UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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 0-8071
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 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
Limited 1974, a California limited partnership (the
"Registrant"), was formed in 1974 for the purpose of investing,
through Local 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 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.
<PAGE>
(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.
<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>
<CAPTION>
<S>
<C> <C> <C> <C>
1999
No. of Percent of
Name Type Units Occupancy
Weyerbacher Terrace
Associates
Indianapolis, IN 236 Rehab. 296 85%
Capitol Hill Associates
Denver, CO 236 Rehab. 121 96%
Community Apartments Ltd.
Cleveland, OH 221 (d)(3) Rehab. 148 97%
51st and King Drive
Partnership
Chicago, IL 236 Rehab. 96 99%
Met-Paca II Associates
New York, NY 236 Rehab. 192 98%
Monatiquot Village
Associates
Braintree, MA MHFA-New* 324 83%
Norway Housing
Associates
Boston, MA MHFA-Rehab.* 136 99%
Notre Dame
Apartments
San Francisco, CA 236 Rehab. 205 95%
Southern Boulevard
Partners II
New York, NY 236 Rehab. 175 99%
</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.
<PAGE>
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>
<CAPTION>
<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>
<CAPTION>
<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.
<PAGE.
<TABLE>
<CAPTION>
<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>
<CAPTION>
<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>
<CAPTION>
<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
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.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
<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>
<CAPTION>
<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>
<CAPTION>
<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.
<PAGE>
<TABLE>
<CAPTION>
<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.
<PAGE>
PART II
Item 5. Market for the Registrant's Securities and Related
Security Holder Matters.
(a) Market Information There is not a ready market for the
transfer of limited partnership interests. Limited partnership
interests may be transferred between individuals with the consent
of the General Partner.
(b) Holders
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Title of Name & Address of Amount and Nature of % of
Class Beneficial Owner Beneficial Ownership Class
General
Partner Interfinancial Real 115 Units 100%
Interest Estate Management Co. ($5,000)
1201 Third Avenue, Suite 5400
Seattle, Washington 98101 3076
Limited
Partner C. T. Holland 625 Units 5.425%
Interest Henderson, Texas 75652 ($625,000)
711 other Limited Partners 10,779 Units
($10,779,000) 94.575%
100.000%
</TABLE>
The Registrant has no officers or directors. Interfinancial
Real Estate Management Company, the General Partner of the
Registrant, is a corporation.
(c) Dividends - The Partnership made distributions of
$1,500,000 during 1999. There were no distributions to partners
during 1998, 1997, 1996 and 1995.
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.
<PAGE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
Year Ended December 31,
1999 1998 1997 1996 1995
Interest income $ 127,651 $ 159,207 $ 59,661 $ 70,644 $ 31,093
Expenses:
Professional fees 20,200 18,701 17,666 15,024 14,078
Management fee 57,020 57,020 57,020 57,020 57,020
Incentive
management fees -0- 33,250 -0- -0- -0-
Amortization of
costs of
acquisition 3,333 3,333 3,333 3,333 3,333
Other expenses 70,446 41,268 33,639 2,971 4,185
150,999 153,572 111,658 78,348 78,616
Income (loss)
before equity
in income (loss)
of Local
Limited
Partnerships (23,348) 5,635 (51,997) (7,704) (47,523)
Equity in
income (loss)
of Local Limited
Partnerships 163,843 2,509,131 98,881 256,509 (1,186,846)
Net income (loss) $ 140,495 $2,514,766 $ 246,884 $ 248,805 $(1,234,369)
Allocation of net
income (loss):
Net income (loss)
allocated to
General Partner 1,405 25,148 2,469 2,488 (12,344)
Net income (loss)
allocated to
Limited Partners 139,090 2,489,618 244,415 246,317 (1,222,025)
$ 140,495 $2,514,766 $ 246,884 $ 248,805 $(1,234,369)
Net financial
reporting income
(loss) per units:
General partnership
units (115 units
outstanding
allocated to General
Partner) $ 12 $ 218 $ 21 $ 22 $ (107)
Limited Partnership
units (11,404 units
outstanding
allocated to
Limited
Partners) $ 12 $ 218 $ 21 $ 22 $ (107)
Total Assets $3,944,528 $5,309,233 $2,803,522 $2,556,685 $ 2,293,578
Long-term
obligations $ -0- $ -0- $ -0- $ -0- $ -0-
Cash distributions $ -0- $ -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
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 $2,253,035 in 1998 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> <C>
1999 1998 1997 1996 1995
Urban's share of
distributions $ 82,794 $2,363,866 $ 78,807 $ 60,553 $1,290,551
Advances
(made to)
repaid by
Local Limited
Partnerships $ 37,931 $ -0- $ 29,730 $ 21,343 $ (1,890)
</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 1995 through 1999. 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
<PAGE>
shall have first received an amount equal to their invested capital attrib-
utable 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.
