UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[XX ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________.
Commission File Number 0-8071
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
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 XXX No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant as of December 31,
1996: No established market value.
PART I
Item 1. Business
(a) General Development of Business Urban
Improvement Fund Limited 1974, a California limited
partnership (the "Registrant"), was formed in 1974 for the
purpose of investing, through local limited real estate
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 originally acquired equity interests as a limited
partner in twelve (12) such LLPs. The Elk Grove Village property
was sold through a resyndication in 1984. The Elk Grove Village
partnership is still in existence with a note receivable for the
sales proceeds of the property. The TDC & Associates property
was donated in December 1985 to the Tenant's Development
Association. The Logan-Washington Associates property
foreclosed in 1993. The remaining nine (9) 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. 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 revenues received from the
limited partnerships in which it is a limited partner.
Investment in government-assisted housing is subject to
significant regulation. These regulations limit, among other
things, the amount of return allowed on the initial equity
investment, the manner in which such properties may be
sold, and the persons to whom such properties may be sold. In
1987, fearing the loss of affordable housing units,
Congress passed emergency legislation which prohibited prepayment
of all FHA insured Section 236 or Section 221(d)(3) mortgages.
Congress passed additional legislation in 1990 known as LIHPRHA
(the Low Income Housing Preservation and Resident Homeownership
Act). However, by 1995, Congress had determined the program
was too expensive to continue. In March 1996, Congress changed
the compensation program, severely limited funding, and restored
the property owners' right to prepay the FHA mortgages and change
the use of the properties under legislation known as the Housing
Opportunity Program Extension Act of 1996. The General Partner
of the Partnership has initiated steps to ensure that the Local
Limited Partnerships comply with the provisions of LIHPRHA and
subsequent legislation. See financial information in Item 6,
Selected Financial Data, in this report.
Item 2. Properties.
The Registrant owns equity interests as a Limited Partner in
the following real estate projects as of December 31, 1996:
<TABLE>
<S> <C> <C> <C>
1995
No. of Percent of
Name Type Units Occupancy
Weyerbacher Terrace Associates
Indianapolis, IN 236 Rehab. 296 96%
Capitol Hill Associates
Denver, CO 236 Rehab. 121 97%
Community Apartments Ltd.
Cleveland, OH 221 (d)(3) Rehab. 148 99%
51st and King Drive Partnership
Chicago, IL 236 Rehab. 96 96%
Met-Paca II Associates
New York, NY 236 Rehab. 192 99%
Monatiquot Village Associates
Braintree, MA MHFA-New* 324 95%
Norway Housing Associates
Boston, MA MHFA-Rehab.* 136 100%
Notre Dame Apartments
San Francisco, CA 236 Rehab. 205 100%
Southern Boulevard
Partners II
New York, NY 236 Rehab. 175 100%
</TABLE>
* Developed under the auspices of the 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:
WEYERBACHER TERRACE ASSOCIATES (also known as
Boulevard Terrace Associates) is a 296 unit project located in
Indianapolis, Indiana consisting of four and five-story buildings
of masonry construction. This project was formerly St.
Vincent's Hospital and was extensively rehabilitated and
converted into apartments designed for elderly tenants. The
project was rehabilitated under Section 236 of the National
Housing Act.
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
16 Efficiency 400
201 1 Bedroom 570
79 2 Bedroom 710
</TABLE>
CAPITOL HILL ASSOCIATES, is a multi-site 121-unit project,
located one mile from downtown Denver, Colorado. It is situated
within an established area of the city that is evenly mixed with
apartment complexes and single-family dwellings. The project was
financed under the auspices of the United States Department of
Housing and Urban Development (HUD).
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
58 Efficiency 350
35 1 Bedroom 480
20 2 Bedroom 650
8 3 Bedroom 850
</TABLE>
The Partnership sold one of its buildings containing 26 rental
units on December 31, 1986.
COMMUNITY APARTMENTS, LTD. is a 148-unit project located in
Cleveland, Ohio. The project consists of two-story row-type
buildings of wood frame construction with a masonry exterior.
The project was rehabilitated under Section 221(d)(3) of the
National Housing Act.
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
122 2 Bedroom 675
26 3 Bedroom 870-980
</TABLE>
51st AND KING DRIVE PARTNERSHIP (also known as Cummings
Building) is a 96-unit project located at 51st and King Drive in
Chicago, Illinois, consisting of a four-story building of brick
and masonry construction. The project was rehabilitated under
Section 236 of the National Housing Act.
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
9 1 Bedroom 750
55 2 Bedroom 935
2 3 Bedroom 1,120
21 4 Bedroom 1,302
9 5 Bedroom 1,488
</TABLE>
MET-PACA II ASSOCIATES is a multi-site 192-unit project
located in New York City in the area bounded by East 118th and
123rd streets and Park and Lexington Avenues. The project
consists of nine four- and five-story buildings of masonry and
brick construction. The project was rehabilitated under Section
236 of the National Housing Act.
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
44 1 Bedroom 500
96 2 Bedroom 600
41 3 Bedroom 850
11 4 Bedroom 1,110
</TABLE>
MONATIQUOT VILLAGE ASSOCIATES is a 324-unit project
located in Braintree, Massachusetts consisting of 27 three-story
buildings of pre-fabricated concrete construction. The project
was constructed under the auspices of the Massachusetts Housing
Finance Agency.
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
80 1 Bedroom 990
40 1 Bedroom 990
134 2 Bedroom 1,170
25 2 Bedroom 1,170
29 3 Bedroom 1,370
16 3 Bedroom 1,370
</TABLE>
NORWAY HOUSING ASSOCIATES is a 136-unit project located in
Boston, Massachusetts. It is situated in a fine residential area
surrounded by the Fenway District and Northeastern University.
The project was financed under the auspices of the Massachusetts
Housing Finance Agency (MHFA).
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
14 Efficiency 500
92 1 Bedroom 625
26 2 Bedroom 850
4 3 Bedroom 1,050
</TABLE>
NOTRE DAME APARTMENTS is a 205-unit project located in the
Pacific Heights area of San Francisco, California, consisting of
a five-story building of reinforced concrete, cement and plaster
construction. The project is designed for elderly residents and
is a converted hospital. The project was rehabilitated under
Section 236 of the National Housing Act.
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
147 Efficiency 310
58 1 Bedroom 474
</TABLE>
SOUTHERN BOULEVARD PARTNERS II is a 175-unit project
located in the Bronx, New York, consisting of 5 five- and six-story
buildings of brick and masonry construction. The Project was
rehabilitated under Section 236 of the National Housing Act.
<TABLE>
<S> <C> <C> <C>
Number of Units Type Average Size (Sq. Ft.)
