UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________.
Commission File Number 0-8071
URBAN IMPROVEMENT FUND LIMITED 1974
(Exact name of registrant as specified in its charter)
California 95-6504946
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
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 __XX__
No_______.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
BALANCE SHEETS
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
<TABLE>
ASSETS
September 30, December 31,
1996 1995
<S> <C> <C>
Cash and cash equivalents $1,380,311 $1,303,161
Investments in and advances to
Local Limited Partnerships
accounted for on the equity method 1,056,553 990,417
--------- ---------
Total Assets $2,436,864 $2,293,578
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Management fee payable $ 14,255 14,255
Distribution payable 2,096 2,096
---------- --------
16,351 16,351
Partners' Capital:
General Partner 115 Partnership units
authorized, issued and outstanding 24,205 22,772
Limited Partners 11,404 Partnership units
authorized, issued and outstanding 2,396,308 2,254,455
---------- ----------
2,420,513 2,277,227
---------- ----------
Total Liabilities and Partners' Capital $2,436,864 $2,293,578
========== ==========
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
CAPITALIZATION AND PARTNERS' CAPITAL
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
<TABLE>
September 30, December 31,
1996 1995
<S> <C> <C>
General Partner Interest 115 Partner-
ship units issued and outstanding $ 115,192 $ 115,192
Limited Partners' Interest 11,404
Partnership units issued and
outstanding 11,404,000 11,404,000
---------- ----------
11,519,192 11,519,192
Offering Expenses (1,315,039) (1,315,039)
Distributions to Partners (1,181,501) (1,181,501)
Accumulated loss through
December 31, 1995 (6,745,425) (6,745,425)
Income for nine-month period ended
September 30, 1996 143,286 -0-
----------- -----------
(6,602,139) (6,745,425)
----------- -----------
Partners' Capital at End of Period $ 2,420,513 $ 2,277,227
============ ============
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF INCOME
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
For the Three-Month For the Nine-Month
Period Ended Period Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ -------
<S> <C> <C> <C> <C>
Revenues $ 20,762 $ 12,663 $ 55,958 $ 13,428
Cost and expenses:
Professional fees 1,650 -0- 15,024 12,780
Management fee 14,255 14,255 42,765 42,765
Other 250 250 2,924 2,938
Amortization 833 1,705 2,499 5,115
------- ------ ------- -------
16,988 16,210 63,212 63,598
------- ------ ------- -------
Income (loss) before equity in
income of Local Limited
Partnerships 3,774 (3,547) (7,254) (50,170)
Equity in net income of Local
Limited Partnerships 49,025 141,278 150,540 403,364
-------- -------- -------- --------
Net Income $ 52,799 $137,731 $143,286 $353,194
======== ======== ======== ========
Allocation of net income:
Net income allocated to General
Partner $ 528 $ 1,377 $ 1,433 $ 3,532
Net income allocated to Limited
Partners 52,271 136,354 141,853 349,662
-------- -------- -------- --------
$ 52,799 $137,731 $143,286 $353,194
======== ======== ======== ========
Net income allocated to Limited
Partners per Limited Partner-
ships Unit (11,404 units out-
standing at September 30, 1996
and 1995) $ 5 $ 12 $ 12 $ 31
======== ======== ======== ========
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
STATEMENTS OF CASH FLOWS
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
For the Three-Month For the Nine-Month
Period Ended Period Ended
September 30, September 30,
1996 1995 1996 1995
------ ------- ------ -------
<TABLE>
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 52,799 $ 137,731 $ 143,286 $ 353,194
Adjustments to reconcile net
income to net cash used by
operating activities:
Amortization of initial
and rent-up fees 833 1,705 2,499 5,115
Equity in net income of
local limited partnerships (49,025) (141,278) (150,540) (403,364)
Decrease in trade accounts
payable and accrued
management fees -0- 14,255 -0- 14,255
--------- --------- -------- ---------
Total adjustments (48,192) (125,318) (148,041) (383,994)
--------- --------- --------- ---------
Net cash provided
(used) by operating
activities 4,607 12,413 (4,755) (30,800)
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received 15,217 15,217 60,554 1,295,413
Net advances paid by limited
partnerships (5,000) (2,500) 21,351 (7,997)
--------- -------- --------- ---------
Net cash provided by investing
activities 10,217 12,717 81,905 1,287,416
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in distribution
payable -0- -0- -0- (709)
--------- -------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 14,824 25,130 77,150 1,255,907
CASH BALANCE AT BEGINNING OF
PERIOD 1,365,487 1,275,920 1,303,161 45,143
---------- ---------- ---------- ----------
CASH BALANCE AT END OF PERIOD $1,380,311 $1,301,050 $1,380,311 $1,301,050
========== ========== ========== ==========
</TABLE>
Unaudited. See accompanying notes.
