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, 1999
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, 1999: 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 resyndi-
cation 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. During 1999, Mystic Valley Associates, Sheridan Manor IV,
Sheridan Manor X and WOGO Associates of Carondelet were sold. The remaining
thirteen (13) 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 regula-
tions. 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 legis-
lation 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 finan-
cial 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, 1999:
<TABLE>
<S>
<CAPTION>
<C> <C> <C> <C>
No. of Units 1999
Residential/ Percent of
Project Name Type Commercial Occupancy
Antonia Manor
San Francisco, CA 221(d)(3) Rehab. 133/2 97%
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 92%
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 98%
RAP-UP II B
Roxbury, MA 236 Rehab. 51/4 98%
The Alexander
San Francisco, CA 221(d)(3) Rehab. 179/1 98%
Wogo Associates of
Fresno (Hotel
California)
Fresno, CA 221(d)(3) Rehab. 219/12 71%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
No. of Units 1999
Residential/ Percent of
Project Name Type Commercial Occupancy
W Street Associates
(Capital Manor)
Washington, D.C. 236 Rehab. 102 90%
The real estate projects owned by the registrant were sold during 1999:
Mystic Valley
Associates
Medford, MA MHFA New* 466 97%
Sheridan Manor X
Los Angeles, CA 236 Rehab. 30 99%
Sheridan Manor IV
Los Angeles, CA 236 Rehab. 48 95%
Wogo Associates of
Carondelet (WOGO II)
Los Angeles, CA 236 Rehab. 124 98%
</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>
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.
<PAGE>
<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
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>
<TABLE>
<CAPTION>
<S>
<C> <C>
Number of Units Type
13 Efficiency
30 1 Bedroom
10 2 Bedroom
2 3 Bedroom
</TABLE>
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.
<PAGE>
<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>
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>
<S>
<C> <C>
Number of Units Type
7 Efficiency
13 1 Bedroom
20 2 Bedroom
4 3 Bedroom
7 4 Bedroom
4 Commercial
</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 FRESNO (HOTEL CALIFORNIA) consists of 219 resi-
dential 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>
The registrant sold its equity interest as a Limited Partner in the following
real estate projects:
MYSTIC VALLEY ASSOCIATES consists of 466 residential units located in
Medford, Massachusetts. The project consists of three fourteen-story buildings.
<TABLE>
<S>
<C> <C>
Number of Units Type
187 1 Bedroom
279 2 Bedroom
</TABLE>
The property of Mystic Valley Towers Associates was sold during 1999 resulting
in a gain of $8,015,602. Urban 73's share of the distribution from the sales
was $2,437,555.
<PAGE>
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>
<S>
<C> <C>
Number of Units Type
18 Efficiency
27 1 Bedroom
3 2 Bedroom
</TABLE>
The property of Sheridan Manor IV was sold during 1999 resulting in a gain of
$530,657. Urban '73's share of the distribution from the sale was $605,782.
In addition, Urban '73 received advance repayments of $133,793.
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>
<S>
<C> <C>
Number of Units Type
30 Efficiency
</TABLE>
The property of Sheridan Manor X was sold during 1999 resulting in a gain of
$404,556. Urban '73's share of the distribution from the sale was $348,995. In
addition, Urban '73 received advance repayments of $21,549.
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>
<S>
<C> <C>
Number of Units Type
94 Efficiency
30 1 Bedroom
</TABLE>
The property of WOGO Associates of Carondelet was sold during 1999 resulting
in a gain of $380,048. Urban '73's share of the distribution from the sale
was $102,925. In addition, Urban '73 received advance repayments of $907,492.
<PAGE>
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>
<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 $11,689.
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>
<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 assump-
tion 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.
The purchaser is negotiating an extension of the note payment. Urban 73's
share of the final installment is $1,650,000 with the balance due to the Local
General Partner.
<PAGE>
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, includ-
ing 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 trans-
ferred between individuals with the consent of the General Partner.
(b) Holders
<TABLE>
<CAPTION>
<S>
<C> <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%
</TABLE>
The Registrant has no officers or directors. Interfinancial Real Estate
Management Company, the General Partner of the Registrant, is a corporation.
(c) Dividends No distributions were paid during 1995, 1996, 1997, 1998
or 1999.
