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, 1998
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, 1998: No established
market value.
<PAGE>
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. Ogo Associates of Mountclef was sold
during 1997 and OGO Associates of Los Arboles was sold during 1998.
The remaining seventeen (17) 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.
<PAGE>
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.
<PAGE>
Item 2. Properties.
The Registrant owns equity interests as a Limited Partner in the
following real estate projects as of December 31, 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
No. of Units 1998
Residential/ Percent of
Project Name Type Commercial Occupancy
Antonia Manor
San Francisco, CA 221(d)(3) Rehab. 133/2 96%
Brighton Gardens
Brighton, MA MHFA New* 62 99%
First Bedford
Pines Apts. I
Atlanta, Georgia 236 Rehab. 134 98%
Freedom Associates
Baltimore, MD 236 Rehab. 308 97%
Glenn Arms
Associates
Washington, D.C. 236 Rehab. 55 99%
Hedin Associates
Washington, D.C. 236 Rehab. 48/2 95%
Himbola Manor
Associates
Lafayette, LA 221(d)(3) New 136 99%
Maria Manor
Associates
San Francisco, CA 221(d)(3) Rehab. 119/1 98%
Marlton Manor
Associates
San Francisco, CA 221(d)(3) Rehab. 151/7 96%
Mystic Valley
Associates
Medford, MA MHFA New* 466 97%
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
No. of Units 1998
Residential/ Percent of
Project Name Type Commercial Occupancy
RAP-UP II B
Roxbury, MA 236 Rehab. 51/4 99%
Sheridan Manor IV
Los Angeles, CA 236 Rehab. 48 90%
Sheridan Manor X
Los Angeles, CA 236 Rehab. 30 98%
The Alexander
San Francisco, CA 221(d)(3) Rehab. 179/1 95%
Wogo Associates of
Carondelet (WOGO II)
Los Angeles, CA 236 Rehab. 124 97%
Wogo Associates of
Fresno (Hotel
California)
Fresno, CA 221(d)(3) Rehab. 219/12 84%
W Street Associates
(Capital Manor)
Washington, D.C. 236 Rehab. 102 83%
</TABLE>
*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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
133 Studio
2 Commercial
</TABLE>
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
2 Studio
40 1 Bedroom
16 2 Bedroom
4 3 Bedroom
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
14 Efficiency
72 1 Bedroom
48 2 Bedroom
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
61 1 Bedroom
186 2 Bedroom
61 3 Bedroom
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
13 Efficiency
30 1 Bedroom
10 2 Bedroom
2 3 Bedroom
</TABLE>
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
28 Efficiency
20 1 Bedroom
2 Commercial
</TABLE>
HIMBOLA MANOR consists of 136 residential units located in
Lafayette, Louisiana. The project consists of eleven new two-story
structures.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
32 1 Bedroom
64 2 Bedroom
40 3 Bedroom
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
119 Studio
1 Commercial
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
140 Studio
11 1 Bedroom
7 Commercial
</TABLE>
<PAGE>
MYSTIC VALLEY ASSOCIATES consists of 466 residential units
located in Medford, Massachusetts. The project consists of three
fourteen-story buildings.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
187 1 Bedroom
279 2 Bedroom
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
7 Efficiency
13 1 Bedroom
20 2 Bedroom
4 3 Bedroom
7 4 Bedroom
4 Commercial
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
18 Efficiency
27 1 Bedroom
3 2 Bedroom
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
30 Efficiency
</TABLE>
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
132 Studio
47 1 Bedroom
1 Commercial
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
94 Efficiency
30 1 Bedroom
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
180 Efficiency
39 1 Bedroom
12 Commercial
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
2 Efficiency
55 1 Bedroom
38 2 Bedroom
7 3 Bedroom
</TABLE>
<PAGE>
The registrant sold its equity interest as a Limited Partner in the following
real estate projects:
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
12 2 Bedroom
6 3 Bedroom
</TABLE>
The property of OGO Associates of Mountclef was sold during 1997
resulting in a gain of $793,525. Urban '73's share of the distribution
from the sale was $351,256. In addition, Urban '73 received advance
repayments of $57,105.
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
25 2 Bedroom
18 3 Bedroom
</TABLE>
The property of OGO Associates of Los Arboles was sold during 1998
resulting in a gain of $2,183,746. Urban '73's share of the distribution
from the sale was $1,092,350. In addition, Urban 73 received advance
repayments of $17,126.
EDGEWOOD II ASSOCIATES consists of 258 residential units located
in the northeast area of Washington, D.C. The project consists of a new
eleven-story building.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Units Type
196 1 Bedroom
62 2 Bedroom
</TABLE>
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
<PAGE>
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.
