (2,385,046) (1,871,046)
Glenn Arms Associates 223,877 (310,938) (87,061)
Hedin Associates (8,524) 131,078 122,554
Himbola Manor, Ltd. 42,920 (524,911) (481,991)
Maria Manor 114,699 461,589 576,288
Marlton Manor Associates 169,820 489,766 659,586
Mystic Valley Towers
Associates (Note 5) 680,314 (3,272,111) (2,591,797)
OGO Associates of Los Arboles 102,916 (265,085) (162,169)
OGO Associates of Mountclef 41,044 (125,704) (84,660)
RAP-UP II B 190,757 (864,695) (673,938)
Sheridan Manor IV 102,867 (125,836) (22,969)
Sheridan Manor X 83,082 (140,998) (57,916)
The Alexander 167,436 1,070,296 1,237,732
WOGO Associates of Carondelet 267,549 (565,178) (297,629)
WOGO Associates of Fresno 549,531 (1,330,445) (780,914)
W Street Associates. 305,500 (578,845) (273,345)
Total $4,338,885 $(11,046,798) $(6,707,913)
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
Antonia Manor $-0- $222 $15,463 $ 641,083
Brighton Gardens
Apartments (Note 5) 1,026,029 -0- 67,135 -0-
First Bedford-Pine
Apts., Ltd. 1,393,130 -0- 57,742 -0-
Freedom Associates
(Note 5) 1,754,611 -0- 116,435 -0-
Glenn Arms Associates -0- 78,292 18,749 9,980
Hedin Associates -0- -0- 14,911 137,465
Himbola Manor, Ltd. 429,277 -0- 52,714 -0-
Maria Manor -0- -0- 16,132 592,420
Marlton Manor Associate -0- -0- 50,622 710,208
Mystic Valley Towers
Associates (Note 5) 2,318,995 -0- 272,802 -0-
OGO Associates of Los
Arboles 115,902 24,448 21,819 -0-
OGO Associates of
Mountclef 26,247 49,264 9,149 -0-
RAP-UP II B 643,902 -0- 30,036 -0-
Sheridan Manor IV -0- 108,098 14,644 99,773
Sheridan Manor X 22,516 23,299 12,101 -0-
The Alexander -0- -0- 41,095 1,278,827
WOGO Associates of
Carondelet 158,362 94,074 45,193 -0-
WOGO Associates of
Fresno 534,835 160,083 85,996 -0-
W Street Associates. 103,682 135,583 34,080 -0-
Total $8,527,488 $673,363 $ 976,818 $3,469,756
Reconciliation to combined statement of partners equity (deficit)
Urban Improvement Fund Limited 1973 capital
contributions less equity in losses $(6,707,913)
Flexible subsidy contributed by HUD 1,168,171
Urban Improvement Fund 1973's share
of combined equity of Local Limited Partnerships
per the accompanying statement $(5,539,742)
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1995:
Antonia Manor $150,900 $257,851 $408,751
Brighton Gardens
Apartments (Note 5) 370,000 (1,378,830) 1,008,830)
First Bedford-Pine
Apts., Ltd. 275,485 (1,761,879) (1,486,394)
Freedom Associates (Note 5) 514,000 (2,387,210) (1,873,210)
Glenn Arms Associates 223,877 (427,654) (203,777)
Hedin Associates (8,524) 83,383 74,859
Himbola Manor, Ltd. 42,920 (577,416) (534,496)
Maria Manor 135,378 202,563 337,941
Marlton Manor Associates 215,185 265,639 480,824
Mystic Valley Towers
Associates (Note 5) 812,190 (3,511,424) (2,699,234)
OGO Associates of Los Arboles 102,916 (300,791) (197,875)
OGO Associates of Mountclef 41,044 (141,332) (100,288)
RAP-UP II B 190,757 (913,354) (722,597)
Sheridan Manor IV 102,867 (181,731) (78,864)
Sheridan Manor X 83,082 (153,446) (70,364)
The Alexander 183,360 719,662 903,022
WOGO Associates of Carondelet 267,549 (576,118) (308,569)
WOGO Associates of Fresno 549,531 (1,417,054) (867,523)
W Street Associates 305,500 (540,089) (234,589)
Total $4,558,017 $(12,739,230) $(8,181,213)
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
Antonia Manor $-0- $-0- $16,430 $425,181
Brighton Gardens
Apartments (Note 5) 941,695 -0- 67,135 -0-
First Bedford-Pine
Apts., Ltd. 1,428,652 -0- 57,742 -0-
Freedom Associates