1 Efficiency 420
24 1 Bedroom 535
101 2 Bedroom 665
40 3 Bedroom 865
9 4 Bedroom 1,010
</TABLE>
Item 3. Legal Proceedings
There are no material legal proceedings pending, at this
time, other than ordinary routine litigation incidental to the
Partnership's business, including the Local Limited Partnerships
in which the Partnership is a limited partner.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders
through the solicitation of proxies or otherwise.
PART II
Item 5. Market for the Registrant's Securities and Related
Security Holder Matters.
(a) Market Information There is not a ready market for the
transfer of limited partnership interests. Limited partnership
interests may be transferred between individuals with the consent
of the General Partner.
(b) Holders
<TABLE>
<S> <C> <C> <C>
Title of Name & Address of Amount and Nature of % of
Class Beneficial Owner Beneficial Ownership Class
General Interfinancial Real 115 Units 100%
Partner Estate Management Co. ($5,000)
Interest 1201 Third Avenue, Suite 5400
Seattle, Washington 98101 3076
Limited C. T. Holland 625 Units 5.425%
Partner Henderson, Texas 75652 ($625,000)
Interest
711 other 10,779 Units 94.575%
Limited Partners ($10,779,000) 100.000%
</TABLE>
The Registrant has no officers or directors. Interfinancial
Real Estate Management Company, the General Partner of the
Registrant, is a corporation.
(c) Dividends There were no distributions to partners during
1992, 1993, 1994, 1995 or 1996.
Item 6. Selected Financial Data
These statements do not include all disclosures required
under generally accepted accounting principles; however, when
read in conjunction with the related financial statements and
notes thereto included under Item 8, the statements include all
generally accepted accounting principles disclosures for the
latest three years.
<TABLE>
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1996 1995 1994 1993 1991
Interest income $70,644 $31,093 $1,434 $896 $2,053
Expenses:
Professional fees 15,024 14,078 14,310 13,325 14,102
Management fee 57,020 57,020 57,020 57,020 57,020
Amortization of costs of
acquisition 3,333 3,333 6,821 6,821 6,821
Other expenses 2,971 4,185 3,954 8,471 1,143
78,348 78,616 82,105 85,637 79,086
Loss before equity in income
(loss) of Local Limited
Partnerships (7,704) (47,523) (80,671) (84,741) (77,033)
Equity in income (loss)
of Local Limited
Partnerships 256,509 (1,186,846) 536,636 642,177 641,929
Net income (loss) $248,805 $1,234,369) $455,965 $557,436 $564,896
Allocation of net income (loss):
Net income (loss)
allocated to
General Partner 2,488 (12,344) $4,560 $5,574 $5,649
Net income (loss)
allocated to
Limited Partners 246,317 (1,222,025) 451,405 551,862 559,247
$248,805 $(1,234,369) $455,965 $557,436 $564,896
Net financial reporting income
(loss) per units:
General partnership units
(115 units outstanding
allocated to General
Partner) $22 $(107) $40 $48 $49
Limited Partnership units
(11,404 units outstanding
allocated to Limited
Partners) $22 $(107) $40 $48 $49
Total
Assets $2,556,685 $2,293,578 $3,514,400 $3,058,517 $2,499,583
Long-term
obligations $-0- $-0- $-0- $-0- $-0-
Cash
distributions $-0- $-0- $-0- $-0- $-0-
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The Partnership has followed the practice of investing
available funds not used in the purchase of properties
or in operations into short-term investments. Interest income
resulted from such short-term investments. The Partnership is
dependent upon interest earned and the distributions and
repayment of advances from Local Limited Partnerships for cash
flow. As shown in the table below, the Partnership has received
distributions in recent years (including $15,216 in 1992 through
1996 from the sale of Elk Grove Village). This trend is expected
to continue.
The Partnership has advanced funds to selected Local Limited
Partnerships. The General Partner does not believe these net
advances will significantly affect the operations of the
Partnership.
<TABLE>
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
Urban's share of
distributions $60,553 $1,290,551 $82,596 $40,101 $62,027
Advances (made to)
repaid by
Local Limited
Partnerships $21,343 $(1,890) $9,723 $2,034 $2,212
</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 $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 $57,020 per year from 1992 through
1996. The Partnership will also pay the General Partner a
liquidation fee for the sale of projects. The liquidation fee is
the lesser of (i) ten percent of the net proceeds to the
Partnership from the sale of a project(s) or (ii) one percent of
the sales price plus three percent of the net proceeds after
deducting an amount sufficient to pay long-term capital
gains taxes. No part of such fee shall accrue or be paid unless:
(i) the Limited Partners' share of the proceeds has
been distributed to them, (ii) the Limited Partners shall have
first received an amount equal to their invested capital
attributable to the project(s) sold, and (iii) the Limited
Partners have received an amount sufficient to pay long-
term capital gains taxes from the sale of the project(s), if any,
calculated at the maximum rate then in effect.
At December 31, 1996, the Partnership had investments in nine
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 in Local Limited
Partnerships resulted from several Local Limited Partnerships,
whose investments have not been reduced to zero, reporting income
from operations and/or Local Limited Partnerships, whose
investments have been reduced to zero, who paid distributions or
repaid an advance. Additional advances to Local Limited
Partnerships, after an investment is reduced to zero, are
recorded as losses. The real estate of the Elk Grove Village
Partnership was sold during 1984. The Partnership holds a note
receivable that accrues interest. The components of the
Partnership's equity in net income (loss) of the Local Limited
Partnerships for 1996, 1995 and 1994 is summarized as follows:
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
Net repayments of advances by (advances to)
Partnerships with zero investments:
Capitol Hill $19,871 $4,860 $9,723
Distributions received from Partnerships
with zero investments:
51st and King 3,375 5,103 7,453
Elk Grove Village 15,217 15,216 15,216
Norway House 10,654 -0- -0-
Income (loss) from investments with
non-zero investment:
Norway House -0- (1,347,256) 389,280
Notre Dame 207,39 135,231 114,964
$256,509 $(1,186,846) $536,636
</TABLE>
The actual combined losses of Local Limited Partnerships will
generally decrease as depreciation and interest decreases and the
projects achieve stable operations. Much of the rental revenue
of the Local Limited Partnerships is dependent on subsidy. The
rents have increased for inflation and operating costs. In
recent years, several Local Limited Partnerships increased
operating expenses to fund repairs and maintenance on the
projects. Such repairs are limited by available cash flow. The
distributions to the Partnership from Local Limited Partnerships
are the result of the profitable operations of these projects.
Liquidity
The Partnership is dependent upon distributions from its
investments in Local Limited Partnerships for cash flow. The
Partnership may not be able to generate sufficient cash flow from
operations or from distributions from its interests in Local
Limited Partnerships to pay future obligations as they become
due without additional financing or advances from the General
Partner. The General Partner is under no obligation to advance
additional funds to the Partnership. The General Partner,
however, anticipates it will receive adequate distributions from
the Local Limited Partnerships to maintain operations.