During 1998, the Partnership also paid an incentive management fee of $33,250
to one of the local limited partnership's general partnership. The incentive
fee was equal to fifty percent of the distributable cash flow to the Partner-
ship.
At December 31, 1999, 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 discon-
tinues 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 Partner-
ship. 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
had a note receivable that was paid off during 1998. The components of the
Partnership's equity in net income (loss) of the Local Limited Partnerships
for 1999, 1998 and 1997 is summarized as follows:
<PAGE>
<TABLE>
<S>
<C> <C> <C> <C>
1999 1998 1997
Net repayments of advances
by (advances to) Partnerships
with zero investments:
Capitol Hill $ (40,430) $ -0- $ 26,598
Distributions received from
Partnerships with zero
investments:
51st and King 7,074 7,074 4,766
Elk Grove Village -0- 2,253,035 15,217
Southern Boulevard III 52,250 66,500 24,700
Income (loss) from
investments with
non-zero investment:
Notre Dame 144,949 182,522 227,600
$ 163,843 $ 2,509,131 $ 298,881
</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 Partner-
ships 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.
<PAGE>
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 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
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,
<PAGE>
it is likely that the acquired properties will be conventional, multi-family
residential projects. During February 2000, Monatiquot Village Associates
exchanged its real estate in a tax free exchange. Urban's share of the
proceeds was $2,500,000. In addition, Urban contributed an additional
$2,347,154 to Monatiquot Village Associates to fund the purchase of the
exchange property. The exchange property was a 460-unit complex in Santa
Maria, California.
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.
<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 will
continue to serve 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
Management Company. The Registrant does not have executive officers as such.
The following is a listing of the executive officers of the General Partner
of the Registrant. These executive officers are elected to serve one-year
terms and will continue to serve until their successors are duly elected and
qualified as executive officers.
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Name Age Office
Paul H. Pfleger 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 previ-
ously 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.
<PAGE>
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.
<PAGE>
Item 11. Executive Compensation
(a) The Registrant does not pay any salary or other remuneration to the
officers of the General Partner of the Registrant.
(b) The Registrant has no plan or arrangement to pay any salary or other
remuneration to the officers in the future.
(c) There are no options, warrants, rights or any other such remuneration
available to the General Partner of the Registrant.
(d) The Registrant will not pay any salary or other remuneration to the
directors of the General Partner of the Registrant.
(e) There are no retirement benefit plans or other remuneration that would
result from the resignation, retirement, termination or any other change in
control of any officer or director of the General Partner of the Registrant.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Title of Name & Address of Amount and Nature of % of
Class Beneficial Owner Beneficial Ownership Class
General Partner Interfinancial Real 115 Units 100%
Interest Estate Management Co. ($5,000)
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.
<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 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.
<PAGE>
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.
<PAGE>
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.
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 distri-
bution 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 1999.
(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 - 1974
BY: INTERFINANCIAL REAL ESTATE MANAGEMENT COMPANY
Date: October 12, 2000 By: Paul H. Pfleger
Paul H. Pfleger
President
Interfinancial Real Estate Management Company
Date: October 12, 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 October 12, 2000
Paul H. Pfleger, Director Date
Interfinancial Real Estate Management Company
By: John M. Orehek October 12, 2000
John M. Orehek, Director Date
Interfinancial Real Estate Management Company.
<PAGE>
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, 1999
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
Form 10-K - Item 8
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, 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 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.