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>
<S>
<C> <C> <C> <C> <C> <C>
Year Ended December 31,
1999 1998 1997 1996 1995
Interest income $ 35,871 $ 8,536 $ 21,957 $ 9,159 $ 19,449
Other income 29,068 100 -0- -0- -0-
64,939 8,636 21,957 9,159 19,449
Operating expenses:
Professional fees 35,790 29,000 26,500 29,245 27,849
Management fees 60,000 99,815 133,770 88,387 92,017
Liquidation fees 379,403 -0- -0- -0- -0-
Other expenses 23,936 3,548 794 11,272 2,318
Amortization
of costs of
acquisition 9,285 12,359 12,359 10,099 9,452
508,414 144,722 173,423 139,003 131,636
Loss before
equity in
income of
Local Limited
Partnerships (443,475) (136,086) (151,466) (129,844) (112,187)
Equity in
income Local
Limited
Partnerships 5,481,819 2,638,652 1,785,081 1,305,678 1,190,208
Net income $5,038,344 $2,502,566 $1,633,615 $1,175,834 $1,078,021
Allocation of
net income:
Net income
allocated
to General
Partner 251,917 125,128 81,681 58,792 53,901
Net income
allocated
to Limited
Partners 4,786,427 2,377,438 1,551,934 1,117,042 1,024,120
$5,038,344 $2,502,566 $1,633,615 $1,175,834 $1,078,021
Net financial
reporting income
per units:
General
partnership
units (621
units
outstanding
allocated to
General
Partner) $ 405 $ 201 $ 131 $ 95 $ 87
Limited
Partnership
units (11,811
units outstand-
ing allocated
to Limited
Partners) $ 405 $ 201 $ 131 $ 95 $ 87
Total assets $9,009,161 $7,958,152 $5,442,066 $3,741,448 $2,521,670
Long-term
obligations $ -0- $ -0- $ -0- $ -0- $ -0-
Distributions $4,015,046 $ -0- $ -0- $ -0- $ -0-
</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 invest-
ments. Interest income resulted from such short-term investments. The Part-
nership 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 (in-
cluding interest payments from the sale of Edgewood II). This trend is
expected to continue. The Partnership has advanced funds and received repay-
ments 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> <C>
1999 1998 1997 1996 1995
Urban's share
of distribution $3,641,790 $1,304,143 $ 672,510 $219,132 $172,610
Advances (made
to) repaid by
Local Limited
Partnerships $ 835,802 $ (344,376) $(378,938) $(1,754) $ 762
</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 $60,000, $99,815, $133,770, $88,387 and $92,017 during 1999,
1998, 1997, 1996 and 1995, 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
<PAGE>
received an amount equal to their invested capital attributable to the pro-
ject(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. Liquidation fees of $379,403
were paid during 1999 from the sale of properties.
Other operating expenses have maintained a consistent level.
At December 31, 1999, the Partnership had investments in thirteen 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, report-
ing income from operations or Local Limited Partnerships, whose investments
have been reduced to zero, who paid distributions or repaid an advance.
dditional advances to Local Limited Partnerships, after an investment is
reduced to zero, are recorded as losses. The real estate of Mystic Valley
Associates, Sheridan Manor IV, Sheridan Manor X, and WOGO Associates of
Carondelet was sold during 1999. The real estate of OGO of Mountclef Associ-
ates 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 1999, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
For the Year Ended
December 31,
1999 1998 1997
Net repayment from
(advances to)
Local Limited
Partnerships with
zero investments:
Los Arboles $ -0- $ -0- $ 12,759
Sheridan X -0- -0- 1,750
Mountclef -0- -0- 49,264
WOGO of Fresno (800) 32,000 (32,000)
W Street Associates (200,000) (712) -0-
Distributions received
from Partnerships
with zero investments:
Himbola Manor 95,869 -0- -0-
Mystic Valley 2,437,555 145,640 163,727
Sheridan X 365,369 -0- 23,488
Los Arboles -0- 1,092,350 4,698
Mountclef -0- -0- 384,132
Sheridan IV 522,909 -0- -0-
WOGO of Carondelet 351,231 -0- -0-
Income (loss) from
Partnerships
with non-zero
investments:
Alexander 716,099 441,737 431,482
Antonia Manor 233,915 105,348 242,085
Hedin House 24,749 52,384 50,647
Los Arboles -0- 11,756 -0-
Maria Manor 380,382 314,505 264,988
Marlton Manor 411,502 245,606 177,547
Sheridan X -0- 5,174 -0-
Sheridan IV -0- 60,713 35,617
Glenn Arms 143,039 130,711 126,049
WOGO of Carondelet -0- 1,440 (151,152)
Equity in income
(loss) of Local
Limited Partnerships $5,481,819 $2,638,652 $1,785,081
Interest received from
Edgewood II included
in interest income: $ -0- $ -0- $ 5,838
</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 distribu-
tions 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 trans-
action. 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 substan-
tially 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
<PAGE>
treated as a likekind 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,
multifamily residential projects.