Capital Resources
The General Partner believes that situations may arise where
it would be advantageous to the Partnership to exchange
properties in a tax-free transaction. The Partnership's basis in
its properties has been reduced through depreciation deductions
and other losses to levels substantially below the amount of debt
secured by the properties. Additionally, the rental properties
owned and operated by the Local Limited Partnerships have
typically computed depreciation for financial reporting purposes
using the straight-line method over the estimated economic useful
life of the property. For income tax reporting purposes,
depreciation generally has been computed over the same or shorter
periods using accelerated methods. As a result, the carrying
values of the Partnership's investments in Local Limited
Partnerships are substantially greater for financial reporting
purposes than for income tax reporting purposes. Upon sale or
other disposition of a property by the Local Limited Partnership,
the gain recognized by the Partnership for income tax reporting
purposes may be substantially greater than the gain recorded for
financial reporting purposes. Accordingly, if the properties
are sold, the Partnership may recognize taxable gain in excess of
the cash available for distribution. If sale proceeds are
reinvested in a manner which permits the original sale to be
treated as a like- kind exchange, the Partnership 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 are
made, it is likely that the acquired properties will be
conventional, multi-family residential projects. The Partnership
has had inquiries about the sale or exchange of properties in its
portfolio, but no offers have been made.
The partnership has made no material commitments for capital
expenditures.
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted in a separate section
of this report.
Item 9. Change In and Disagreements with Accountants on
Accounting and Financial Disclosure
There have been no disagreements with accountants on any
matters of accounting principles or practices or
financial statement disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The General Partner of the Registrant is Interfinancial
Real Estate Management Company. The Registrant does not have
directors as such. The following is a listing of the Directors
of the General Partner of the Registrant. These Directors are
elected to serve one-year terms and will continue to serve until
their successors are duly elected and qualified as directors.
<TABLE>
<S> <C> <C> <C>
Name Age Office
Paul H. Pfleger 61 Director/President
John M. Orehek 42 Director/Senior Vice President
</TABLE>
(b) The General Partner of the Registrant is Interfinancial
Real Estate Management Company. The Registrant does not have
executive officers as such. The following is a listing of the executive
officers of the General Partner of the Registrant. These executive officers
are elected to serve one-year terms and will continue to serve until their
successors are duly elected and qualified as executive officers.
<TABLE>
<S> <C> <C> <C>
Name Age Office
Paul H. Pfleger 61 Chairman of the Board
John M. Orehek 42 Senior Vice President
Michael Fulbright 42 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:
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 over
280 properties with approximately 38,000 housing units throughout the
United States.
John M. Orehek, Senior Vice President. Mr. Orehek is the Chief
Executive Officer and President of Security Properties Investment Inc.
From 1982 to 1987, he was employed by Security Properties Inc. (SPI) as
President of First Columbia Corporation, its affiliated broker/dealer, and
Senior Vice President of SPI. From 1987 to 1991, when he rejoined SPI,
he was President of Hallmark Capital Partners, Ltd., a Seattle real estate
development corporation. From 1979 to 1982 he was a member of the tax
department in the Cleveland, Ohio and Seattle, Washington offices of
Arthur Andersen & Co., Certified Public Accountants. He received a B.S.
degree in Economics from Allegheny College, Meadville, Pennsylvania and
a law degree from Case Western Reserve University School of Law. Mr.
Orehek was first elected a director of the General Partner, Interfinancial
Real Estate Management Company, during 1992.
Michael Fulbright, Secretary. Mr. Fulbright is General Counsel
for Security Properties Inc. He joined the Company in 1989 as Special
Counsel responsible for new development activities and sales and financing
transactions in the syndication portfolio. Prior to joining SPI, he was a
partner at Tousley Brain, a Seattle law firm that specializes in commercial
real estate matters. His practice there included representation of lenders,
institutional investors and commercial developers. He received a Masters
of Business Administration degree from Texas A&M and a law degree
from the University of Washington. He is a member of the Washington
State Bar Association. Mr. Fulbright was first elected an officer of the
General Partner, Interfinancial Real Estate Management Company, during
1994.
(f) Section 20 of the Amended Certificate and Agreement of
Limited Partnership of the Registrant provides for the indemnification of
the General Partner and its designees and nominees against liability
resulting from errors in judgment or any acts or omissions, whether or not
disclosed, unless caused by a breach of fiduciary duty of such
parties to the Registrant or its limited partners. None of the officers or
directors of the General Partner of the registrant have filed a petition under
the federal bankruptcy laws or any state insolvency act, nor have they been
engaged in any acts over the past five years that would impair their ability
or integrity as directors or executive officers of the General Partner of the
registrant.
Item 11. Executive Compensation
(a) The Registrant does not pay any salary or other remuneration to the
officers of the General Partner of the Registrant.
(b) The Registrant has no plan or arrangement to pay any salary or
other remuneration to the officers in the future.
(c) There are no options, warrants, rights or any other such
remuneration available to the General Partner of the Registrant.
(d) The Registrant will not pay any salary or other remuneration to the
directors of the General Partner of the Registrant.
(e) There are no retirement benefit plans or other remuneration that
would result from the resignation, retirement, termination or any other
change in control of any officer or director of the General Partner of the
Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
(a) Security Ownership of Certain Beneficial Owners
<TABLE>
<S> <C> <C> <C>
Title of Name & Address of Amount and Nature of % of
Class Beneficial Owner Beneficial Ownership Class
General Interfinancial Real 115 Units 100%
Partner Estate Management Co. ($5,000)
Interest 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.
Item 13. Certain Relationships and Related Transactions
(a) There are no transactions in which the directors or
officers of the General Partner or security holder of
the Registrant have a material interest.
(b) There are no transactions in which the directors of the
General Partner have a material interest.
(c) There is no indebtedness of the management of the
General Partner of the Registrant to the Registrant.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports
on Form 8-K.
(a) 1. Financial Statements:
Report of independent certified public accountants.
Balance Sheets at December 31, 1996 and 1995.
Statements of Income for the years ended December 31, 1996, 1995 and
1994.
Statements of Changes in Partners' Capital for the years ended December
31, 1996, 1995 and 1994.
Statements of Cash Flows for the years ended December 31, 1996, 1995
and 1994.
Notes to Financial Statements.
(a) 2. Financial Statement Schedules:
IV Indebtedness of and to Related Parties
XI Real Estate and Accumulated Depreciation and
Amortization of Local Limited Partnerships.
All other schedules are omitted because they are not applicable or the
required information is included in the financial statements or the notes
thereto.
FINANCIAL STATEMENTS OF UNCONSOLIDATED SUBSIDIARIES FIFTY PERCENT
OWNED PERSONS OR OTHER UNCONSOLIDATED PERSONS ACCOUNTED FOR ON THE
EQUITY METHOD
Separate financial statements of the nine 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 Pre-Effective Amendment No. 2 to Registration Statement
on Form S-11 filed July, 1974.