(Note 5). 1,756,775 -0- 116,435 -0-
Glenn Arms Associates 84,826 99,555 19,396 -0-
Hedin Associates -0- -0- 15,843 90,702
Himbola Manor, Ltd. 481,782 -0- 52,714 -0-
Maria Manor -0- -0- 17,140 355,081
Marlton Manor Associates -0- -0- 53,786 534,610
Mystic Valley Towers
Associates (Note 5) 2,426,432 -0- 272,802 -0-
OGO Associates of
Los Arboles 141,701 34,355 21,819 -0-
OGO Associates of
Mountclef 44,977 46,162 9,149 -0-
RAP-UP II B 692,561 -0- 30,036 -0-
Sheridan Manor IV -0- 102,703 15,458 39,297
Sheridan Manor X 36,718 21,545 12,101 -0-
The Alexander -0- -0- 43,662 946,684
WOGO Associates
of Carondelet 175,996 87,380 45,193 -0-
WOGO Associates
of Fresno 633,701 147,826 85,996 -0-
W Street Associates 68,426 132,083 34,080 -0-
Total $8,914,242 $671,609 $ 986,917 $2,391,555
Reconciliation to combined statement of partners equity (deficit)
Urban Improvement Fund Limited 1973 capital
contributions less equity in losses $ (8,181,213)
Flexible subsidy contributed by HUD 1,168,169
Urban Improvement Fund 1973's share
of combined equity of Local Limited Partnerships
per the accompanying statement $ (7,013,044)
The combined balance sheets of the Local Limited Partnerships, accounted
for on the equity method at December 31, 1996 and 1995 and the related
combined statements of income, partners' capital (deficit) and cash flows and
selected footnote disclosures from the audited financial statements for the
years ended December 31, 1996, 1995 and 1994 are summarized as follows:
COMBINED BALANCE SHEETS OF LOCAL LIMITED PARTNERSHIPS
Assets
1996 1995
Cash $ 1,564,135 $ 1,069,366
Cash in escrow and other
restricted funds 7,337,467 6,907,032
Accounts receivable 173,287 165,491
Notes receivable 470,000 705,000
Prepaid expenses 259,042 283,211
Other assets 157,688 166,955
9,961,619 9,297,055
Property on the basis of cost:
Land 3,191,991 3,191,991
Buildings and improvements 57,045,930 55,385,308
60,237,921 58,577,299
Less accumulated depreciation (39,340,633) (37,607,483)
20,897,288 20,969,816
$ 30,858,907 $ 30,266,871
Liabilities and Partners' Capital (Deficit)
Mortgage notes payable $ 33,196,352 $33,939,855
Accounts payable and accrued expenses 2,232,774 2,455,199
Advances from Urban Improvement Fund
Limited 1973 673,363 671,609
Advances from general partners 227,948 227,948
Notes payable 1,466,624 1,462,890
Advances from and payable to affiliates 60,425 65,453
Tenants' security and other deposits 556,775 539,596
38,414,261 39,362,550
Partners' capital (deficit) per accompanying
statements (7,555,354) (9,095,679)
$ 30,858,907 $ 30,266,871
COMBINED STATEMENTS OF INCOME OF LOCAL LIMITED
PARTNERSHIPS
December 31,
1996 1995 1994
Revenue:
Net rental income $16,257,311 $16,073,536 $15,671,810
Financial 189,824 202,730 97,486
Other 306,244 659,587 1,156,917
Total Revenue 16,753,379 16,935,853 16,926,213
Expenses:
Administrative 3,269,904 3,296,771 3,028,454
Utilities 2,382,845 2,362,187 2,305,856
Operating 4,070,141 3,835,220 4,028,012
Taxes and insurance 1,963,446 2,019,568 2,061,275
Total Operating Expenses 11,686,336 11,513,746 11,423,597
Net Operating Income 5,067,043 5,422,107 5,502,616
Non-operating expenses:
Financial expenses 1,238,098 1,352,108 1,387,265
Depreciation and
amortization 1,739,991 1,670,080 1,662,804
Other expenses 288,325 377,513 326,754
3,266,414 3,399,701 3,376,823
Net income $1,800,629 $2,022,406 $2,125,793
Amortization of capitalized interest amounted to $80,861 in 1996, 1995 and
1994.
