UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1997
[ ] 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 0-13520
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2828131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27 Christina Street, Suite 203, Newton, Massachusetts 02161
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 244-2242
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] 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 this
Form 10-K. [ x ]
Aggregate market value of voting stock held by non-affiliates of the registrant:
Not applicable
Documents incorporated by reference: None
Exhibits Index on Pages: 103 -116
Page 1 of 118
<PAGE>
PART I
Item 1. Business
The Registrant, Liberty Housing Partners Limited Partnership (the
"Partnership"), is a limited partnership organized under the provisions of the
Massachusetts Uniform Limited Partnership Act on March 20, 1984. Until December
27, 1995, the partners in the Partnership consisted of Liberty Real Estate
Corporation, the managing general partner (the "Former Managing General
Partner"), LHP Associates Limited Partnership, the associate general partner
(the "Former Associate General Partner") and, together with the Former Managing
General Partner, (the "Former General Partners"), and Limited Partners owning
21,576 units of Limited Partnership Interest ("Units").
The Units were offered and sold commencing July 13, 1984, pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933. The
offering was completed on July 12, 1985.
On December 27, 1995, the Former General Partners withdrew from the
Partnership and TNG Properties, Inc., a Massachusetts corporation (the "Managing
General Partner"), was admitted to the Partnership as a substitute general
partner with an interest equivalent to the aggregate interests of the Former
General Partners.
The Partnership will terminate on December 31, 2020, unless sooner
dissolved or terminated as provided in Section 11 of the Amended Agreement of
Limited Partnership dated as of July 13, 1984, as amended to date (the
"Partnership Agreement").
The Partnership has no employees. Under the Partnership Agreement, the
Managing General Partner is solely responsible for the operation of the
Partnership and its properties.
The Partnership is engaged in only one industry segment, the business
of investing in, operating, owning, leasing and improving interests in real
estate through ownership of interests in other limited partnerships (the "Local
Limited Partnerships") which own and operate government-assisted, multi-family
rental housing complexes. As described in Item 2, the Partnership owns interests
in 13 Local Limited Partnerships, each of which owns and operates a
government-assisted, garden-style, residential multi-family housing complex.
Each complex consists of one-to-three-story buildings of wood frame and brick
construction located on landscaped lots. The apartments within each of the
complexes contain fully equipped kitchens and some of the complexes include
swimming pools.
The Partnership paid for two of the 13 limited partnership interests in
cash upon acquisition. The Partnership paid for 11 of such limited partnership
interests by delivery of cash, short-term promissory notes (which have all been
paid in full) and non-recourse promissory notes which bear interest at the rate
of 9% per annum ("Purchase Money Notes"). Each Purchase Money Note permits
interest to accrue to the extent cash distributions to the Partnership from the
applicable Local Limited Partnership are insufficient to enable the Partnership
to pay the Purchase Money Note on a current basis. The Purchase Money Notes do
not require payment of any portion of the principal amount of the notes prior to
maturity (except that the Purchase Money Notes require immediate payment
following a default (as defined therein) by the Partnership thereunder).
2
<PAGE>
Item 1. Business, continued
As a result of these interest accrual and payment provisions, each Purchase
Money Note will require a substantial balloon payment at maturity. The payment
of each Purchase Money Note is secured by a pledge of the Partnership's interest
in the Local Limited Partnership to which the note relates. The Purchase Money
Notes had an original term of from 15 to 17 years and mature at varying dates
during 1999, 2000 and 2001. Additional information concerning the Purchase Money
Notes is set forth below under "Management's Discussion and Analysis of
Financial Condition and Results of Operations." One of the two Local Limited
Partnerships in which the Partnership acquired its interest for cash issued
purchase money notes in connection with the purchase of its housing complex.
Such notes have terms which are substantially identical to those of the Purchase
Money Notes, and are secured by a pledge by all of the partners in such Local
Limited Partnership (including the Partnership) of their respective partnership
interests therein. See the table under Item 2 (Properties) below.
The Partnership does not intend to make any additional investments. The
Partnership's business is not seasonal.
In connection with the Partnership's investment in the Local Limited
Partnerships, Liberty LGP Limited Partnership, an affiliate of the Former
General Partners ("Liberty LGP") acquired co-general partnership interests or
special limited partnership interests in each of the Local Limited Partnerships.
In some cases, such interests entitle Liberty LGP to approve or disapprove
certain actions proposed to be taken by the unaffiliated general partners of the
Local Limited Partnership (the "Local General Partners"). In all cases, Liberty
LGP, acting alone, is authorized to cause each Local Limited Partnership to sell
and/or refinance the project owned by such Local Limited Partnership. On
December 27, 1995, TNG Properties, Inc. acquired a 19.8% limited partnership
interest in Liberty LGP. Liberty Housing Corporation held an 80.2% interest as a
general partner in Liberty LGP. Michael A. Stoller, President and CEO of the
Managing General Partner acquired all of the outstanding stock of Liberty
Housing Corporation from the Former Managing General Partner.
The Partnership's investments are and will continue to be subject to
various risks, including the following:
(1) The risk that Partnership funds will not be sufficient to enable the
Partnership to pay its debts and obligations. Among the Partnership's
liabilities are the Purchase Money Notes. Such notes do not require payments
during their term, except to the extent of cash distributions from the Local
Limited Partnerships, but will require substantial balloon payments at maturity.
The Partnership may not have funds sufficient to repay such notes at maturity.
See Item 7.
(2) Risk of recapture of previously claimed tax losses as a result of the
Partnership's inability to pay at maturity the Purchase Money Notes. As a result
of such recapture, the investors in the Partnership would have taxable income
from the Partnership, and the associated income tax liability, without cash
distributions from the Partnership with which to satisfy such income tax
liability.
(3) The risks associated with an investment in a partnership, including tax
risks as a result of possible adjustments by the IRS to federal income tax
returns filed by the Partnership and its Partners, and other tax risks.
3
<PAGE>
Item 1. Business, continued
(4) Risks that the federal government will cease or reduce funding of housing
subsidies, including subsidies under the Section 8 and Section 236 programs,
both of which provide substantial operating revenues to many of the Local
Limited Partnerships.
(5) Possible restrictions imposed by Federal, state or local agencies that
provide government assistance to the projects, which may limit the amount of
costs which may be passed on to tenants in the form of rent increases, limit
future direct government assistance to Local Limited Partnerships, or restrict
the Partnership's ability to sell or refinance its Local Limited Partnership
interests.
(6) The risk that properties owned by Local Limited Partnerships will not
generate income sufficient to meet their operating expenses and debt service or
to fund adequate reserves for capital expenditures.
(7) Continuing quality of on-site management of the local properties. Such
on-site management is subject to direct control by the Local General Partners of
the Local Limited Partnerships and not by the Partnership.
(8) Possible adverse changes in general economic conditions and adverse local
conditions, such as competitive over-building, a decrease in employment, or
adverse changes in real estate selling laws, which may reduce the desirability
of real estate in a particular area.
(9) Circumstances over which the Local Limited Partnerships may have little or
no control, such as fires, earthquakes, and floods.
(10) The risk that properties owned by Local Limited Partnerships will be unable
to replace the revenue received under federal housing assistance contracts or
extend the current contract at the same terms upon their termination.
Item 2. Properties
The Partnership owns limited partnership interests in 13 Local Limited
Partnerships, each of which owns the fee interest in a government-assisted
residential multi-family rental housing complex. The following table reflects:
(1) the name of each of the Local Limited Partnerships and the percentage of the
total interests in the Local Limited Partnership represented by the
Partnership's interest; (2) the date on which the Partnership acquired each of
such interests; (3) the consideration paid for each interest, (including
purchase money notes); (4) the original principal amount, the aggregate amount
of the principal and accrued and unpaid interest outstanding as of December 31,
1997, and the maturity date of the Purchase Money Notes relating to each
interest; (5) the Partnership's share of the mortgage indebtedness of each Local
Limited Partnership; (6) the size and the location of the housing project owned
by each Local Limited Partnership; and (7) the government program pursuant to
which the complex receives assistance and the number of housing units in the
project receiving such assistance.
More detailed information related to the properties owned by the Local
Limited Partnerships, including their respective amounts of mortgage
indebtedness is included in Schedule III, Real Estate and Accumulated
Depreciation, included in Item 8, and is contained in the separate financial
statements of the Local Limited Partnerships. It is unlikely that operating cash
flows from the Local Limited Partnerships will generate any distributions to
investors in the Partnership, because in nearly all cases, the Partnership's
share of operating cash flows from the properties owned by the Local Limited
Partnerships must be applied to repayment of accrued interest and principal on
the related Purchase Money Notes.
4
<PAGE>
<TABLE>
<CAPTION>
Item 2. Properties
Purchase Money Notes
----------------------------------
Unpaid
Principal At Acquisition
Total and -----------------------
Name/Percentage Interest Acquisi- Original Interest LHPLP Total
Ownership of Local Acquisiton tion Principal as of Maturity Share of Invested
Limited Partnership Date Cost Amount(A) 12/31/96 Date Local Debt Assets (C)
- ----------------------- ---------- -------- --------- --------- -------- ---------- ----------
98% interests are owned
in the following Local
Limited Partnerships(B):
<S> <C> <C> <C> <C> <C> <C> <C>
1 Glendale Manor 8/31/84 $810,000 $450,000 $587,984 8/29/2000 $929,000 $1,739,000
Apartments
2 Surry Manor, Ltd. 8/31/84 740,000 360,000 666,106 7/9/2001 1,006,000 1,746,000
3 Oxford Homes 9/28/84 1,004,000 644,000 859,085 9/28/1999 653,000 1,657,000
for the Elderly, Ltd.
4 Williamston 9/28/84 1,064,000 664,000 745,586 9/28/1999 649,000 1,713,000
Homes for the
Elderly, Ltd.
5 Fuquay-Varina 9/28/84 1,118,000 707,000 757,380 9/28/1999 822,000 1,940,000
Homes for the
Elderly, Ltd.
6 Fiddlers Creek 9/28/84 2,876,000 1,750,000 2,816,909 9/28/1999 2,396,000 5,272,000
Apartments
7 Austintown 10/30/84 3,081,000 1,600,000 3,346,140 10/30/1999 3,635,000 6,716,000
Associates
8 Osuna Apartments 11/30/84 2,042,000 1,300,000 2,711,536 11/27/1999 1,527,000 3,569,000
Company
9 Linden Park 12/06/84 2,997,000 1,800,000 2,446,032 12/11/1999 3,359,000 6,356,000
Associates
Limited Partnership
<CAPTION>
Description of Apartment Complex
Name/Percentage -----------------------------------------------
Ownership of Local Geographic Government
Limited Partnership Size Location Assistance (D)
- ----------------------- ----- ---------- --------------
98% interests are owned
in the following Local
Limited Partnerships(B):
<S> <C> <C> <C>
1 Glendale Manor 50 Units Clinton, SC 221(d)(4)
Apartments 30,310 SF 100% Section 8 (E)
5.5 Acres
2 Surry Manor, Ltd. 44 Units Dobson, NC 221(d)(4)
27,253 SF 100% Section 8 (E)
5.0 Acres
3 Oxford Homes 50 Units Oxford, NC 221(d)(4)
for the Elderly, Ltd. 26,672 SF 100% Section 8 (E)
4.5 Acres
4 Williamston 50 Units Williamstown, 221(d)(4)
Homes for the 26,496 SF NC 100% Section 8 (E)
Elderly, Ltd. 7 Acres
5 Fuquay-Varina 60 Units Fuqyay-Varina, 221(d)(4)
Homes for the 35,056 SF NC 100% Section 8 (E)
Elderly, Ltd. 6 Acres
6 Fiddlers Creek 160 Units Winston-Salem, 221(d)(4)
Apartments 126,900 SF NC
15 Acres
7 Austintown 200 Units Austintown, 236 HUD
Associates 189,200 SF OH 100% Section 8 (E)
20 Acres
8 Osuna Apartments 110 Units Albuquerque, 236 HUD
Company 97,400 SF NM Section 8, (E)
7.3 Acres 22 Units
9 Linden Park 198 Units Triangle, 221(d)(4)
Associates 164,327 SF VA VA Housing
Limited Partnership 10 Acres Development
Authority Interest
Subsidy
(Continued)
5
<PAGE>
<CAPTION>
Item 2. Properties, continued
Purchase Money Notes
----------------------------------
Unpaid
Principal At Acquisition
Total and -----------------------
Name/Percentage Interest Acquisi- Original Interest LHPLP Total
Ownership of Local Acquisiton tion Principal as of Maturity Share of Invested
Limited Partnership Date Cost Amount(A) 12/31/96 Date Local Debt Assets (C)
- ----------------------- ---------- -------- --------- --------- -------- ---------- ----------
94% interests are owned
in the following Local
Limited Partnerships(B):
<S> <C> <C> <C> <C> <C> <C> <C>
10 Pine Forest 10/29/84 736,000 350,000 733,840 10/30/1999 1,190,000 1,926,000
Apartments, Ltd.
11 Brierwood, Ltd. 10/29/84 563,000 270,000 574,662 10/30/1999 838,000 1,401,000
12 Meadowwood, Ltd. 10/29/84 1,001,000 610,000 1,316,085 10/30/1999 1,004,000 2,005,000
13 Brierwood II, Ltd. 01/25/85 101,000 351,000 452,000
----------- ----------- ----------- ----------- -----------
Total Acquisitions $18,133,000 $10,505,000 $17,561,345 $18,359,000 $36,492,000
=========== =========== =========== =========== ===========
<CAPTION>
Description of Apartment Complex
Name/Percentage -----------------------------------------------
Ownership of Local Geographic Government
Limited Partnership Size Location Assistance (D)
- ----------------------- ----- ---------- --------------
94% interests are owned
in the following Local
Limited Partnerships(B):
<S> <C> <C> <C>
10 Pine Forest 64 Units Cairo, GA 515 RHS
Apartments, Ltd. 53,344 SF 521 RHS
6 Acres 29 Units
11 Brierwood, Ltd. 56 Units Bainbridge, 515 RHS
42,840 SF GA 521 RHS
6 Acres 33 Units
12 Meadowwood, Ltd. 80 Units Tifton,GA 515 RHS
67,416 SF
6.8 Acres
13 Brierwood II, Ltd. 18 Units Bainbridge, 515 RHS
12,402 SF GA
1.4 Acres
Total Acquisitions 1,140 units
(Continued)
6
<PAGE>
Item 2. Properties, continued
<FN>
(A) Purchase Money Notes bear interest at 9% per annum (See Note 6 to Financial Statements). Notes issued in conjuction with
the acquisition of Linden Park were issued by the Local Limited Partnership; all other notes were issued by the
Partnership. Each note requires no principal payments prior to maturity. Each note requires payment of interest prior to
maturity solely to the extent of cash distributions from the Local Limited Partnership to which the note relates. To the
extent interest is not paid currently, it accrues and is payable at maturity. Accordingly, each note will require a
substantial balloon payment at maturity.
The total of principal and accrued and unpaid interest outstanding at December 31, 1997 on the Purchase Money Notes is as
follows:
Principal Interest Total
----------- ------------ -----------
Obligation of:
The Partnership $ 8,705,000 $ 6,410,313 $15,115,313
Linden Park 1,800,000 646,032 2,446,032
----------- ----------- -----------
$10,505,000 $ 7,056,345 $17,561,345
=========== =========== ===========
(B) Where the Partnership has acquired a 98% interest as investor partner, the Local General Partner has retained a 1% general
partner interest and Liberty LGP has acquired a 1% general partner interest. Where the Partnership has acquired a 94%
interest as investor partner, the Local General Partner has retained a 5% general partner interest and Liberty LGP has
acquired a 1% Special Limited Partner interest.
(C) The amount of any partnership management fee, as defined in the Partnership Agreement, which may be accrued and unpaid for
any year is limited to a specified percentage of Invested Assets, as defined in the Partnership Agreement.
(D) Government Assistance:
221 (d) (4): Mortgage is insured by HUD
Section 8: Rental Assistance from HUD for low income or elderly housing
515 RHS: Mortgage financing and interest subsidies from RHS pursuant to Section 515 of the Housing Act
of 1949
521 RHS: Rental assistance from RHS pursuant to Section 521 of the Housing Act of 1949
236 HUD: Mortgage insurance and interest subsidies from HUD
(E) Section 8 rental assistance contracts expire as follows:
Glendale Manor Apartments 05/2000
Surry Manor, Ltd. 07/2000
Oxford Homes for the Elderly, Ltd. 07/1998
Williamston Homes for the Elderly, Ltd. 09/1998
Fuquay-Varina Homes for the Elderly, Ltd. 05/1998
Austintown Associates 11/1998
Osuna Apartments Company 08/1999
</FN>
</TABLE>
7
<PAGE>
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the Partnership
is a party or, to the knowledge of the Managing General Partner, of which any of
the properties owned by the Local Limited Partnerships is the subject.
Osuna Apartment Company ("Osuna"), one of the Local Limited
Partnerships, is party to a wrongful death action brought by the estate of a
former tenant in the Second Judicial District of the State of New Mexico. The
suit arises out of the murder of the tenant by the son of a maintenance
contractor periodically engaged by Osuna. No specific amount has been claimed.
Osuna is vigorously contesting the allegations of its liability. The Partnership
presently expects that if Osuna were found to have some liability in this
action, substantially all of the amount would be covered by Osuna's liability
insurance.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Partnership's Securities and Related Security
Holder Matters
(a) Market Information
The Partnership's outstanding securities consist of units of limited
partnership interest ("Units"). There is no public market for the Units, and it
is not anticipated that such a public market will develop. Transfer of the Units
is subject to compliance with state and federal securities laws, and in various
states is subject to compliance with the minimum investment and suitability
standards imposed by the Partnership and applicable "blue sky" laws.
(b) Holders.
As of March 18, 1998, there were 1000 holders of record of the 21,576
Units outstanding.
(c) Dividends.
The Partnership Agreement requires that Distributable Cash from
Operations (as defined in the Partnership Agreement) be distributed 99% to the
Limited Partners and 1% to the General Partners, to the extent then available,
within 120 days after completion of the Partnership's fiscal year.
The Partnership Agreement provides that Cash from Sales or Refinancings
(as defined in the Partnership Agreement), if any, received by the Partnership,
will be distributed (i) first, until the Limited Partners have received an
amount equal to their total invested capital, 100% to the Limited Partners, and
(ii) the balance, 85% to the Limited Partners and 15% to the General Partners;
provided however that if the amount of Cash from Sales or Refinancings exceeds
the amount of profits for tax purposes arising from such sale or refinancing,
the amount of such excess is distributed to those Partners, if any, who have
positive balances in their capital accounts following any distributions made
pursuant to clause (i) in connection with such sale or refinancing, in
proportion to and to the extent of such positive balances, and prior to any
distributions pursuant to clause (ii).
8
<PAGE>
Item 6. Selected Financial Data
The following table sets forth selected financial information regarding
the Partnership's financial position and operating results. This information
should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Financial Statements and
Notes thereto, which are included in Items 7 and 8 of this Report. Amounts are
expressed in thousands with the exception of per Unit calculations.