<PAGE>
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
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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%
</TABLE>
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 $198,928 in
1994. No distributions were paid during 1995, 1996, 1997 or 1998.
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.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1998 1997 1996 1995 1994
Interest income $ 8,536 $ 21,957 $ 9,159 $ 19,449 $ 19,916
Other income 100 -0- -0- -0- -0-
8,636 21,957 9,159 19,449 19,916
Operating expenses:
Professional fees 29,000 26,500 29,245 27,849 27,855
Management fees 99,815 133,770 88,387 92,017 115,297
Other expenses 3,548 794 11,272 2,318 2,204
Amortization of costs
of acquisition 12,359 12,359 10,099 9,452 8,639
144,722 173,423 139,003 131,636 153,995
Loss before equity
in income (loss) of
Local Limited
Partnerships (136,086) (151,466) (129,844) (112,187) (134,079)
Equity in income
Local Limited
Partnerships 2,638,652 1,785,081 1,305,678 1,190,208 684,090
Net income $2,502,566 $1,633,615 $1,175,834 $1,078,021 $550,011
Allocation of net
income:
Net income
allocated
to General
Partner $125,128 $ 81,681 $ 58,792 $ 53,901 $ 27,501
Net income
allocated to
Limited
Partners 2,377,438 1,551,934 1,117,042 1,024,120 522,510
$2,502,566 $1,633,615 $1,175,834 $1,078,021 $ 550,011
Net financial
reporting income
per units:
General partnership
units (621 units
outstanding
allocated to
General
Partner) $ 201 $ 131 $ 95 $ 87 $ 44
Limited Partnership
units (11,811 units
outstanding
allocated to
Limited
Partners) $ 201 $ 131 $ 95 $ 87 $ 44
Total assets $7,958,152 $5,442,066 $3,741,448 $2,521,670 $1,455,073
Long-term
obligations $ -0- $ -0- $ -0- $ -0- $ -0-
Cash
dividends $ -0- $ -0- $ -0- $ -0- $ 198,928
</TABLE>
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994
Urban's share
of distribution $1,304,143 $ 672,510 $219,132 $172,610 $265,505
Advances (made
to) repaid by
Local Limited
Partnerships $ (344,376) $(378,938) $(1,754) $ 762 $ (7,605)
</TABLE>
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 $99,815, $133,770, $88,387, $92,017 and $115,297
during 1998, 1997, 1996, 1995 and 1994, 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
<PAGE>
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, 1998, the Partnership had investments in eighteen 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 OGO of Mountclef
Associates was sold during 1997 and the real estate of OGO of Los
Arboles was sold during 1998. The real estate of Edgewood II Associates
was sold during 1984. The Partnership holds a note receivable that
accrues interest from the sale of Edgewood II Associates.
<PAGE>
The components of the Partnerships' equity in net income of the Local
Limited Partnerships for 1998, 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the Year Ended
December 31,
1998 1997 1996
Net repayment from (advances to)
Local Limited Partnerships with
zero investments:
Los Arboles $ -0- $ 12,759 $ 9,907
Sheridan X -0- 1,750 (1,754)
Mountclef -0- 49,264 (3,102)
WOGO of Carondelet -0- -0- (6,694)
WOGO of Fresno 32,000 (32,000) (12,257)
W Street Associates (712) -0- (3,500)
Distributions received from
Partnerships with zero
investments:
Mystic Valley 145,640 163,727 131,877
Sheridan X -0- 23,488 -0-
Los Arboles 1,092,350 4,698 -0-
Mountclef -0- 384,132 -0-
Income (loss) from
Partnerships with
non-zero investments:
Alexander 441,737 431,482 350,632
Antonia Manor 105,348 242,085 221,936
Hedin House 52,384 50,647 47,695
Los Arboles 11,756 -0- -0-
Maria Manor 314,505 264,988 259,026
Marlton Manor 245,606 177,547 224,127
Sheridan X 5,174 -0- -0-
Sheridan IV 60,713 35,617 55,895
Glenn Arms 130,711 126,049 31,890
WOGO of Carondelet 1,440 (151,152) -0-
Equity in income
(loss) of
Local Limited
Partnerships $2,638,652 $1,785,081 $1,305,678
Interest received
from Edgewood II
included in interest
income: $ -0- $ 5,838 $ -0-
</TABLE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Age Office
Paul H. Pfleger 63 Director/President
John M. Orehek 44 Director/Senior Vice President
</TABLE>
(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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name Age Office
Paul H. Pfleger 63 Chairman of the Board
John M. Orehek 44 Senior Vice President
Michael Fulbright 44 Secretary
</TABLE>
(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:
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(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
</TABLE>
(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.
<PAGE>
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.
<PAGE>
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, 1998 and 1997.
Statements of Income for the years ended December 31, 1998, 1997
and 1996.
Statements of Changes in Partners' Capital for the years ended
December 31, 1998, 1997 and 1996.
Statements of Cash Flows for the years ended December 31, 1998,
1997 and 1996.
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.
<PAGE>
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.
<PAGE>
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
1998.
<PAGE>
(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: October 1, 1999 By: Paul H. Pfleger
Paul H. Pfleger
President
Interfinancial Real Estate Management Company
Date: October 1, 1999 By: John M. Orehek
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.
By: Paul H. Pfleger October 1, 1999
Paul H. Pfleger, Director Date
Interfinancial Real Estate Management Company
By: John M. Orehek October 1, 1999
John M. Orehek, Director Date
Interfinancial Real Estate Management Company.
<PAGE>
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, 1998
<PAGE>
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, 1998 and 1997 . . . . . . . . . . F-4
Statements of income
for the years ended December 31, 1998, 1997 and 1996. . . . . F-5
Statements of changes in partners' capital
for the years ended December 31, 1998, 1997 and 1996. . . . . F-6
Statements of cash flows
for the years ended December 31, 1998, 1997 and 1996. . . . . 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-26
XI. Real Estate and Accumulated Depreciation of
Local Limited Partnerships. . . . . . . . . . . . . . . .F-27
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, 1998
and 1997, and the related statements of income, changes in partners'
capital and cash flows for the years ended December 31, 1998, 1997 and
1996, 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, 1998, 1997 and 1996. 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 four 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, 1998 and 1997.