<PAGE>
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, 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 - 1974 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 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 of total assets at December 31, 1999, 1998
and 1997; and its equity in their operations represents zero percent of the
net income for 1999, three percent of the net income for 1998, twelve
percent of the net income for 1997.
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 signifi-
cant 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, 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 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
July 11, 2000
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<S>
<C> <C> <C>
December 31,
1999 1998
Cash and cash equivalents $1,723,113 $3,818,235
Due from affiliates 42,521 -0-
Distributions receivable 52,250 -0-
Deposits 520,000 -0-
Investments in and
advances to Local
Limited Partnerships
accounted for on the
equity method -
Notes 4, 5, 6 and 7
(Schedules IV and XI) 1,606,644 1,490,998
$3,944,528 $5,309,233
LIABILITIES AND PARTNERS' CAPITAL
Distributions payable $ 2,096 $ 2,096
Accounts payable -0- 5,200
Management fee payable 14,255 14,255
16,351 21,551
Partners' capital - Note 2
General Partners - 115
partnership units
Authorized, issued and
outstanding 39,282 52,877
Limited Partners - 11,404
partnership units
Authorized, issued
and outstanding 3,888,895 5,234,805
3,928,177 5,287,682
Commitments and
contingent liabilities - Note 3
$3,944,528 $5,309,233
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Year Ended December 31,
1999 1998 1997
Interest income $ 127,651 $ 159,207 $ 59,661
Expenses:
Professional fees 20,200 18,701 17,666
Management fees - Note 3 57,020 57,020 57,020
Incentive management fees -0- 33,250 -0-
Amortization of costs of
acquisition 3,333 3,333 3,333
Other expenses 70,446 41,268 33,639
150,999 153,572 111,658
Income (loss) before
equity in income (loss)
of Local Limited
Partnerships (23,348) 5,635 (51,997)
Equity in income
(loss) of Local
Limited Partnerships - Note 4 163,843 2,509,131 298,881
Net income $ 140,495 $ 2,514,766 $ 246,884
Allocation of net income:
Net income allocated to
General Partners $ 1,405 $ 25,148 $ 2,469
Net income
allocated to
Limited Partners 139,090 2,489,618 244,415
$ 140,495 $ 2,514,766 $ 246,884
Net financial reporting
income per unit:
General partnership units (115
units outstanding allocated
to General Partner) $ 12 $ 218 $ 21
Limited partnership units
(11,404 units outstanding
allocated to Limited
Partners) $ 12 $ 218 $ 21
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
General Limited
Partner Partners Total
Partner's capital
at January 1, 1997 $ 25,260 $ 2,500,772 $2,526,032
Net income - 1997 2,469 244,415 246,884
Partners' capital at
December 31, 1997 27,729 2,745,187 2,772,916
Net income - 1998 25,148 2,489,618 2,514,766
Partners' capital at
December 31, 1998 52,877 5,234,805 5,287,682
Net income - 1999 1,405 139,090 140,495
Distributions - 1999 (15,000) (1,485,000) (1,500,000)
Partners' capital at
December 31, 1999 $ 39,282 $ 3,888,895 $ 3,928,177
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Year Ended December 31,
1999 1998 1997
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income $ 140,495 $2,514,766 $ 246,884
Adjustments to reconcile
net income to net cash
provided (used) by
operating activities:
Amortization of initial
and rent up fees 3,333 3,333 3,333
Increase in advances
to affiliates and
distributions receivable (94,771) -0- -0-
Increase (decrease) in
accounts payable (5,200) 5,200 (47)
Decrease) in
management fee
payable -0- (14,255) -0-
Equity in income
of Local Limited
Partnerships (111,593) (220,345) (298,881)
Total adjustments (208,231) (226,067) (295,595)
Net cash provided
(used) by operating
activities (67,736) 2,288,699 (48,711)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Deposit on investment (520,000) -0- -0-
Distributions from Local
Limited Partnerships 30,544 75,080 78,807
Net repayments from
(advances to) Local
Limited Partnerships (37,930) -0- 29,370
Net cash provided (used)
by investing activities (527,386) 75,080 108,177
CASH FLOWS FROM
FINANCING ACTIVITIES:
Distributions to Partners (1,500,000) -0- -0-
Net cash used by financing
activities (1,500,000) -0- -0-
NET INCREASE IN
CASH AND CASH
EQUIVALENTS (2,095,122) 2,363,779 59,466
CASH BALANCE AT
BEGINNING OF YEAR 3,818,235 1,454,456 1,394,990
CASH BALANCE AT
END OF YEAR $1,723,113 $3,818,235 $1,454,456
</TABLE>
The Notes to Financial Statements are an integral part of these Statements.