For the Years Ended December 31,
--------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Interest income $ 46 $ 61 $ 32 $ 36 $ 34
Net loss (2,218) (1,962) (1,564) (1,527) (1,364)
Net loss per Unit(a) (101.75) (90.02) (71.77) (69.92) (62.47)
Total assets at
December 31 2,229 2,587 2,964 3,174 3,833
Long-term debt
(including
current portion,
net of discount)
at December 31 11,544 9,684 8,152 6,864 5,869
Distributable Cash
From Operations
per Unit(a) (b) -- -- -- -- --
(a) Per Unit calculations as presented above are based on 21,576 Units
outstanding for the years ended December 31, 1995 through 1997 and
21,616 units outstanding for the years ended December 31, 1993 and
1994.
(b) Distributable cash is calculated pursuant to the terms of the
Partnership Agreement. See Note 11 to the Financial Statements.
9
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Partnership.
The Partnership is liable for the amount of the purchase money notes
delivered to purchase its interests in the Local Limited Partnerships (as
hereinafter described), and for the Partnership's day-to-day administrative and
operating expenses.
The Partnership acquired its interests in two Local Limited
Partnerships for cash. The Partnership acquired its interests in the other
eleven Local Limited Partnerships by delivery of cash, short-term promissory
notes (all of which have been paid in full) and purchase money promissory notes
which bear interest at the rate of 9% per annum (the "Purchase Money Notes").
The payment of each Purchase Money Note is secured by a pledge of the
Partnership's interest in the Local Limited Partnership to which the note
relates. Each note had an initial term of 15 to 17 years, and the Purchase Money
Notes mature at varying dates between September 1999 and July 2001. None of the
Purchase Money Notes is cross-defaulted to the others, nor are the Purchase
Money Notes cross-collateralized in any manner.
The terms of each Purchase Money Note permit interest to accrue to the
extent cash distributions to the Partnership from the applicable Local Limited
Partnership are insufficient to enable the Partnership to pay the Purchase Money
Note on a current basis. Generally, the amount of such cash distributions have
not been sufficient in any year to pay the full amount of interest accrued for
that year on the Purchase Money Notes. The Purchase Money Notes do not require
payment of any portion of the principal amount of the note prior to maturity
(except that the Purchase Money Notes require immediate payment following a
default (as defined therein) by the Partnership thereunder). Accordingly, each
Purchase Money Note will require a substantial balloon payment at maturity. The
aggregate outstanding principal amount of and accrued and unpaid interest on the
Purchase Money Note obligations of the Partnership, as of December 31, 1997, as
set forth in the table included in Item 2 above, was $15,115,313. The
outstanding obligations are expected to increase annually until maturity as
interest continues to accrue under the Purchase Money Notes. The aggregate
outstanding principal amount of the Purchase Money Notes reported on the
Partnership's Balance Sheet ($11,544,195 at December 31, 1997), reflects a
discount using an imputed interest rate of approximately 21%, which was applied
to the face amount of the notes on the respective investment purchase dates and
which is used to calculate an annual interest accrued in accordance with
generally accepted accounting principles that will equate to the legal
obligation (as presented in Item 2 and discussed above) expected at maturity of
the notes.
Linden Park Limited Partnership, one of the two Local Limited
Partnerships in which the Partnership acquired its interest for cash ("LPLP"),
issued purchase money notes in connection with the purchase of its housing
complex. The terms of such notes are substantially identical to those of the
Partnership's Purchase Money Notes, requiring no payment of principal prior to
maturity and permitting interest to accrue prior to maturity to the extent
LPLP's cash flow is insufficient to pay such interest.
10
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources, continued
The Partnership acquired its interest in LPLP for cash, and accordingly,
no Purchase Money Notes were delivered in connection therewith. However, LPLP
delivered purchase money notes in the original principal amount of $1,800,000 in
connection with LPLP's acquisition of the housing project which it owns (the
"LPLP Notes"). The LPLP Notes are secured by a pledge of LPLP's cash flow, and
by a pledge by each of the partners in LPLP (including the Partnership) of its
respective interest in LPLP. The LPLP Notes were issued on December 6, 1984,
bear interest at the rate of 9% per annum and mature on December 11, 1999. The
LPLP Notes permit interest to accrue to the extent that cash flow of LPLP is not
sufficient to enable LPLP to pay interest on a current basis. The LPLP Notes do
not require payment of any portion of the principal amount thereof prior to
maturity (except that such notes require immediate payment following a default
(as defined therein) by LPLP thereunder). As a result of such interest accrual
and payment provisions, the LPLP Notes will require substantial balloon payments
at maturity. As of December 31, 1997 the unpaid principal amount of and accrued
and unpaid interest on the LPLP Notes equaled $2,446,032. In order for LPLP to
pay at maturity the LPLP Notes, LPLP would most likely be required to sell or
refinance its housing project in a transaction generating proceeds sufficient to
repay the notes. There can be no assurance that LPLP will be able to
successfully consummate any of such types of transactions. Accordingly, the LPLP
Notes, while not technically Purchase Money Notes issued by the Partnership,
will present the same issues to the Partnership as will the maturity of the
Purchase Money Notes.
In order to pay at maturity the Purchase Money Notes with respect to any
particular Local Limited Partnership, the Partnership will most likely be
required to (a) sell its interest in the Local Limited Partnership for a price
equal to or greater than the amounts due under the associated notes (b) obtain
financing in an amount sufficient to repay the notes or (c) cause the Local
Limited Partnership to sell or refinance its housing project in a transaction
sufficient to repay indebtedness encumbering the project and generate net
proceeds to the Partnership sufficient to enable the Partnership to repay the
notes. Alternatively, the Partnership could seek extension or modification of
the payment terms of the Purchase Money Notes. The process of exploring and
negotiating any of the foregoing alternatives will require substantial time,
effort and resources. Management is in the process of negotiating the potential
sale of the Partnership's Limited Partnership interest in six of the Local
Limited Partnerships that share common ownership and management. There can be no
assurance that the Partnership will be able to successfully consummate any of
such types of transactions.
If Partnership funds are insufficient to pay when due the Purchase Money
Notes, the holders of the Purchase Money Notes will have the right to foreclose
on the Partnership's respective interests in the Local Limited Partnerships. The
sale or other disposition by the Partnership of its interests in the Local
Limited Partnerships, including in connection with such a foreclosure, is likely
to result in recapture of previously claimed tax losses to the Partnership and
may have other adverse tax consequences to the Partnership and to the Limited
Partners. Such recapture may cause some or all of the Limited Partners to have
taxable income from the Partnership without cash distributions from the
Partnership with which to satisfy the tax liability resulting therefrom.
11
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources, continued
The only sources of Partnership funds are (i) distributions from the
Local Limited Partnerships (substantially all of which are presently required to
be applied to payment of interest accruing on the Purchase Money Notes), (ii)
payments to the Partnership of amounts due under certain promissory notes
acquired by the Partnership from one of the Local Limited Partnerships (as
hereinafter described) and (iii) Partnership reserves. At December 31, 1997, the
Partnership's had reserves of $65,685 (in cash and cash equivalents), compared
with $163,915 at December 31, 1996. Such reserves have partially funded the
Partnership administrative expenses, including expense reimbursement to the
Former Managing General Partner. Due to the assignment of the Former Managing
General Partner's interest to the current Managing General Partner, the
Partnership incurs certain administrative costs, including the partnership
Management Fee, which are earned by or reimbursed to the current Managing
General Partner. As discussed more fully in Note 6 to the financial statements,
such administrative costs were $107,007 and $98,240 in 1997 and 1996,
respectively.
In connection with the assignment of the Former General Partners'
interests to the current Managing General Partner, the Former Managing General
Partner refunded to the Partnership certain amounts previously received from the
Partnership as expense reimbursements. The amount refunded in respect of
expenses accrued prior to January 1, 1995 has been recorded as a $3,202
contribution to the Partnership's capital by the Former Managing General
Partner.
During 1997, 1996 and 1995, distributable cash flow from the Local
Limited Partnerships (LLP's) to which the Partnership delivered purchase money
notes was distributed to the partnership, as follows: 1997: Seven LLP's -
$369,947; 1996: Seven LLP's - $288,577; and 1995: Eight LLP's - $316,819. By
April 30, 1997, 1996, and 1995, the Partnership used such cash distributions to
pay a portion of the accrued and unpaid interest on the related Purchase Money
Notes.
In 1989, the Partnership purchased long-term purchase money notes of
Linden Park Associates Limited Partnership, one of the Local Limited
Partnerships ("Linden Park"). Such notes represent obligations of Linden Park to
former partners whose partnership interests were purchased for resale to the
Partnership (in connection with the Partnership's acquisition of an interest in
Linden Park). The Partnership purchased such notes, which had an outstanding
principal amount of $173,803 plus accrued and unpaid interest of $49,692, as of
the date of acquisition, for $58,000. The notes mature on December 11, 1999, and
bear interest at 9% per annum, payable only to the extent of available cash from
Linden Park's operations. During 1997, the Partnership received $23,803 of
interest payments on such notes and accrued unpaid interest of $73,290. As of
December 31, 1997, the outstanding balance of principal and accrued and unpaid
interest receivable on these notes amounted to $247,092, prior to the
unamortized discount of $103,607.
12
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Local Limited Partnerships.
The liquidity of the Local Limited Partnerships in which the
Partnership has invested is dependent on the ability of the respective Local
Limited Partnerships, which own and operate government assisted multi-family
rental housing complexes, to generate cash flow sufficient to fund operations
and debt service and to maintain working capital reserves. Each of the Local
Limited Partnerships is regulated by government agencies which require monthly
funding of certain operating and capital improvements reserves and which
regulate the amount of cash to be distributed to owners. Each Local Limited
Partnership's source of funds is rental income received from tenants and
government subsidies. Certain of the Local Limited Partnership's receive rental
income pursuant to Section 8 rental assistance contracts which expire beginning
in 1998 and continuing through 2000. With Congressional passage in October 1997
of the Multifamily Assisted Housing and Reform and Affordability Act, HUD has
been given budgetary authority to approve requests for one year renewals on all
Section 8 contracts through September 30, 1998. Three of the four expiring
Section 8 contracts expire before September 30, 1998, and thus will be eligible
for one year renewals.
Each of the Local Limited Partnerships has incurred mortgage
indebtedness as reflected in Item 8 in Schedule III - Real Estate and
Accumulated Depreciation. The mortgage loans provide for equal monthly payments
of principal and interest in amounts which will reduce the principal amount of
the loans to zero at maturity. Each of the maturity dates of the respective
mortgages is substantially beyond the due date of the Purchase Money Note
obligations. Upon a sale of a property by a Local Limited Partnership the
mortgage indebtedness of such property must be satisfied prior to distribution
of any funds to the partners in the Local Limited Partnership.
Partnership Operations
The Partnership is engaged solely in the business of owning interests
in the Local Limited Partnerships rather than the direct ownership of real
estate. The Partnership's interest income reflects interest earned on reserves
and interest net of discount amortization on the long term notes receivable.
Total interest income decreased to $45,607 in 1997 from $61,407 in 1996. This
decrease was attributable to a decrease in interest payments received on the
long-term note receivable ($23,803 in 1997 versus $35,410 in 1996) and the lower
reserve balance maintained during the year. Interest income was $32,035 in 1995.
In 1995, interest payments received on the long-term note receivable were
$2,919.
The Partnership's interest expense increased to $2,214,122 in 1997 from
$1,904,536 in 1996 and $1,569,007 in 1995. Such increases are attributable to
the accrual of interest under the Purchase Money Notes. Refer to Note 7 to the
Financial Statements.
General and administrative expenses of the Partnership were $145,864 in
1997, $143,556 in 1996 and $121,353 in 1995. In 1995, the Partnership was
charged for less expense reimbursements by the Former Managing General Partner
due to the assignment of its interest in the Partnership.
Average occupancy levels at the projects owned by the Local Limited
Partnerships ranged from 88% to 100% in 1997, and 94% to 100% in 1996, and 89%
to 100% in 1995.
13
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Partnership Operations, continued
The Partnership's equity in income from the Local Limited Partnerships
was $96,766 in 1997, $24,678 in 1996 and $94,133 in 1995. The recognition of
income in 1997 is primarily attributable to the fact that the partnership did
not record losses totaling approximately $172,000 for five Local Limited
Partnerships because its related investment accounts had already been reduced to
zero and recognized investment income of $23,065 of cash distributions received
from Glendale Manor as it would have reduced its investment balance below zero.
In 1996, the Partnership did not record approximately $125,000 of net losses for
four Local Limited Partnerships but was able to apply $55,714 of loss
carry-forward against the current year net income of one Local Limited
Partnership. In 1995, approximately $256,000 of net losses were not recorded.
The Partnership is not obligated to make additional capital contributions to
fund the deficit in its capital accounts in any of the Local Limited
Partnerships.
Because of the above discussed factors, net loss increased to $2,217,613
in 1997 from $1,962,007 and $1,564,192 in 1996 and 1995, respectively.
The operations of the Partnership and of each of the Local Limited
Partnerships are subject to numerous risks, including material tax risks. The
rents of the Properties, many of which receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8"), are subject to specific laws, regulations
and agreements with federal and state agencies. The subsidy agreements expire at
various times from May 1998 through July 2000. The United States Department of
Housing and Urban Development ("HUD") has issued notices which implement
provisions to renew certain project based Section 8 contracts expiring during
HUD's fiscal year 1998 where requested by an owner, for an additional one year
term generally at or below current rent levels, subject to certain guidelines.
HUD has an additional program which, in general, provides for restructuring
rents and/or mortgages where rents may be adjusted to market levels and mortgage
terms may be adjusted based on the reduction in rents, although there may be
instances in which only rents, but not mortgages, are restructured. The
Partnership cannot reasonably predict legislative initiatives and governmental
budget negotiations, the outcome of which could result in a reduction in funds
available for the various federal and state administered housing programs
including the Section 8 program. Such changes could adversely affect the future
net operating income and debt structure of certain Local Partnerships currently
receiving such subsidy or similar subsidies. See Item 1 above.
Recent Accounting Pronouncements
The Partnership has adopted SFAS No. 128, "Earnings per Share" and SFAS
No. 129, "Disclosure of Information about Capital Structure." SFAS No. 128
provides accounting and reporting standards for the amount of earnings per
share. SFAS No. 129 requires the disclosure, in summary form within the
financial statements, of the pertinent rights and privileges of the various
securities outstanding. The implementation of these standards has not materially
affected the Registrant's financial statements.
14
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Recent Accounting Pronouncements, continued
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." In February 1998, the
Financial Accounting Standards Board issued SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The Registrant
does not have any items of other comprehensive income, does not have other
segments of its business on which to report, and does not have any pensions or
other postretirement benefits. Consequently, these pronouncements are expected
to have no effect on the financial statements.
Impact of the Year 2000 Issue
Based on correspondence with our software provider, The Partnership's
software is year 2000 compliant. Management anticipates no further issues or
incurring any future costs relating to this issue.
15
<PAGE>
Item 8. Financial Statements and Supplementary Data
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX
Page
Financial Statements:
Balance Sheets, December 31, 1997 and 1996 17-18
Statements of Operations for the Years
Ended December 31, 1997, 1996 and 1995 19
Statements of Changes in Partners' Deficit
for the Years Ended December 31, 1997, 1996 and 1995 20
Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995 21
Notes to Financial Statements 22-33
Independent Auditors' Report 34
Separate Financial Statements, including
Reports of Independent Accountants, for
Significant Subsidiaries:
Austintown Associates 35-66
Osuna Apartments Company 67-95
Financial Statement Schedules:
Independent Auditors' Report 96
Schedule III - Real Estate and Accumulated Depreciation 97
All schedules other than those indicated in the index have been omitted as the
required information is inapplicable or the information is presented in the
financial statements or related notes.
16
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS
December 31,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 65,685 $ 163,915
Other current assets 0 31
---------- ----------
Total current assets 65,685 163,946
Long-term notes and accrued interest
receivable 143,485 127,668
Investments in local limited
partnerships 2,019,775 2,295,189
---------- ----------
Total Assets $2,228,945 $2,586,803
========== ==========
(continued)
17
<PAGE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS (continued)
December 31,
-----------------------------
1997 1996
---- ----
<S> <C> <C>
Liabilities and Partners' Deficit
Current liabilities:
Accounts payable to affiliates $ 75,271 $ 58,271
Accounts payable 1,410 1,000
Accrued expense 16,000 15,600
Accrued interest payable 370,165 385,901
------------ ------------
Total current liabilities 462,846 460,772
Purchase money notes 11,544,195 9,684,281
------------ ------------
Total liabilities 12,007,041 10,145,053
------------ ------------
Partners' deficit:
General partners:
Capital contributions 4,202 4,202
Capital distributions (22) 0
Accumulated losses (198,550) (176,373)
------------ ------------
(194,370) (172,171)
------------ ------------
Limited partners (21,576 Units in 1997 and in 1996):
Capital contributions (net of
offering costs of $1,134,440) 9,649,520 9,649,520
Capital distributions (2,211) 0
Accumulated losses (19,231,035) (17,035,599)
------------ ------------
(9,583,726) (7,386,079)
------------ ------------
Total partners' deficit (9,778,096) (7,558,250)
------------ ------------
Total liabilities and partners' deficit $ 2,228,945 $ 2,586,803
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
------------------------------------------
1997 1996 1995
---- ---- ----
Interest income $ 45,607 $ 61,407 $ 32,035
Expenses:
Interest expense 2,214,122 1,904,536 1,569,007
General and administrative
expense 145,864 143,556 121,353
----------- ----------- -----------
Total expenses 2,359,986 2,048,092 1,690,360
----------- ----------- -----------
Loss before equity in income
of local limited partnership
investments (2,314,379) (1,986,685) (1,658,325)
Equity in income of local
limited partnership
investments 96,766 24,678 94,133
----------- ----------- -----------
Net loss $(2,217,613) $(1,962,007) $(1,564,192)
=========== =========== ===========
Net loss per Limited
Partnership Unit, based
on 21,576 Units outstanding
in 1995 through 1997 $ (101.75) $ (90.02) $ (71.77)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
For the years ended December 31, 1997, 1996 and 1995
General Limited
Partners Partners Total
----------- ----------- -----------
Partners' deficit
at December 31, 1994 $ (140,111) $(3,895,142) $(4,035,253)
Net loss (15,642) (1,548,550) (1,564,192)
Capital Contributed 3,202 -- 3,202
----------- ----------- -----------
Partners' deficit
at December 31, 1995 $ (152,551) $(5,443,692) $(5,596,243)
Net loss (19,620) (1,942,387) (1,962,007)
----------- ----------- -----------
Partners' deficit
at December 31, 1996 $ (172,171) $(7,386,079) $(7,558,250)
Net loss (22,177) (2,195,436) (2,217,613)
Capital Distributions (22) (2,211) (2,233)
----------- ----------- -----------
Partners' deficit
at December 31, 1997 $ (194,370) $(9,583,726) $(9,778,096)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
<TABLE>
<CAPTION>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31
-----------------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Cash distributions from local limited
partnerships $ 372,180 $ 288,577 $ 316,819
Interest payments on purchase money notes (369,947) (290,554) (316,109)
Cash paid for Partnership administration
expenses (128,051) (173,106) (23,136)
Interest received 29,821 45,667 19,300
----------- ----------- -----------
Net cash used in operating activities (95,997) (129,416) (3,126)
----------- ----------- -----------
Cash flows from financing activity:
Contributions from former general partners -- -- 3,202
Capital distributions (2,233) -- --
----------- ----------- -----------
Net cash provided by financing activity (2,233) -- 3,202
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents (98,230) (129,416) 76
Cash and cash equivalents at:
Beginning of period 163,915 293,331 293,255
----------- ----------- -----------
End of period 65,685 $ 163,915 $ 293,331
=========== =========== ===========
Reconciliation of net loss to net cash used in operating activities:
Net loss $(2,217,613) $(1,962,007) $(1,564,192)
Adjustments to reconcile net loss to net
cash used in operating activities:
Share of income of local limited
partnership investments (96,766) (24,678) (94,133)
Cash distributions from local limited
partnerships 372,180 288,577 316,819
Interest expense added to purchase money
notes, net of discount amortization 1,859,914 1,532,710 1,287,533
Interest income added to long-term
notes receivable, net of discount
amortization, and interest received (15,817) (15,818) (14,607)
Decrease in other current assets 31 77 1,870
(Decrease) increase in:
Accrued interest payable (15,736) 81,273 (34,635)
Accounts payable to affiliates 17,000 (30,500 82,569
Accounts payable 410 1,000 --
Accrued expenses 400 (50) 15,650
----------- ----------- -----------
Net cash used in operating activities (95,997) $ (129,416) $ (3,126)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Organization of Partnership
Liberty Housing Partners Limited Partnership (the "Partnership") was
formed under the Massachusetts Uniform Limited Partnership Act on March 20, 1984
for the primary purpose of investing in other limited partnerships which own and
operate government assisted multi-family rental housing complexes (the "Local
Limited Partnerships").