Urban
Improvement Other
Fund Limited Limited General
1973 Partners Partners Total
Partners' capital (deficit)
at January 1, 1994 (10,320,623) (1,071,855) (1,332,255) (12,724,733)
Cash distributions (265,505) (5,131) (18,614) (289,250)
Net income 1994 1,839,706 71,863 214,224 2,125,793
Partners' capital (deficit)
at December 31, 1994 $(8,746,422) $(1,005,123) $(1,136,645) $(10,888,190)
Cash distributions (188,073) (10,799) (31,023) (229,895)
Net income 1995 1,921,451 18,277 82,678 2,022,406
Partners' capital (deficit)
at December 31, 1995 (7,013,044) (997,645) (1,084,990) (9,095,679)
Cash distributions (219,132) (10,276) (30,896) (260,304)
Net income 1996 1,692,434 20,986 87,209 1,800,629
Partners' capital (deficit)
at December 31, 1996 $(5,539,742) $(986,935) $(1,028,677) $(7,555,354)
STATEMENT OF CASH FLOWS
December 31,
1996 1995 1994
Net income $1,800,629 $2,022,406 $2,125,793
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,733,150 1,670,080 1,662,804
Decrease (increase) in escrows,
restricted deposits and
receivables, prepaid expenses
and other assets (169,795) (754,119) 1,727,882)
Increase (decrease) in accounts
payable, accrued expenses,
tenant security deposit
liability and other liabilities (205,247) (36,364) 51,903
Total adjustments 1,358,108 879,597 (13,175)
Net cash provided by
operating activities 3,158,737 2,902,003 2,112,618
CASH FLOWS FROM INVESTING ACTIVITIES:
Net capital expenditures (1,660,621) (1,940,192) (1,709,984)
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage principal payments (743,503) (797,413) (680,194)
Distributions paid (260,304) (229,895) (289,250)
Advances from
(repayments to) affiliates (3,274) (508,293) 21,709
Proceeds from issuance of
notes payable 3,734 472,092 174,200
Net cash used by financing
activities (1,003,347) (1,063,509) (773,535)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 494,769 (101,698) (370,901)
CASH BALANCE AT BEGINNING OF YEAR 1,069,366 1,171,064 1,541,965
CASH BALANCE AT END OF YEAR $1,564,135 $1,069,366 $1,171,064
SUPPLEMENTAL INFORMATION REGARDING INTEREST PAYMENTS IS AS FOLLOWS:
Interest paid, net of subsidy $ 990,930 $ 1,034,167 $1,142,346
A reconciliation between combined income for financial reporting purposes
and the combined income for income tax purposes follows:
December 31,
1996 1995 1994
Combined net income for financial
reporting purposes $1,800,629 $2,022,406 $2,125,793
Equity in deductions taken by Local
Limited Partnerships for tax purposes
in excess of loss for financial
reporting purposes 581,931 536,325 573,580
Accrual adjustments for financial
reporting purposes 45,394 (105,653) 67,229
Combined income for income tax
purposes $2,527,954 $2,453,078 $2,766,602
A reconciliation of combined partners' capital (deficit) for financial reporting
purposes and combined partners' capital (deficit) for income tax purposes
follows:
December 31,
1996 1995 1994
Combined partners' capital (deficit)
for financial reporting purposes $ (7,555,354) $(9,095,679) $(10,888,190)
Carrying costs during construction
capitalized for financial reporting
purposes, excess of depreciation for
tax purposes and accrual adjustments
for financial reporting purposes (5,447,227) (6,141,240) (6,513,800)
Combined partners' capital (deficit) for
income tax purposes as reported on
the federal income tax returns $(13,002,581) $(15,236,919) $(17,401,990)
Cost of Buildings
For financial statement purposes, the Local Limited Partnerships generally
capitalized all project costs, including payments to the general partners,
interest, taxes, carrying costs and operating expenses offset by incidental
rental income, up to the cutoff date for cost certification purposes. For
income tax purposes, certain of these amounts were deducted when paid.