<PAGE>
Note 1 - Organization and Accounting Policies
Organization
Urban Improvement Fund Limited (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 Inter-
financial 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.
Investment in Local Limited Partnerships
As of December 31, 1999 and 1998, 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 partic-
ular Local Limited Partnership is reduced to zero, unless the Partnership
intends to commit additional funds to the Local Limited Partnership. Repay-
ment 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 recog-
nized 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. Amorti-
zation is discontinued when the investment is reduced to zero.
<PAGE>
Note 1 - Organization and Accounting Policies - Continued
The Partnership had an investment in one Limited Partnership that sold its real
estate during 1984 (Note 6). This Partnership (Elk Grove Elderly) held a note
receivable for a portion of the sales proceeds. The note was paid off during
1998.
The Partnerships' equity in income (loss) of the Local Limited Partnerships is
summarized as follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
1999 1998 1997
Repayment of
advances by
(advances to)
Partnerships with
zero investments:
Capitol Hill $ (40,430) $ -0- $ 26,598
Distributions received
from Partnerships
with zero investments:
51st and King 7,074 7,074 4,766
Elk Grove -0- 2,253,035 15,217
Southern Boulevard II 52,250 66,500 24,700
Income (loss) from
investments with
non-zero investment:
Notre Dame 144,949 182,522 227,600
$ 163,843 $ 2,509,131 $ 298,881
</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.
<PAGE>
Note 1 - Organization and Accounting Policies - Continued
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.
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>
<CAPTION>
<S>
<C> <C> <C> <C>
Year Ended December 31,
1999 1998 1997
Net income (loss) for
financial reporting
purposes $ 140,495 $2,514,766 $ 246,884
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 3,333
Equity in losses
reported by Local
Limited Partnerships
for income tax reporting
purposes in excess
of income (losses)
for financial reporting
purposes 689,112 706,851 652,520
Accrual and other
adjustments for
financial reporting
purposes -0- (16,636) 3,189
Net income (loss)
as reported on the
federal income tax return $ 832,940 $3,208,314 $ 905,926
</TABLE>
<PAGE>
Note 2 - Reconciliation Between Net Income (Loss) and Partners' Capital
(Deficit) of the Partnership For Financial Reporting Purposes
and Income Tax Reporting Purposes - Continued
A reconciliation between partners' capital for financial reporting purposes
and partners' capital (deficit) for income tax reporting purposes follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Year Ended December 31,
1999 1998 1997
Partners' capital
for financial
reporting purposes $ 3,928,177 $ 5,287,682 $ 2,772,916
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 purposes (899,024) (902,357) (905,690)
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 (21,973,475) (22,662,587) (23,369,438)
Accrual and other
adjustments for
financial reporting
purposes 36,335 36,335 52,971
Partners' capital
(deficit) as reported
on the federal income
tax return $(17,592,948) $(16,925,888) $(20,134,202)
</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.
<PAGE>
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 1999, 1998
and 1997, 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.
During 1998, the Partnership also paid an incentive management fee
of $33,250 to one of the local limited partnership's general partnership.
The incentive fee was equal to fifty percent of the distributable cash flow
to the Partnership.
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 1999, 1998 or 1997. 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>
<CAPTION>
<S>
<C> <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.