The General Partners of the Partnership through December 27, 1995 were
Liberty Real Estate Corporation, which served as the Managing General Partner,
and LHP Associates Limited Partnership, which served as the Associate General
Partner. On December 27, 1995, Liberty Real Estate Corporation and LHP
Associates Limited Partnership withdrew from the Partnership and assigned and
transferred all of their interests in the Partnership to the Successor General
Partner, TNG Properties Inc., which was admitted to the Partnership as Successor
General Partner. TNG Properties Inc. serves as the Managing General Partner.
The Partnership Agreement authorized the sale of up to 30,010 units of
Limited Partnership Interest ("Units") of which 21,616 were subscribed for and
sold as of the completion of the offering on July 12, 1985. During fiscal 1995,
the Partnership recorded as cancelled and no longer outstanding 40 units which
were formally abandoned by the holders of such units.
Pursuant to terms of the Partnership Agreement, Profits or Losses for
Tax Purposes (other than from sales or refinancings) and Distributable Cash From
Operations, both as defined in the Partnership Agreement, are allocated 99% to
the Limited Partners and 1% to the General Partners. Different allocations of
profits or losses and cash distributions resulting from other events are
specified in the Partnership Agreement.
2. Significant Accounting Policies
The Partnership records are maintained on the accrual basis of
accounting.
Investments in Local Limited Partnerships are accounted for by the
equity method whereby costs to acquire the investments, including cash paid,
notes issued and other costs of acquisition, are capitalized as part of the
investment account. The Partnership's equity in the earnings or losses of each
of the Local Limited Partnerships is reflected as an addition to or reduction of
the respective investment account. The Partnership does not recognize losses
which reduce its investment account below zero.
Cash equivalents at December 31, 1997, consist of money market fund
investments with no stated maturity, valued at cost, which approximates market
value. At December 31, 1996, cash equivalents also included a 14 day certificate
of deposit with interest accruing at a rate of 4.5 percent.
Discounts on long-term purchase money notes are amortized over the
terms of the related notes using the effective interest method. Discounts on
long-term notes receivable are amortized over the term of the notes using the
effective interest method.
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss through to, and is reportable
bypass the partners individually.
22
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
2. Significant Accounting Policies, continued
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Net loss per Limited Partnership Unit is based on the weighted average
number of Units outstanding in the applicable year. Refer to Note 1 for
information regarding profit and loss sharing ratios. No provision for income
taxes has been made since the liability for such taxes is the obligation of the
Partners rather than the Partnership.
The Partnership has adopted SFAS No. 128, "Earnings per Share" and SFAS
No. 129, "Disclosure of Information about Capital Structure." SFAS No. 128
provides accounting and reporting standards for the amount of earnings per
share. SFAS No. 129 requires the disclosure, in summary form within the
financial statements, of the pertinent rights and privileges of the various
securities outstanding. The implementation of these standards has not materially
affected the Registrant's financial statements.
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." In February 1998, the
Financial Accounting Standards Board issued SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The Registrant
does not have any items of other comprehensive income, does not have other
segments of its business on which to report, and does not have any pensions or
other postretirement benefits. Consequently, these pronouncements are expected
to have no effect on the financial statements.
3. Contingencies
The Partnership's cash balances have decreased each year from December
31, 1995 through December 31, 1997. If the trend continues, the Partnership may
not have sufficient cash available for operating expenses during 1998. In
addition, the Purchase Money Notes (PMN) have maturity dates ranging from
September 1999 through July 2001. Sources of funds to satisfy the maturing PMN
will have to come from either the sale of the Partnership's interest in the
Local Limited Partnership or from refinancing or sale proceeds of the property
of the Local Limited Partnership for a price equal to or greater than the
amounts due under the associated PMN. The rents of the Properties, many of which
receive rental subsidy payments, including payments under Section 8 of Title II
of the Housing and Community Development Act of 1974 ("Section 8"), are subject
to specific laws, regulations and agreements with federal and state agencies.
The subsidy agreements expire at various times from May 1998 through July 2000.
The United States Department of Housing and Urban Development ("HUD") has issued
notices which implement provisions to renew certain project based Section 8
contracts expiring during HUD's fiscal year 1998 where requested by an owner,
for an additional one year term generally at or below current rent levels,
subject to certain guidelines. HUD has an additional program which, in general,
provides for restructuring rents and/or mortgages where rents may be adjusted to
market levels and mortgage terms may be adjusted based on the reduction in
rents, although there may be instances in which only rents, but not mortgages,
are restructured.
23
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
3. Contingencies, continued
The Partnership cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of certain Local
Limited Partnerships currently receiving such subsidy or similar subsidies.
Management of the Partnership is presently implementing plans to
address these matters. Management has decided that the Partnership may defer
payment of the management fee, and defer payment of the reimbursements for
general and administrative costs. In addition, management expects an increase in
distributions from one of the lower tiers due to the local state housing
authority removing the limited dividend restriction on distributions. Management
is in the process of negotiating the potential sale of the Partnership's Limited
Partnership interest in six of the Local Limited Partnerships that share common
ownership and management. Management is recommending that the Local Limited
Partnership exercise their options to renew the Section 8 contracts pursuant to
the HUD guidelines described in the preceding paragraph.
4. Investments in Local Limited Partnerships
The Partnership acquired Local Limited Partnership interests in
thirteen Local Limited Partnerships which own and operate government assisted
multi-family housing complexes. The Partnership, as Investor Limited Partner
pursuant to Local Limited Partnership Agreements, acquired interests ranging
from 94% to 98% in the profit or losses from operations and cash from operations
of each of the Local Limited Partnerships.
Twelve Local Limited Partnership interests were acquired from
withdrawing partners of existing Local Limited Partnerships and one Local
Limited Partnership interest was acquired from a newly formed Local Limited
Partnership. In conjunction with the acquisition of eleven of the Local Limited
Partnership interests from withdrawing partners, the Partnership issued
long-term purchase money notes in the aggregate principal amount of $8,705,000,
before discount, to such withdrawing partners. In conjunction with the
acquisition of one of the Local Limited Partnership interests, the Local Limited
Partnership issued purchase money notes to withdrawing partners amounting to
$1,800,000 with the same terms as the purchase money notes issued by the
Partnership in connection with its acquisition of interests in other Local
Limited Partnerships. All of the Purchase Money Notes carry simple interest at
9% per annum. Interest is payable annually but only to the extent of cash
distributed from the respective Local Limited Partnerships. Both principal and
unpaid interest are due at maturity. Recourse on such purchase money notes is
limited to the Partnership's respective Local Limited Partnership interests
which are pledged as security on the notes. See Note 7 for further information
on Purchase Money Notes.
The following is a summary of cumulative activity for investments in
Local Limited Partnerships since their dates of acquisition:
24
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
4. Investments in Local Limited Partnerships, continued
Years Ended December 31,
------------------------
1997 1996
---- ----
Total acquisition cost to the Partnership $ 9,356,379 $ 9,356,379
Additional capital contributed by the
Partnership 11,425 11,425
Partnership's share of losses of Local
Limited Partnerships (3,744,473) (3,818,174)
Cash distributions received from Local
Limited Partnerships (3,603,556) (3,254,441)
----------- -----------
Investments in Local Limited Partnerships $ 2,019,775 $ 2,295,189
=========== ===========
Summarized financial information from the combined financial statements
of all Local Limited Partnerships is as follows:
Summarized Balance Sheets
December 31,
------------
1997 1996
---- ----
Assets:
Investment property, net
of accumulated depreciation $ 16,526,177 $ 17,379,631
Current assets 2,376,801 2,637,472
Other assets 294,284 307,297
------------ ------------
Total assets $ 19,197,262 $ 20,324,400
============ ============
Liabilities and Partners' Equity (Deficit):
Current liabilities $ 1,671,568 $ 1,945,146
Long-term debt, net of discounts 16,839,912 17,217,990
------------ ------------
Total liabilities 18,511,480 19,163,136
Partnership's equity(deficit) 878,863 1,344,630
Other partners' equity(deficit) (193,081) (183,366)
------------ ------------
Total liabilities and
partners' equity(deficit) $ 19,197,262 $ 20,324,400
============ ============
25
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
4. Investments in Local Limited Partnerships, continued
<TABLE>
<CAPTION>
Summarized Statements of Operations
-----------------------------------
For the Years Ended December 31,
--------------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Rental and other income $ 5,358,709 $ 5,199,572 $ 5,191,089
Expenses:
Operating expenses 3,424,047 3,298,651 3,185,215
Interest expense 1,041,432 954,170 1,242,398
Depreciation and amortization 993,415 991,323 922,690
----------- ----------- -----------
Total expenses 5,458,894 5,244,144 5,350,303
----------- ----------- -----------
Net loss $ (100,185) $ (44,572) $ (159,214)
=========== =========== ===========
Partnership's share of net loss $ (97,997) $ (45,752) $ (161,616)
=========== =========== ===========
Other partners' share
of net income (loss) $ (2,188) $ 1,180 $ 2,402
=========== =========== ===========
</TABLE>
The difference between the Partnership's share of income (loss) in Local
Limited Partnership investments in the Partnership's Statement of Operations for
the years ended December 31, 1997 through 1995 and the share of loss in the
above Summarized Statements of Operations consists of the Partnership's
unrecorded share of losses as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Share of income in Local
Limited Partnership Investments in
the Partnership's Statement of Operations $ 96,766 $ 24,678 $ 94,133
Partnership's share of income in
the above summarized Statements of Operations (97,997) (44,572) (161,616)
----------- ----------- -----------
Difference $ 194,763 $ 69,250 $ 255,749
=========== =========== ===========
Unrecorded Losses:
Linden Park (Prior year loss
carry forward applied against 1996 net income) $ 46,355 $ (55,714) $ 192,452
Brierwood, Ltd. 35,037 36,982 16,115
Brierwood II, Ltd. 11,530 20,189 4,458
Pine Forest Apartments, Ltd. 66,954 39,870 42,724
Surry Manor 11,822 28,145 --
Other -- (222) --
----------- ----------- -----------
Subtotal Unrecorded Losses 171,698 69,250 255,749
Cash distributions from Glendale Manor
recorded as investment income 23,065 -- --
----------- ----------- -----------
Total $ 194,763 $ 69,250 $ 255,749
=========== =========== ===========
</TABLE>
26
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
4. Investments in Local Limited Partnerships, continued
The Partnership's investment in Local Limited Partnerships reported in
its Balance Sheets at December 31, 1997 and 1996 are $1,140,912 and $950,559,
respectively, greater than the Partnership's equity reported in the Summarized
Balance Sheets above. This is related to the share of unrecorded losses of the
five Local Limited Partnerships and in 1997 from cash distributions received
from Glendale Manor which were recorded as investment income. The investment of
these six Local Limited Partnerships has been reduced to zero.
The Partnership recorded its share of losses in Linden Park, Brierwood
Ltd., Brierwood II, Ltd. Pine Forest Apartments, Ltd., Surry Manor and Glendale
Manor until its related investment was reduced to zero. Subsequent to that
point, any cash distributions received from these six partnerships will be
recognized as investment income rather than as a reduction in Investment in
Local Limited Partnerships on the Partnership's Balance Sheet. In 1997, $23,065
of cash distributions from Glendale Manor was recognized as investment income as
it would have reduced its investment balance below zero. The Partnership is not
obligated to make additional capital contributions to fund the deficit in its
capital accounts in these Local Limited Partnerships.
Certain Local Limited Partnerships have made payments on behalf of the
Partnership for non-resident state withholding taxes in accordance with state
income tax regulations. These amounts totaling $2,233 in 1997 have been treated
as distributions from the Local Limited Partnerships and a distribution to the
partners of Liberty Housing Partners Limited Partnership.
5. Long-term Notes and Interest Receivable
During 1989, the Partnership purchased long-term purchase money notes of
Linden Park Associates Limited Partnership ("Linden Park"), a Local Limited
Partnership. The notes represent obligations of Linden Park to former partners
whose partnership interests were purchased for resale to the Partnership in
connection with the Partnership's acquisition of an interest in Linden Park. The
Partnership purchased such notes, which carried a face value of $173,803 plus
accrued and unpaid interest of $49,692, for $58,000. The notes mature on
December 11, 1999 and bear interest at 9% per annum payable only from available
cash from operations of Linden Park. During the year ended December 31, 1997 the
Partnership received $23,803 of interest on such notes. Any interest that is
unpaid prior to maturity is due at maturity. As of December 31, 1997 and 1996,
the outstanding balance of principal and accrued interest net of unamortized
discount is $143,485 and $127,668, respectively.
27
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
6. Transactions with Affiliates
During the years ended December 31, 1997, 1996 and 1995 the Partnership
recognized general and administrative expenses owed to the current or
predecessor Managing General Partner, as follows:
1997 1996 1995
---- ---- ----
Reimbursement of Partnership
administration expenses 57,007 $48,240 $38,771
Partnership management fees 50,000 50,000 50,000
As of December 31, 1997 and 1996, accounts payable to affiliates
totaling $75,271 and $58,271 respectively, represent amounts owed for
reimbursements of Partnership administration expenses of $20,000 and $7,771,
respectively, and partnership management fees of $55,271 and $50,500,
respectively.
28
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
7. Long-term Purchase Money Notes
Long-term purchase money notes consist of the following at
December 31:
1997 1996
---- ----
Purchase Money Notes, due July 9, 2001,
bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest
in Surry Manor, Ltd.:
Original principal balance $ 360,000 $ 360,000
Accrued and unpaid interest 306,106 287,304
Purchase Money Notes, due August 29,
2000, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Glendale Manor Apartments:
Original principal balance 450,000 450,000
Accrued and unpaid interest 137,984 134,981
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Oxford Homes for the Elderly, Ltd.:
Original principal balance 643,600 643,600
Accrued and unpaid interest 215,485 182,165
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Williamston Homes for the Elderly, Ltd.:
Original principal balance 664,100 664,100
Accrued and unpaid interest 81,486 44,295
29
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
7. Long-term Purchase Money Notes (Continued)
1997 1996
---- ----
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Fuquay-Varina Homes for the Elderly, Ltd.:
Original principal balance $707,300 $707,300
Accrued and unpaid interest 50,080 45,907
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Fiddlers Creek Apartments:
Original principal balance 1,750,000 1,750,000
Accrued and unpaid interest 1,066,909 1,076,436
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Meadowwood, Ltd.:
Original principal balance 610,000 610,000
Accrued and unpaid interest 706,085 651,185
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Brierwood, Ltd.:
Original principal balance 270,000 270,000
Accrued and unpaid interest 304,662 280,362
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Pine Forest Apartments, Ltd.:
Original principal balance 350,000 350,000
Accrued and unpaid interest 383,840 352,340
30
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
7. Long-term Purchase Money Notes (Continued)
1997 1996
---- ----
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Austintown Associates:
Original principal balance $1,600,000 $1,600,000
Accrued and unpaid interest 1,746,140 1,622,822
Purchase Money Notes, due
November 27, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Osuna Apartments Company:
Original principal balance 1,300,000 1,300,000
Accrued and unpaid interest 1,411,536 1,303,637
------------ -----------
Total principal and accrued and unpaid
interest at 9% at December 31 15,115,313 14,686,434
Aggregate discount on the above purchase
money notes plus accrued interest (based
upon average imputed interest rates of 21%) (3,571,118) (5,002,153)
------------ -----------
Long-term purchase money note liability $ 11,544,195 $ 9,684,281
============ ===========
The purchase money notes were originally discounted using an imputed
interest rate of approximately 19% and assuming a certain level of cash flow
from distributions from the underlying Local Limited Partnerships
("distributions"). Since 1990, on an annual basis, the Partnership has reviewed
the estimated annual level of distributions expected to be received based on
historical and re-forecasted future distributions and adjusted accordingly the
future effective annual interest expense. The effective annual interest rate as
of December 31, 1997 is approximately 21%.
All of the purchase money notes and accrued interest thereon may be
repaid without penalty prior to maturity. However, it is not anticipated that
any principal payments will be made prior to maturity and therefore the
principal balances are classified as long-term.
The portion of interest which is expected to be paid currently is
classified as a current liability and the portion of interest which is not
expected to be paid until maturity has been reflected as interest added to
purchase money note debt.
31
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
8. Reconciliation of Loss in Financial Statements to Loss for Federal
Income Tax Purposes
A reconciliation of the loss reported in the Statements of Operations for
the years ended December 31, 1997, 1996 and 1995, to the loss reported for
Federal income tax purposes is as follows:
1997 1996 1995
---- ---- ----
Net loss per Statements of
Operations $(2,217,613) $(1,962,007) $(1,564,192)
Less: Excess of tax equity over
book equity in loss of
Local Limited
Partnership (669,980) (746,209) (835,209)
Add: Additional book basis
interest 1,292,826 1,033,449 728,881
Expenses not deducted
pursuant to I.R.C
Section 267 17,000 (30,500) 88,771
----------- ----------- -----------
Net loss for Federal income
tax purposes $(1,577,767) $(1,705,267) $(1,581,749)
=========== =========== ===========
9. Disclosure About Fair Value of Financial Instruments
Long Term Notes Receivable
Management does not believe it is practical to estimate the fair value of
the notes receivable because notes with similar terms and provisions are not
available to the partnership.
Purchase Money Mortgages Payable
Management does not believe it is practical to determine the fair value
of the Purchase Money Notes payable because notes with similar terms and
provisions are not currently available to the partnership.
10. Concentration of Credit Risk
The Partnership maintains its cash and cash equivalents in one
financial institution. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000 by this bank.