3.A. Amended Certificate and Agreement of Limited Partnership,
incorporated by reference from Pre-Effective Amendment No. 2
on form S-11 filed July, 1974.
3.B. Amendment to Certificate of Limited Partnership,
incorporated by reference from Pre-Effective Amendment No. 2 to
Registration Statement on Form S-11 filed July, 1974.
3.C. Amendment to certificate of Limited Partnership.
Incorporated by reference from proxy statement filed September 18, 1991.
4.A. Subscription agreement incorporated by reference
from Pre-Effective Amendment No. 2 to Registration Statement on Form
S-11 filed July, 1974.
5.A. Opinion and Consent of Counsel, incorporated by
reference from Pre- Effective Amendment No. 2 to Registration
Statement on Form S-11 filed July, 1974.
8.A. Opinion and Consent of special Tax Counsel,
incorporated by reference from Pre-Effective Amendment No. 2 to
Registration Statement on Form S-11 filed July, 1974.
8.B-1 Tax Ruling from the Internal Revenue Service dated
July 10, 1974, incorporated by reference from Pre-Effective Amendment
No. 2 to Registration Statement on Form S-11 filed July, 1974.
8.B-2 Supplemental Tax ruling from the Internal Revenue
Service dated July 19, 1974, incorporated by reference from Pre-Effective
Amendment No. 2 to Registration Statement on Form S-11 filed July,
1974.
10.A. Correspondence between the Management Company on
behalf of the General Partner, with various developers, constituting
agreements to invest in local limited partnerships, incorporated by
reference from Pre-Effective Amendment No. 2 to Registration Statement
on Form S-11 filed July, 1974.
10.B. Extension of Maturity Date of promissory note dated
April 18, 1990 on behalf of Elk Grove Village Associates by Elk Grove
Investors, Ltd.
16.A. Copy of letter of Price Waterhouse & Co. regarding
change in certifying accountant, incorporated by reference from Form 8-K
filed July, 1976.
28.A. Letter to investors dated August 28, 1974 regarding
status of the offering, incorporated by reference from Post-Effective
Amendment No. 1 to Registration Statement on Form S-11 filed
August, 1974.
28.B. Sticker Supplement dated August 28, 1974 to Prospectus
dated July 23, 1974, incorporated by reference from Pre-Effective
Amendment No. 1 to Registration Statement on Form S-11 filed August,
1974.
28.C. Balance Sheet (unaudited) dated June 30, 1974 of
Interfinancial Real Estate Management Company, incorporated by
reference from Pre-Effective Amendment No. 1 to Registration Statement
on Form S-11 filed August, 1974.
28.D. Letters to Subscribers dated January 21, 1975 and
February 7, 1975 relating to tax reporting information and status of
the offering, incorporated by reference from Pre-Effective Amendment
No. 2 to Registration Statement on Form S-11 filed February,
1975.
28.E. Net worth statements by general partners of local
limited partnerships, incorporated by reference from Pre-Effective
Amendment No. 3 to Registration Statement on Form S-11 filed March,
1975.
28.F. Table of limited partnership interests acquired in
local distribution entities, incorporated by reference from Form 8-K
filed December, 1974.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last
quarter of 1995.
(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.
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 1974
BY: INTERFINANCIAL REAL ESTATE
MANAGEMENT COMPANY
Date: 08-22-97
By: Paul H. Pfleger
President
Interfinancial Real Estate Management Company
Date: 08-22-97
By: John M. Orehek
Senior Vice President
Interfinancial Real Estate Management Company
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: 08-22-97
By: Paul H. Pfleger, Director
Interfinancial Real Estate Management Company
Date: 08-22-97
By: John M. Orehek, Director
Interfinancial Real Estate Management Company.
URBAN IMPROVEMENT FUND LIMITED 1974
SEATTLE, WASHINGTON
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2) AND ITEM 14(d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES
YEAR ENDED December 31, 1996
URBAN IMPROVEMENT FUND LIMITED 1974
(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
1974 are included in Item 8 and Item 14(a)(1)
Independent auditors' report . . . . .. . . . . . . . . . . . . F-3
Balance sheets at December 31, 1996 and 1995 . . . . . . . ... . F-4
Statements of income (loss) for the
years ended December 31, 1996, 1995 and 1994. . . . . . ...... . F-5
Statements of changes in partners' capital for the
years ended December 31, 1996, 1995 and 1994. . . . . . . .... . F-5
Statements of cash flows for the
years ended December 31, 1996, 1995 and 1994. . . . . . . ... . F-6
Notes to financial statements. . . . . . . . . . . . . . . . . . F-7
The following financial statement schedules of Urban Improvement
Fund Limited 1974 are included in Item 14(a)(2) and 14(d):
IV. Indebtedness of and to Related Parties. . . . . . . . .. . .F-22
XI. Real Estate and Accumulated Depreciation of
Local Limited Partnerships. . . . . . . . . . . . . . . .F-23
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 nine limited partnerships accounted for
on the equity method have been omitted because combined financial
statements are included in Note 4 to the financial statements.
INDEPENDENT AUDITORS' REPORT
To The Partners
Urban Improvement Fund Limited 1974
We have audited the accompanying balance sheets of Urban
Improvement Fund Limited 1974 (a Limited Partnership),
as of December 31, 1996 and 1995, and the related statements of
changes in partners' capital, income (loss) and cash flows
for the years ended December 31, 1996, 1995 and 1994 and the
related schedules listed in Item 14(a)(2) of the annual report
on Form 10-K of Urban Improvement Fund Limited 1974 for the
years ended December 31, 1996, 1995 and 1994. These
financial statements and financial statement schedules are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We did not audit the financial statements of seven of Urban
Improvement Fund Limited 1974'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's investment in these
Partnerships represents zero percent of total assets at December
31, 1996 and zero percent of total assets at December 31,
1995; and its equity in their operations represents twelve
percent of the net income for 1996 and ninety-seven percent of
the net loss for 1995.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan
and perform the audits 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 1974 as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years ended December 31, 1996, 1995 and 1994, in
conformity with generally accepted accounting principles. In
addition, in our opinion, based upon our audits and the reports
of other auditors, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required therein.