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 64 Director/President
John M. Orehek 45 Director/Senior Vice President
</TABLE>
(b) The General Partner of the Registrant is Interfinancial Real Estate Man-
agement 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 quali-
fied as executive officers.
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Name Age Office
Paul H. Pfleger 64 Chairman of the Board
John M. Orehek 45 Senior Vice President
Michael Fulbright 45 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 approxi-
mately 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 Account-
ants. He received a B.S. degree in Economics from Allegheny College, Mead-
ville, 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 Admini-
stration degree from Texas A&M and a law degree from the University of Washing-
ton. 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>
<S>
<C> <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
</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, 1999 and 1998.
Statements of Income for the years ended December 31, 1999, 1998
and 1997.
Statements of Changes in Partners' Capital for the years ended
December 31, 1999, 1998 and 1997.
Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997.
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 seventeen 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.
<PAGE>
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.
<PAGE>
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: September 26, 2000 By: Paul H. Pfleger
Paul H. Pfleger
President
Interfinancial Real Estate Management Company
Date: September 26, 2000 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 September 26, 2000
Paul H. Pfleger, Director Date
Interfinancial Real Estate Management
Company
By: John M. Orehek September 26, 2000
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, 1999
<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, 1999 and 1998 . . . . . . . . . . F-4
Statements of income
for the years ended December 31, 1999, 1998 and 1997. . . . . F-5
Statements of changes in partners' capital
for the years ended December 31, 1999, 1998 and 1997. . . . . F-6
Statements of cash flows
for the years ended December 31, 1999, 1998 and 1997. . . . . 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 seventeen limited partnerships accounted
for on the equity method have been omitted because combined financial state-
ments 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, 1999 and 1998,
and the related statements of income, changes in partners' capital and cash
flows for the years ended December 31, 1999, 1998 and 1997, 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, 1999, 1998
and 1997. 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, 1999
and 1998.
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, 1999 and 1998, and the results of its operations and its
cash flows for the years ended December 31, 1999, 1998 and 1997, 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
August 2, 2000
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
December 31,
1999 1998
Cash and cash equivalents $1,179,729 $1,183,218
Distribution receivable 198,536 159,543
Receivable from affiliates 20,562 -0-
Investments in and advances
to Local Limited Partnerships
accounted for on the equity
method - Note 4
(Schedules IV and XI) 7,610,334 6,615,391
$9,009,161 $7,958,152
LIABILITIES AND PARTNERS' CAPITAL
Due to affiliate $ -0- $ 29,616
Distribution payable 105,443 1,634
Management fee payable
(Schedule IV) 95,491 141,973
200,934 173,223
Partners' capital - Note 2
General Partner - 621
Partnership units
authorized, issued and
outstanding 440,390 389,225
Limited partners - 11,811
Partnership units authorized,
issued and outstanding 8,367,837 7,395,704
8,808,227 7,784,929
Commitments and contingent
liabilities - Notes 3 and 5
$9,009,161 $7,958,152
</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>
<CAPTION>
<<S>
<C> <C> <C> <C>
Year ended December 31,
1999 1998 1997
Interest income $ 35,871 $ 8,536 $ 21,957
Other income 29,068 100 -0-
64,939 8,636 21,957
Expenses:
Professional fees 35,790 29,000 26,500
Management fees - Note 3 60,000 99,815 133,770
Liquidation fee 379,403 -0- -0-
Other expenses 23,937 3,548 794
Amortization of costs
of acquisition 9,284 12,359 12,359
508,414 144,722 173,423
Loss before equity in
income of Local
Limited Partnerships (443,475) (136,086) (151,466)
Equity in income
of Local Limited
Partnerships - Note 4 5,481,819 2,638,652 1,785,081
Net income $5,038,344 $2,502,566 $1,633,615
Allocation of net income:
Net income allocated
to General Partner 251,917 125,128 81,681
Net income allocated