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, 1998 and 1997, and the results of its operations
and its cash flows for the years ended December 31, 1998, 1997 and 1996,
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
July 23, 1999
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
December 31,
1998 1997
Cash and cash equivalents $1,183,218 $ 21,310
Distribution receivable 159,543 441,237
Investments in and advances
to Local Limited Partnerships
accounted for on the equity
method - Note 4
(Schedules IV and XI) 6,615,391 4,948,930
$7,958,152 $5,411,477
LIABILITIES AND PARTNERS' CAPITAL
Due to affiliate $ 29,616 $ 25,322
Distribution payable 1,634 1,634
Management fee payable
(Schedule IV) 141,973 102,158
173,223 129,114
Partners' capital - Note 2
General Partner - 621
Partnership units
authorized, issued and
outstanding 389,225 264,097
Limited partners - 11,811
Partnership units authorized,
issued and outstanding 7,395,704 5,018,266
7,784,929 5,282,363
Commitments and
contingent liabilities -
Notes 3 and 5 $7,958,152 5,411,477
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<S> <C> <C> <C>
Year ended December 31,
1998 1997 1996
Interest income $ 8,536 $ 21,957 $ 9,159
Other income 100 -0- -0-
8,636 21,957 9,159
Expenses:
Professional fees 29,000 26,500 29,245
Management fees - Note 3 99,815 133,770 88,387
Other expenses 3,548 794 11,272
Amortization of costs
of acquisition 12,359 12,359 10,099
144,722 173,423 139,003
Loss before equity in
income of Local Limited
Partnerships (136,086) (151,466) (129,844)
Equity in income of Local
Limited Partnerships - Note 4 2,638,652 1,785,081 1,305,678
Net income $2,502,566 $1,633,615 $1,175,834
Allocation of net income:
Net income allocated to
General Partner $ 125,128 $ 81,681 $ 58,792
Net income allocated to
Limited Partners 2,377,438 1,551,934 1,117,042
$2,502,566 $1,633,615 $1,175,834
Net financial reporting
income per units:
General partnership
units (621 units
outstanding allocated
to General Partner) $ 201 $ 131 $ 95
Limited partnership
units (11,811 units
outstanding allocated
to Limited Partners) $ 201 $ 131 $ 95
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
S> <C> <C> <C>
General Limited
Partner Partners Total
Partners' capital
at January 1, 1996 $ 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
Net income - 1997 81,681 1,551,934 1,633,615
Partners' capital
at December 31, 1997 264,097 5,018,266 5,282,363
Net income - 1998 125,128 2,377,438 2,502,566
Partners' capital
at December 31, 1998 $ 389,225 $7,395,704 $7,784,929
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C>
Year ended December 31,
1998 1997 1996
Net income $ 2,502,566 $ 1,633,615 $ 1,175,834
Adjustments to reconcile
net income to net cash
used by operating activities:
Increase in distribution
receivable 281,694 (441,237) -0-
Amortization of costs
of acquisition 12,359 12,359 10,099
Equity in income
of local limited
partnerships (2,638,652) (1,785,081) (1,305,678)
Increase (decrease)
in management
fee payable and
accounts payable 39,880 11,068 43,944
Increase in due to
affiliate 4,294 25,322 -0-
(2,300,425) (2,177,569) (1,251,635)
Net cash used by
operating activities 202,141 (543,954) (75,801)
CASH FLOWS FROM INVESTING ACTIVITIES:
Current year
distributions 1,304,143 672,510 219,132
Net advances repaid
by (paid to) local
limited partnerships (344,376) (378,938) (1,754)
Net cash provided by
investing activities 959,767 293,572 217,378
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS 1,161,908 (250,382) 141,577
CASH BALANCE AT BEGINNING
OF YEAR 21,310 271,692 130,115
CASH BALANCE AT END OF YEAR $ 1,183,218 $ 21,310 $ 271,692
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
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, 1998, the Partnership has investments in seventeen
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.
<PAGE>
Note 1 - Organization and Accounting Policies - Continued
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:
<TABLE>
<S> <C> <C> <C>
For the Year Ended
December 31,
1998 1997 1996
Net repayment from
(advances to) Local
Limited Partnerships
with zero investments: $ 31,288 $ 31,773 $ (17,400)
Distributions received
from Local Limited
Partnerships with zero
investments: 1,237,990 576,045 131,877
Income from Local
Limited Partnerships
with non-zero investments: 1,369,374 1,177,263 1,191,201
Equity in income of
Local Limited
Partnerships $2,638,652 $1,785,081 $1,305,678
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, 1998 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.