<PAGE>
Note 4 - Investments in Local Limited Partnerships Accounted for on the Equity
Method - Continued
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, 1999:
Capitol Hill $ 277,900 $ (585,944) $ (308,044)
Community Apts. 287,244 (1,262,793) (975,549)
51st & King Drive 173,434 (497,243) (323,809)
Met-Paca II 1,219,550 (4,940,083) (3,720,533)
Monatiquot Village 940,000 (9,783,735) (8,843,735)
Norway Housing (1,053,606) 670,439 (383,167)
Notre Dame 193,145 1,359,739 1,552,884
Southern Boulevard II 445,014 (2,256,784) (1,811,770)
Weyerbacher Terrace 703,080 (2,680,316) (1,977,236)
$ 3,185,761 $(19,976,720) $(16,790,959)
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
December 31, 1999:
Capitol Hill $ 52,998 $ 191,064 $ 63,982 $ -0-
Community Apts 920,623 -0- 54,926 -0-
51st & King Drive 276,839 -0- 46,970 -0-
Met-Paca II 3,589,201 -0- 131,332 -0-
Monatiquot Village 8,558,070 -0- 285,665 -0-
Norway Housing 352,639 -0- 30,528 -0-
Notre Dame -0- -0- 53,760 1,606,644
Southern Boulevard II 1,707,378 -0- 104,392 -0-
Weyerbacher Terrace 1,849,767 -0- 127,469 -0-
$17,307,515 $ 191,064 $ 899,024 $1,606,644
</TABLE>
<TABLE>
<S>
<C> <C> <C>
Equity In
Capital Income
Contributions (Losses) Subtotal
December 31, 1998:
Capitol Hill $ 277,900 $ (729,125) $ (451,225)
Community Apts. 287,244 (1,212,667) (925,423)
51st & King Drive 180,508 (679,659) (499,151)
Met-Paca II 1,219,550 (5,183,296) (3,963,746)
Monatiquot Village 940,000 (9,308,751) (8,368,751)
Norway Housing (1,053,606) 370,602 (683,004)
Notre Dame 216,615 1,214,790 1,431,405
Southern Boulevard II 497,264 (2,235,967) (1,738,703)
Weyerbacher Terrace 703,080 (2,455,520) (1,752,440)
$3,268,555 $(20,219,593) $(16,951,038)
</TABLE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
Losses Not Costs of
Recorded Acquisition
(Note 1) Advances (Note 1) Total
December 31, 1998:
Capitol Hill $ 236,610 $ 150,633 $ 63,982 $ -0-
Community Apts. 870,497 -0- 54,926 -0-
51st & King Drive 452,181 -0- 46,970 -0-
Met-Paca II 3,832,414 -0- 131,332 -0-
Monatiquot Village 8,083,086 -0- 285,665 -0-
Norway Housing 652,477 -0- 30,527 -0-
Notre Dame -0- 2,501 57,092 1,490,998
Southern Boulevard II 1,634,311 -0- 104,392 -0-
Weyerbacher Terrace 1,624,972 -0- 127,468 -0-
$17,386,548 $ 153,134 $ 902,354 $1,490,998
</TABLE>
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, changes in 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:
<PAGE>
Note 4 - Investments in Local Limited Partnerships Accounted for on
the Equity Method - Continued
COMBINED BALANCE SHEETS OF LOCAL LIMITED PARTNERSHIPS
Assets
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
December 31,
1999 1998
Cash $ 1,974,808 $ 1,188,256
Cash in escrow and
other restricted funds 3,948,091 4,681,614
Accounts receivable 394,441 377,838
Prepaid expenses 549,591 547,813
Other assets (net of
accumulated amortization) 387,630 271,152
Note receivable 28,534 -0-
7,283,095 7,066,673
Property on the basis of cost:
Land 1,645,981 1,645,981
Buildings and improvements 51,706,548 50,918,793
53,352,529 52,564,774
Less accumulated depreciation (42,831,706) (41,565,354)
10,520,823 10,999,420
$ 17,803,918 $ 18,066,093
Liabilities and Partners' Capital (Deficit)
Mortgage notes payable $ 29,437,610 $ 30,691,987
Accounts payable and
accrued expenses 1,579,624 1,324,127
Notes payable 5,310,652 4,795,501
Advances from Urban
Improvement
Fund Limited - 1974 191,064 153,134
Tenants' security
and other deposits 504,824 425,938
37,023,774 37,390,687
Partners' capital (deficit)
per accompanying
statements (19,219,856) (19,324,594)
$ 17,803,918 $ 18,066,093
</TABLE>
Note 4 - Investments in Local Limited Partnerships Accounted for on the Equity
Method - Continued
COMBINED STATEMENTS OF INCOME (LOSS) OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<CAPTION?