to Limited Partners 4,786,427 2,377,438 1,551,934
$5,038,344 $2,502,566 $1,633,615
Net financial reporting
income per units:
General partnership
units (621 units
outstanding allocated
to General Partner) $ 405 $ 201 $ 131
Limited partnership
units (11,811 units
outstanding allocated
to Limited Partners) $ 405 $ 201 $ 131
</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>
<CAPTION>
<S>
<C> <C> <C> <C>
General Limited
Partner Partners Total
Partners' capital at
January 1, 1997 $ 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
Net income - 1999 251,917 4,786,427 5,038,344
Distributions - 1999 (200,752) (3,814,294) $(4,015,046)
Partners' capital at
December 31, 1999 $ 440,390 $ 8,367,837 $ 8,808,227
</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>
<CAPTION>
<S>
<C> <C> <C> <C>
Year ended December 31,
1999 1998 1997
Net income $ 5,038,344 $ 2,502,566 $ 1,633,615
Adjustments to
reconcile net
income to net
cash used by
operating
activities:
Amortization
of costs of
acquisition 9,284 12,359 12,359
(Increase)
decrease in
distribution
receivable (38,993) 281,694 (441,237)
Increase in
receivable
from affiliates (20,562) -0- -0-
Equity in income of
local limited
partnerships (5,481,819) (2,638,652) (1,785,081)
Increase (decrease)
in management
fee payable and
accounts payable (46,482) 39,880 11,068
Increase in
distribution
payable 103,809 -0- -0-
Increase (decrease)
in due to affiliate (29,616) 4,294 25,322
(5,504,379) (2,300,425) (2,177,569)
Net cash provided
(used) by operating
activities (466,035) 202,141 (543,954)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Current year
distributions 3,641,790 1,304,143 672,510
Net advances repaid
by (paid to) local
limited partnerships 835,802 (344,376) (378,938)
Net cash provided
by investing
activities 4,477,592 959,767 293,572
CASH FLOWS FROM
FINANCING ACTIVITIES:
Partnership
distributions (4,015,046) -0- -0-
NET INCREASE (DECREASE)
IN CASH AND
CASH EQUIVALENTS (3,489) 1,161,908 (250,382)
CASH BALANCE AT
BEGINNING OF YEAR 1,183,218 21,310 271,692
CASH BALANCE
AT END OF YEAR $ 1,179,729 $ 1,183,218 $ 21,310
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAID>
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 - 973 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, 1999, the Partnership has investments in thirteen 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 acqui-
sition. 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.
<PAGE>
Note 1 - Organization and Accounting Policies - Continued
The Partnerships' equity in income of the Local Limited Partnerships is
summarized as follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
For the Year Ended
December 31,
1999 1998 1997
Net repayment
from (advances
to) Local Limited
Partnerships with
zero investments: $ (200,800) $ 31,288 $ 31,773
Distributions
received from Local
Limited Partnerships
with zero investments: 3,772,933 1,237,990 576,045
Income from Local
Limited Partnerships
with non-zero
investments: 1,909,686 1,369,374 1,177,263
Equity in income
of Local Limited
Partnerships $5,481,819 $2,638,652 $1,785,081
</TABLE>
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, 1999 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.
<PAGE>
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>
<CAPTION>
<S>
<C> <C> <C> <C>
For the Year Ended December 31,
1999 1998 1997
Net income for
financial reporting
purposes $5,038,344 $2,502,566 $1,633,615
Amortization of
initial and rent-
up fees and other
costs of acquisition
capitalized for
financial reporting
purposes and
previously deducted
for income tax
reporting purposes 9,284 12,359 12,359
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. 3,398,751 1,357,951 1,202,597
Other accrual adjustments (83,580) 39,815 22,212
Net income as reported
on the federal
income tax return $8,362,799 $3,912,691 $2,870,783
</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>
<CAPTION>
<S>
<C> <C> <C> <C>
Year Ended December 31,
1999 1998 1997
Partners' capital for
financial reporting
purposes $ 8,808,227 $ 7,784,929 $ 5,282,363
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 (573,255) (971,651) (984,010)
Equity in cumulative
losses of Local
Limited Partnerships
for income tax
purposes, in excess
of losses for
financial reporting
purposes (8,079,613) (11,089,252) (12,447,203)
Other accrual adjustments 55,639 153,310 113,495
Partners' capital
(deficit) as
reported on the
federal income
tax return $ 1,461,834 $ (2,871,828) $ (6,784,519)
</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 $60,000, $99,815 and $133,770, respectively, during 1999, 1998
and 1997. 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. Liqui-
dation fees of $379,403 were paid during 1999.