32
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
11. Statement of Distributable Cash from Operations (Unaudited)
Distributable Cash From Operations for the year ended December 31, 1997,
as defined in Section 17 of the Partnership Agreement, is as follows:
Interest income per Statement of Operations $45,607
Less: Interest income added to long-term notes
receivable, net of discount amortization (15,817)
Plus: 1997 cash distributions to be received from
Local Limited Partnerships, net of non-resident
state withholding taxes 353,038
Less: 1997 interest payments on purchase money
notes to be paid out of 1997 cash
distributions from Local Limited Partnerships (353,038)
General and administrative expenses per
Statement of Operations (145,864)
--------
Cash from Operations, as defined (116,074)
--------
Distributable Cash from Operations, as defined $ 0
========
33
<PAGE>
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Liberty Housing Partners Limited Partnership
We have audited the accompanying balance sheets of Liberty Housing
Partners Limited Partnership (a Massachusetts Limited Partnership) as of
December 31, 1997 and 1996, and the related statements of operations, changes in
partners' deficit, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the financial
statements of certain operating partnerships in which Liberty Housing Partners
Limited Partnership owns a limited partnership interest. Investments in such
partnerships comprise 45.3% and 41.7% of the assets as of December 31, 1997 and
1996, and losses from such partnerships comprise 1.5%, 6.6%, and 1.6% of the
partnership loss for each of the three years in the period ended December 31,
1997, of Liberty Housing Partners Limited Partnership. The financial statements
of these partnerships were audited by other auditors, whose reports have been
furnished to us, and our opinion, insofar as it relates to information relating
to these partnerships, is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other
auditors referred to above, the financial statements referred to above present
fairly, in all material respects, the financial position of Liberty Housing
Partners Limited Partnership as of December 31, 1997 and 1996, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ Reznick Fedder & Silverman
Boston, Massachusetts REZNICK FEDDER & SILVERMAN
March 12, 1998
34
<PAGE>
AUSTINTOWN ASSOCIATES
FHA PROJECT NO. 042-44213
--------------------
FINANCIAL STATEMENTS
and
SUPPLEMENTARY INFORMATION
with
INDEPENDENT AUDITOR'S REPORT
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
35
<PAGE>
1. LEAD AUDITOR ON ENGAGEMENT:
Mary Ann Gehringer
Audit Partner
Bicko Fredman & Co.
3912 Prospect Avenue
Cleveland, Ohio 44115
(216) 426-2100
2. INFORMATION ON LICENSING FOR AN OUT-OF-STATE CPA:
n/a
3. CPA'S FEDERAL EMPLOYER ID NUMBER:
34-1285712
36
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS:
Balance sheets 2
Statement of operations 3
Statement of partners' equity 4
Statement of cash flows 5-6
Notes to financial statements 7-10
SUPPLEMENTARY INFORMATION:
INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTARY INFORMATION 11
Statement of profit and loss (HUD Form 92410) 12-13
Computation of surplus cash, distributions and
residual receipts (HUD Form 93486) 14
Changes in fixed asset accounts 15
Other supporting data required by HUD 16-18
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS 19
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO NONMAJOR HUD PROGRAM TRANSACTIONS 20
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION 21
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROLS 22-23
Schedule of findings and questioned costs 24
Auditor's comments on audit resolution matters 25
MORTGAGOR'S CERTIFICATION 26
MANAGING AGENT'S CERTIFICATION 27
37
<PAGE>
Independent Auditor's Report
Austintown Associates HUD Field Office Director
Youngstown, Ohio Cleveland, Ohio
We have audited the accompanying balance sheets of Austintown Associates,
HUD Project No. 042-44213 as of December 31, 1997 and 1996, and the related
statements of operations, changes in partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Project's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Austintown
Associates as of December 31, 1997 and 1996 and the results of its operations
and cash flows for the years then ended, in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards and the Consolidated
Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing
and Urban Development, we have also issued a report dated January 9, 1998 on our
consideration of Austintown Associates' internal control and reports dated
January 9, 1998 on its compliance with specific requirements applicable to major
HUD programs and specific requirements applicable to Fair Housing and
Non-Discrimination, and specific requirements applicable to nonmajor HUD program
transactions.
/s/ Bich Fredman & Co.
Cleveland, Ohio
January 9, 1998
1
38
<PAGE>
<TABLE>
<CAPTION>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
1997 1996
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
1120 Cash and cash equivalents $ 38,985 $ 87,531
1130 Accounts receivable - tenants 1,553 2,158
1144 - HUD 1,855 155
1145 - other 2,500 -
1210 Inventory supplies 5,436 5,381
1280 Prepaid expense 5,100 -
---------- ----------
55,429 95,225
---------- ----------
DEPOSITS HELD IN TRUST - FUNDED:
1191 Tenant security deposits 37,882 35,573
---------- ----------
RESTRICTED DEPOSITS AND FUNDED RESERVES:
1320 Reserve for Replacements 196,232 181,814
1310 Mortgage escrow deposits 43,238 49,116
---------- ----------
239,470 230,930
---------- ----------
FIXED ASSETS, AT COST:
1410 Land 397,105 397,105
1420 Buildings 5,004,422 4,999,696
1440 Equipment 152,209 150,485
---------- ----------
5,553,736 5,547,286
4120 Less: accumulated depreciation 2,312,953 2,145,754
---------- ----------
3,240,783 3,401,532
---------- ----------
OTHER ASSETS:
1810 Unamortized loan costs - net 14,036 14,693
1900 Deposit 433 433
---------- ----------
14,469 15,126
---------- ----------
TOTAL ASSETS $3,588,033 $3,778,386
========== ==========
39
<PAGE>
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY
1997 1996
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES:
2110 Accounts payable - trade $ 20,154 $ 51,646
- insurance 14,546 14,957
2210 Deferred rent - 117
2140 Distribution payable - management fee 7,500 7,500
2141 Distribution payable 21,104 33,308
2150 Accrued real estate taxes 87,300 87,213
2130 Accrued interest payable 1,915 2,367
2320 Current portion of long-term debt 88,740 82,690
---------- ----------
241,259 279,798
---------- ----------
DEPOSIT LIABILITIES:
2191 Tenant security deposits 26,939 26,491
---------- ----------
LONG-TERM LIABILITIES:
2320 Mortgage payable 2,869,654 2,954,665
2390 Operating loss loan 15,779 19,507
---------- ----------
2,885,433 2,974,172
---------- ----------
TOTAL LIABILITIES 3,153,631 3,280,461
---------- ----------
PARTNERS' EQUITY
3130 Partners' equity 434,402 497,925
---------- ----------
TOTAL LIABILITIES AND
PARTNERS' EQUITY $3,588,033 $3,778,386
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
40
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
--------- ---------
REVENUE:
Rental $ 862,532 $ 806,224
Interest 14,821 13,390
Other 15,089 16,499
--------- ---------
892,442 836,113
--------- ---------
EXPENSES:
Administrative 172,010 163,887
Utilities 127,753 120,618
Operating and maintenance 260,298 243,485
Taxes and insurance 136,776 134,064
Interest and mortgage insurance 40,079 45,752
Depreciation and amortization 190,445 192,884
Entity expense 7,500 7,500
--------- ---------
934,861 908,190
--------- ---------
NET (LOSS) $ (42,419) $ (72,077)
========= =========
The accompanying notes are an integral part of these financial statements.
3
41
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
STATEMENT OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
General Limited
Partners Partner Total
---------- ---------- ---------
Balance, December 31, 1995 $ (2,469) $ 598,079 $ 595,610
Net loss -- (72,077) (72,077)
Return of prior year distribution 7,700 -- 7,700
Earned distribution currently
payable (8,212) (25,096) (33,308)
--------- --------- ---------
Balance, December 31, 1996 (2,981) 500,906 497,925
Net loss -- (42,419) (42,419)
Earned distribution currently
payable (422) (20,682) (21,104)
--------- --------- ---------
Balance, December 31, 1997 $ (3,403) $ 437,805 $ 434,402
========= ========= =========
The accompanying notes are an integral part of these financial statements.
4
42
<PAGE>
<TABLE>
<CAPTION>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Rental receipts $ 860,786 $ 811,929
Interest receipts 14,821 13,390
Other receipts 13,616 19,639
Insurance proceeds 398,887 --
----------- -----------
1,288,110 844,958
----------- -----------
Administrative 48,784 35,047
Management fees 83,200 76,800
Utilities 139,312 120,356
Payroll and related expenses 191,889 173,415
Operating and maintenance 175,903 189,156
Fire repairs 393,113 --
Taxes - real estate 87,216 77,544
Property insurance 13,377 12,369
Miscellaneous taxes and insurance 394 456
Interest on mortgage 40,531 30,975
Mortgage insurance -- 240
Entity expense 7,500 7,500
----------- -----------
1,181,219 723,858
----------- -----------
Net cash provided by operating activities 106,891 121,100
----------- -----------
INVESTING ACTIVITIES:
(Increase) decrease in Reserve for Replacements (14,418) 60,479
Decrease (increase) in mortgage escrow deposits 5,878 (14,398)
Fixed asset purchases (29,038) (27,247)
Security deposits funded (2,309) (2,221)
----------- -----------
Net cash (used) provided by investing
activities (39,887) 16,613
----------- -----------
FINANCING ACTIVITIES:
Mortgage principal payments (82,690) (77,052)
Net security deposits collected 448 471
Partnership distributions (33,308) (200)
Return of partnership distribution -- 7,700
----------- -----------
Net cash (used) by financing activities (115,550) (69,081)
----------- -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (48,546) 68,632
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 87,531 18,899
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 38,985 $ 87,531
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
43
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
--------- ---------
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (42,419) $ (72,077)
--------- ---------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 190,445 192,884
(Increase) decrease in accounts receivable (3,595) 6,721
Increase in prepaid expenses (5,100) --
Increase in inventory supplies (55) (1,414)
Decrease in accounts payable (31,903) (14,380)
(Decrease) increase in deferred rent (117) 117
Increase in accrued real estate taxes 87 9,669
Decrease in accrued interest payable (452) (420)
--------- ---------
Total adjustments 149,310 193,177
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 106,891 $ 121,100
========= =========
The accompanying notes are an integral part of these financial statements.
6
44
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. ORGANIZATION, BASIS OF PREPARATION, AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
ORGANIZATION
Austintown Associates, a partnership, was formed as a limited
partnership on February 15, 1973 pursuant to the provisions of the laws
of the State of Ohio. The Partnership operates a 200 unit apartment
project, Compass West, (the Project) located in Youngstown, Ohio. The
Project is operated under the terms of a Federal Housing Administration
(FHA) Regulatory Agreement for Limited Distribution Mortgages under
Section 236 of the National Housing Act dated February 22, 1973.
Distributions to partners are allowable only from surplus cash and are
limited in any one fiscal year to six percent of the initial equity
investment, on a cumulative basis. The FHA, under commitment to the
Partnership, makes interest subsidiary payments to the mortgage lender.
On October 30, 1984, ownership interests for the partners amounting to
99% of the interests of the existing partners were transferred by the
original partners to new partners. As a result of the transfer, the
Partnership retained one of the original General Partners as a Local
General Partner, admitted a new General Partner as Associate General
Partner, and admitted a Sole Investor Limited Partner. During 1995,
there was a substitution of the Associate General Partner.
The Partnership accounted for this transfer of ownership interests by
the goodwill method whereby assets and liabilities are adjusted to
reflect the value of Partnership assets based on the cost to the new
partners of their interests in the Partnership.
Profit of loss and cash distributions:
Pursuant to Article X of the Amended and Restated Certificate of
Formation and Agreement of Limited Partnership, profits and losses are
allocated 1% to the Local General Partner, 1% to the Associate General
Partner and 98% to the Investor Limited Partner, provided all partners
individually have only positive balances or only negative balances. The
agreement requires that all losses be allocated to the Investor Limited
Partner if any General Partner has a negative balance at a time when any
Limited Partner has a positive capital balance.
The agreement also specifies the order of allocations in such instances
as gain from a sale or refinancing and loss from a sale. These
allocations may differ from those for operating profits and losses.
BASIS OF PREPARATION
The financial statements of the Project have been prepared in accordance
with accounting principles applicable to a U.S. Department of Housing
and Urban Development (HUD) project, in conformity with generally
accepted accounting principles and the disclosure requirements as
outlined in HUD Handbook 4370.2 REV 1.
7
45
<PAGE>
BASIS OF PREPARATION, CONTINUED
PART I - Funds of the Project:
Under the conditions of the Regulatory Agreement, the "borrower" is
obligated to create a Revenue Fund account into which all operating
income of the Project is deposited and a Reserve Fund for Replacements
for application toward the cost of unusual or extraordinary maintenance
or repairs, renewals or replacements with the prior permission of HUD.
PART II - Investment restrictions:
The Regulatory Agreement and Section 236 place certain restrictions on
the investment of funds set aside in the required Reserve. In essence,
investment is restricted to direct obligations of, or obligations the
principal of and the interest on which are guaranteed to include both
securities issued by the United States Government and its agencies, and
those insured by the United States Government and its agencies, and
those insured under the Federal Deposit Insurance Corporation. In
addition, any interest earned on the investment of such funds must be
retained in the required Reserve.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies have been followed in the
preparation of the financial statements:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Cash equivalents
For purposes of the statement of cash flows, the Partnership considers
all highly-liquid, debt instruments purchased with a maturity of three
months or less, not invested in a Reserve required under the terms of
its Regulatory Agreement, to be "cash equivalents."
Property and equipment
Property and equipment is recorded on the basis of cost. Depreciation is
computed using the straight-line method over the estimated useful lives
of the assets. The estimated useful lives of the assets range from 3 to
30 years. Management continually reviews property and equipment to
determine that the carrying values have not been impaired.
Maintenance
Routine maintenance is charged to maintenance expense. Expenditures
which materially increase the value or extend the useful lives of the
assets are capitalized.
Unamortized loan costs
Loan costs are being amortized over the appropriate loan period on a
straight-line basis.
8
46
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Inventory, supplies
Supplies consist of various maintenance and cleaning products carried at
cost.
Income taxes
For income tax purposes, each partner is required to take into account
his share of the Partnership's income or loss and, accordingly, no
provision or benefit for income taxes is included in the financial
statements.
2. MORTGAGE PAYABLE
The mortgage is insured by the FHA and secured by the property and
equipment of the Project. The mortgagee's recourse on the debt is
limited to such security.
The mortgage, which bears interest at 7% per annum, requires monthly
principal and interest payments of $24,095 less monthly interest subsidy
($15,503 for 1997 and $15,538 for 1996) thru December, 2015. Annual
principal payments for the next five years are as follows: 1998 --
$85,011; 1999 -- $91,157; 2000 -- $97,746; 2001 -- $104,812; 2002 -
$112,389 and thereafter -- $2,463,550.
Under Section 236 of the National Housing Act, developers are given an
interest reduction, in that the interest rate to develop and build the
Project is subsidized to an effective rate of 1%.
1997 1996
-------- --------
Expense $209,402 $214,778
Subsidy 186,002 186,417
-------- --------
Net interest $ 23,400 $ 28,361
======== ========
Under agreements with the mortgage lender and the FHA, the Project is
required to make escrow deposits for taxes, insurance and replacement
of Project assets. The Project is also subject to restrictions as to
operating policies, rental charges, operating expenditures and
distributions to partners.
3. OPERATING LOSS LOAN
The operating loss loan is an FHA-secured note with interest payable at
9%, due in monthly installments of $444, including principal and
interest through January, 2002. Annual principal payments for the next
five years, are as follows: 1998 -- $3,729; 1999 -- $4,079; 2000 --
$4,462; 2001 -- $4,881; 2002 -- $2,357, and thereafter -- $-0-.
4. UNUSUAL TRANSACTIONS
During the year ended December 31, 1997, the Project experienced two
fires. Insurance proceeds of $363,109 and $35,778 were received and
used to pay the contractor for the repairs. Additional insurance
proceeds of $13,184 were received under a business interruption claim
and recorded as an offset to the vacancy loss.
The repairs were performed by a party related to one of the General
Partners. At December 31, 1997, $5,000 is owed pending completion of
all repairs.
9
47
<PAGE>
5. TRANSACTIONS WITH RELATED PARTIES
Distribution payable consists of administrative fees to the Associate
General Partner for services in overseeing the operations of the
Partnership. The $7,500 per annum fee is payable only out of surplus
cash reserves. The fee owed at December 31, 1997 and 1996 was $7,500.
Pursuant to a management agreement dated July 1, 1994, management fees
of 9.9% of gross rental collections are payable to Federal Management
Company, an affiliate of the Local General Partner. On October 12,
1990, HUD approved a monthly management fee of $32 per unit. Management
fees were $76,800 per annum for the years ended December 31, 1997 and
1996.
Included in operating expenses are reimbursements to Federal Management
Company for payroll, payroll taxes, medical insurance, accounting fees,
and office supplies. Payments for such reimbursements were $202,002 and
$169,630 for the years 1997 and 1996, respectively.
Miscellaneous revenue includes commissions for the collection of
monthly fees for equipment provided by B & M Professional Services, an
affiliate of the Local General Partner. Receipts for the fiscal years
ending December 31, 1997 and 1996 were $2,115 and $2,105, respectively.
Included in operating expenses are payments of $47,227 and $27,260 for
1997 and 1996 respectively, to B & M Professional Services for window
replacement, painting and drywall repairs.
Payables to related parties as of December 31 are as follows:
1997 1996
-------- --------
Federal Management Company $ - $ 16,656
B & M Professional Services $ 3,274 $ 9,809
6. HOUSING ASSISTANCE PAYMENTS
HUD has contracted with the partnership, under Section 8 of Title II of
the Housing and Community Development Act of 1974, to make housing
assistance payments to the partnership on behalf of qualified tenants.
One agreement covering 120 units expires on November 30, 1998. A second
agreement covering 80 units expires on May 31, 1999.
With congressional passage in October 1997 of the Multifamily Assisted
Housing and Reform and Affordability Act (the Act), HUD has been given
budgetary authority to approve requests for one-year renewals on all
Section 8 contracts expiring through September 30, 1998.
Under provisions of the Act, renewal of Section 8 contracts expiring
after September 30, 1998 are subject to evaluation and assessment under
a complex set of requirements as prescribed by this "mark-to-market"
legislation. Further, implementing regulations by HUD affecting
administration over the renewal process have not yet been finalized. As
a result, it is uncertain whether HUD will renew these contracts under
terms that are consistent with the successful operation of the project.
The project is economically dependent upon the rental income received
from both of its agreements. If HUD were not to extend either one, the
project's operating cash flows would be adversely affected.
10
48
<PAGE>
SUPPLEMENTARY INFORMATION
49
<PAGE>
Independent Auditor's Report on Supplementary Information
Austintown Associates HUD Field Office Director
Youngstown, Ohio Cleveland, Ohio
Our report on our audit of the basic financial statements of Austintown
Associates, HUD Project No. 042-44213, for December 31, 1997 appears on page 1.
That audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplementary information on pages 12 to 18 is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements of Austintown Associates, HUD Project No.
042-44213. Such information has been subjected to the auditing procedures
applied in the audit of the financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/ Bick Fredman & Co.
Cleveland, Ohio
January 9, 1998
11
50
<PAGE>
<TABLE>
<CAPTION>
Statement of Profit and Loss U.S. Department of Housing and Urban Development
Office of Housing
Federal Housing Commissioner
OMB Approval No. 2502-0052(Exp. 1/31/95)
Public Reporting Burden for this collection of information is estimated to average 1.0 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to the Reports Management Officer, Office of Information Policies and Systems, U.S.