Depreciation and Amortization
For financial statement purposes, depreciation is computed using the
straight-line and various accelerated methods over useful lives of twenty to
forty years from the date of completion of the building or rehabilitation.
For income tax purposes, buildings are depreciated over twenty to forty years
using various accelerated methods, and certain rehabilitation costs are
amortized on the straight-line method over sixty months under the provisions
of section 167(k) of the Internal Revenue Code.
Certain expenses related to obtaining permanent financing for the partnerships
have been deferred and are being amortized for financial statement purposes
using the straight-line method over periods of twenty to forty years.
Mortgage Notes Payable
The Partnerships have mortgages which are payable to or are insured by the
Department of Housing and Urban Development (HUD) and the Massachusetts
Housing Finance Agency (MHFA) totaling $33,196,352 at December, 1996
($20,062,663 by HUD and $13,133,689 by MHFA) and $33,939,855 at December,
1995 ($20,556,542 by HUD and $13,383,313 by MHFA). The mortgage notes
payable are secured by deeds of trust on rental property and bear interest at
rates from 6.9 percent to 8.5 percent per annum. The mortgages are payable
in monthly installments of principal and interest aggregating approximately
$271,000 over periods of forty years. HUD will make interest reduction
payments on the mortgages of eight Local Limited Partnerships which have
mortgages insured under Section 236 in amounts which will reduce the mortgage
payments to those required for mortgages carrying a one percent interest rate.
The scheduled principal reductions for the next five years are as follows:
Year Ended December 31, Amount
1997 $ 842,834
1998 904,046
1999 969,727
2000 1,039,200
2001 1,116,714
Beyond 28,323,831
$33,196,352
National Housing Act Subsidies and Restrictions
Under terms of the regulatory agreement with HUD and MHFA, the Local Limited
Partnerships cannot make cash distributions to partners of the Local Limited
Partnerships in excess of six percent per annum of stated equity in the
respective partnerships. Such distributions are cumulative but can only be
paid from "surplus cash," as defined in the agreements. The Local Limited
Partnerships must deposit all cash in excess of the distributable amounts
into residual receipts funds which are under the control of the mortgagees,
and from which disbursements must be approved by HUD. As of December 31,
1996, approximately $2,823,898 could be paid to partners of the Local Limited
Partnerships as surplus cash becomes available.
Under terms of the regulatory agreements, the Local Limited Partnerships are
required to make monthly deposits into replacement funds which are under the
control of the mortgagees. Such deposits commence with the initial principal
payments on the mortgage loans. Expenditures from the replacement funds must
be approved by HUD.
Five Local Limited Partnerships (LLP's) entered into flexible subsidy contracts
with HUD. Under the terms of the contracts, HUD contributed $1,226,162 to the
Local Limited Partnerships between 1980 and 1982. These amounts were allocated
$1,168,171 to Urban Improvement Fund Limited 1973 and $57,989 to other
partners. The partners contributed $138,805 in 1981 and 1980 to the capital
of the LLP's. Such funds were used for improving LLP properties.
All of the Local Limited Partnerships have entered into rent supplement and/or
Section 8 contracts with HUD or state agencies to provide financial assistance
to qualified tenants of the apartment units. Under terms of these contracts,
HUD will pay a portion of the rent on behalf of qualified tenants. The maximum
dollar amount of these payments is limited by HUD. A substantial portion of
rental income is collected through these contracts. During 1996, 1995 and
1994, the Local Limited Partnerships received approximately $7,877,000,
$7,643,000 and $8,536,000, respectively, in rent supplement and Section 8 funds.