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 1999, 1998 or 1997. 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>
<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> <C>
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1999
Antonia Manor $ 108,975 $ 1,061,134 $ 1,170,109
Brighton Gardens
Apartments (Note 5) 370,000 (1,723,367) (1,353,367)
First Bedford-Pine Apts., Ltd. 275,485 (1,757,164) (1,481,679)
Freedom Associates (Note 5) 514,000 (2,266,542) (1,752,542)
Glenn Arms Associates 223,877 88,861 312,738
Hedin Associates (48,964) 258,858 209,894
Himbola Manor, Ltd. (52,950) (129,550) (182,500)
Maria Manor 84,318 1,421,464 1,505,782
Marlton Manor Associates 117,842 1,324,421 1,442,263
Mystic Valley Towers
Associates (Note 5) (2,066,607) 2,066,607 -0-
RAP-UP II B 190,757 (545,345) (354,588)
Sheridan Manor IV (289,400) 289,400 -0-
Sheridan Manor X (506,419) 506,419 -0-
The Alexander 117,119 2,659,615 2,776,734
WOGO Associates of Carondelet 164,624 (164,624) -0-
WOGO Associates of Fresno 549,531 (1,132,066) (582,535)
W Street Associates 305,500 (763,876) (458,376)
Total $ 57,688 $ 1,194,245 $ 1,251,933
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition Investment
(Note 1) Advances (Note 1) Net
December 31, 1999:
Antonia Manor $ -0- $ 800 $ 12,562 $1,183,471
Brighton Gardens
Apartments (Note 5) 1,286,232 -0- 67,135 -0-
First Bedford-Pine
Apts., Ltd. 1,423,937 -0- 57,742 -0-
Freedom Associates
(Note 5) 1,636,107 -0- 116,435 -0-
Glenn Arms Associates -0- 55,897 16,808 385,443
Hedin Associates -0- 7,000 12,115 229,009
Himbola Manor, Ltd. 129,786 -0- 52,714 -0-
Maria Manor -0- -0- 13,108 1,518,890
Marlton Manor Associates -0- -0- 41,130 1,483,393
Mystic Valley Towers
Associates (Note 5) -0- -0- -0- -0-
RAP-UP II B 324,552 -0- 30,036 -0-
Sheridan Manor IV -0- -0- -0- -0-
Sheridan Manor X -0- -0- -0- -0-
The Alexander -0- -0- 33,394 2,810,128
WOGO Associates
of Carondelet -0- -0- -0- -0-
WOGO Associates
of Fresno 335,656 160,883 85,996 -0-
W Street Associates 88,001 336,295 34,080 -0-
Total $5,224,271 $ 560,875 $ 573,255 $7,610,334
</TABLE>
<TABLE>
<S>
<C> <C>
Reconciliation to combined statement
of partners equity (deficit)
Urban Improvement Fund Limited -
1973 capital contributions less
equity in losses $ 1,251,933
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 $ 2,420,104
</TABLE>
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships Accounted
for on the Equity Method - Continued
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1998:
Antonia Manor $ 108,975 $ 827,220 $ 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 $ (5,662,704) $ (2,957,359)
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition Investment
(Note 1) Advances (Note 1) Net
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> <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
The combined balance sheets of the Local Limited Partnerships, accounted for
on the equity method at December 31, 1999 and 1998 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, 1999, 1998 and 1997 are summarized as follows:
COMBINED BALANCE SHEETS OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<CAPTION
<S>
Assets
<C> <C> <C>
1999 1998
Cash $ 1,085,018 $ 1,775,764
Cash in escrow and
other restricted funds 6,805,505 8,432,292
Accounts receivable 1,490,139 635,586
Prepaid expenses 152,877 212,545
Other assets 184,580 202,720
9,718,119 11,258,907
Property on the basis of cost:
Land 2,330,755 3,085,398
Buildings and improvements 38,098,215 61,650,270
40,428,970 64,735,668
Less - accumulated depreciation (26,159,639) (41,761,689)
14,269,331 22,973,979
$ 23,987,450 $ 34,232,886
Liabilities and Partners' Capital (Deficit)
Mortgage notes payable $ 16,739,659 $ 30,496,267
Accounts payable and
accrued expenses 2,149,580 2,830,299
Advances from Urban
Improvement Fund
Limited - 1973 553,075 1,396,677
Advances from general partners 227,948 227,948
Notes payable 1,297,454 2,590,930
Advances from and
payable to affiliates 23,425 23,425
Tenants' security and other deposits 309,913 344,503
21,301,054 37,910,049
Partners' capital (deficit)
per accompanying statements 2,686,396 (3,677,163)
$ 23,987,450 $ 34,232,886
</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> <C>
December 31,
1999 1998 1997
Revenue:
Net rental income $14,957,928 $16,677,495 $16,255,054
Financial 471,234 943,900 929,657
Other 228,535 395,621 483,421
Total Revenue 15,657,697 18,017,016 17,668,132
Expenses:
Administrative 3,153,950 3,361,257 3,396,404
Utilities 2,148,680 2,498,739 2,343,109
Operating 3,620,908 3,974,421 4,299,664
Taxes and insurance 1,484,673 1,783,978 1,874,438
Total Operating Expenses 10,408,211 11,618,395 11,913,615
Net Operating Income 5,249,486 6,398,621 5,754,517
Non-operating expenses:
Financial expenses 938,077 1,800,576 1,874,465
Depreciation and
amortization 1,640,348 1,852,350 1,792,116
Other expenses 152,701 278,666 255,766
2,731,126 3,931,592 3,922,347
Net income before gain on
sale of property 2,518,360 2,467,029 1,832,170
Gain on sale of property 9,330,863 2,183,746 793,525
Net income $11,849,223 $ 4,650,775 $ 2,625,695
</TABLE>
Amortization of capitalized interest amounted to $80,861 in 1999, 1998
and 1997.