Atlanta, Georgia
June 4, 1997
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<S> <C> <C>
December 31,
1996 1995
Cash and cash equivalents $1,394,990 $1,303,161
Investments in and advances to Local
Limited Partnerships accounted for
on the equity method Notes 4, 5, 6 and 7
(Schedules IV and XI) 1,161,695 990,417
$2,556,685 $2,293,578
LIABILITIES AND PARTNERS' CAPITAL
Distributions payable $ 2,096 $ 2,096
Accounts payable 47 -0-
Management fee payable 28,510 14,255
Partners' capital Note 2
General Partners 115 partnership units
Authorized, issued and outstanding 25,260 22,772
Limited Partners 11,404 partnership units
Authorized, issued and outstanding 2,500,772 2,254,455
2,526,032 2,277,227
Commitments and
contingent liabilities Note 3 $2,556,685 $2,293,578
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
STATEMENTS OF INCOME (LOSS)
<TABLE>
<S> <C> <C> <C>
Year Ended December 31,
1996 1995 1994
Interest income $ 70,644 $ 31,093 $ 1,434
Expenses:
Professional fees 15,024 14,078 14,310
Management fees Note 3 57,020 57,020 57,020
Amortization of
costs of acquisition 3,333 3,333 6,821
Other expenses 2,971 4,185 3,954
78,348 78,616 82,105
Loss before equity in income (loss)
of Local Limited
Partnerships (7,704) (47,523) (80,671)
Equity in income (loss) of
Local Limited
Partnerships Note 4 256,509 (1,186,846) 536,636
Net income (loss) $ 248,805 $(1,234,369) $ 455,965
Allocation of net income (loss):
Net income (loss) allocated to
General Partners 2,488 (12,344) $ 4,560
Net income (loss) allocated to
Limited Partners 246,317 (1,222,025) 451,405
$ 248,805 $(1,234,369) $ 455,965
Net financial reporting income (loss)
per unit:
General partnership units (115
units outstanding allocated
to General Partner) $ 22 $ (107) $ 40
Limited partnership units (11,404
units outstanding allocated
to Limited Partners) $ 22 $ (107) $ 40
</TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<S> <C> <C> <C>
General Limited
Partner Partners Total
Partners' capital at
January 1, 1995 $ 35,116 $ 3,476,480 $ 3,511,596
Net loss 1995 (12,344) (1,222,025) (1,234,369)
Partners' capital at
December 31, 1995 22,772 2,254,455 2,277,227
Net income 1996 2,488 246,317 248,805
Partners' capital at
December 31, 1996 $ 25,260 $ 2,500,772 $ 2,526,032
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C>
Year Ended December 31,
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 248,805 $(1,234,369) $ 455,965
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Amortization of initial
and rent up fees 3,333 3,333 6,821
Increase in
accounts payable 47 -0- -0-
Increase in management
fee payable 14,257 14,255 -0-
Equity in loss (income)
of Local Limited
Partnerships (256,509) 1,186,846 (536,636)
Total adjustments (238,872) 1,204,434 (529,815)
Net cash provided (used)
by operating activities 9,933 (29,935) (73,850)
CASH FLOWS FROM INVESTING ACTIVITIES:
Current year distributions 60,553 1,290,551 82,596
Net repayments from (advances
to) Local Limited
Partnerships 21,343 (1,890) 9,723
Net cash provided by
investing activities 81,896 1,288,661 92,319
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in
distribution payable -0- (708) (82)
Net cash provided (used) by
financing activities -0- (708) (82)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 91,829 1,258,018 18,387
CASH BALANCE AT
BEGINNING OF YEAR 1,303,161 45,143 26,756
CASH BALANCE AT
END OF YEAR $1,394,990 $ 1,303,161 $ 45,143
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
Note 1 Organization and Accounting Policies
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, speci-fied 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 propor-tion 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.
Investment in Local Limited Partnerships
As of December 31, 1996 and 1995, the Partnership had investments
in nine active real estate limited partnerships (Local Limited Partnerships),
which are accounted for on the equity method (Note 4). The investment
account represents the sum of the capital investment and unamortized cost
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. 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 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 (15 to 40 years) of the
Local Limited Partnership 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 6). This Partnership (Elk Grove
Elderly) holds a note receivable for a portion of the sales proceeds.
The Partnerships' equity in income (loss) of the Local Limited
Partnerships is summarized as follows:
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
Repayment of advances by (advances to)
Partnerships with zero investments:
Capitol Hill $ 19,871 $ 4,860 $ 9,723
Distributions received from Partnerships
with zero investments:
51st and King 3,375 5,103 7,453
Elk Grove 15,217 15,216 15,216
Norway House 10,654 -0- -0-
Income (loss) from investments with
non-zero investment:
Norway House -0- (1,347,256) 389,280
Notre Dame 207,392 135,231 114,964
$ 256,509 $(1,186,846) $ 536,636
</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.
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.
Fair Value of Financial Instruments and Use of Estimates
The Partnership estimates that the aggregate fair value of all
financial instruments at December 31, 1996 does not differ materially from
the aggregate carrying values of its financial instruments recorded in the
balance sheet. These estimates are not necessarily indicative of the
amounts that the Partnership could realize in a current market exchange.
The preparation of financial statements requires the use of estimates and
assumptions. Actual results could differ from those estimates.
Note 2 Reconciliation Between Net Income (Loss) and Partners'
Capital (Deficit) of the Partnership For Financial Reporting
Purposes and Income Tax Reporting Purposes
A reconciliation of the Partnership's income (loss)for financial
reporting purposes and the Partnership's income (loss) for income tax
reporting purposes follows:
<TABLE>
<S> <C> <C> <C>
Year Ended December 31,
1996 1995 1994
Net income (loss) for financial
reporting purposes $ 248,805 $(1,234,369) $ 455,965
Amortization of initial and rent-up
fees and other costs of acquisition
capitalized for financial reporting
purposes and previously deducted for
income tax purposes 3,333 3,333 6,821
Equity in losses reported by Local
Limited Partnerships for income
tax reporting purposes in excess
of income (losses) for financial
reporting purposes 663,282 (2,443,172) 1,130,947
Accrual and other adjustments for
financial reporting purposes 19,370 256,027 (5,118)
Net income (loss) as reported on the
federal income tax return $ 934,790 $(3,418,181) $1,588,615
</TABLE>
A reconciliation between partners' capital for financial reporting purposes
and partners' capital (deficit) for income tax reporting purposes follows:
<TABLE>
<S> <C> <C> <C>
Year Ended December 31,
1996 1995 1994
Partners' capital for financial
reporting purposes $ 2,526,032 $ 2,277,227 $ 3,511,596
Unamortized portion of initial and
rent-up fees and other costs of
acquisition capitalized for
financial reporting purposes
and previously deducted
for income tax purposes (909,023) (912,356) (915,688)
Commissions and offering expenses
capitalized for income tax purposes
and charged to capital for financial
reporting purposes 1,315,039 1,315,039 1,315,039
Equity in cumulative losses of Local
Limited Partnerships for income tax
reporting purposes in excess of
losses for financial reporting
purposes (24,005,801) (24,669,082) (22,486,781)
Accrual and other
adjustments for
financial reporting
purposes 33,625 14,255 -0-
Partners' capital (deficit) as
reported on the federal income
tax return $(21,040,128) $(21,974,917) $(18,575,834)
</TABLE>
The Partnership has received a ruling from the Internal Revenue
Service that the basis of the limited partners' interest 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.