<PAGE>
Note 1 - Organization and Accounting Policies - Continued
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:
</TABLE>
<TABLE>
<S> <C> <C> <C>
For the Year Ended December 31,
1998 1997 1996
Net income for financial
reporting purposes $2,502,566 $1,633,615 $1,175,834
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 12,359 12,359 10,099
Equity in income of
Local Limited Partner-
ships for income tax
reporting purposes in
excess of that recognized
under the equity method
for financial reporting
purposes. 1,357,951 1,202,597 1,024,353
Other accrual adjustments 39,815 22,212 44,161
Net income as reported
on the federal
income tax return $3,912,691 $2,870,783 $2,254,447
</TABLE>
A reconciliation of the partners' capital for financial reporting purposes
and the partners' capital (deficit) for income tax purposes follows:
<PAGE>
Note 2 - Reconciliation Between Net Income and Partners' Capital
(Deficit) of the Partnership For Financial Reporting Purposes and
Income Tax Purposes - Continued
<TABLE>
<S> <C> <C> <C>
Year Ended December 31,
1998 1997 1996
Partners' capital for
financial reporting
purposes $ 7,784,929 $ 5,282,363 $ 3,648,748
Commissions and
offering expenses
capitalized for
income tax purposes
and charged to
capital for
financial reporting
purposes 1,250,836 1,250,836 1,250,836
Unamortized portion of
initial and rent-up fees
and other costs of
acquisition capitalized
for financial reporting
purposes and prev-
iously deducted for
income tax reporting
purposes (971,651) (984,010) (996,369)
Equity in cumulative
losses of Local Limited
Partnerships for income
tax purposes, in excess
of losses for financial
reporting purposes (11,089,252) (12,447,203) (13,655,264)
Other accrual adjustments 153,310 113,495 91,283
Partners' capital (deficit)
as reported on the federal
income tax return $ (2.871.828) $(6,784,519) $(9,660,766)
</TABLE>
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.
<PAGE>
Note 2 - Reconciliation Between Net Income and Partners' Capital (Deficit)
of the Partnership For Financial Reporting Purposes and Income
Tax Purposes - Continued
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 $99,815 during 1998, $133,770
during 1997, $88,387 during 1996. 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 1998, 1997 or 1996. 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:
<PAGE>
Note 3 - Management of Urban Improvement Fund Limited - 1973 -
Continued
<TABLE>
<S> <C> <C>
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
</TABLE>
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.
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships
Accounted for on the Equity Method - Continued
Investments in and advances to the Local Limited Partnerships, accounted
for on the equity method, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1998:
Antonia Manor. $ 108,975 $ 827,218 $ 936,195
Brighton Gardens
Apartments (Note 5) 370,000 (1,619,271) (1,249,271)
First Bedford-Pine
Apts., Ltd. 275,485 (1,751,229) (1,475,744)
Freedom Associates
(Note 5) 514,000 (2,376,859) (1,862,859)
Glenn Arms
Associates 223,877 (54,178) 169,699
Hedin Associates (48,964) 234,109 185,145
Himbola Manor, Ltd. 42,919 (251,272) (208,353)
Maria Manor 93,975 1,041,082 1,135,057
Marlton Manor
Associates 142,783 912,919 1,055,702
Mystic Valley Towers
Associates (Note 5) 370,948 (2,610,085) (2,239,137)
OGO Associates
of Los Arboles (994,132) 994,132 -0-
RAP-UP II B 190,757 (637,930) (447,173)
Sheridan Manor IV 99,363 (29,506) 69,857
Sheridan Manor X 59,595 (88,071) (28,476)
The Alexander 133,184 1,943,516 2,076,700
WOGO Associates
of Carondelet 267,549 (556,528) (288,979)
WOGO Associates
of Fresno 549,531 (1,091,323) (541,792)
W Street Associates. 305,500 (549,430) (243,930)
Total $ 2,705,345 $ (5,662,706) $ (2,957,359)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
December 31, 1998:
Antonia Manor. . $ -0- $ -0- $ 13,529 $ 949,724
Brighton Gardens
Apartments (Note 5) 1,182,136 -0- 67,135 -0-
First Bedford-Pine
Apts., Ltd. 1,418,002 -0- 57,742 -0-
Freedom Associates
(Note 5) 1,746,424 -0- 116,435 -0-
Glenn Arms
Associates -0- 37,465 17,455 224,619
Hedin Associates -0- -0- 13,047 198,192
Himbola Manor, Ltd. 155,639 -0- 52,714 -0-
Maria Manor -0- -0- 14,116 1,149,173
Marlton Manor
Associates -0- -0- 44,294 1,099,996
Mystic Valley Towers
Associates (Note 5) 1,966,335 -0- 272,802 -0-
OGO Associates
of Los Arboles -0- -0- -0- -0-
RAP-UP II B 417,137 -0- 30,036 -0-
Sheridan Manor IV -0- 133,793 13,016 216,666
Sheridan Manor X -0- 21,549 12,101 5,174
The Alexander -0- -0- 35,961 2,112,661
WOGO Associates
of Carondelet -0- 907,492 40,673 659,186
WOGO Associates
of Fresno 295,713 160,083 85,996 -0-
W Street Associates. 73,555 136,295 34,080 -0-
Total $7,254,941 $1,396,677 $ 921,132 $6,615,391
</TABLE>
<TABLE>
<S> <C>
Reconciliation to combined
statement of partners equity
(deficit) Urban Improvement
Fund Limited - 1973 capital
contributions less equity in losses $(2,957,359)
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 $(1,789,188)
</TABLE>