<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> <C>
Urban
Improvement Other
Fund Limited Limited General
1973 Partners Partners Total
Partners' capital
(deficit) at
January 1, 1997 $(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)
Cash distributions (3,641,790) (4,037) (1,839,837) (5,485,664)
Net income - 1999 7,851,082 906,066 3,092,075 11,849,223
Partners' capital
(deficit) at
December 31, 1999 $ 2,420,104 $ (44,885) $ 311,177 $ 2,686,396
</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> <C>
December 31,
1999 1998 1997
Net income $11,849,223 $ 4,650,775 $ 2,625,695
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Gain on sale (9,858,451) (3,874,391) (2,057,392)
Depreciation and amortization 1,640,348 1,852,350 1,792,116
Decrease (increase) in escrows,
restricted deposits and
receivables, prepaid expenses
and other assets 831,902 37,950 (1,093,899)
Increase (decrease) in accounts
payable, accrued expenses,
tenant security deposit
liability and other liabilities (715,309) 147,903 232,895
Total adjustments (8,101,510) (1,836,188) (1,126,280)
Net cash provided (used) by
operating activities 3,747,713 2,814,587 1,499,415
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures (2,504,843) (1,852,350) (1,792,116)
Proceeds from sale of assets 19,445,734 2,800,000 1,059,839
Net cash provided by
investing activities 16,940,891 947,650 (732,277)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Mortgage principal payments (13,756,608) (1,580,168) (1,119,917)
Distributions paid (5,485,664) (2,344,038) (1,054,243)
Advances from (repayments
to) affiliates (843,602) 309,376 346,938
Proceeds from (repayments
on) notes payable (1,293,476) 209,796 914,510
Net cash used by financing
activities (21,379,350) (3,405,034) (912,712)
NET INCREASE (DECREASE)
IN CASH AND
CASH EQUIVALENTS (690,746) 357,203 (145,574)
CASH BALANCE AT
BEGINNING OF YEAR 1,775,764 1,418,561 1,564,135
CASH BALANCE AT
END OF YEAR $ 1,085,018 $ 1,775,764 $ 1,418,561
SUPPLEMENTAL INFORMATION
REGARDING INTEREST
PAYMENTS IS AS FOLLOWS:
Interest paid,
net of subsidy $ 757,384 $ 749,758 $ 999,360
</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> <C>
December 31,
1999 1998 1997
Combined net income
for financial reporting
purposes $11,849,223 $4,650,775 $2,625,695
Equity in deductions
taken by Local Limited
Partnerships for tax
purposes in excess
of loss for financial
reporting purposes 699,557 743,182 530,882
Accrual adjustments
for financial
reporting purposes 100,253 41,856 261,083
Combined income
for income tax
purposes $12,649,033 $5,435,813 $3,417,660
</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> <C>
December 31,
1999 1998 1997
Combined partners' capital
(deficit) for financial
reporting purposes $ 2,686,396 $(2,295,422) $(5,983,900)
Carrying costs during
construction capitalized
for financial reporting
purposes, excess of
depreciation for
tax purposes and
accrual adjustments
for financial
reporting purposes (2,140,121) (1,919,606) (4,530,570)
Combined partners'
capital (deficit) for
income tax purposes
as reported on the
federal income
tax returns $ 546,275 $ (4,215,028) $(10,514,470)
</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 $16,739,659 at December 31, 1999
($11,916,965 by HUD and $4,822,694 by MHFA)and $30,496,267 at December 31,
1998 ($12,257,860 by HUD and $18,238,407 by MHFA). The mortgage notes
payable are secured by deeds of trust on rental property and bear interest
at rates from approximately seven percent to eight and one-half percent per
annum. The mortgages are payable in monthly installments of principal and
interest aggregating approximately $144,000 over periods of forty years.