Note 3 Management of Urban Improvement Fund Limited
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.) In 1996, 1995 and 1994, the minimum annual management
fee of $57,020 was earned and recorded as an expense of the Partnership.
The Partnership will also pay the General Partner a liquidation fee for the
sale of projects. The liquidation fee is the lesser of (i) ten percent
of the net proceeds to the Partnership from the sale of a project(s) or (ii)
one percent of the sales price plus three percent of the net proceeds after
deducting an amount sufficient to pay long-term capital gains taxes. No
part of such fee shall accrue or be paid unless: (i) the
Limited Partners' share of the proceeds has been distributed to them, (ii)
the Limited Partners shall have first received an amount equal to their
invested capital attributable to the project(s) sold, and (iii) the Limited
Partners have received an amount sufficient to pay long-term capital gains
taxes from the sale of the project(s), if any, calculated at the maximum rate
then in effect.
The General Partner of the Partnership is a corporation 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. No fees were paid to PSI during 1996, 1995 or 1994. In
addition, as shown in the following table, PSI has become the General
Partner in three of the Local Limited Partnerships in which the Partnership
has or had investments:
<TABLE>
<S> <C>
Date PSI Became
Local Limited Partnership General Partner
Notre Dame Apartments March 1977
Capitol Hill Associates December 1978
Logan-Washington Associates December 1978
</TABLE>
Note 4 Investments in Local Limited Partnerships Accounted for
on the Equity Method
The Partnership has ninety-five percent to ninety-nine percent
interests in profits and losses of the Local Limited
Partnerships. Investments in these Local Limited Partnerships were made
in installments based typically on the stages of completion and/or
occupancy.
Investment in and advances to the Local Limited Partnerships
accounted for on the equity method are as follows:
<TABLE>
<S> <C> <C> <C>
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1996:
Capitol Hill $ 277,900 $ (1,043,449) $ (765,549)
Community Apts. 287,244 (1,139,924) (852,680)
Elk Grove Village (30,434) 30,434 -0-
51st & King Drive 192,349 (948,683) (756,334)
Met-Paca II 1,219,550 (5,676,866) (4,457,316)
Monatiquot Village 940,000 (8,406,176) (7,466,176)
Norway Housing (1,053,606) (95,223) (1,148,829)
Notre Dame 287,991 804,668 1,092,659
Southern Boulevard II 588,464 (2,543,146) (1,954,682)
Weyerbacher Terrace 703,080 (2,320,601) (1,617,521)
$3,412,538 $(21,338,966) $(17,926,428)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
December 31, 1996:
Capitol Hill $ 524,336 $ 177,231 $ 63,982 $ -0-
Community Apts. 797,754 -0- 54,926 -0-
Elk Grove Village -0- -0- -0- -0-
51st & King Drive 709,364 -0- 46,970 -0-
Met-Paca II 4,325,984 -0- 131,332 -0-
Monatiquot Village 7,180,511 -0- 285,665 -0-
Norway Housing 1,118,302 -0- 30,527 -0-
Notre Dame -0- 5,278 63,758 1,161,695
Southern Boulevard II 1,850,290 -0- 104,392 -0-
Weyerbacher Terrace 1,490,053 -0- 127,468 -0-
$17,996,594 $ 182,509 $ 909,020 $1,161,695
</TABLE>
<TABLE>
<S> <C> <C> <C>
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1995:
Capitol Hill $ 277,900 $ (1,138,514) $ (860,614)
Community Apts. 287,244 (1,075,000) (787,756)
51st & King Drive 195,724 (1,094,332) (898,608)
Met-Paca II 1,219,550 (5,571,743) (4,352,193)
Monatiquot Village 940,000 (8,088,423) (7,148,423)
Norway Housing (1,042,953) (305,914) (1,348,867)
Notre Dame 319,300 597,276 916,576
Southern Boulevard II 588,464 (2,766,272) (2,177,808)
Weyerbacher Terrace 703,080 (2,208,478) (1,505,398)
$ 3,488,309 $(21,651,400) $(18,163,091)
</TABLE>
<TABLE>
<S> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
December 31, 1995:
Capitol Hill $ 599,530 $ 197,102 $ 63,982 $ -0-
Community Apts. 732,830 -0- 54,926 -0-
51st & King Drive 851,638 -0- 46,970 -0-
Met-Paca II 4,220,861 -0- 131,332 -0-
Monatiquot Village 6,862,758 -0- 285,665 -0-
Norway Housing 1,318,339 -0- 30,528 -0-
Notre Dame -0- 6,750 67,091 990,417
Southern Boulevard II 2,073,416 -0- 104,392 -0-
Weyerbacher Terrace 1,377,929 -0- 127,469 -0-
$18,037,301 $ 203,852 $ 912,355 $ 990,417
</TABLE>
The combined balance sheets of the Local Limited Partnerships,
accounted for on the equity method at December 31, 1996 and 1995, and
the related combined statements of income, changes in partners capital
(deficit) and cash flows and selected footnote disclosures from the audited
financial statements for the years ended December 31, 1996, 1995 and
1994, are summarized as follows:
COMBINED BALANCE SHEETS OF LOCAL LIMITED
PARTNERSHIPS
Assets
<TABLE>
<S> <C> <C>
December 31,
1996 1995
Cash $ 1,154,174 $ 1,305,143
Cash in escrow and other
restricted funds 4,018,535 3,824,722
Accounts receivable 140,742 227,502
Prepaid expenses 508,995 406,944
Other assets (net of
accumulated amortization) 501,213 425,871
6,323,659 6,190,182
Property on the basis of cost:
Land 1,637,381 1,637,381
Buildings and improvements 49,259,098 48,732,104
50,896,479 50,369,485
Less accumulated
depreciation (39,024,325) (37,571,751)
11,872,154 12,797,734
$ 18,195,813 $ 18,987,916
</TABLE>
Liabilities and Partners' Capital (Deficit)
<TABLE>
<S> <C> <C>
Mortgage notes payable $ 32,806,320 $ 34,033,309
Accounts payable and
accrued expenses 1,186,924 1,342,507
Notes payable 3,926,789 3,547,492
Advances from Urban
Improvement Fund Limited 1974 182,509 203,852
Tenants' security and
other deposits 400,547 409,135
38,503,089 39,536,295
Partners' capital (deficit) per
accompanying statements (20,307,276) (20,548,379)
$ 18,195,813 $ 18,987,916
</TABLE>
COMBINED STATEMENTS OF INCOME (LOSS) OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<S> <C> <C> <C>
December 31,
1996 1995 1994
Revenue:
Net rental income $12,423,399 $12,152,955 $12,318,151
Financial income 412,522 459,080 222,748
Other income 108,247 131,608 349,771
12,944,168 12,743,643 12,890,670
Expenses:
Administrative 2,118,987 2,132,480 2,070,220
Utilities 2,341,588 2,238,369 2,189,730
Operating 3,347,357 3,429,303 2,911,237
Taxes and insurance 1,552,464 1,428,173 1,337,813
Total Operating Expenses 9,360,396 9,228,325 8,509,000
Net Operating Income 3,583,772 3,515,318 4,381,670
Non-operating expenses:
Financial expenses 1,753,314 4,621,490 1,624,918
Depreciation expenses 1,503,842 1,747,112 1,838,475
Other expenses 24,302 30,283 62,190
3,281,458 6,398,885 3,525,583
Net income (loss) $ 302,314 $(2,883,567) $ 856,087
</TABLE>
Amortization of capitalized interest was $44,436 in 1996, 1995 and 1994.