Substantially all notes payable represent residual receipts notes payable by
several Local Limited Partnerships. These notes are payable to the former
general partners upon sale of the property after a provision for income taxes
resulting from the gain from such sales and the return of contributed capital
and advances plus interest to the Partnership. The residual receipt notes
payable totaled $1,466,624 at December 31, 1996 and $1,462,890 at December 31,
1995.
Management
The Local Limited Partnerships have entered into property management contracts
with various agents under which the agents are paid property management fees of
approximately five percent to fifteen percent of the gross revenues of the
respective projects. Most of the management agents are affiliated with or are
the general partners of the Local Limited Partnerships.
Note 5 Sale of the Assets of Edgewood II Associates
The property of Edgewood II Associates was sold during 1984. The sales price of
$8,270,146 was composed of a cash payment of $1,215,000, the assumption of
the underlying mortgage of $4,855,146 and an installment payment of $2,200,000
that is due on December 31, 1999 along with accrued interest. Urban 73's share
of the final installment is $1,650,000 with the balance due to the Local General
Partner. Interest accrues at nine and one-half percent per annum and is payable
on the anniversary date of the note to the extend of seventy five percent of the
property's distributable cash flow. The gain on the sale of the real estate is
recognized on the cost recovery method to first recognize the recovery of the
asset value, then recognize the gain as the proceeds are received. For the
years ended December 31, 1996, 1995 and 1994, the Partnership received and
recorded as interest income of zero, $15,462 and $16,340, respectively.
URBAN IMPROVEMENT FUND LIMITED 1973
(A Limited Partnership)
Schedule IV
INDEBTEDNESS OF RELATED PARTIES
December 31,
1996 Change 1995 Change 1994
Advances to (repayments
from) Local Limited
Partnerships:
Antonia Manor $222 $222 $ -0- $ -0- $ -0-
Glenn Arms 78,292 (21,263) 99,555 -0- 99,555
OGO of Los Arboles 24,448 (9,907) 34,355 (17,071) 51,426
OGO of Mountclef 49,264 3,102 46,162 18,973 27,189
Sheridan Manor IV 108,098 5,395 102,703 862 101,841
Sheridan Manor X 23,299 1,754 21,545 (4,368) 25,913
WOGO of Carondelet 94,074 6,694 87,380 842 86,538
WOGO of Fresno 160,083 12,257 147,826 -0- 147,826
W-Street Associates 135,583 3,500 132,083 -0- 132,083
$673,363 $1,754 $671,609 $(762) $672,371
All advances are included in the balance sheet caption "Investments in and
advances to Local Limited Partnerships accounted for on the equity method."
See Note 4 to financial statements.
December 31,
1996 Change 1995 Change 1994
Payable to affiliate:
Management fee
payable to
General Partners $90,510 $43,388 $47,122 $(8,175) $55,297
URBAN IMPROVEMENT FUND LIMITED 1973
(A Limited Partnership)
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF LOCAL LIMITED PARTNERSHIPS
December 31, 1996
Outstanding
Description Mortgage
Partnership/location No. of Units Balance Land
Antonia Manor 133 apartment
San Francisco, CA 2 commercial $ 1,162,333 $ 175,557
Brighton Gardens Apts
Brighton, MA 62 apartment 1,301,386 322,929
First Bedford-Pine Apts
Atlanta, GA 134 apartment 1,660,378 43,491
Freedom Associates
Baltimore, MD30 8 apartment 2,447,078 298,637
Glenn Arms Associates
Washington, DC 55 apartment 756,915 125,898
Hedin Associates 48 apartment
Washington, DC 1 commercial 589,910 38,600
Himbola Manor
LaFayette, LA 136 apartment 1,522,618 111,000
Maria Manor 119 apartment
San Francisco, CA 1 commercial 1,193,742 285,140