HUD will make interest reduction payments on the mortgages of five 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
2000 $ 636,833
2001 683,010
2002 734,518
2003 790,358
2004 850,717
Beyond 13,044,223
$16,739,659
</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,
1999, approximately $1,708,796 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 part-
ners. 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 1999, 1998 and
1997, the Local Limited Partnerships received approximately $6,502,000,
$6,909,000 and $7,929,000, respectively, in rent supplement and Section 8
funds.
<PAGE>
Note 4 - Investments in and Advances to Local Limited Partnerships Accounted for
on the Equity Method - Continued
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 and
$1,297,454 at December 31, 1999 and 1998, respectively.
The flexible subsidy notes are for the repair of damage attributable to the
Southern California earthquake of 1994. The balance payable was paid in full
in 1999 upon completion of the sale of the assets of Sheridan Manor IV and
WOGO Associates of Carondelet.
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, 1998 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 pay-
able on the anniversary date of the note to the extent 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 recov-
ery of the asset value, then recognize the gain as the proceeds are received.
For the years ended December 31, 1999, 1998 and 1997, the Partnership received
and recorded as interest income of zero, zero and $5,838, respectively.
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.
<PAGE>
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 - Sale of the Assets of Mystic Valley Towers Associates
The property of Mystic Valley Towers Associates was sold during 1999 resulting
in a gain of $8,015,602. Urban '73's share of the distribution from the sale
was $2,437,555.
Note 9 - Sale of the Assets of Sheridan Manor IV
The property of Sheridan Manor IV was sold during 1999 resulting in a gain of
$530,657. Urban '73's share of the distribution from the sale was $605,782.
In addition, Urban '73 received advance repayments of $133,793.
Note 10 - Sale of the Assets of Sheridan Manor X
The property of Sheridan Manor X was sold during 1999 resulting in a gain of
$404,556. Urban '73's share of the distribution from the sale was $348,995.
In addition, Urban '73 received advance repayments of $21,549.
Note 11 - Sale of the Assets of WOGO Associates of Carondelet
The property of WOGO Associates of Carondelet was sold during 1999 resulting
in a gain of $380,048. Urban '73's share of the distribution from the sale
was $102,925. In addition, Urban '73 received advance repayments of $907,492.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1973
(A Limited Partnership)
Schedule IV
INDEBTEDNESS OF RELATED PARTIES
<TABLE>
<S>
<C> <C> <C> <C> <C> <C>
December 31,
1999 Change 1999 Change 1997
Advances to (repayments
from) Local Limited
Partnerships:
Antonia Manor $ 800 $ 800 $ -0- $ -0- $ -0-
Glenn Arms 55,897 18,432 37,465 (40,827) 78,292
Hedin House 7,000 7,000 -0- -0- -0-
OGO of Los
Arboles -0- -0- -0- (11,689) 11,689
Sheridan Manor IV -0- (133,793) 133,793 14,090 119,703
Sheridan Manor X -0- (21,549) 21,549 -0- 21,549
WOGO of
Carondelet -0- (907,492) 907,492 414,090 493,402
WOGO of Fresno 160,883 800 160,083 (32,000) 192,083
W-Street
Associate 336,295 200,000 136,295 712 135,583
$560,875 $(835,802) $1,396,677 $ 344,376 $1,052,301
</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> <C>
December 31,
1999 Change 1998 Change 1997
Payable to affiliate:
Management fee
payable to
General Partners $ 95,491 $ (46,482) $ 141,973 $ 39,815 $ 102,158
</TABLE>
<PAGE>
(A Limited Partnership)
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF LOCAL LIMITED
PARTNERSHIPS
December 31, 1999
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Outstanding
Description Mortgage