<PAGE>
NOTES TO SUMMARIZE FINANCIAL INFORMATION
September 30, 1996
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
Note 1 - Organization
- ---------------------
Urban Improvement Fund Limited (the Partnership)
was formed under the California Uniform Limited Partnership Act on
January 13, 1974, for the principal purpose of investing in other limited
partnerships (Local Limited Partnerships), which own federal and state-
assisted housing projects. The Partnership issued 11,404 units of
limited partnership interest pursuant to a public offering of such units
which terminated on December 31, 1974. The Partnership also issued 115
units of general partnership interest to Interfinancial Real Estate
Management Company (the General Partner).
The Urban Improvement Fund Limited 1974 prospectus, dated July 23,
1974, specified that the General Partner will have at least a one 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. It is the General Partners' intention to
allocate, for income tax and financial reporting purposes, the profits,
losses and special allocations in the ratio of ninety-nine percent to the
limited partners and one percent to the General Partner.
Note 2 Method of accounting
- -----------------------------
Initial rent-up fees paid by the Partnership to the General Partner,
deducted when paid for income tax purposes, are capitalized as acquisition
costs 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 lives (fifteen to forty years) of the Local
Limited Partnership Properties. Amortization is discontinued when the
investment is reduced to zero.
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 period received.
Additional advances to Local Limited Partnership after an investment is
reduced to zero are recognized as losses in the period paid.
The unaudited interim financial statements furnished in this report
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods
presented. All such adjustments are of a normal recurring nature.
Taxes on Income
- --------------
No provision for taxes on income is required since all taxable income
or loss of the Partnership is allocated to the partners for inclusion in
their respective tax returns.
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.
Management of Urban Improvement Fund Limited 1974
- ---------------------------------------------------
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 $146,065 (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 $57,020). The Partnership
will also pay the General Partner a liquidation fee for the sale of
projects.
The General Partner of the Partnership is a corporation in which Paul
H. Pfleger owns 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. In addition, as shown in the following
table, PSI has become the General Partner in two of the Local Limited
Partnerships in which the Partnership has investments:
<TABLE>
Date PSI Became
Local Limited Partnership General Partner
------------------------- ---------------
<S> <C>
Notre Dame Apartments March 1977
Capitol Hill Associates December 1978
</TABLE>
Note 3 Investments in Local Limited Partnerships
- --------------------------------------------------
As of September 30, 1996 and 1995, the Partnership has investments in nine
active real estate Limited Partnerships (Local Limited Partnerships), which
are accounted for on the equity method. The investment account represents
the sum of the capital investment and unamortized costs of acquisitions less the
Partnership's share in losses since the date of acquisition. The
Partnership discontinues recognizing losses and amortizing cost of
acquisition under the equity method 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.
The Partnership has an investment in one Limited Partnership that sold
its real estate during 1984. This Partnership (Elk Grove Elderly) holds
a note receivable for a portion of the sales proceeds. The investments
in Local Limited Partnerships are comprised of:
<TABLE>
September 30, 1996 December 31, 1995
------------------ ----------------
<S> <C> <C>
Capital contributions $ 7,280,364 $ 7,280,364
Distributions (4,332,804) (4,287,467)
Equity in losses (2,983,365) (3,118,688)
Advances 182,501 203,852
Unamortized costs of acquisitions 909,857 912,356
----------- -----------
$ 1,056,553 $ 990,417
=========== ===========
</TABLE>
Item 2 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 Partners for cash flow.
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 $146,065
(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 $57,020). The
Partnership recorded management fee expense of $42,765 for the nine
months ended September 30, 1996 and 1995.
The components of the Partnership's equity in income of the Local
Limited Partnerships for September 30, 1996 and 1995, is summarized as
follows:
<TABLE>
For the Three-Month For the Nine-Month
Period Ended Period Ended
September 30, September 30,
1996 1995 1996 1995
------ ----- ------ ------
<S> <C> <C> <C> <C>
Income from investments with non-
zero investment:
Norway House $ -0- $ 97,320 $ -0- $291,960
Notre Dame 33,808 28,741 101,424 86,224
--------- -------- --------- --------
33,808 126,061 101,424 378,184
--------- -------- --------- --------
Repayment of advance from part-
nership with zero investment:
Capitol Hill -0- -0- 19,871 4,860
Distribution received from partner-
ships with zero investment:
Elk Grove 15,217 15,217 15,217 15,217
Norway House -0- -0- 10,653 -0-
51st and King Drive -0- -0- 3,375 5,103
--------- --------- --------- ---------
15,217 15,217 29,245 20,320
--------- --------- --------- ---------
$ 49,025 $ 141,278 $ 150,540 $ 403,364
========= ========= ========= =========
</TABLE>
<PAGE>
PART II OTHER INFORMATION
Items 1 through 5 not applicable
Item 6 Exhibits and Reports on Form 8-K
a) None
b) The registrant has not filed a report on Form 8-K during the
quarter ending September 30, 1996.
<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.
URBAN IMPROVEMENT FUND LIMITED 1974
-------------------------------------
(Registrant)
By: Interfinancial Real Estate Management
Company, General Partner
Date 11/15/96 Michael Fulbright
---------------------------------
(Signature)
By: Michael Fulbright, Secretary
Date 11/15/96 John M. Orehek
---------------------------------
(Signature)
By: John M. Orehek, Senior Vice President