COMBINED STATEMENTS OF CHANGES IN PARTNERS'
CAPITAL (DEFICIT) OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<S> <C> <C> <C> <C>
Urban
Improvement Other
Fund Limited General
Limited Partners Partners Total
Partners capital (deficit)
at January 1, 1994 $(14,712,976) $ (3,366) $(878,502) $(15,594,844)
Net income 1994 822,353 309 33,425 856,087
Distributions 1994 (82,596) -0- (1,068) (83,664)
Partners capital (deficit) at
December 31, 1994 (13,973,219) (3,057) (846,145) (14,822,421)
Net income 1995 (2,752,441) 223 (131,349) (2,883,567)
Distributions 1995 (1,437,431) -0- (1,404,960) (2,842,391)
Partners capital (deficit) at
December 31, 1995 (18,163,091) (2,834) (2,382,454) (20,548,379)
Net income 1996 297,216 335 4,763 302,314
Distributions 1996 (60,553) -0- (658) (61,211)
Partners capital (deficit) at
December 31, 1996 $(17,926,428) $(2,499) $(2,378,349)$(20,307,276)
</TABLE>
STATEMENTS OF CASH FLOWS OF
LOCAL LIMITED PARTNERSHIPS
<TABLE>
<S> <C> <C> <C>
December 31,
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 302,314 $(2,883,567) $ 856,087
Adjustments to reconcile net
income (loss) to net cash
provided (used) by operating
activities:
Depreciation and
amortization 1,503,842 1,747,112 1,716,433
Decrease (increase) in
receivables, escrows, restricted
deposits, prepaid expenses
and other assets (335,714) (323,452) (294,795)
Increase (decrease) in accounts
payable, accrued expenses,
notes payable and tenant
security deposit liability (164,171) 183,808 (241,792)
Total adjustments 1,003,957 1,607,468 1,179,846
Net cash provided (used)
by operating activities 1,306,271 (1,276,099) 2,035,933
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (526,994) (580,266) (694,582)
Net cash used by
investing activities (526,994) (580,266) (694,582)
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage principal
payments (1,226,989) (912,763) (623,766)
Proceeds from recapitalization
of mortgage -0- 2,623,679 -0-
Increase (decrease) in
notes payable 371,628 (146,583) 347,253
Distributions paid (61,211) (2,842,391) (83,663)
Advances from (repayments to)
affiliates- net (13,674) 1,890 (11,423)
Net cash used by financing
activities (930,246) (1,276,168) (371,599)
INCREASE IN CASH AND CASH
EQUIVALENTS (150,969) (3,132,533) 969,752
CASH BALANCE AT BEGINNING
OF YEAR 1,305,143 4,437,676 3,467,924
CASH BALANCE AT END
OF YEAR $ 1,154,174 $1,305,143 $ 4,437,676
</TABLE>
SUPPLEMENTAL INFORMATION REGARDING INTEREST PAYMENTS IS AS FOLLOWS:
<TABLE>
<S> <C> <C> <C>
Interest paid,
net of subsidy $ 1,274,606 $1,498,104 $ 918,000
</TABLE>
A reconciliation between the combined net income (loss) for
financial reporting purposes and the combined income (loss) for income tax
reporting purposes follows:
<TABLE>
<S> <C> <C> <C>
For the Year Ended December 31,
1996 1995 1994
Combined net income (loss)
for financial reporting
purposes $ 302,314 $(2,883,567) $ 856,087
Excess of depreciation
for financial reporting
purposes over depreciation
for tax reporting purposes 439,323 653,149 729,932
Accrual adjustments for
financial reporting
purposes 27,285 12,033 (27,355)
Combined net income (loss)
for income tax purposes
as reported on the federal
income tax returns $ 768,922 $(2,218,385) $1,558,664
</TABLE>
A reconciliation between combined partners' capital (deficit) for
financial reporting purposes and combined partners' capital (deficit) for
income tax reporting purposes follows:
<TABLE>
<S> <C> <C> <C>
December 31,
1996 1995 1994
Combined partners' capital
(deficit) for financial
reporting purposes $(20,307,276) $(20,548,379) $(14,822,421)
Carrying costs during construction
capitalized for financial
reporting purposes, excess of
depreciation for tax reporting
purposes over depreciation
for financial reporting purposes
and accrual adjustments for
financial reporting purposes (2,869,058) (3,336,027) (4,002,189)
Combined partners' capital
(deficit) as reported on the
federal income tax returns $(23,176,334) $(23,884,406) $(18,824,610)
</TABLE>
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 during the construction period. For income tax
purposes, certain of these amounts were deducted when paid.
Depreciation and amortization
For financial statement purposes, depreciation is computed using
straight-line and various accelerated methods over useful lives of fifteen to
forty years from the date of completion of the building or rehabilitation. For
income tax purposes, buildings are depreciated over fifteen 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
reporting purposes using the straight-line method over periods of five 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 $32,806,320
at December 31, 1996 ($20,996,289 by HUD and $11,810,031 by MFHA)
and $34,033,309 at December 31, 1995 ($21,516,546 by HUD and
$12,516,763 by MFHA). The mortgage notes payable are secured by deeds
of trust on rental property and bear interest at rates of seven percent to nine
and one-half percent per annum. The mortgages are payable
in monthly installments of principal and interest of approximately $275,000
over periods of forty years. HUD makes interest reduction payments on the
mortgages insured under Section 236 in amounts which effectively 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:
<TABLE>
<S> <C> <C>
Year Ended December 31, Amount
1997 $ 1,008,284
1998 1,026,174
1999 1,139,641
2000 1,196,998
2001 963,211
Beyond 27,472,012
$32,806,320
</TABLE>
National Housing Act Subsidies and Restrictions
Under terms of the regulatory agreements 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 the respective agencies. As of December 31,
1996, approximately $3,460,000 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 the respective agencies.