<S>
<C> <C> <C> <C>
December 31,
1999 1998 1997
Revenue:
Net rental income $12,570,044 $12,235,410 $12,169,958
Financial income 289,610 342,183 439,839
Other income 190,686 255,072 335,088
13,050,340 12,832,665 12,944,885
Expenses:
Administrative 2,128,904 2,429,293 2,084,812
Utilities 2,227,658 2,053,968 2,375,107
Operating 3,866,962 3,255,656 3,189,805
Taxes and insurance 1,600,756 1,475,794 1,576,715
Total Operating Expenses 9,824,280 9,214,711 9,226,439
Net Operating Income 3,226,060 3,617,954 3,718,446
Non-operating (income) expenses:
Financial expenses 1,652,173 1,705,620 1,721,987
Depreciation expense 1,320,162 1,302,510 1,316,907
Other expenses 7,899 34,270 35,225
Proceeds from sale of Elk Grove -0- (4,506,070) -0-
2,980,234 (1,463,670) 3,074,119
Net income $ 245,826 $ 5,081,624 $ 644,327
</TABLE>
Amortization of capitalized interest was $44,336 in 1999, 1998 and 1997.
<PAGE>
Note 4 - Investments in Local Limited Partnerships Accounted for on the
Equity Method - Continued
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
Urban
Improvement Other
Fund Limited General
Limited Partners Partners Total
Partners capital
(deficit) at
January 1, 1997 $(17,926,428) $ (2,499) $(2,378,349) $(20,307,276)
Net income - 1997 608,198 287 35,842 644,327
Distributions - 1997 (78,807) -0- (43,243) (122,050)
Partners capital
(deficit) at
December 31, 1997 (17,397,037) (2,212) (2,385,750) (19,784,999)
Net income - 1998 2,809,865 296 2,271,463 5,081,624
Distributions - 1998 (2,363,866) -0- (2,257,353) (4,621,219)
Partners capital (deficit)
at December 31, 1998 (16,951,038) (1,916) (2,371,640) (19,324,594)
Net income (loss) - 1999 242,873 462 2,491 245,826
Distributions - 1999 (82,794) -0- (58,294) (141,088)
Partners capital (deficit)
at December 31, 1999 $(16,790,959) $(1,454) $(2,427,443) $(19,219,856)
</TABLE>
<PAGE>
STATEMENTS OF CASH FLOWS OF LOCAL LIMITED PARTNERSHIPS
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
December 31,
1999 1998 1997
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income $ 245,826 $5,081,624 $ 644,327
Adjustments to
reconcile net
income to net
cash provided
by operating activities:
Depreciation 1,266,352 1,302,510 1,316,907
Decrease (increase)
in receivables,
escrows, restricted
deposits, prepaid
expenses and
other assets 598,664 (281,751) (452,223)
Increase (decrease)
in accounts payable,
accrued expenses,
notes payable and tenant
security deposit liability 334,383 (69,586) 232,181
Total adjustments 2,199,399 951,173 1,096,865
Net cash provided by
operating activities 2,445,225 6,032,797 1,741,192
CASH FLOWS FROM
INVESTING ACTIVITIES:
Capital expenditures (787,755) (782,412) (939,231)
Increase in notes receivable (28,534) -0- -0-
Net cash used by
investing activities (816,289) (782,412) (939,231)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Mortgage principal payments (1,254,377) (1,089,668) (1,024,665)
Increase in notes payable 515,151 440,841 406,696
Distributions paid (141,088) (4,621,219) (122,050)
Advances from
(repayments to)
affiliates - net 37,930 -0- (8,199)
Net cash used
by financing
activities (842,384) (5,270,046) (748,218)
INCREASE (DECREASE)
IN CASH AND
CASH EQUIVALENTS 786,552 (19,661) 53,743
CASH BALANCE AT
BEGINNING OF YEAR 1,188,256 1,207,917 1,154,174
CASH BALANCE AT
END OF YEAR $ 1,974,808 $ 1,188,256 $ 1,207,917
SUPPLEMENTAL INFORMATION
REGARDING INTEREST PAYMENTS
IS AS FOLLOWS:
Interest paid, net of subsidy $ 847,122 $ 917,371 $ 1,157,659
</TABLE>
<PAGE>
Note 4 - Investments in Local Limited Partnerships Accounted for on
the Equity Method - Continued
A reconciliation between the combined net income for financial reporting
purposes and the combined income for income tax reporting purposes follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
For the Year Ended December 31,
1999 1998 1997
Combined net income (loss) for
financial reporting purposes $ 245,826 $ 5,081,624 $ 644,327
Excess of depreciation for
financial reporting purposes
over depreciation for
tax reporting purposes 488,799 270,947 397,834
Accrual adjustments for
financial reporting purposes 150,453 (5,354) (45,732)