Department of Housing and Urban Development, Washington, D.C. 20410-3600 and to the Office of Management and Budget, Paperwork
Reduction Project (2502-0052), Washington, D.C. 20503. Do not send this completed form to either of these addresses.
For Month/Period Ending: Project Project Name:
Beginning: Number:
January 1, 1997 December 31, 1997 042-44213 Austintown Associates
Part I Description of Account Acct. No. Amount*
<S> <C> <C> <C> <C>
Rental Income 5100 Apartments or Member Carrying Charges (Coops) 5120 $ 175,419
Tenant Assistant Payments 5121 $ 700,101
Furniture and Equipment 5130 $
Stores and Commercial 5140 $
Garage and Parking Spaces 5170 $
Flexible Subsidy Income 5180 $
Miscellaneous (specify) 5190 $
Total Rent Revenues Potential at 100% Occupancy $875,520
Vacancies 5200 Apartments 5220 $ (26,172)
Furniture and Equipment 5230
Stores and Commercial 5240
Garage and Parking Spaces 5270
Miscellaneous (specify) Business Interruption Proceeds 5290 13,184
Total Vacancies (12,988)
Net Rental Revenue Rent Revenue Less Vacancies $862,532
Elderly and Congregate Service Income --5300
Total Service Income (Schedule Attached) 5300 $
Financial Revenue 5400 Interest Income--Project Operations 5410 $ 5,079
Income from Investments--Residual Receipts 5430 $
Income from Investments--Reserve for Replacement 5440 $ 9,041
Income from Investments--Miscellaneous 5490 $ 701
Total Financial Revenue $ 14,821
Other Revenue 5900 Laundry and Vending 5910 $ 1,094
NSF and Late Charges 5920 $ 1,851
Damages and Cleaning Fees 5930 $ 3,217
Forfeited Tenant Security Deposits 5940 $ 444
Other Revenue (specify) 5990 $ 8,483
Total Other Revenue $ 15,089
Total Revenue $892,442
Administrative Expenses Advertising 6210 $ 2,171
6200/6300 Other Administrative Expense 6250 $ 868
Office Salaries 6310 $ 36,553
Office Supplies 6311 $ 12,536
Office or Model Apartment Rent 6312 $
Management 6320 $ 76,800
Manager or Superintendent Salaries 6330 $ 18,675
Manager or Superintendent Rent Free Unit 6331 $
Legal Expenses (Project) 6340 $ 391
Auditing Expenses (Project) 6350 $ 9,800
Bookkeeping Fees/Accounting Services 6351 $
Telephone and Answering Service 6360 $ 5,456
Bad Debts 6370 $ 1,840
Miscellaneous Administrative Expenses (specify) 6390 $ 6,920
Total Administrative Expenses $172,010
Utilities Expense 6400 Fuel Oil/Coal 6420 $
Electricity (Light and Misc. Power) 6450 $ 51,851
Water 6451 $ 75,902
Gas 6452 $
Sewer 6453 $
Total Utilities Expense $127,753
*All amounts must be rounded to the nearest dollar; $.50 and over, round up--$.49 and below, round down.
Page 1 of 2
12
51
<PAGE>
Austintown Associates 042-44213
Operating and Janitor and Cleaning Payroll 6510 $ 30,796
Maintenance Expenses Janitor and Cleaning Supplies 6515 $ 6,486
6500 Janitor and Cleaning Contract 6517 $ 2,137
Exterminating Payroll/Contract 6519 $ 206
Exterminating Supplies 6520 $ 713
Garbage and Trash Removal 6525 $ 17,880
Security Payroll/Contract 6530 $ 1,818
Grounds Payroll 6535 $ 11,997
Grounds Supplies 6536 $ 3,765
Grounds Contract 6537 $ 674
Repairs Payroll 6540 $ 48,205
Repairs Material 6541 $ 97,705
Repairs Contract 6542 $
Elevator Maintenance/Contract 6545 $
Heating/Cooling Repairs and Maintenance 6546 $ 445
Swimming Pool Maintenance/Contract 6547 $ 2,990
Snow Removal 6548 $ 1,300
Decorating Payroll/Contract 6560 $ 21,565
Decorating supplies 6561 $ 6,508
Other 6570 $ 3,514
Miscellaneous Operating and Maintenance Expenses 6590 $ 1,594
Total Operating and Maintenance Expenses $260,298
Taxes and Insurance 6700 Real Estate Taxes 6710 $ 87,303
Payroll Taxes (FICA) 6711 $ 23,846
Miscellaneous Taxes, Licenses and Permits 6719 $ 394
Property and Liability Insurance (Hazard) 6720 $ 12,595
Fidelity Bond Insurance 6721 $ 371
Workmen's Compensation 6722 $ 996
Health Insurance and Other Employee Benefits 6723 $ 11,271
Other Insurance (specify) 6729 $
Total Taxes and Insurance $136,776
Financial Expenses 6800 Interest on Bonds Payable 6810 $ 23,374
Interest on Mortgage Payable 6820 $ 1,924
Interest on Notes Payable (Long-Term) 6830 $
Interest on Notes Payable (Short-Term) 6840 $ 14,781
Mortgage Insurance Premium/Service Charge 6850 $
Miscellaneous Financial Expenses 6890 $
Total Financial Expenses $ 40,079
Elderly & Congregate Total Service Expenses--Schedule Attached 6900 $
Service Expenses 6900 Total Cost of Operations Before Depreciation $739,916
Profit (Loss) Before Depreciation $155,526
Depreciation (Total)--6600 (specify) 6600 $190,445
Operating Profit or (Loss) $(34,919)
Corporate or Mortgagor Office Salaries 7110 $
Entity Expenses 7100 Legal Expenses (Entity) 7120 $
Taxes (Federal-State-Entity) 7130-32 $
Other Expenses (Entity) Admin. Fee - 4,000 7190 $ 7,500
Total Corporate Expenses Amortization 982 $ 7,500
Net Profit or (Loss) $(42,419)
<CAPTION>
Warning: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001,
1010, 1012; 31 U.S.C. 3729, 3802) Miscellaneous or other Income and Expense Sub-account Groups. If miscellaneous or other income
and/or expense sub- accounts (5190, 5290, 5490, 5990, 6390, 6590, 6729, 6890, and 7190) exceed the Account Groupings by 10% or more,
attach a separate schedule describing or explaining the miscellaneous income or expense.
Part II
<S> <C>
1. Total principal payments required under the mortgage, even if payments under a
Workout Agreement are less or more than those required under t he mortgage. $ 79,280
2. Replacement Reserve deposits required by the Regulatory Agreement or
Amendments thereto, even if payments may be temporarily suspended or waived. $ 54,000
3. Replacement or Painting Reserve releases which are included as expense items on
this Profit and Loss statement $ 48,623
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement. $
</TABLE>
Page 2 of 2
13
52
<PAGE>
<TABLE>
<CAPTION>
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE OF MULTIFAMILY HOUSING MANAGEMENT AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
Austintown Associates December 31, 1997 042-44213
PART A - COMPUTE SURPLUS CASH
<S> <C> <C>
1. Cash (Accounts 1110, 1120, 1191) $76,867
2. Tenant subsidiary vouchers due for period covered
by financial statement $ 1,815
3. Other (describe) other accounts receivable $ 2,500
(a) Total Cash (Add Lines 1, 2, and 3) $81,222
4. Accrued mortgage interest payable $ 1,915
5. Delinquent mortgage principal payments $
6. Delinquent deposits to reserve for replacements $
7. Accounts payable (due within 30 days) $15,154
8. Loans and notes payable
(due within 30 days) $
9. Deficient Tax Insurance or MIP Escrow Deposits $ 7,755
10. Accrued expenses (not escrowed) $
11. Prepaid Rents (Account 2210) $
12. Tenant security deposits liability (Account 2191) $26,939
13. Other (Describe) payable to HUD $ 855
(b) Less Total Current Obligations (Add Lines 4 through 13) $52,618
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $28,604
<CAPTION>
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS
<S> <C> <C>
1. Surplus Cash $28,604
2a. Distribution Earned During Fiscal Period
Covered by the Statement $25,850
2b. Distribution Accrued and Unpaid as of the
End of the Prior Fiscal Period $153,796
2c. Distributions Paid During Fiscal Period Covered by Statement $40,808
3. Distributions Earned but Unpaid as of the End of
the Fiscal Period Under Review (Line 2a + 2b - 2c) $138,838
4. Amount Available for Distribution During Next Fiscal Period $28,604
5. Deposit Due Residual Receipts
(Must be deposited with Mortgagee within 60 days after Fiscal Period ends) $
PREPARED BY REVIEWED BY
LOAN TECHNICIAN LOAN SERVICERIAN
DATE DATE
</TABLE>
HUD-93486 (12-80)
14
53
<PAGE>
<TABLE>
<CAPTION>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
CHANGES IN FIXED ASSET ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1997
ASSETS ACCUMULATED DEPRECIATION
------------------------------------------------ --------------------------------------------------
Balance Balance Balance Balance
Fixed Assets 1/1/97 Additions Disposals 12/31/97 1/1/97 Expenses Disposals 12/31/97
- ----------------- ---------- --------- --------- ---------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Land $ 397,105 $ -- $ -- $ 397,105 $ -- $ -- $ -- $ --
Building 4,999,696 27,314 22,588 5,004,422 2,004,842 185,887 22,588 2,168,141
Equipment:
Furniture & fixtures 120,618 1,724 -- 122,342 113,144 3,034 -- 116,178
Maintenance equipment 29,867 -- -- 29,867 27,768 866 -- 28,634
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL $5,547,286 $ 29,038 $ 22,588 $5,553,736 $2,145,754 189,787 $ 22,588 $2,312,953
========== ========== ========== ========== ========== ========== ==========
Amortization 657
--------
Total $190,444
========
Fixed asset additions/disposals:
Refrigerators $ 9,003 $ 8,830
Carpeting 14,811 13,758
Porch 3,500 --
Computer 1,724 --
------- --------
$29,038 $ 22,588
======= ========
<CAPTION>
Net
Carrying
Amount
Fixed Assets 12/31/97
- ----------------- ---------
<S> <C>
Land $ 397,105
Building 2,836,281
Equipment:
Furniture & fixtures 6,164
Maintenance equipment 1,233
----------
TOTAL $3,240,783
==========
</TABLE>
15
54
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
OTHER SUPPORTING DATA REQUIRED BY HUD
DECEMBER 31, 1997
1. ACCOUNTS OR NOTES RECEIVABLE OTHER THAN REGULAR TENANT ACCOUNTS
Duplicate payment to vendor. $ 2,500
=======
2. DELINQUENT TENANT ACCOUNTS
# of Tenants Amount Past Due
0 to 30 days 10 $ 304
31 to 60 days 15 277
61 to 90 days 6 138
Over 90 days 19 1,689
-------
$ 2,408
=======
3. ACCOUNTS PAYABLE OTHER THAN TRADE CREDITORS
Manchi Realty Co. - retention not currently payable $ 5,000
B & M Professional Services 3,274
-------
$ 8,274
=======
4. LOANS OR NOTES PAYABLE OTHER THAN THE INSURED MORTGAGE
9% operating loss loan dated March 24, 1978 in the original amount of
$57,300. Balance at December 31, 1997:
Current $ 3,729
Long-term 15,779
--------
$ 19,508
========
5. COMPENSATION OF PARTNERS
None.
6. CHANGES IN CAPITAL INTERESTS, PROFIT AND LOSS INTERESTS, AND CASH
FLOW INTERESTS
None.
7. TRANSACTIONS WITH PARTIES-AT-INTEREST
Amount
Company Description Paid
--------------------------- ----------------------- --------
Liberty LGP Administrative fee $ 7,500
Federal Management Co. Management fee $ 83,200
Manchi Realty Co. Insurance repairs $390,546
James P. Manchi Maintenance supplies $ 2,390
B & M Professional Services Maintenance and repairs $ 47,227
8. UNAUTHORIZED DISTRIBUTIONS
None.
9. DISTRIBUTIONS TO PARTNERS
March 3, 1997 $ 40,808
========
16
55
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
OTHER SUPPORTING DATA REQUIRED BY HUD (CONTINUED)
DECEMBER 31, 1996
10. MORTGAGE ESCROW DEPOSITS
Estimated amount required as of December 31, 1997 for future payment
of:
Mortgage insurance premium $ 14,546
Property insurance 7,347
Real estate taxes 29,100
--------
50,993
Amount on deposit deficient
of estimated requirements (7,755)
--------
Total confirmed $ 43,238
========
11. ACCRUED TAXES
Description Basis for Period Date Amount
of tax Accrual Covered Due Accrued
----------- --------------- ----------- ----------- --------
Real Estate 1997 effective 01/01/97 to Semi-Annual
tax rate 12/31/97 1998 $ 87,300
========
12. RESERVE FOR REPLACEMENTS
In accordance with the provisions of the Regulatory Agreement,
restricted cash is held by the mortgage servicing agent, Manufacturers
and Traders Trust, and is used for replacement of property with the
approval of HUD.
Balance at January 1, 1997 $ 181,814
Monthly deposits ($4,500 x 12 mos.) 54,000
Authorized releases:
October 28, 1997 (48,623)
Interest income 9,041
---------
Balance at December 31, 1997, confirmed by mortgagee $ 196,232
=========
Invested in:
Money Market $ 62,370
Treasury Bill, due March 5, 1998 133,862
---------
Balance at December 31, 1997 $ 196,232
=========
The following information pertains to Reserve for Replacement
Reimbursement requests approved during December 31, 1997:
<TABLE>
<CAPTION>
Amount Purpose Account
of Request of Request Charged
---------- ---------- -------
<S> <C> <C>
$ 4,286 Parking Lot 6541
6,872 Kitchen cabinetry 6541, 6542
7,676 Refrigerators Building
1,400 Exterior walk and steps 6561
14,811 Carpeting Building
770 Windows 6542
11,325 Waterproofing and foundation repairs 6541, 6542
298 Disposals 6541
1,185 Hot water tanks 6541
--------
$ 48,623 Form HUD 9250 approved October 28, 1997
========
</TABLE>
17
56
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
OTHER SUPPORTING DATA REQUIRED BY HUD (CONTINUED)
DECEMBER 31, 1997
13. TENANT SECURITY DEPOSITS
Tenant security deposits in the total amount of $37,882, which is
sufficient to fund the related liability, are held in the following
bank accounts at December 31, 1997:
Metropolitan Savings Certificate of Deposit
(5.1% due 12/30/98) $ 32,577
Mahoning National Bank Savings 5,305
--------
$ 37,882
========
14. DETAIL OF STATEMENT OF PROFIT AND LOSS SELECTED ACCOUNTS
Account 5990 Other Revenue
Community room/office rentals $ 882
Air conditioning fee 2,115
Cable 4,216
Pool 487
Miscellaneous 783
--------
$ 8,483
========
Account 6390 Miscellaneous Administration Expenses
Computer services $ 1,497
Seminars 1,248
Miscellaneous 1,275
Comprehensive Needs Assessment 2,900
--------
$ 6,920
========
15. NON-REVENUE PRODUCING UNITS
None.
18
57
<PAGE>
Independent Auditor's Report on Compliance with Specific
Requirements Applicable to Major HUD Programs
Austintown Associates HUD Field Office Director
Youngstown, Ohio Cleveland, Ohio
We have audited the financial statements of Austintown Associates as
of and for the year ended December 31, 1997 and have issued our report thereon
dated January 9, 1998. In addition, we have audited Austintown Associates'
compliance with the following specific program requirements:
Specific Compliance Requirements
o Federal Financial Reports
o Mortgage Status
o Replacement Reserve
o Residual Receipts
o Security Deposits
o Cash Receipts and Disbursements
o Distributions to Owners
o Tenant Application, Eligibility and Recertification
o Management Functions
that are applicable to each of its major HUD-assisted programs, for the year
ended December 31, 1997. The management of Austintown Associates is responsible
for compliance with those requirements. Our responsibility is to express an
opinion on compliance with those requirements based on our audit.
We conducted our audit of compliance in accordance with generally
accepted auditing standards, and Government Auditing Standards, issued by the
Comptroller General of the United States, and the Consolidated Audit Guide for
Audits of HUD Programs (the "Guide"), issued by the U.S. Department of Housing
and Urban Development, Office of Inspector General. Those standards and The
Guide require that we plan and perform the audit to obtain reasonable assurance
about whether material noncompliance with the requirements referred to above
occurred. An audit includes examining, on a test basis, evidence about
Austintown Associates' compliance with those requirements. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, Austintown Associates complied, in all material
respects, with the requirements described above, that are applicable to each of
its major HUD-assisted program for the year ended December 31, 1997.
This report is intended for the information of the partners,
management, and the Department of Housing and Urban Development. However, this
report is a matter of public record and its distribution is not limited.
/s/ Bick Fredman & Co.
Cleveland, Ohio
January 9, 1998
19
58
<PAGE>
Independent Auditor's Report on Compliance with Specific
Requirements Applicable to Nonmajor HUD Program Transactions
Austintown Associates HUD Field Office Director
Youngstown, Ohio Cleveland, Ohio
We have audited the financial statements of Austintown Associates as
of and for the year ended December 31, 1997, and have issued our report thereon
dated January 9, 1998.
In connection with our audit of the 1997 financial statements of
Austintown Associates and with our consideration of the Project's internal
control structure used to administer HUD programs, as required by the
Consolidated Audit Guide for Audits of HUD Programs (the "Guide"), issued by the
U.S. Department of Housing and Urban Development, Office of Inspector General,
we selected certain transactions applicable to a certain nonmajor HUD-assisted
program for the year ended December 31, 1997.
As required by the Guide, we performed auditing procedures to test
compliance with the requirements governing cash expenditures and matching
requirements that are applicable to those transactions. Our procedures were
substantially less in scope than an audit, the objective of which is the
expression of an opinion on the Project's compliance with those requirements.
Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that
are required to be reported herein under the Guide.
This report is intended for the information of the Partners,
management, and the U.S. Department of Housing and Urban Development. However,
this report is a matter of public record and its distribution is not limited.
/s/ Bick Fredman & Co.
Cleveland, Ohio
January 9, 1998
20
59
<PAGE>
Independent Auditor's Report on Compliance with Specific
Requirements Applicable to Fair Housing and Non-Discrimination
Austintown Associates HUD Field Office Director
Youngstown, Ohio Cleveland, Ohio
We have audited the financial statements of Austintown Associates as
of and for the year ended December 31, 1997, and have issued our report thereon
dated January 9, 1998.
We have applied procedures to test the Project's compliance with Fair
Housing and Non-Discrimination requirements applicable to its HUD-assisted
programs, for the year ended December 31, 1997.
Our procedures were limited to the applicable compliance requirement
described in the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide") issued by the U.S. Department of Housing and Urban Development, Office
of Inspector General. Our procedures were substantially less in scope than an
audit, the objective of which is the expression of an opinion on the Project's
compliance with the Fair Housing and Non-Discrimination requirements.
Accordingly, we do not express such an opinion.
The results of those procedures disclosed no instances of
noncompliance that are required to be reported herein under the Guide.
This report is intended for the information of the Partners,
management, and the U.S. Department of Housing and Urban Development. However,
this report is a matter of public record and its distribution is not limited.
/s/ Bick Fredman & Co.