Partnership/Location No. of Units Balance
Antonia Manor 133 apartment
San Francisco, CA 2 commercial $ 1,049,151
Brighton Gardens Apts
Brighton, MA 62 apartment 1,211,229
First Bedford-Pine Apts
Atlanta, GA 134 apartment 1,513,731
Freedom Associates
Baltimore, MD 308 apartment 2,302,355
Glenn Arms Associates
Washington, DC 55 apartment 694,684
Hedin Associates 48 apartment
Washington, DC 1 commercial 533,866
Himbola Manor
LaFayette, LA 136 apartment 1,376,300
Maria Manor 119 apartment
San Francisco, CA 1 commercial 1,091,160
Marlton Manor Assoc. 151 apartment
San Francisco, CA 7 commercial 1,377,211
Mystic Valley Towers
Medford, MA 466 apartment -0-
OGO Associates of
Los Arboles
Thousand Oaks, CA 43 apartment -0-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Outstanding
Description Mortgage
Partnership/Location No. of Units Balance
RAP-UP II B 51 apartment
Roxbury, MA 4 commercial 767,278
Sheridan Manor IV
Los Angeles, CA 48 apartment -0-
Sheridan Manor X
Los Angeles, CA 30 apartment -0-
The Alexander 179 apartment
San Francisco, CA 1 commercial 1,537,092
WOGO Associates of
Carondelet
Los Angeles, CA 124 apartment -0-
WOGO Associates of Fresno 219 apartment
Fresno, CA 12 commercial 2,032,407
W-Street Associates
Washington, D.C. 102 apartment 1,253,195
$16,739,659
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Buildings
and
Partnership/Location Land Improvement(B) Total
Antonia Manor
San Francisco, CA $ 175,557 $ 3,203,146 $ 3,378,703
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 4,111,846 4,410,483
Glenn Arms Associates
Washington, DC 125,898 1,627,577 1,753,475
Hedin Associates
Washington, DC 38,600 1,313,031 1,351,631
Himbola Manor
LaFayette, LA 111,000 2,914,939 3,025,939
Maria Manor
San Francisco, CA 285,140 2,657,256 2,942,396
Marlton Manor Assoc.
San Francisco, CA 258,373 4,036,132 4,294,505
Mystic Valley Towers
Medford, MA -0- -0- -0-
OGO Associates of
Los Arboles
Thousand Oaks, CA -0- -0- -0-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Buildings
and
Partnership/Location Land Improvement(B) Total
RAP-UP II B
Roxbury, MA 23,097 1,466,961 1,490,058
Sheridan Manor IV
Los Angeles, CA -0- -0- -0-
Sheridan Manor X
Los Angeles, CA -0- -0- -0-
The Alexander
San Francisco, CA 195,999 4,371,720 4,567,719
WOGO Associates of
Carondelet
Los Angeles, CA -0- -0- -0-
WOGO Associates of Fresno
Fresno, CA 395,680 4,971,571 5,367,251
W-Street Associates
Washington, D.C. 56,354 3,178,222 3,234,576
$2,330,755 $38,098,215 $40,428,970
</TABLE>
<TABLE>
<CAPTION>
<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
San Francisco, CA $ (1,733,661) 1974 1973 7-40 years
Brighton Gardens Apts
Brighton, MA (1,525,804) 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 (1,095,834) 1975 1973 3-25 years
Hedin Associates
Washington, DC (739,963) 1974 1973 5-30 years
Himbola Manor
LaFayette, LA (2,236,910) 1974 1973 3-25 years
Maria Manor
San Francisco, CA (1,604,595) 1974 1973 5-40 years
Marlton Manor Assoc.
San Francisco, CA (1,860,938) 1974 1973 5-40 years
Mystic Valley Towers
Medford, MA -0- 1975 1973 5-40 years
OGO Associates of
Los Arboles
Thousand Oaks, CA -0- 1974 1973 7-30 years
</TABLE>
<PAGE>
<TABLE>
<S>
<C> <C> <C> <C> <C>
Building & Total Accumulated
Land Improvement Cost Depreciation
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
Additions during
year -0- 1,557,186 1,557,186 1,622,208
Deletions during
year (754,643) (25,109,241) (25,863,884) (17,224,258)
Balance at December
31, 1999 $ 2,330,755 $ 38,098,215 $40,428,970 $ 26,159,639
</TABLE>
NOTE: Capital improvements since original construction or rehabilitation are
not material to the combined financial statements and, as such, are not dis-
closed separately. The financial statement category of buildings and improve-
ments is composed substantially of cost plus the initial renovation upon acqui-
sition. Total cost of land and building for federal income tax purposes amounts
to approximately $29,500,000.
<PAGE>