Marlton Manor Assoc. 151 apartment
San Francisco, CA 7 commercial 1,523,104 258,373
Mystic Valley Towers
Medford, MA 466 apartment 11,832,303 487,159
OGO Associates of Los Arboles
Thousand Oaks, CA 43 apartment 728,134 84,716
OGO Associates of Mountclef
Thousand Oaks, CA 18 apartment 284,877 21,876
RAP-UP II B 51 apartment
Roxbury, MA 4 commercial 851,342 23,098
Sheridan Manor IV
Los Angeles, CA 48 apartment 490,708 96,827
Sheridan Manor X
Los Angeles, CA 30 apartment 307,779 16,105
The Alexander 179 apartment
San Francisco, CA 1 commercial 1,698,451 195,999
WOGO Associates of Carondelet
Los Angeles, CA 124 apartment 1,222,183 154,552
WOGO Associates of Fresno 219 apartment
Fresno, CA 12 commercial 2,251,662 395,680
W-Street Associates
Washington, D.C. 102 apartment 1,371,449 56,354
$33,196,352 $3,191,991
Building & Accumulated
Partnership Improvement(B) Total Depreciation
Antonia Manor $ 2,683,993 $2,859,550 $(1,470,488)
Brighton Gardens Apts 1,830,882 2,153,811 (1,385,704)
First Bedford-Pine Apts 2,414,932 2,458,423 (2,390,498)
Freedom Associates 3,995,723 4,294,360 (3,468,163)
Glenn Arms Associates 1,342,655 1,468,553 (899,863)
Hedin Associates 1,176,581 1,215,181 (602,758)
Himbola Manor 2,619,492 2,730,492 (1,892,077)
Maria Manor 2,448,158 2,733,298 (1,390,574)
Marlton Manor Assoc. 3,070,036 3,328,409 (1,547,999)
Mystic Valley Towers 17,858,253 18,345,412 (12,668,071)
OGO Associates of Los Arboles 1,165,324 1,250,040 (787,903)
OGO Associates of Mountclef 486,467 508,343 (333,993)
RAP-UP II B 1,280,883 1,303,981 (1,079,575)
Sheridan Manor IV 832,852 929,679 (656,337)
Sheridan Manor X 554,462 570,567 (434,268)
The Alexander 4,104,008 4,300,007 (2,305,352)
WOGO Associates of Carondelet 2,080,431 2,234,983 (1,417,342)
WOGO Associates of Fresno 4,152,271 4,547,951 (2,844,886)
W-Street Associates 2,948,527 3,004,881 (1,764,782)
$57,045,930 $60,237,921 (39,340,633)
Depreciation
Date of in latest
Completion of Date Income Statement
Partnership Construction Acquired is Computed
Antonia Manor 1974 1973 7-40 years
Brighton Gardens Apts 1975 1973 5-40 years
First Bedford-Pine Apts 1974 1973 25 years
Freedom Associates 1974 1973 7-25 years
Glenn Arms Associates 1975 1973 3-25 years
Hedin Associates 1974 1973 5-30 years
Himbola Manor 1974 1973 3-25 years
Maria Manor 1974 1973 5-40 years
Marlton Manor Assoc. 1974 1973 5-40 years
Mystic Valley Towers 1975 1973 5-40 years
OGO Associates of Los Arboles 1974 1973 7-30 years
OGO Associates of Mountclef 1974 1973 7-30 years
RAP-UP II B 1974 1973 7-20 years
Sheridan Manor IV 1975 1973 5-25 years
Sheridan Manor X 1975 1973 7-25 years
The Alexander 1974 1973 5-30 years
WOGO Associates of Carondelet 1974 1973 5-30 years
WOGO Associates of Fresno 1974 1973 5-30 years
W-Street Associates 1975 1973 5-30 years
Building & Total Accumulated
Land Improvement Cost Depreciation
Balance at
January 1, 1995 $3,191,991 $53,445,116 $56,637,107 $36,001,409
Additions during year -0- 1,940,192 1,940,192 1,606,074
Balance at
December 31, 1995 3,191,991 55,385,308 58,577,299 37,607,483
Additions during year -0- 1,660,622 1,660,622 1,733,150
Balance at
December 31, 1996 $3,191,991 $57,045,930 $60,237,921 $39,340,633
NOTE: Capital improvements since original construction or rehabilitation are
not material to the combined financial statements and, as such, are not
disclosed separately. The financial statement category of buildings and
improvements is composed substantially of cost plus the initial renovation
upon acquisition. Total cost of land and building for federal income tax
purposes amounts to approximately $51,049,103.
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