Cleveland, Ohio
January 9, 1998
21
60
<PAGE>
Independent Auditor's Report on Internal Controls
Austintown Associates HUD Field Office Director
Youngstown, Ohio Cleveland, Ohio
We have audited the financial statements of Austintown Associates as
of and for the year ended December 31, 1997, and have issued our report thereon
dated January 9, 1998. We have also audited the Project's compliance with
requirements applicable to HUD-assisted programs and have issued our reports
thereon dated January 9, 1998.
We conducted our audits in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide"), issued by the U.S. Department of Housing and Urban Development,
Office of the Inspector General. Those standards and the Guide require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement and about whether the
Project complied with laws and regulations, noncompliance with which would be
material to a HUD- assisted program.
The management of Austintown Associates is responsible for
establishing and maintaining internal controls. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal controls. The objectives of
internal controls are to provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss from unauthorized use or
disposition, that transactions are executed in accordance with management's
authorization and recorded properly to permit the preparation of financial
statements in accordance with generally accepted accounting principles, and that
HUD-assisted programs are managed in compliance with applicable laws and
regulations. Because of inherent limitations in any internal control structure,
errors, irregularities, or instances of noncompliance may nevertheless occur and
not be detected. Also, projection of any evaluation of the structure to future
periods is subject to the risk that procedures may become inadequate because of
changes in conditions or that the effectiveness of the design and operation of
policies and procedures may deteriorate.
22
61
<PAGE>
In planning and performing our audits for the year ended December 31,
1997, we obtained an understanding of the internal control structure. With
respect to the internal control structure, we obtained an understanding of the
design of relevant policies and procedures and determined whether they have been
placed in operation, and we assessed control risk in order to determine our
auditing procedures for the purpose of expressing our opinions on the Project's
financial statements and its compliance with specific requirements applicable to
its major HUD-assisted programs and to report on the internal control structure
in accordance with the provisions of the Guide and not to provide any assurance
on the internal control structure.
We performed tests of controls, as required by the Guide, to evaluate
the effectiveness of the design and operation of internal control structure
policies and procedures that we considered relevant to preventing or detecting
material noncompliance with specific requirements applicable to the Project's
major HUD-assisted programs. Our procedures were less in scope than would be
necessary to render an opinion on internal control structure policies and
procedures. Accordingly, we do not express such an opinion.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure that might be
material weaknesses under standards established by the American Institute of
Certified Public Accountants. A material weakness is a reportable condition in
which the design or operation of one or more of the specific internal control
structure elements does not reduce to a relatively low level the risk that
errors or irregularities in amounts that would be material in relation to the
financial statements being audited or that noncompliance with laws and
regulations that would be material to a HUD-assisted program may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. We noted no matters involving the internal
control structure and its operation that we consider to be material weaknesses
as defined above.
This report is intended for the information of the Partners,
management, and the U.S. Department of Housing and Urban Development. However,
this report is a matter of public record and its distribution is not limited.
/s/ Bick Fredman & Co.
Cleveland, Ohio
January 9, 1998
23
62
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
DECEMBER 31, 1997
None.
24
63
<PAGE>
AUSTINTOWN ASSOCIATES
PROJECT NO. 042-44213
AUDIT RESOLUTION MATTERS
DECEMBER 31, 1997
The findings noted on the prior year's audit report and their depositions are
reported below:
1. RESERVE FOR TAXES AND INSURANCE
At December 31, 1996, the Reserve for Taxes and Insurance was
deficient by $1,830.
Action taken
Escrow payment was not increased until November of 1997 resulting in a
continuation of the deficiency in the balance that exists at December
31, 1997.
2. SURPLUS CASH CALCULATION/CURRENT YEAR DISTRIBUTIONS
On November 22, 1996, HUD informed the Project owner that the surplus
cash calculation as of December 31, 1995 was in error in that Line 3
included a pending release from the Reserve for Replacements which was
not authorized until 1996. As a consequence of eliminating this item,
the Project had no surplus cash at December 31, 1995. In 1996, the
Project distributed $7,700 to the partners based on the original
surplus cash calculation. In order to comply with HUD's instructions,
on December 6, 1996, one of the general partners returned the entire
distribution of $7,700. This amount is repayable to him out of surplus
cash that exists as of December 31, 1996.
Action taken
No additional action is needed.
25
64
<PAGE>
MORTGAGOR'S CERTIFICATION
We hereby certify that we have examined the accompanying financial
statements and supplemental data of Austintown Associates and, to the best of
our knowledge and belief, the same is complete and accurate.
/s/ James Manchi
2/25/98
Date
EIN: 74-2343727
26
65
<PAGE>
MANAGING AGENT'S CERTIFICATION
We hereby certify that we have examined the accompanying 1997 financial
statements and supplemental data of Austintown Associates and, to the best of
our knowledge and belief, the same is complete and accurate.
Federal Management Company, Inc.
By /s/ James Manchi
James Manchi
2/25/98
Date
Federal I.D. #34-1527725
27
66
<PAGE>
OSUNA APARTMENTS COMPANY
HUD Project No. 116-44052-LDP
(A Limited Partnership)
Financial Statements
and
Supplemental Data
For the Year Ended December 31, 1997
67
<PAGE>
OSUNA APARTMENTS COMPANY
HUD Project No. 116-44052-LDP
(A Limited Partnership)
Table of Contents
Independent Auditor's Report
Financial Statements:
Balance Sheet Exhibit A
Statement of Profit and Loss Exhibit B
Statement of Changes in Partners' Equity Exhibit C
Statement of Cash Flows Exhibit D
Notes to Financial Statements
Supplemental Data:
Supporting Data Required by HUD Schedule 1
Independent Auditor's Report on Compliance with Specific
Requirements Applicable to Major HUD Programs Schedule 2
Independent Auditor's Report on Compliance with Specific
Requirements Applicable to Nonmajor HUD Transactions Schedule 3
Independent Auditor's Report on Internal Control Schedule 4
Independent Auditor's Report on Compliance with Specific
Requirements Applicable to Fair Housing and Non-Discrimination Schedule 5
Schedule of Findings and Questioned Costs Schedule 6
Auditor's Comments on Audit Resolution Matters Schedule 7
Auditee's Corrective Action Plan Schedule 8
Partners' Certification Schedule 9
Managing Agent's Certification Schedule 10
68
<PAGE>
[Letterhead of James M. Klein, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Osuna Apartments Company
I have audited the accompanying balance sheet of Osuna Apartments Company (a
limited partnership), HUD Project No. 116-44052-LDP, as of December 31, 1997,
and the related statements of profit and loss, changes in partners' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Osuna Apartments Company (a limited
partnership), HUD Project No. 116-44052-LDP as of December 31, 1997, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 28, 1998, on my
consideration of Osuna Apartments Company's internal control, and reports dated
January 28, 1998, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to Affirmative Fair
Housing, and specific requirements applicable to nonmajor HUD program
transactions.
My audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data required by HUD
included in Schedule 1 provides additional analysis which is not a required part
of the basic financial statements of the Partnership. The information in such
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in my opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ James M. Klein, P.C.
January 28, 1998
69
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Exhibit A
<TABLE>
<CAPTION>
Balance Sheet
December 31, 1997
Assets
Current assets:
<S> <C> <C>
1110 Petty cash $ 100
1120 Cash in bank - operations (Note 1) (Schedules 1 and 2) 47,658
1130 Accounts receivable - tenants (Schedule 1) 1,233
1143 Accounts receivable - HUD (Schedule 1) 121
1144 Accounts receivable - other (Schedule 1) 374
Prepaid expenses:
1240 Property insurance 4,593
1250 Mortgage insurance 3,442 8,035
------------- --------------
Total current assets 57,521
Deposits held in trust - funded:
1191 Tenant security deposits (contra) (Schedules 1 and 2) 10,900
Restricted deposits and funded reserves:
1310 Mortgage escrow deposits (Schedules 1 and 2) 17,509
1320 Reserve for replacements 151,260
(Note 2 and Schedules 1 and 2)
1330 Reserve for exterior painting (Schedules 1 and 2) 35,276
1340 Reserve for residual receipts
(Note 2 and Schedules 1 and 2) 253,300 457,345
-------------
Fixed assets (at cost) (Notes 1 and 3) (Schedule 1):
1410 Land 255,230
1420 Buildings 1,854,035
1430 Building equipment 7,487
1460 Furnishings 159,337
-------------
2,276,089
Less accumulated depreciation 964,348 1,311,741
-------------
Other asset:
1900 Unamortized deferred expenses (Note 1) 18,614
--------------
$ 1,856,121
==============
<CAPTION>
Liabilities and Partners' Equity
Current liabilities:
<S> <C>
2110 Accounts payable - trade (Schedule 1) $ 8,733
2115 Accounts payable - HUD (Schedule 1) 3,147
2120 Accrued taxes (Schedule 1) 22,252
2130 Accrued interest payable 678
2140 Other accrued expenses (Note 4 and Schedule 1) 2,500
2210 Prepaid rent 38
2320 Current maturities of long-term debt (Note 3) 37,272
--------------
Total current liabilities 74,620
Deposit liabilities:
2191 Tenant security deposits (contra) (Schedules 1 and 2) 10,900
Long-term debt (Note 3):
2320 Mortgage payable, 7 percent, less
current maturities of $37,272 1,211,614
Contingency (Note 8)
3130 Partners' equity (Notes 1 and 5) 558,987
--------------
$ 1,856,121
==============
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
Statement of Profit and Loss U.S. Department of Housing and Urban Development Exhibit B
Office of Housing
Federal Housing Commissioner
OMB Approval No. 2502-0052(Exp. 1/31/95)
Public Reporting Burden for this collection of information is estimated to average 1.0 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to the Reports Management Officer, Paperwork Reduction Project (25020-0052), Office
of Information Technology, U.S. Department of Housing and Urban Development, Washington, D.C. 20410-3600. This agency may not
collect this information, and you are not required to complete this form, unless it displays a currently valid OMB control number.
Do not send this form to the above address.
For Month/Period Ending: Project Project Name:
Beginning Number: OSUNA APARTMENTS
1/97 12/97 116-44052-LDP
Part I Description of Account Acct. No. Amount*
<S> <C> <C> <C> <C>
Rental Income 5100 Apartments or Member Carrying Charges (Coops) 5120 $ 376,353
Tenant Assistant Payments 5121 $ 37,095
Furniture and Equipment 5130 $
Stores and Commercial 5140 $
Garage and Parking Spaces 5170 $
Flexible Subsidy Income 5180 $
Miscellaneous (specify) 5190 $
Total Rent Revenues Potential at 100% Occupancy $413,448
Vacancies 5200 Apartments 5220 $ (4,469)
Furniture and Equipment 5230
Stores and Commercial 5240
Garage and Parking Spaces 5270
Miscellaneous (specify) 5290
Total Vacancies (4,469)
Net Rental Revenue Rent Revenue Less Vacancies $408,979
Elderly and Congregate Service Income --5300
Total Service Income (Schedule Attached) 5300 $
Financial Revenue 5400 Interest Income--Project Operations 5410 $ 1,935
Income from Investments--Residual Receipts 5430 $ 7,676
Income from Investments--Reserve for Replacement 5440 $ 4,652
Income from Investments--Miscellaneous 5490
Total Financial Revenue $ 14,263
Other Revenue 5900 Laundry and Vending 5910 $ 4,485
NSF and Late Charges 5920 $ 1,802
Damages and Cleaning Fees 5930 $ 694
Forfeited Tenant Security Deposits 5940 $ 1,842
Other Revenue (specify) 5990 $ 626
Total Other Revenue $ 9,449
Total Revenue $432,691
Administrative Expenses Advertising 6210 $
6200/6300 Other Administrative Expense 6250 $ 41
Office Salaries 6310 $ 6,452
Office Supplies 6311 $ 4,619
Office or Model Apartment Rent 6312 $
Management 6320 $ 39,119
Manager or Superintendent Salaries 6330 $ 16,530
Manager or Superintendent Rent Free Unit 6331 $ 3,336
Legal Expenses (Project) 6340 $ 932
Auditing Expenses (Project) 6350 $ 5,884
Bookkeeping Fees/Accounting Services 6351 $ 5,280
Telephone and Answering Service 6360 $ 1,524
Bad Debts 6370
Miscellaneous Administrative Expenses (specify) 6390 $ 1,260
Total Administrative Expenses $ 84,977
Utilities Expense 6400 Fuel Oil/Coal 6420 $
Electricity (Light and Misc. Power) 6450 $ 46,934
Water 6451 $ 14,465
Gas 6452 $ 29,029
Sewer 6453 $ 7,336
Total Utilities Expense $ 97,764
*All amounts must be rounded to the nearest dollar; $.50 and over, round up--$.49 and below, round down.
Page 1 of 2
The accompanying notes are an integral part of the finacial statements.
71
<PAGE>
OSUNA APARTMENTS 116-44052-LDP
Operating and Janitor and Cleaning Payroll 6510 $
Maintenance Expenses Janitor and Cleaning Supplies 6515 $ 68
6500 Janitor and Cleaning Contract 6517 $ 2,350
Exterminating Payroll/Contract 6519 $ 2,640
Exterminating Supplies 6520 $
Garbage and Trash Removal 6525 $ 7,638
Security Payroll/Contract 6530 $
Grounds Payroll 6535 $
Grounds Supplies 6536 $ 407
Grounds Contract 6537 $ 18,569
Repairs Payroll 6540 $ 20,563
Repairs Material 6541 $ 14,589
Repairs Contract 6542 $ 10,782
Elevator Maintenance/Contract 6545 $
Heating/Cooling Repairs and Maintenance 6546 $ 196
Swimming Pool Maintenance/Contract 6547 $
Snow Removal 6548 $
Decorating Payroll/Contract 6560 $ 14,724
Decorating supplies 6561 $ 3,997
Other 6570 $ 347
Miscellaneous Operating and Maintenance Expenses 6590 $
Total Operating and Maintenance Expenses $ 96,870
Taxes and Insurance 6700 Real Estate Taxes 6710 $ 42,753
Payroll Taxes (FICA) 6711 $ 4,073
Miscellaneous Taxes, Licenses and Permits 6719 $
Property and Liability Insurance (Hazard) 6720 $ 10,199
Fidelity Bond Insurance 6721 $ 533
Workmen's Compensation 6722 $ 1,047
Health Insurance and Other Employee Benefits 6723 $ 115
Other Insurance (specify) 6729 $
Total Taxes and Insurance $ 58,720
Financial Expenses 6800 Interest on Bonds Payable 6810 $
Interest on Mortgage Payable 6820 $ 9,158
Interest on Notes Payable (Long-Term) 6830 $
Interest on Notes Payable (Short-Term) 6840 $
Mortgage Insurance Premium/Service Charge 6850 $ 6,418
Miscellaneous Financial Expenses 6890 $ 1,054
Total Financial Expenses $ 16,630
Elderly & Congregate Total Service Expenses--Schedule Attached 6900 $
Service Expenses 6900 Total Cost of Operations Before Depreciation $354,961
Profit (Loss) Before Depreciation $ 77,730
Depreciation (Total)--6600 (specify) 6600 64,519 $ 64,519
Operating Profit or (Loss) $ 13,211
Corporate or Mortgagor Office Salaries 7110 $
Entity Expenses 7100 Legal Expenses (Entity) 7120 $
Taxes (Federal-State-Entity) 7130-32 $
Other Expenses (Entity) Admin. Fee - 4,000 7190 $ 2,500
Total Corporate Expenses Amortization 982 $ 2,500
Net Profit or (Loss) $ 10,711
<CAPTION>
Warning: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001,
1010, 1012; 31 U.S.C. 3729, 3802) Miscellaneous or other Income and Expense Sub-account Groups. If miscellaneous or other income
and/or expense sub- accounts (5190, 5290, 5490, 5990, 6390, 6590, 6729, 6890, and 7190) exceed the Account Groupings by 10% or more,
attach a separate schedule describing or explaining the miscellaneous income or expense.
Part II
<S> <C> <C>
1. Total principal payments required under the mortgage, even if payments under a
Workout Agreement are less or more than those required under t he mortgage. $ 34,759
2. Replacement Reserve deposits required by the Regulatory Agreement or
Amendments thereto, even if payments may be temporarily suspended or waived. $ 6,068
3. Replacement or Painting Reserve releases which are included as expense items on
this Profit and Loss statement $ -
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement. $ -
<FN>
Page 2 of 2
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
72
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Exhibit C
<TABLE>
<CAPTION>
Statement of Changes in Partners' Equity
For the Year Ended December 31, 1997
Associate Local
General General Limited
Total Partner Partner Partner
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
Balance, January 1, 1997 $ 557,588 $ 2,940 $ 3,055 $ 551,593
Distributions to partners (9,312) (93) (118) (9,101)
Net income (loss) for the year 10,711 557 557 9,597
------------ ---------- ----------- ------------
Balance, December 31, 1997 $ 558,987 $ 3,404 $ 3,494 $ 552,089
============ ========== =========== ============
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
73
<PAGE>
Exhibit D
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
<TABLE>
<CAPTION>
Statement of Cash Flows
For the Year Ended December 31, 1997
Cash flows from operating activities:
<S> <C> <C>
Rental receipts $ 402,449
Interest receipts 1,934
Other receipts 9,449 $ 413,832
-------------
Administrative expenses 28,492
Management fees 39,119
Utilities 102,215
Salaries and wages 34,482
Maintenance expenses 82,087
Real estate taxes and escrow deposits 27,914
Taxes - other 3,846
Insurance 11,856
Mortgage interest 9,346
Mortgage insurance premium 6,206 345,563
------------- -------------
Net cash provided by operating activities 68,269
Cash flows from investing activities:
Deposit to residual receipts (24,725)
Deposits to reserve for replacements (6,068)
Deposits to reserve for exterior painting (3,600)
Purchase of fixed assets (2,061)
-------------
Net cash used in investing activities (36,454)
Cash flows from financing activities:
Mortgage principal payments (34,759)
Distribution to partners (9,312)
-------------
Net cash used in financing activities (44,071)
-------------
Decrease in cash (12,256)
Cash, beginning of year 60,014
-------------
Cash, end of year $ 47,758
=============
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
74
<PAGE>
Exhibit D
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
<TABLE>
<CAPTION>
Statement of Cash Flows (Continued)
For the Year Ended December 31, 1997
Cash flows from operating activities:
<S> <C> <C>
Net income $ 10,711
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization $ 65,573
Increase in accounts receivable - tenants (276)
Increase in accounts receivable - HUD (10)
Increase in accounts receivable - other (374)
Decrease in prepaid expenses 250
Increase in mortgage escrow account (6,536)
Decrease in accounts payable - trade (10,231)
Increase in accounts payable - HUD 40
Decrease in accrued interest payable (187)
Decrease in prepaid rent (337)
Increase in accrued taxes 21,975
Interest earned on reserve accounts (12,329) 57,558
----------- ------------
Net cash used in by operating activities $ 68,269
============
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 9,346
============
Interest earned on restricted reserve accounts and
maintained in the respective reserve accounts $ 12,329
============
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
</TABLE>
75
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 1 Organization and Summary of Significant Accounting Policies
The Partnership was organized as a limited partnership on February 25, 1974, to
acquire an interest in real property located in Albuquerque, New Mexico and to
construct and operate thereon an apartment complex of 110 units, under Section
236 of the National Housing Act. Such projects are regulated by HUD as to rent
charges and operating methods. Lower rental charges to tenants are recovered by
the Partnership through rent subsidies provided by HUD. The project's major
program is its insured loan under Section 236. The project's nonmajor program
results from its participation in the Section 8 housing assistance program.