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships
Accounted for on the Equity Method - Continued
<TABLE>
<S> <C> <C> <C>
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1997:
Antonia Manor $ 119,765 $ 721,871 $ 841,636
Brighton Gardens
Apartments (Note 5) 370,000 (1,597,626) (1,227,626)
First Bedford-Pine
Apts., Ltd. 275,485 (1,782,682) (1,507,197)
Freedom
Associates (Note 5) 514,000 (2,487,176) (1,973,176)
Glenn Arms
Associate 223,877 (184,889) 38,988
Hedin Associates (20,710) 181,725 161,015
Himbola Manor, Ltd 42,919 (384,469) (341,550)
Maria Manor 104,365 726,577 830,942
Marlton Manor
Associates 142,783 667,313 810,096
Mystic Valley Towers
Associates (Note 5) 516,588 (2,987,850) (2,471,262)
OGO Associates
of Los Arboles 98,218 (231,221) (133,003)
OGO Associates
of Mountclef (343,088) 343,088 -0-
RAP-UP II B 190,757 (787,780) (597,023)
Sheridan Manor IV 99,363 (90,219) 9,144
Sheridan Manor X 59,595 (124,073) (64.478)
The Alexander 149,903 1,501,778 1,651,681
WOGO Associates
of Carondelet 267,549 (557,968) (290,419)
WOGO Associates
of Fresno 549,531 (1,218,502) (668,971)
W Street Associates 305,500 (535,244) (229,744)
Total $ 3,666,400 $ (8,827,347) $ (5,160,947)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
December 31, 1997:
Antonia Manor $ -0- $ -0- $ 14,496 $ 856,132
Brighton Gardens
Apartments (Note 5) 1,160,491 -0- 67,135 -0-
First Bedford-Pine
Apts., Ltd. 1,449,455 -0- 57,742 -0-
Freedom
Associates (Note 5) 1,856,741 -0- 116,435 -0-
Glenn Arms
Associates -0- 78,292 18,102 135,382
Hedin Associates -0- -0- 13,979 174,994
Himbola Manor, Ltd 288,836 -0- 52,714 -0-
Maria Manor -0- -0- 15,124 846,066
Marlton Manor
Associates -0- -0- 47,458 857,554
Mystic Valley Towers
Associates (Note 5) 2,198,460 -0- 272,802 -0-
OGO Associates
of Los Arboles 99,495 11,689 21,819 -0-
OGO Associates
of Mountclef -0- -0- -0- -0-
RAP-UP II B 566,987 -0- 30,036 -0-
Sheridan Manor IV -0- 119,703 13,830 142,677
Sheridan Manor X 30,828 21,549 12,101 -0-
The Alexander -0- -0- 38,528 1,690,209
WOGO Associates
of Carondelet -0- 493,402 42,933 245,916
WOGO Associates
of Fresno 390,892 192,083 85,996 -0-
W Street Associates 60,081 135,583 34,080 -0-
Total $8,102,266 $1,052,301 $ 955,310 $4,948,930
</TABLE>
<TABLE>
<S> <C>
Reconciliation to combined
statement of partners equity (deficit)
Urban Improvement Fund Limited - 1973 capital
contributions less equity in losses $ (5,160,947)
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 $ (3,992,776)
</TABLE>
Note 4 - Investments in and Advances to Local Limited Partnerships
Accounted for on the Equity Method - Continued
The combined balance sheets of the Local Limited Partnerships, accounted
for on the equity method at December 31, 1998 and 1997 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, 1998, 1997 and 1996 are summarized as
follows:
COMBINED BALANCE SHEETS OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
Cash $ 1,775,764 $ 1,418,561
Cash in escrow and
other restricted funds 8,432,292 8,261,304
Accounts receivable 635,586 585,691
Notes receivable -0- 235,000
Prepaid expenses 212,545 236,378
Other assets 202,720 173,010
11,258,907 10,909,944
Property on the basis of cost:
Land 3,085,398 3,170,114
Buildings and improvements 61,650,270 59,518,971
64,735,668 62,689,085
Less: accumulated depreciation (41,761,689) (40,789,787)
22,973,979 21,899,298
$ 34,232,886 $ 32,809,242
Liabilities and Partners' Capital (Deficit)
Mortgage notes payable $30,496,267 $ 32,076,435
Accounts payable and
accrued expenses 2,830,299 2,485,629
Advances from Urban
Improvement Fund
Limited - 1973 1,396,677 1,052,301
Advances from general partners 227,948 227,948
Notes payable 2,590,930 2,381,134
Advances from and payable
to affiliates 23,425 28,425
Tenants' security and
other deposits 344,503 541,270
37,910,049 38,793,142
Partners' capital (deficit)
per accompanying
statements (3,677,163) (5,983,900)
$34,232,886 $32,809,242
</TABLE>
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships
Accounted for on the Equity Method - Continued
COMBINED STATEMENTS OF INCOME OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
December 31,
1998 1997 1996
Revenue:
Net rental income $16,677,495 $16,255,054 $16,257,311
Financial 943,900 929,657 189,824
Other 395,621 483,421 306,244
Total Revenue 18,017,016 17,668,132 16,753,379
Expenses:
Administrative 3,361,257 3,396,404 3,269,904
Utilities 2,498,739 2,343,109 2,382,845
Operating 3,974,421 4,299,664 4,070,141
Taxes and insurance 1,783,978 1,874,438 1,963,446
Total Operating
Expenses 11,618,395 11,913,615 11,686,336
Net Operating Income 6,398,621 5,754,517 5,067,043
Non-operating expenses:
Financial expenses 1,800,576 1,874,465 1,238,098
Depreciation 1,852,350 1,792,116 1,739,991
Other expenses 278,666 255,766 288,325
3,931,592 3,922,347 3,266,414
Net income before gain
on sale of property 2,467,029 1,832,170 1,800,629
Gain on sale of property 2,183,746 793,525 -0-
Net income $ 4,650,775 $ 2,625,695 $ 1,800,629
</TABLE>
Amortization of capitalized interest amounted to $80,861 in 1998, 1997
and 1996.