Combined net income (loss)
for income tax purposes as
reported on the federal
income tax returns $ 885,078 $ 5,347,217 $ 996,429
</TABLE>
A reconciliation between combined partners' capital (deficit) for financial
reporting purposes and combined partners' capital (deficit) for income tax
reporting purposes follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
For the Year Ended December 31,
1999 1998 1997
Combined partners'
capital (deficit) for
financial reporting
purposes $(19,219,856) $(19,324,594) $(19,784,999)
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 (1,756,217) (2,393,259) (2,669,638)
Combined partners'
capital (deficit)
as reported on the
federal income
tax returns $(20,976,073) $(21,717,853) $(22,454,637)
</TABLE>
<PAGE>
Note 4 - Investments in 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 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 $29,437,610 at December 31, 1999
($19,366,649 by HUD and $10,070,961 by MFHA)and $30,691,987 at December 31,
1998 ($19,935,876 by HUD and $10,756,111 by MFHA). The mortgage notes payable
are secured by deeds of trust on rental property and bear interest at rates
of seven to nine and six-tenths percent per annum. The mortgages are payable
in monthly installments of principal and interest of approximately $269,000
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.
<PAGE>
Note 4 - Investments in Local Limited Partnerships Accounted for on
the Equity Method - Continued
Mortgage Notes Payable - Continued
The scheduled principal reductions for the next five years are as follows:
<TABLE>
<CAPTION>
<S>
<C> <C>
Year Ended December 31, Amount
2000 $ 1,197,116
2001 963,184
2002 1,035,013
2003 1,112,105
2004 1,193,837
Beyond 23,936,355
$29,437,610
</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, 1999, approximately
$3,884,000 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 1999, the Local
Limited Partnerships received approximately $4,731,000 in rent supplement and
Section 8 funds.
<PAGE>
Note 4 - Investments in Local Limited Partnerships Accounted for on
the Equity Method - Continued
Management
The Local Limited Partnerships have entered into property management con-
tracts with various agents under which the agents are paid property manage-
ment 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 of $5,380,466.
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, 1997 and 1996, the Partnership received
and recorded interest income of $15,217. During 1998, with the consent of the
Partnership, Elk Grove Village Associates agreed to discount the note to accept
$4,500,000 in full satisfaction of the note and accrued interest. This resulted
in a discount of approximately $3,520,000.
Note 6 - Investment in Met Paca II Associates
Met Paca II Associates has a severe working capital deficiency primarily
resulting from the loss of its real estate tax abatement. This deficiency
caused the Partnership to become delinquent in meeting its obligation under
the mortgage note payable to HUD. Although the Partnership is attempting
to obtain additional real estate tax abatements, there is no assurance that
the Partnership will be successful. This raises substantial doubt about the
Partnership's ability to continue as a going concern. The financial state-
ments do not include any adjustments that might be necessary if the Partner-
ship is unable to continue as a going concern.
Note 7 - Subsequent Events
Monatiquot Village Associates exchanged its real estate in a tax free exchange
during February 2000. The Partnership purchased an exchange property with 460
units in Santa Maria, California.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
SCHEDULE IV
INDEBTEDNESS OF RELATED PARTIES
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
December 31,
Change Change
1999 1999 1998 1998 1997
Advances to
(repayments from)
local limited partnerships:
Capitol Hill $ 191,064 $ 40,431 $ 150,633 $ -0- $ 150,633
Notre Dame -0- (2,501) 2,501 -0- 2,501
$ 191,064 $ 37,930 $ 153,134 $ -0- $ 153,134
</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.