During the year ended December 31, 1997, rental revenue from HUD totaled $37,095
representing nine percent of total revenue. The rent subsidy contract with HUD
expires August 31, 1999.
The Certificate of Limited Partnership provides that profits and losses from
operations be allocated 1% to the local general partner, 1% to the associate
general partner and 98% to the investor limited partner. However, the allocation
of deductions in respect to depreciation on property contributed to the
Partnership is to be allocated according to the basis contributed by respective
partners. In the case of certain other events which are specified in the
Partnership Agreement (for example, a sale or refinancing of the property) the
allocation may be different than as described above for profits and losses from
operations.
The partnership does business under the assumed name of "Osuna Apartments ".
The regulatory agreement limits annual distributions of net operating receipts
to "surplus cash" available at the end of the year. The maximum distributable
amount for the year ended December 31, 1997 was $11,812 and "surplus cash"
amounted to $34,405. Undistributed amounts are cumulative and may be distributed
in subsequent years if future operations provide "surplus cash" in excess of
current requirements. The cumulative amount distributable at December 31, 1997
was $11,812.
The following significant accounting policies have been followed in the
preparation of the financial statements:
Basis of accounting
The Partnership's policy is to prepare its financial statements on the basis of
accounting practices prescribed by the Department of Housing and Urban
Development. Assets and liabilities are classified as current based on the
instructions provided in the Consolidated Audit Guide for Audits of HUD
Programs. For purposes of the statement of cash flows, cash does not include
tenant security deposits or restricted deposits.
76
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 1 Organization and Summary of Significant Accounting Policies (Continued)
Depreciation
Depreciation is provided using the accelerated and straight-line methods over
the estimated useful lives of the assets which range from five to 40 years.
Deferred expenses
Unamortized deferred expenses consist of fees for obtaining the HUD insured
mortgage loan which are being amortized on the straight-line method over the
life of the mortgage loan.
Income taxes
No income tax provision has been included in the financial statements since
income or loss of the partnership is required to be reported by the respective
partners on their income tax returns.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Actual results could differ
from those estimates.
Rental revenue
Gross rental revenue earned (accounts 5120 and 5121) was based on the approved
rental rate structure (revenue and non-revenue units) of the project. Two
non-revenue apartments (a 1BR and a 2BR) were occupied by the resident manager
and maintenance person during the year.
Concentration of credit risk
The Partnership maintains its cash in various insured bank accounts which, at
times, may exceed Federally insured limits. The partnership has not experienced
any losses in such accounts and believes it is not exposed to any significant
risk on cash. Management is aware of the limitation and attempts to minimize any
risk.
77
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 2 - Replacement Reserves and Residual Receipts
Replacement reserve funds are held in cash ($56,372) and U.S. Treasury bills
($94,888) due April 1998. Residual receipts are held in cash ($96,735) and U.S.
Treasury bills ($156,565) due April 1998. The Treasury bills bear interest at
approximately 5.64% per annum. The amounts reported approximate fair value and
are based on quoted market prices.
Note 3 Longterm Debt
The seven percent mortgage note payable is insured by HUD and is payable in
monthly installments of $10,293 (before any interest supplement) through August,
2015. A portion of the interest is paid by HUD under its 236 Program. The
apartment project is pledged as collateral for the note.
Current maturities of longterm debt over the next five years ending December 31,
are as follows:
1998 $37,272
1999 $39,966
2000 $42,856
2001 $45,954
2002 $49,275
It is impractical to estimate, with any precision, the fair value of the
outstanding debt without incurring excessive cost.
Note 4 Related Party Transactions
During 1997, the general partners earned $2,500 in local partnership
administrative fees. This amount is reflected as an accrued expense at December
31, 1997. These fees are treated as a portion of the limited dividend payable
and can only be paid as part of the allowable distribution from surplus cash.
Note 5 - Restricted Equity
Under the terms of the Regulatory Agreement, the Partnership is required to set
aside specified amounts for the replacement of property and other project
expenditures as approved by HUD. Restricted funds, which approximate $404,560 at
December 31, 1997, are held in separate accounts and generally are not available
for operating purposes without HUD's prior written approval.
78
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
December 31, 1997
Note 6 - Rent Increases
Under the regulatory agreement, the partnership may not increase rents charged
to tenants without HUD approval.
Note 7 - Management Fees
Management fees of $39,119 were earned under a HUD approved 9.4% management
contract. Management fees are based on collections of rentals, commercial
(laundry and vending), late and NSF fees and forfeited security deposits. In
addition, accounting fees of four dollars per unit per month ($5,280) were paid
to the management company.
Note 8 - Contingency
The Partnership has been named in a lawsuit stemming from the alleged wrongful
death of a tenant. The Partnership's insurance carrier has retained counsel to
represent the Partnership in this action. The allegations are denied and are
being vigorously contested. However, the ultimate outcome of this litigation is
unknown at the present time. Accordingly, no provision for any liability (if
any) that might result has been made in the accompanying financial statements.
Note 9 - Current Vulnerability Due to Certain Concentrations
The Partnership's sole asset is Osuna Apartments. The Partnership's operations
are concentrated in the mutifamily real estate market. In addition, the
Partnership receives rental subsidies from HUD and operates in a heavily
regulated environment. The operations of the Partnership are subject to the
administrative directives, rules and regulations of federal, state and local
regulatory agencies, including, but not limited to, HUD. Such administrative
directives, rules and regulations are subject to change by an act of congress or
an administrative change mandated by HUD. Such changes may occur with little
notice or inadequate funding to pay for the related cost, including the
additional administrative burden, to comply with a change.
79
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
Supporting Data Required by HUD
Accounts and Notes Receivable (Other Than Tenants)
Accounts receivable - HUD represents an adjustment of Section 8 funds received
in January 1998. Accounts receivable - other represents an overpayment of state
withholding taxes.
Accounts Receivable - Tenants
Tenant accounts receivable at December 31, 1997 were comprised primarily of
unpaid rents.
Number of
Tenants Aging Amount Due
5 0 - 30 Days $ 1,233
=========
Mortgage Escrow Deposits
Estimated amount required for future payment of:
City, state and county taxes $ 7,125
Property insurance 6,095
Mortgage insurance 2,006
-------
15,226
Amount in excess of estimated requirements 2,283
-------
Total held by mortgagee $17,509
=======
This supporting data is presented for purposes of additional analysis and is not
a required part of the basic financial statements.
80
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
Supporting Data Required by HUD (Continued)
Reserve for Replacements
In accordance with the provisions of the regulatory agreement, restricted cash
and securities are held by GMAC Commercial Mortgage at December 31, 1997 to be
used for replacement of property with the approval of HUD as follows:
Balance, January 1, 1997 $140,540
Monthly deposits ($506 x 12) 6,068
Interest earned 4,652
--------
Balance, December 31, 1997 $151,260
========
Reserve for Residual Receipts
In accordance with the provisions of the regulatory agreement, residual receipts
cash and securities are held by GMAC Commercial Mortgage. Use of these funds is
contingent upon HUD's prior written approval. The following is an analysis of
1997 transactions.
Balance, January 1, 1997 $220,898
Interest earned 7,677
1996 residual receipts transferred 24,725
--------
Balance, December 31, 1997 $253,300
========
Reserve for Exterior Painting
Restricted cash is held by a bank to be used for exterior painting as follows:
Balance, January 1, 1997 $31,676
Deposits for 1997 ($300 x 12) 3,600
Interest earned 1,017
Interest transferred to operating (1,017)
-------
Balance, December 31, 1997 $35,276
=======
This supporting data is presented for purposes of additional analysis and is not
a required part of the basic financial statements.
81
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
Supporting Data Required by HUD (Continued)
Accounts Payable (Other Than Trade Creditors)
None
Accounts Payable - Trade
Accounts payable trade represent current obligations of the Partnership due in
30 days.
Accounts Payable - HUD
Accounts payable HUD represents excess income collected and remitted in January
1997.
Accrued Taxes
Basis Amount
Description of Tax of Accrual Period Covered Date Due Accrued
Payroll Monthly December 1997 January
1997 $ 878
Ad valorem Annual 1997 May 1998 21,374
--------
$22,252
========
Tenant Security Deposits
Tenant security deposits are fully funded and are held in a separate interest
bearing account in the name of the project in an account insured by the Federal
government at Norwest Bank Texas, Waco, N.A. Interest earned on the account does
not inure to the tenants and is transferred into the operating account. At
December 31, 1997 the account consisted of $10,900 in cash.
Partnership Changes
There were no changes in the partners' ownership during 1997.
Distributions to Partners
In March 1997, $11,812 in limited dividends, earned in 1996, were paid to the
partners. At December 31, 1997 an equal amount ($11,812) was earned and is
expected to be paid in 1998.
This supporting data is presented for purposes of additional analysis and is not
a required part of the basic financial statements.
82
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
Supporting Data Required by HUD (Continued)
Unauthorized Distributions to Partners
There were no unauthorized distributions to partners during 1997.
Compensation of Partners
There was no compensation paid to partners.
Identity of Interest Companies
During 1997, the general partners earned $2,500 in local partnership
administrative fees. These fees are treated as part of the limited dividend and
are only paid out of surplus cash.
Loans (Other Than Insured Mortgages) and Notes Payable
None
Comments on Other Balance Sheet Items
None
Miscellaneous Information
The lead auditor of the engagement was James M. Klein, the shareholder in the
firm of James M. Klein, P.C. (EIN: 75-2465724), located at 4901 LBJ Freeway,
Suite 120, Dallas, Texas 75244.
This supporting data is presented for purposes of additional analysis and is not
a required part of the basic financial statements.
83
<PAGE>
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
<TABLE>
<CAPTION>
Supporting Data Required By HUD (Continued)
December 31, 1997
Changes in the Apartment Project
Assets Accumulated Depreciation Net
------------------------------------------ ----------------------------------------- Carrying
Balance Balance, Balance, Balance, Amount
Jan. 1, Deduc- Dec. 31, Jan. 1, Deduc- Dec. 31, Dec. 31,
1997 Additions tions 1997 1997 Provision tions 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Land $ 255,230 $ -- $ - $ 255,230 $ -- $ -- $ - $ -- $ 255,230
Buildings 1,854,035 -- - 1,854,035 743,049 61,848 - 804,897 1,049,138
Building equipment
fixed 7,487 -- - 7,487 3,665 1,070 - 4,735 2,752
Furnishings 157,276 2,061 - 159,337 153,115 1,601 - 154,716 4,621
--------- --------- - --------- --------- --------- - --------- ---------
Totals $ 2,274,028 $ 2,061 $ - $2,276,089 $ 899,829 $ 64,519 $ - $ 964,348 $1,311,741
========= ========= = ========= ========= ========= = ========= =========
<FN>
This supporting data is presented for purposes of additional analysis and is not
a required part of the financial statements.
</FN>
</TABLE>
84
<PAGE>
<TABLE>
<CAPTION>
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE OF MULTIFAMILY HOUSING MANAGEMENT AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND SCHEDULE 1
RESIDUAL RECEIPTS
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
OSUNA APARTMENTS 12/31/97 116-44052-LDP
PART A - COMPUTE SURPLUS CASH
<S> <C> <C>
1. Cash (Accounts 1110, 1120, 1191, 1192) $58,658
2. Tenant subsidiary vouchers due for period covered
by financial statement $ 121
3. Other (describe)
$
(a) Total Cash (Add Lines 1, 2, and 3) $58,779
4. Accrued mortgage interest payable $ 678
5. Delinquent mortgage principal payments $ -
6. Delinquent deposits to reserve for replacements $ -
7. Accounts payable (due within 30 days) $ 8,733
8. Loans and notes payable
(due within 30 days) $
9. Deficient Tax Insurance or MIP Escrow Deposits $
10. Accrued expenses (not escrowed) $ 878
11. Prepaid Rents (Account 2210) $ 38
12. Tenant security deposits liability (Account 2191) $10,900
13. Other (Describe) Excess Income $ 3,147
(b) Less Total Current Obligations (Add Lines 4 through 13) $24,374
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $34,405
<CAPTION>
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS
<S> <C> <C>
1. Surplus Cash $34,405
Limited Dividend Projects
2a. Distribution Earned During Fiscal Period
Covered by the Statement $11,812
2b. Distribution Accrued and Unpaid as of the
End of the Prior Fiscal Period $11,812
2c. Distributions Paid During Fiscal Period Covered by Statement $11,812
3. Distributions Earned but Unpaid as of the End of
the Fiscal Period Under Review (Line 2a + 2b - 2c) $11,812
4. Amount Available for Distribution During Next Fiscal Period $11,812
5. Deposit Due Residual Receipts
(Must be deposited with Mortgagee within 60 days after Fiscal Period ends) $22,593
PREPARED BY REVIEWED BY
LOAN TECHNICIAN LOAN SERVICERIAN
DATE DATE
</TABLE>
See Reverse for Instructions) HUD-93486
This supporting data is presented for additional analysis and is not a required
part of the basic financial statements.
85
<PAGE>
Schedule 2
INDEPENDENT AUDITOR'S REPORT ON
COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS
To the Partners of
Osuna Apartments Company
I have audited the financial statements of Osuna Apartments Company (a limited
partnership), Project No. 116-44052-LDP, as of and for the year ended December
31, 1997, and have issued my report thereon dated January 28, 1998.
I have also audited Osuna Apartments Company's compliance with the specific
program requirements governing federal financial reports, mortgage status, the
replacement reserve, the residual receipts, tenant security deposits, cash
receipts and disbursements, distributions to owners, tenant application, tenant
eligibility, tenant recertification, and management functions, that are
applicable to its major HUD-assisted program for the year ended December 31,
1997. The management of the Partnership is responsible for compliance with those
requirements. My responsibility is to express an opinion on compliance with
those requirements based on my audit.
I conducted my audit of compliance with those requirements in accordance with
generally accepted auditing standards, Government Auditing Standards, issued by
the Comptroller General of the United States and the Consolidated Audit Guide
for Audits of HUD Programs (the "Guide") issued by the U.S. Department of
Housing and Urban Development, Office of Inspector General. Those standards and
the Guide require that I plan and perform the audit to obtain reasonable
assurance about whether material noncompliance with the requirements referred to
above occurred. An audit includes examining, on a test basis, evidence about the
Partnership's compliance with those requirements. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, Osuna Apartments Company complied, in all material respects, with
the requirements described above that are applicable to its major HUD-assisted
program for the year ended December 31, 1997.
This report is intended for the information of management and the Department of
Housing and Urban Development. However, this report is a matter of public record
and its distribution is not limited.
/s/ James M. Klein, P.C.
Dallas, Texas
January 28, 1998
86
<PAGE>
Schedule 3
INDEPENDENT AUDITOR'S REPORT
ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO
NONMAJOR HUD TRANSACTIONS
To the Partners of
Osuna Apartments Company
I have audited the financial statements of Osuna Apartments Company (a limited
partnership), HUD Project No. 116-44052-LDP as of and for the year ended
December 31, 1997, and have issued my report thereon dated January 28, 1998.
In connection with my audit of the 1997 financial statements of Osuna Apartments
Company and with my consideration of the Partnership's internal control used to
administer HUD programs, as required by the Consolidated Audit Guide for Audits
of HUD Programs (the "Guide"), issued by the U.S. Department of Housing and
Urban Development, Office of Inspector General. I selected certain transactions
applicable to certain nonmajor HUD-assisted programs for the year ended December
31, 1997. As required by the Guide, I performed auditing procedures to test
compliance with the requirements governing fair housing and non-discrimination,
management, maintenance, the replacement reserve, federal financial reports,
tenant application, tenant eligibility, tenant recertification, and tenant
security deposits that are applicable to those transactions. My procedures were
substantially less in scope than an audit, the objective of which is the
expression of an opinion on the Partnership's compliance with those
requirements. Accordingly, I do not express such an opinion.
The results of my tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended for the information of management and the Department of
Housing and Urban Development. However, this report is a matter of public record
and its distribution is not limited.
/s/ James M. Klein, P.C.
Dallas, Texas
January 28, 1998
87
<PAGE>
Schedule 4
INDEPENDENT AUDITOR'S REPORT
ON INTERNAL CONTROL
To the Partners of
Osuna Apartments Company
I have audited the financial statements of Osuna Apartments Company (a limited
partnership), HUD Project No. 116-44052-LDP as of and for the year ended
December 31, 1997, and have issued my report thereon dated January 28, 1998. I
have also audited the Partnership's compliance with requirements applicable to
its major HUD-assisted program and have issued my report thereon dated January
28, 1998.
I conducted my audits in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs (the
"Guide"), issued by the U.S. Department of Housing and Urban Development, Office
of the Inspector General. Those standards and the Guide require that I plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement and about whether the Partnership
complied with laws and regulations, noncompliance with which would be material
to a major HUD-assisted program.
The management of Osuna Apartments Company is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. The objectives of internal control are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, that transactions are executed in
accordance with management's authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted
accounting principles, and that HUD-assisted programs are managed in compliance
with applicable laws and regulations. Because of inherent limitations in any
internal control, errors, irregularities or instances of noncompliance may
nevertheless occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that procedures may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation of controls may deteriorate.
In planning and performing my audits, I obtained an understanding of the design
of relevant controls and determined whether they had been placed in operation,
and I assessed control risk in order to determine my auditing procedures for the
purpose of expressing my opinions on Osuna Apartments Company's financial
statements and on its compliance with specific requirements applicable to its
major HUD-assisted program and to report on internal control in accordance with
the provisions of the Guide and not to provide any assurance on internal
control.
88
<PAGE>
I performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of controls that I considered relevant
to preventing or detecting material noncompliance with specific requirements
applicable to the Partnership's major HUD-assisted program. My procedures were
less in scope than would be necessary to render an opinion on internal control.
Accordingly, I do not express such an opinion.
My consideration of internal control structure would not necessarily disclose
all matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public Accountants.
A material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that errors or irregularities in amounts that would be material
in relation to the financial statements or that noncompliance with laws and
regulations that would be material to a HUD-assisted program may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. I noted no matters involving internal
control and its operation that I consider to be material weaknesses as defined
above.
This report is intended for the information of management and the Department of
Housing and Urban Development. However, this report is a matter of public record
and its distribution is not limited.
/s/ James M. Klein, P.C.
Dallas, Texas
January 28, 1998
89
<PAGE>
Schedule 5
INDEPENDENT AUDITOR'S REPORT
ON COMPLIANCE WITH SPECIFIC REQUIREMENTS
APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION
To the Partners of
Osuna Apartments Company
I have audited the financial statements of Osuna Apartments Company as of and
for the year ended December 31, 1997, and have issued my report thereon dated
January 28, 1998.
I have also applied procedures to test Osuna Apartments Company's compliance
with the Fair Housing and Non-Discrimination requirements applicable to its
HUD-assisted program for the year ended December 31, 1997.
My procedures were limited to the applicable compliance requirement described by
the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by
the U.S. Department of Housing and Urban Development, Office of Inspector
General. My procedures were substantially less in scope than an audit, the
objective of which is the expression of an opinion on Osuna Apartments Company's
compliance with the Fair Housing and Non-Discrimination requirements.