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships
Accounted for on the Equity Method - Continued
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(DEFICIT) OF LOCAL LIMITED PARTNERSHIPS - CONTINUED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Urban
Improvement Other
Fund Limited Limited General
1973 Partners Partners Total
Partners' capital
(deficit) at
January 1, 1996 $(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)
Cash distributions (672,510) (12,886) (368,845) (1,054,241)
Net income - 1997 2,219,476 27,942 378,277 2,625,695
Partners' capital
(deficit) at
December 31, 1997 (3,992,776) (971,879) (1,019,245) (5,983,900)
Cash distributions (1,304,143) (11,646) (1,028,249) (2,344,038)
Net income - 1998 3,507,731 36,611 1,106,433 4,650,775
Partners' capital
(deficit) at
December 31, 1998 $ (1,789,188) $ (946,914) $ (941,061) $(3,677,163)
</TABLE>
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships
Accounted for on the Equity Method - Continued
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
December 31,
1998 1997 1996
Net income $ 4,650,775 $ 2,625,695 $1,800,629
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Gain on sale (3,874,391) (2,057,392) -0-
Depreciation 1,852,350 1,792,116 1,739,991
Decrease (increase)
in escrows, restricted
deposits and receivables,
prepaid expenses and
other assets 37,950 (1,093,899) (169,795)
Increase (decrease)
in accounts payable,
accrued expenses,
tenant security
deposit liability
and other liabilities 147,903 232,895 (212,088)
Total adjustments (1,836,188) (1,126,280) 1,358,108
Net cash provided
by operating
activities 2,814,587 1,499,415 3,158,737
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures (1,852,350) (1,792,116) (1,660,621)
Proceeds from
sale of assets 2,800,000 1,059,839 -0-
Net cash provided
by investing
activities 947,650 (732,277) (1,660,621)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Mortgage principal
payments (1,580,168) (1,119,917) (743,503)
Distributions paid (2,344,038) (1,054,243) (260,304)
Advances from
(repayments to)
affiliates 309,376 346,938 (3,274)
Proceeds from
issuance of
notes payable 209,796 914,510 3,734
Net cash used
by financing
activities (3,405,034) (912,712) (1,003,347)
NET INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 357,203 (145,574) 494,769
CASH BALANCE
AT BEGINNING
OF YEAR 1,418,561 1,564,135 1,069,366
CASH BALANCE
AT END OF YEAR $ 1,775,764 $1,418,561 $1,564,135
SUPPLEMENTAL INFORMATION
REGARDING INTEREST
PAYMENTS IS AS FOLLOWS:
Interest paid, net
of subsidy $ 749,758 $ 999,360 $ 990,930
</TABLE>
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships
Accounted for on the Equity Method - Continued
A reconciliation between combined income for financial reporting purposes
and the combined income for income tax purposes follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
December 31,
1998 1997 1996
Combined net income
for financial
reporting purposes $4,650,775 $2,625,695 $1,800,629
Equity in deductions
taken by Local
Limited Partnerships
for tax purposes
in excess of loss
for financial
reporting purposes 743,182 530,882 581,931
Accrual adjustments
for financial
reporting purposes 41,856 261,083 145,394
Combined income
for income tax
purposes $5,435,813 $3,417,660 $2,527,954
</TABLE>
A reconciliation of combined partners' capital (deficit) for financial
reporting purposes and combined partners' capital (deficit) for income
tax purposes follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
December 31,
1998 1997 1996
Combined partners'
capital (deficit) for
financial reporting
purposes $(2,295,422) $ (5,983,900) $ (7,555,354)
Carrying costs during
construction capitalized
for financial reporting
purposes, excess of
depreciation for tax
purposes and accrual
adjustments for financial
reporting purposes (1,919,606) (4,530,570) (5,447,227)
Combined partners'
capital (deficit) for
income tax purposes
as reported on
the federal income
tax returns $ (4,215,028) $(10,514,470) $(13,002,581)
</TABLE>
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships Accounted
for on the Equity Method - Continued
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 and $17,627,415 at December 31, 1998
($9,156,610 by HUD and $8,470,805 by MHFA) and $32,076,435 at December 31,
1997 ($19,209,853 by HUD and $12,866,582 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 $264,000 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:
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships Accounted
for on the Equity Method - Continued
<TABLE>
<CAPTION>
<S>
<C> <C>
Year Ended December 31, Amount
1999 $ 827,803
2000 887,998
2001 953,766
2002 1,023,441
2003 1,097,854
Beyond 12,836,553
$17,627,415
</TABLE>
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, 1998,
approximately $2,565,302 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.
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships Accounted
for on the Equity Method - Continued
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 1998, 1997 and 1996,
the Local Limited Partnerships received approximately $6,909,425, $7,929,000
and $7,877,000, respectively, in rent supplement and Section 8 funds.