<PAGE>
URBAN IMPROVEMENT FUND LIMITED - 1974
(A Limited Partnership)
Schedule XI
REAL ESTATE AND ACCUMULATED DEPRECIATION OF LOCAL LIMITED
PARTNERSHIPS
December 31, 1999
<TABLE>
<S>
<C> <C> <C>
Outstanding
Description Mortgage
Partnership/Location No. of Units Balance
Capitol Hill Associates
Denver, Colorado 121 apartments $ 1,717,812
Community Apartments, Ltd.
Cleveland, OH 148 apartments 1,233,890
51st and King Drive
Chicago, IL 96 apartments 1,377,202
Met-Paca II Associates
New York, New York 192 apartments 4,861,633
Monatiquot Village Associates
Braintree, MA 324 apartments 7,040,963
Norway Housing Associates
Boston, MA 136 apartments 3,029,998
Notre Dame
San Francisco, CA 205 apartments 3,167,729
Southern Boulevard II
New York, New York 175 apartments 3,200,959
Weyerbacher Terrace
Indianapolis, IN 296 apartments 3,807,424
$29,437,610
</TABLE>
<TABLE>
<S>
<C> <C> <C> <C>
Buildings
and
Partnership/Location Land Improvement Total
Capitol Hill Associates
Denver, Colorado $ 309,590 $ 2,654,947 $ 2,964,537
Community Apartments, Ltd.
Cleveland, OH 182,031 2,075,954 2,257,985
51st and King Drive
Chicago, IL 100,858 2,683,390 2,784,248
Met-Paca II Associates
New York, New York 205,597 7,688,374 7,893,971
Monatiquot Village Associates
Braintree, MA 393,928 11,956,485 12,350,413
Norway Housing Associates
Boston, MA 150,026 3,331,715 3,481,741
Notre Dame
San Francisco, CA 244,847 7,047,792 7,292,639
Southern Boulevard II
New York, New York 37,441 6,617,569 6,655,010
Weyerbacher Terrace
Indianapolis, IN 21,663 7,650,322 7,671,985
$ 1,645,981 $51,706,548 $53,352,529
</TABLE>
<TABLE>
<S>
<C> <C> <C> <C>
<C>
Life over which
Depreciation
in Latest
Date of Income
Accumulated Completion of Date Statement
Partnership/Location Depreciation Construction Acquired is Computed
Capitol Hill Associates
Denver, Colorado $ (1,895,556) 1975 1974 5-25 years
Community Apartments, Ltd.
Cleveland, OH (2,015,355) 1975 1974 15-25 years
51st and King Drive
Chicago, IL (2,377,310) 1975 1974 15 years
Met-Paca II Associates
New York, New York (7,468,010) 1976 1974 7-27.5 years
Monatiquot Village Associates
Braintree, MA (10,161,130) 1975 1974 4-40 years
Norway Housing Associates
Boston, MA (3,228,570) 1975 1974 3-25 years
Notre Dame
San Francisco, CA (3,807,543) 1976 1974 5-40 years
Southern Boulevard II
New York, New York (5,958,522) 1975 1974 7-27.5 years
Weyerbacher Terrace
Indianapolis, IN (5,919,710) 1976 1974 5-30 years
$(42,831,706)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Buildings and Accumulated
Land Improvements Cost Depreciation
Balance at
January 1, 1998 $1,637,381 $50,144,891 $51,782,272 $40,287,794
Additions 8,600 798,762 807,362 1,302,510
Deletions -0- (24,950) (24,950) (24,950)
Balance at
December 31, 1998 1,645,981 50,918,703 52,564,684 41,565,354
Additions -0- 787,845 787,845 1,266,352
Balance at
December 31, 1999 $1,645,981 $51,706,548 $53,352,529 $42,831,706
</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 renova-
tion upon acquisition. Total cost of land and buildings for federal
income tax purposes is approximately $49,000,000.
<PAGE>