All of the Local Limited Partnerships have entered into rent
supplement and/or Section 8 contracts with HUD or state agencies to
provide financial assistance to qualified tenants of the apartment units.
Under terms of these contracts, HUD will pay a portion of the rent on
behalf of qualified tenants. The maximum dollar amount of these
payments is limited by HUD. A substantial portion of rental
income is collected through these contracts. During 1996, the Local
Limited Partnerships received approximately $4,808,000 in rent supplement
and Section 8 funds.
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 four percent
to eleven percent of the gross revenues of the respective projects. The
management agents are affiliated with the general partners of the Local
Limited Partnerships.
Note 5 Sale of the Assets of Elk Grove Village
The property of Elk Grove Village was sold during 1984. The
sales price of $11,235,930 was composed of $5,855,464 for assumption of
the underlying mortgage and installment payments as follows:
<TABLE>
<S> <C> <C>
Urban 74 General Partner
1985 $ 651,191 $ -0-
1986 411,116 70,059
1987 -0- 176,425
1989 -0- 171,675
1999 1,950,000 1,950,000
$3,012,307 $2,368,159
</TABLE>
The final installment is due on December 31, 1999 along with
accrued interest. Interest will continue to accrue at
nine and one-half percent per annum and is payable on the
anniversary date of the note to the extent that the property has distributable
cash flow in excess of $10,000. The gain on the sale of the real estate is
recognized on the cost recovery method to first recognize the recovery of
the asset value, then recognize the gain as the proceeds
are received. For each of the years ended December 31, 1996, 1995 and
1994, the Partnership received and recorded interest income of $15,217.
Note 6 Recapitalization
In April 1995, Norway Housing Associates entered into an
agreement with MHFA to borrow $2,623,679 under a
second mortgage and to distribute the proceeds of this borrowing,
together with the Partnership's surplus cash, as determined by MHFA.
Approximately fifty-one percent of the available funds after payment of
allowable fees and expenses were paid to MHFA and $2,787,584 was
distributed to the partners. The MHFA required that
approximately $348,000 be retained as debt service and operating
reserves controlled by MHFA. $2,841,242, the amount paid to MHFA was
deemed to be residual receipts, i.e., an accumulation of operating funds in
excess of current requirements. Payment of these funds to MHFA has been
treated as a charge against operations for financial and tax reporting
purposes.
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
SCHEDULE IV
INDEBTEDNESS OF RELATED PARTIES
<TABLE>
<S> <C> <C> <C> <C> <C>
December 31,
Change Change
1996 1996 1995 1995 1994
Advances to (repayments from)
local limited partnerships:
Capitol Hill $ 177,231 $ (19,871) $ 197,102 $(4,860) $201,962
Notre Dame 5,278 (1,472) 6,750 6,750 -0-
$ 182,509 $ (21,343) $ 203,852 $ 1,890 $201,962
</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 the financial statements. The
advances have been reduced to zero on the books of the Partnership for
Capitol Hill Associates because the investment in this partnership has
been reduced to zero under the equity method of accounting.
URBAN IMPROVEMENT FUND LIMITED 1974
(A Limited Partnership)
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF LOCAL LIMITED PARTNERSHIPS
December 31, 1996
<TABLE>
<S> <C> <C>
Outstanding
Description mortgage
Partnership/location No. of units balance
Capitol Hill Associates
Denver, Colorado 121 apartments $ 1,844,376
Community Apartments, Ltd.
Cleveland, OH 148 apartments 1,345,670
51st and King Drive
Chicago, IL 96 apartments 1,509,456
Met-Paca II Associates
New York, New York 192 apartments 5,255,251
Monatiquot Village Associates
Braintree, MA 324 apartments 7,566,292
Norway Housing Associates
Boston, MA 136 apartments 4,243,739
Notre Dame
San Francisco, CA 205 apartments 3,444,355
Southern Boulevard II
New York, New York 175 apartments 3,468,330
Weyerbacher Terrace
Indianapolis, IN 296 apartments 4,128,851
$32,806,320
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Buildings & Accumulated
Partnership Land Improvements Total Depreciation
Capitol Hill
Associates $300,990 $2,200,497 $2,501,487 $(1,591,449)
Community
Apartments, Ltd. 182,031 2,075,954 2,257,985 (1,789,634)
51st and King Drive 100,858 2,585,016 2,685,874 (2,314,270)
Met-Paca II
Associates 205,597 7,678,509 7,884,106 (7,447,684)
Monatiquot Village
Associates 393,928 11,516,293 11,910,221 (9,358,008)
Norway Housing
Associates 150,026 3,331,715 3,481,741 (2,839,380)
Notre Dame 244,847 6,574,657 6,819,504 (3,160,516)
Southern
Boulevard II 37,441 6,185,198 6,222,639 (5,677,191)
Weyerbacher
Terrace 21,663 7,111,259 7,132,922 (4,846,193)
$ 1,637,381 $49,259,098 $50,896,479 $(39,024,325)
</TABLE>
<TABLE>
<S> <C> <C> <C>
Life over which
depreciation
in latest
Date of income
completion of Date statement
Partnership construction acquired is computed
Capitol Hill Associates 1975 1974 5-25 years
Community Apartments, Ltd. 1975 1974 15-25 years
51st and King Drive 1975 1974 15 years
Met-Paca II Associates 1976 1974 7-27.5 years
Monatiquot Village Associates 1975 1974 4-40 years
Norway Housing Associates 1975 1974 3-25 years
Notre Dame 1976 1974 5-40 years
Southern Boulevard II 1975 1974 7-27.5 years
Weyerbacher Terrace 1976 1974 5-30 years
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Building and Accumulated
Land Improvements Cost Depreciation
Balance at January
1, 1995 $1,637,381 $48,176,788 $49,814,169 $35,867,933
Additions -0- 580,266 580,266 1,728,768
Deletions -0- (24,950) (24,950) (24,950)
Balance at December
31, 1995 1,637,381 48,732,104 50,369,485 37,571,751
Additions -0- 526,994 526,994 1,452,574
Deletions -0- -0- -0- -0-
Balance at December
31, 1996 $1,637,381 $49,259,098 $50,896,479 $39,024,325
</TABLE>
NOTE: Capital improvements since original construction or
rehabilitation are not material to the combined financial statements and, as
such, are not disclosed separately. The financial statement category of
buildings and improvements is composed substantially of cost plus
the initial renovation upon acquisition. Total cost of land and buildings for
federal income tax purposes is approximately $46,726,640.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,394,990
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,556,685
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,556,685
<CURRENT-LIABILITIES> 30,653
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,526,032
<TOTAL-LIABILITY-AND-EQUITY> 2,556,685
<SALES> 0
<TOTAL-REVENUES> 70,644
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 78,348
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 248,805
<INCOME-TAX> 248,805
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 248,805
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