The notes payable represent residual receipts notes payable by several Local
Limited Partnerships and flexible subsidy notes due to HUD. These residual
receipts 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 $1,297,454 at
December 31, 1998 and 1997.
The flexible subsidy notes are for the repair of damage attributable to the
Southern California earthquake of 1994. The balance payable was $1,293,476
at December 31, 1998 and $1,083,680 at December 31, 1997.
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, 1998, 1997 and 1996, the Partnership received and
recorded as interest income of zero, $5,838 and zero, respectively.
<PAGE>
Note 6 - Sale of the Assets of OGO of Mountclef Associates
The property of OGO Associates of Mountclef was sold during 1997 resulting in
a gain of $793,525, Urban '73's share of the distribution from the sale was
$351,256. In addition, Urban '73 received advance repayments of $57,105.
Note 7 - Sale of Assets of OGO of Los Arboles
The property of OGO Associates of Los Arboles was sold during 1998 resulting
in a gain of $2,183,746. Urban '73's share of the distribution from the sale
was $1,092,350. In addition, Urban 73 received advance repayments of $17,126.
Note 8 - Year 2000 Risk Assessment and Action Plan
The Partnership is aware of the current concerns throughout the business
community of reliance upon computer software that does not properly recognize
the year 2000 in date formats, often referred to as the "Year 2000 Problem."
The Year 2000 Problem is the result of software being written using two digits
rather than four digits to define the applicable year (i.e., "98" rather than
"1998"). A failure by a business to properly identify and correct a Year 2000
Problem in its operations could result in system failures or miscalculations.
In turn, this could result in disruptions of operations, including, among other
things, a temporary inability to process transactions, or otherwise engage in
routine business transactions on a day-to-day basis.
Operations of the Partnership are not dependent upon the successful operation
on a daily basis of its computer software programs. The Partnership relies
upon software purchased from third-party vendors rather than internally-
generated software. In its analysis of software, and based upon its ongoing
discussions with these vendors, a plan of action has been put in place by the
Partnership to minimize its risk exposure to the Year 2000 Problem. The
properties that the Partnership has invested in may be dependent upon the
successful operation on a daily basis of its computer software programs. The
Partnership has not been informed by any of these properties that they are
not Year 2000 compliant.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
Schedule IV
INDEBTEDNESS OF RELATED PARTIES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
December 31,
1998 Change 1997 Change 1996
Advances to (repayments
from) Local Limited
Partnerships:
Antonia Manor $ -0- $ -0- $ -0- $ (222) $ 222
Glenn Arms 37,465 (40,827) 78,292 -0- 78,292
OGO of Los
Arboles -0- (11,689) 11,689 (12,759) 24,448
OGO of Mountclef -0- -0- -0- (49,264) 49,264
Sheridan Manor IV 133,793 14,090 119,703 11,605 108,098
Sheridan Manor X 21,549 -0- 21,549 (1,750) 23,299
WOGO of
Carondelet 907,492 414,090 493,402 399,328 94,074
WOGO of Fresno 160,083 (32,000) 192,083 32,000 160,083
W-Street
Associates 136,295 712 135,583 -0- 135,583
$1,396,677 $ 344,376 $1,052,301 $ 378,938 $ 673,363
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
December 31,
1998 Change 1997 Change 1996
Payable to affiliate:
Management fee
payable to
General Partners $141,973 $ 39,815 $102,158 $ 11,648 $ 90,510
</TABLE>
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF LOCAL LIMITED
PARTNERSHIPS
December 31, 1998
<TABLE>
<S>
<C> <C> <C>
Outstanding
Description Mortgage
Partnership/Location No. of Units Balance
Antonia Manor 133 apartment
San Francisco, CA 2 commercial $ 1,089,540
Brighton Gardens Apts
Brighton, MA 62 apartment 1,243,593
First Bedford-Pine Apts
Atlanta, GA 134 apartment 1,566,062
Freedom Associates
Baltimore, MD 308 apartment 2,302,355
Glenn Arms Associates
Washington, DC 55 apartment 716,892
Hedin Associates 48 apartment
Washington, DC 1 commercial 553,875
Himbola Manor
LaFayette, LA 136 apartment 1,429,085
Maria Manor 119 apartment
San Francisco, CA 1 commercial 1,128,290
Marlton Manor Assoc. 151 apartment
San Francisco, CA 7 commercial 1,429,273
Mystic Valley Towers
Medford, MA 466 apartment 11,337,172
OGO Associates of
Los Arboles
Thousand Oaks, CA 43 apartment -0-
</TABLE>
<TABLE>
<S>
<C> <C> <C> <C>
Buildings
and
Partnership/Location Land Improvement(B) Total
Antonia Manor $ 175,557 $ 3,016,630 $ 3,192,187
Brighton Gardens Apts
Brighton, MA 322,929 1,830,882 2,153,811
First Bedford-Pine Apts
Atlanta, GA 43,491 2,414,932 2,458,423
Freedom Associates
Baltimore, MD 298,637 3,995,723 4,294,360
Glenn Arms Associates
Washington, DC 125,898 1,522,618 1,648,516
Hedin Associates
Washington, DC 38,600 1,232,673 1,271,273
Himbola Manor
LaFayette, LA 111,000 2,819,700 2,930,700
Maria Manor
San Francisco, CA 285,140 2,603,642 2,888,782
Marlton Manor Assoc.
San Francisco, CA 258,373 3,575,559 3,833,932
Mystic Valley Towers
Medford, MA 487,159 19,187,699 19,674,858
OGO Associates of
Los Arboles
Thousand Oaks, CA -0- -0- -0-
</TABLE>
<TABLE>
<S>
<C> <C> <C> <C> <C>
Depreciation
in Latest
Date of Income
Accumulated Completion of Date Statement
Partnership/Location Depreciation Construction Acquired is Computed
Antonia Manor $ (1,645,575) 1974 1973 7-40 years
Brighton Gardens Apts
Brighton, MA (1,479,104) 1975 1973 5-40 years
First Bedford-Pine Apts
Atlanta, GA (2,414,932) 1974 1973 25 years
Freedom Associates
Baltimore, MD (3,697,855) 1974 1973 7-25 years
Glenn Arms Associates
Washington, DC (1,026,322) 1975 1973 3-25 years
Hedin Associates
Washington, DC (691,941) 1974 1973 5-30 years
Himbola Manor
LaFayette, LA (2,126,510) 1974 1973 3-25 years
Maria Manor
San Francisco, CA (1,531,499) 1974 1973 5-40 years
Marlton Manor Assoc.
San Francisco, CA (1,742,761) 1974 1973 5-40 years
Mystic Valley Towers
Medford, MA (13,765,600) 1975 1973 5-40 years
OGO Associates of
Los Arboles
Thousand Oaks, CA -0- 1974 1973 7-30 years
</TABLE>
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
Schedule XI - Continued
REAL ESTATE AND ACCUMULATED DEPRECIATION OF LOCAL LIMITED
PARTNERSHIPS
December 31, 1998
<TABLE>
<S>
<C> <C> <C>
Outstanding
Description Mortgage
Partnership/Location No. of Units Balance
RAP-UP II B 51 apartment
Roxbury, MA 4 commercial 798,895
Sheridan Manor IV
Los Angeles, CA 48 apartment 462,765
Sheridan Manor X
Los Angeles, CA 30 apartment 289,090
The Alexander 179 apartment
San Francisco, CA 1 commercial 1,594,673
WOGO Associates of
Carondelet
Los Angeles, CA 124 apartment 1,148,645
WOGO Associates of Fresno 219 apartment
Fresno, CA 12 commercial 2,110,648
W-Street Associates
Washington, D.C. 102 apartment 1,295,414
$30,496,267
</TABLE>
<TABLE>
<S>
<C> <C> <C> <C>
Buildings
and
Partnership/Location Land Improvement(B) Total
RAP-UP II B
Roxbury, MA 23,097 1,401,439 1,424,536
Sheridan Manor IV
Los Angeles, CA 96,827 913,063 1,009,890
Sheridan Manor X
Los Angeles, CA 16,105 572,855 588,960
The Alexander
San Francisco, CA 195,999 4,252,271 4,448,270
WOGO Associates of
Carondelet
Los Angeles, CA 154,552 4,435,624 4,590,176
WOGO Associates of Fresno
Fresno, CA 395,680 4,824,901 5,220,581
W-Street Associates
Washington, D.C. 56,354 3,050,059 3,106,413
$3,085,398 $61,650,270 $64,735,668
</TABLE>
<TABLE>
<S>
<C> <C> <C> <C> <C>
Depreciation
in Latest
Date of Income
Accumulated Completion of Date Statement
Partnership/Location Depreciation Construction Acquired is Computed
RAP-UP II B
Roxbury, MA (1,118,382) 1974 1973 7-20 years
Sheridan Manor IV
Los Angeles, CA (733,805) 1975 1973 5-25 years
Sheridan Manor X
Los Angeles, CA (483,468) 1975 1973 7-25 years
The Alexander
San Francisco, CA (2,569,124) 1974 1973 5-30 years
WOGO Associates of
Carondelet
Los Angeles, CA (1,602,263) 1974 1973 5-30 years
WOGO Associates of Fresno
Fresno, CA (3,132,173) 1974 1973 5-30 years
W-Street Associates
Washington, D.C. (2,000,375) 1975 1973 5-30 years
$(41,761,689)
</TABLE>
<TABLE>
<S>
<C> <C> <C> <C>
Building & Total Accumulated
Land Improvement Cost Depreciation
Balance at
January 1, 1997 $ 3,191,991 $57,045,930 $60,237,921 $39,340,633
Additions during year -0- 2,959,508 2,959,508 1,792,116
Deletions during year (21,877) (486,467) (508,344) (342,962)
Balance at
December 31, 1997 3,170,114 59,518,971 62,689,085 40,789,787
Additions during year -0- 3,363,170 3,363,170 1,852,350
Deletions during year (84,716) (1,231,871) (1,316,587) (880,448)
Balance at
December 31, 1998 $ 3,085,398 $61,650,270 $64,735,668 $41,761,689
</TABLE>
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 $53,800,000.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,183,218
<SECURITIES> 0
<RECEIVABLES> 159,543
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,615,391
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,958,152
<CURRENT-LIABILITIES> 173,223
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,784,929
<TOTAL-LIABILITY-AND-EQUITY> 7,958,152
<SALES> 0
<TOTAL-REVENUES> 2,647,288
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 144,722
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,502,566
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,502,566
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