Accordingly, I do not express such an opinion.
The results of my tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended for the information of management and the Department of
Housing and Urban Development. However, this report is a matter of public record
and its distribution is not limited.
/s/ James M. Klein, P.C.
Dallas, Texas
January 28, 1998
90
<PAGE>
Schedule 6
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule of Findings and Questioned Costs
December 31, 1997
There were no findings, including material questioned costs, noted during the
audit.
91
<PAGE>
Schedule 7
AUDITOR'S COMMENTS ON
AUDIT RESOLUTION MATTERS
RELATING TO HUD PROGRAMS
To the Partners of
Osuna Apartments Company
I have audited the financial statements of Osuna Apartments Company (a limited
partnership) as of and for the year ended December 31, 1997, and have issued my
report thereon dated January 28, 1998.
During the 1996 audit, no material matters involving internal control and its
operation or compliance with specific requirements applicable to its major HUD
program were noted. Accordingly corrective action was not required during 1997.
Further, based on the auditor's discussions with management, there were no HUD
OIG audits, physical inspections or program reviews during 1997. Furthermore,
there were no mortgagee physical inspections during 1997.
/s/ James M. Klein, P.C.
Dallas, Texas
January 28, 1998
92
<PAGE>
Schedule 8
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Auditee's Corrective Action Plan
December 31, 1997
Section I - Internal Control Review
There were no findings or recommendations which require comment.
Section II - Compliance Review
There were no instances of noncompliance with laws and regulations which require
comment. Further, as noted in Schedule 7, there were no HUD audits or physical
inspections on which to comment.
NOTE: As a result of the above, there is no need for a separate mortgagor
letter proposing a corrective action plan.
93
<PAGE>
Schedule 9
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Partners' Certification
We hereby certify that we have examined the accompanying financial statements
and supplemental data of Osuna Apartments Company for the year ended December
31, 1997, and, to the best of our knowledge and belief, the same is complete and
accurate.
By: /s/ Michael A. Stoller
2/19/98 President Liberty LGP LP.
DATE GENERAL PARTNER (Printed Name)
By: /s/ Samuel R. Campbell, Pres.
2/18/98 Personal Economics Development, Corp.
DATE GENERAL PARTNER (Printed Name)
Employer Identification
No. 74-2347236
94
<PAGE>
Schedule 10
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Managing Agent's Certification
I hereby certify that I have examined the accompanying financial statements and
supplemental data of Osuna Apartments Company for the year ended December 31,
1997, and, to the best of my knowledge and belief, the same is complete and
accurate.
The Sovereign Management Corporation
2-17-98
DATE MANAGING AGENT
BY: /s/ Joyce Brow
Joyce Brow
(Printed Name)
TITLE: Director of Management
95
<PAGE>
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Liberty Housing Partners Limited Partnership
Our report on the 1997 and 1996 financial statements of Liberty Housing
Partners Limited Partnership is included on page 34 of this Form 10-K. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 15 of this
Form 10-K. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/ Reznick Fedder & Silverman
Boston, Massachusetts REZNICK FEDDER & SILVERMAN
March 12, 1998
96
<PAGE>
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
<TABLE>
<CAPTION>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED BY LOCAL
LIMITED PARTNERSHIPS IN WHICH REGISTRANT HAS INVESTED
At December 31,1997
Cost at Interest Net Gross Amount At Which Carried Date Life on
Acquisition Date Improvements At December 31, 1997 B Which
---------------------- Capitalized --------------------------------- Accumu- u Depreci-
Number Total Buildings Subsequent Buildings lated i ation is
Of Encum- And to And Depre- l Computed
Property Units brances Land Improvements Acquisition Land Improvements Total ciation t (Years)
- ---------------------- ----- ----------- ---------- ----------- ---------- ---------- ----------- ----------- ----------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Garden Apartment Complexes - Elderly Housing:
Surry Manor Apartments, 44 $ 934,598 $ 50,239 $ 1,259,177 $ 23,067 $ 50,239 $ 1,282,244 $ 1,332,483 $ 596,321 1981 3-30
Dobson, NC
Glendale Manor 50 855,216 53,652 1,187,181 10,090 53,652 1,197,271 1,250,923 557,869 1980 3-30
Apartments,
Clinton, SC
Fuquay-Varina Homes, 60 743,122 72,396 1,401,073 22,123 72,396 1,423,196 1,495,592 650,806 1977 3-30
Fuquay, NC
Williamston Homes, 50 586,767 60,967 1,096,520 14,692 60,967 1,111,212 1,172,179 513,983 1978 3-30
Williamston, NC
Oxford Homes, Oxford, NC 50 590,460 64,360 1,085,939 25,772 64,360 1,111,711 1,176,071 510,287 1978 3-30
Garden Apartment Complexes - Low and Moderate Income Housing:
Compass West 200 3,110,997 397,105 4,822,593 334,038 397,105 5,156,631 5,553,736 2,312,953 1974 7-30
Apartments,
Austintown, OH
Meadowwood Apartments, 80 788,895 90,146 1,337,358 39,379 90,146 1,376,737 1,466,883 746,723 1977 10-25
Tifton, GA
Brierwood Apartments, 56 856,358 76,325 1,024,970 (26,931) 76,325 998,039 1,074,364 516,382 1979 10-25
Bainbridge, GA
Pine Forest Apartments, 64 1,229,691 44,588 1,491,921 1,380 44,588 1,493,301 1,537,889 806,605 1980 10-25
Cairo, GA
Osuna Apartments, 110 1,316,060 255,230 1,987,767 33,092 255,230 2,020,859 2,276,089 964,348 1975 5-30
Albuquerque, NM
Linden Park Apartments 198 4,261,517 357,236 4,544,514 1,639,713 456,828 6,084,635 6,541,463 2,373,003 1975 5-30
Triangle, VA
Brierwood II Apartments 18 369,139 27,288 423,387 -- 27,288 423,387 450,675 232,479 1984 10-25
Bainbridge, GA
Garden Apartment Complexes - Other Assisted Housing:
Fiddlers Creek 160 2,178,611 275,147 3,156,533 42,875 275,147 3,199,408 3,474,555 1,494,966 1977 5-30
Apartments,
Winston Salem, NC ----- ----------- ---------- ----------- ---------- ---------- ----------- ----------- -----------
Total Local Limited
Partnership Real
Estate 1,140 $17,821,431 $1,824,679 $24,818,933 $2,159,290 $1,924,271 $26,878,631 $28,802,902 $12,276,725
===== =========== ========== =========== ========== ========== =========== =========== ===========
<CAPTION>
The aggregate cost of the above properties for Federal income tax purposes at December 31, 1997 is $35,803,153.
A reconciliation of summarized carrying value of the above properties for the years ended December 31, 1997, 1996 and 1995 is a
follows :
1997 1996 1995
<S> <C> <C> <C>
Balance at beginning of year $28,708,988 $27,292,762 $27,237,957
Additions during the period - Improvements subse-
equent to acquisition, net of dispositions 93,914 1,416,226 54,805
---------------- ----------------- ---------------
Balance at end of year $28,802,902 $28,708,988 $27,292,762
================ ================= ===============
<CAPTION>
A reconciliation of summarized accumulated depreciation on the above properties for the years ended December 31, 1997, 1996 and 1995
is as follows :
1997 1996 1995
<S> <C> <C> <C>
Balance at beginning of year ($11,329,357) ($10,381,105) ($9,492,160)
Current provision for depreciation (947,368) (948,252) (888,945)
================ ================= ===============
Balance at end of year ($12,276,725) ($11,329,357) ($10,381,105)
================ ================= ===============
</TABLE>
97
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Partnership
(a-b) Identification of Directors and Executive Officers
The Partnership has no directors or officers. As indicated in Item 1 of
this report, the Managing General Partner of the Partnership, as of December 27,
1996, is TNG Properties Inc., a Massachusetts corporation. Under the Partnership
Agreement, the Managing General Partner is solely responsible for the operation
of the Partnership's properties, and the Limited Partners have no right to
participate in the control of such operations. The names and ages of the
directors and executive officers of the Managing General Partner, TNG Properties
Inc., are as follows as of March 18, 1998:
<TABLE>
<CAPTION>
Name Title Age
- ---- ----- ---
<S> <C> <C>
Michael A. Stoller President, Chief Executive Officer and Director 41
Wilma R. Brooks Vice President, Treasurer and Director 40
Barbara A. Gilman Vice President and Director of Management 48
Stephen D. Puliafico Director 42
James C. Coughlin Director 33
</TABLE>
The directors of the Managing General Partner generally are elected at
the annual meeting of stockholders of the Managing General Partner, to serve
until the next such annual meeting, and until their successors are duly elected
and qualified, or until their earlier death, resignation or removal. The
executive officers the Managing General Partner generally are elected at the
annual meeting of directors of the Managing General Partner, to serve until the
next such annual meeting, and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
(c) Identification of certain significant persons.
None.
(d) Family relationship
Mr. Stoller and Ms. Brooks are husband and wife.
98
<PAGE>
Item 10. Directors and Executive Officers of the Partnership, continued
(e) Business experience
Michael A. Stoller is President, CEO, and a Director of the Managing
General Partner and The Newton Group, LLC. From 1992 to 1994, Mr. Stoller was
President and Director of MBMC, Inc. of Boston, and the Managing General Partner
of MB Management Company Limited Partnership, of Boston, a property management
company. From 1983 to 1992, Mr. Stoller was employed by REMAS, Inc. and was a
Partner and Chief Operating Officer of MB Associates, which companies engaged in
the development and management of government assisted housing properties. Mr.
Stoller holds a B.S. from Babson College and is a Certified Public Accountant.
Stephen D. Puliafico is Director of the Managing General Partner. Since
August 1995 Mr. Puliafico has been Executive Vice President of The Newton Group,
LLC. From 1994 to 1995 Mr. Puliafico was a Regional Sales Manager for Staples, a
seller of office supplies. From 1982 to 1994, Mr. Puliafico was a General
Manager for Lechmere, a discount department store chain. Mr. Puliafico holds a
B.S. from Southeastern Massachusetts University.
James C. Coughlin is a Director of the Managing General Partner. Since
September, 1997 Mr. Coughlin has been Vice President of Acquisitions of The
Newton Group, LLC. Mr. Coughlin is responsible for corporate finance, project
finance, project acquisitions, site selection and strategic planning. From 1995
to 1997, Mr. Coughlin was a principal of Peacock Associates, a real estate
consulting and financial advisory firm. From 1992 to 1995, Mr. Coughlin was a
real estate finance specialist for The Berkshire Group. Mr. Coughlin received
his B.A. from Stonehill College and his M.B.A. from Suffolk University. Mr.
Coughlin is a licensed Massachusetts real estate broker and a candidate at
Boston University's Real Estate Finance Certificate Program.
Wilma R. Brooks is Vice President, Treasurer and a Director of the
Managing General Partner and Vice President and Treasurer of The Newton Group,
LLC. From 1987 to 1993, Ms. Brooks was Chief Financial Officer and Treasurer of
Congress Group Ventures, Inc., of Cambridge, Massachusetts, a commercial real
estate developer. Ms. Brooks holds a B.S. from the University of Vermont and is
a Certified Public Accountant.
Barbara A. Gilman is Vice President and Director of Management of the
Managing General Partner. For the seven years prior to joining the Managing
General Partner in 1994, Ms. Gilman was Director of Management of Beacon
Management Company, of Boston, Massachusetts, a property management company. Ms.
Gilman holds a B.S. from Stonehill College.
(f-g) Involvement in certain legal proceedings
The Partnership is not aware of any legal proceedings during the past
five years which may be material to the evaluation of the ability and integrity
of any director or executive officer of the Managing General Partner.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Partnership's officers and directors, and persons who own more than
ten percent of a registered class of the Partnership's equity securities, to
file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with
the Securities and Exchange Commission.
99
<PAGE>
Item 10. Directors and Executive Officers of the Partnership, continued
Such officers, directors and ten-percent security holders are also required by
applicable rules to furnish the Partnership with copies of all Section 16(a)
reports they file. Although the Partnership has no directors or officers, the
rules promulgated under ss. 16(a) provide that, for purposes of ss. 16, officers
of the Managing General Partner are considered to be officers of the
Partnership. Based solely on its review of the copies of such forms received by
it, or written representation from certain reporting persons that no Forms 3, 4
or 5 were required for such persons. The Partnership believes that, during the
fiscal year ended December 31, 1997, its officers and ten percent security
holders complied with all Section 16(a) filing requirements applicable to such
individuals.
Item 11. Executive Compensation
(a), (b), (c), (d), and (e): The officers and directors of the Managing
General Partner are compensated as employees of the Managing General Partner,
but receive no compensation from the Partnership. The Managing General Partner
and its affiliates receive compensation and expense reimbursement from the
Partnership, as more fully described in Note 6 of the Notes to Financial
Statements of the Partnership included in Item 8 of this report.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
(a) Security ownership of certain beneficial owners and management.
Because it is organized as a limited partnership, the Partnership has
issued no securities possessing traditional voting rights. However, the
Partnership Agreement provides that certain matters require the approval of a
majority in interest of the Limited Partners. Such matters include:
(1) Amendment of the Limited Partnership Agreement;
(2) Termination of the Partnership;
(3) Removal of any General Partner; and
(4) Sale of substantially all the assets of the Partnership.
Under the Partnership Agreement, the Managing General Partner is solely
responsible for the operation of the Partnership's properties, and the Limited
Partners have no right to participate in the control of such operations. On
December 27, 1995, the Former Managing General Partner and Former Associate
General Partner withdrew from the Partnership and TNG Properties Inc. was
admitted in their place as Successor General Partner and became Managing General
Partner of the Partnership.
No person or group is known by the Managing General Partner to own
beneficially more than 5% of the Partnership's 21,576 Units outstanding as of
December 31, 1997.
(b) Security ownership of management.
100
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management, continued
By virtue of its organization as a limited partnership, the Partnership has no
officers or directors. The Former Associate General Partner owned 10 Units which
have been be assigned, as of January 1, 1997, to the current Managing General
Partner.
(c) Changes in Control.
None.
Item 13. Certain Relationships and Related Transactions
(a), (b), and (c): The managing general partner of the Partnership is TNG
Properties, Inc., a Massachusetts corporation. See Note 6 to the Financial
Statements of the Partnership contained in Item 8 of this report for a
description of the fees and expense reimbursement paid by the Partnership to the
current or former Managing General Partner and its affiliates. Directors and
executive officers of TNG Properties, Inc. are identified in Item 10 of this
report. During 1997, the Partnership was not involved in any transaction
involving any of these directors or officers of the Corporation or any member of
the immediate family of these individuals, nor did any of these persons provide
services to the Partnership for which they received direct or indirect
remuneration. Similarly, there exists no business relationship between the
Partnership and any of the directors or officers of the Managing General
Partner, nor were any of the individuals indebted to the Partnership. Liberty
LGP, formerly an affiliate of the predecessor general partners and now an
affiliate of the Managing General Partner is entitled to receive certain
administrative fees from the Local Limited Partnerships. At January 1, 1997 an
aggregate of $113,917 in accrued and unpaid administrative fees were due to
Liberty LGP from the Local Limited Partnerships. During 1997, Liberty LGP
accrued $68,500 in administrative fees due from the Local Limited Partnership
and received payment aggregating $60,738. At December 31, 1997 accrued and
unpaid administrative fees aggregated $121,679. Liberty LGP is not entitled to
interest on the accrued and unpaid amount.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) 1. Financial Statements
See Index included in Item 8, on page 15 of this Report.
2. Financial Statement Schedules
See Index included in Item 8 on page 15 of this Report for schedules applicable
to registrant.
3. Exhibits
101
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Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K (continued)
See (c) below
(b) Reports on Form 8-K
None
(c) Index to Exhibits
Except as set forth below, all Exhibits to Form 10-K, as set forth in Item 601
of Regulation S-K, are not applicable.
102
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Exhibit Page Number or Filing from
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4. Instruments defining the rights of
security holders:
4.1 The Amended and Restated Certificate Exhibit 4.1 to the registrants Annual
of Limited Partnership Report on Form 10-K, for the
periode nded December 31, 1995.
4.2 First Amendment to Second Amended and Exhibit 4.2 to the
Restated Certificate of Limited registrants Annual
Partnership Report on Form 10-K, for the
period ended December 31, 1995.
*4.39 Amended Agreement of Limited Exhibit A to the
Partnership prospectus contained
in Form S-11Registration Statement
(File 2-90617)
4.4 Amendment to the Amended Agreement of Exhibit 4.4 to the
Limited Partnership (withdrawal of registrants Annual
Liberty Real Estate Corporation and Report on Form
Admission of TNG Properties Inc. 10-K, for the period
ended December 31, 1995.
4.5 Amendment to the Amended Agreement of Exhibit 4.5 to the registrants
Limited Partnership (withdrawal of LHP Annual Report on Form
Associates Limited Partnership) 10-K, for the period
ended December 31, 1995.
10. Material Contracts and Other Documents
10.4 Documents Relating to Partnership
Interest in Surry Manor, Ltd.
*10.4 (a) Escrow Agreement dated August 31, 1984 Exhibit 10.4 (a)
between Billy P. Shadrick, Bobby Ray Effective to
Badgett, Housing Projects, Inc. and Post-Amendment No. 1
Liberty Housing Partners Limited to Form S-11
Partnership. Registration Statement
(File 2-90617)
*10.4 (b) Amended and Restated Certificate and Exhibit 10.4 (b) to
Agreement of Limited Partnership of Post- Effective
Surry Manor, Ltd. Amendment No. 1 to
Form S-11 Registration
Statement (File 2-90617)
103
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Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
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<S> <C> <C>
*10.4 (c) Promissory Notes dated August 31, 1984 Exhibit 10.4 (c) to
from Liberty Housing Partners Limited Post-Effective
Partnership to Billy P. Shadrick and Amendment No. 1 to
from Liberty Housing Partners Limited Form S-11 Registration
Partnership to Bobby Joe Davis. Statement (File 2-90617)
*10.4 (d) Purchase Money Notes dated August 31, Exhibit 10.4 (d) to
1984 from Liberty Housing Partners to Post-Effective
Billy P. Shadrick and from Liberty Amendment No. 1 to
Housing Partners Limited Partnership Form S-11 Registration
to Bobby Joe Davis. Statement (File 2-90617)
*10.4 (e) Pledge Agreements dated August 31, Exhibit 10.4 (e) to
1984 between Billy P. Shadrick and Post-Effective
Liberty Housing Partners Limited Amendment No. 1 to
Partnership and between Bobby Joe Form S-11 Registration
Davis and Liberty Housing Partners Statement (File
Limited Partnership. 2-90617)
*10.4 (f) Deed of Trust Note dated July 11, 1980 Exhibit 10.4 (f) to
from Surry Manor, Ltd. to Highland Post-Effective
Mortgage Company and related Deed of Amendment No. 1 to
Trust dated July 11, 1980 among Surry Form S-11 Registration
Manor, Ltd., James M. Tanner, and Statement (File
Highland Mortgage Company. 2-90617)
*10.4 (g) Regulatory Agreement dated July 11, Exhibit 10.4 (g) to
1980 between Surry Manor, Ltd. and the Post-Effective
Secretary of Housing and Urban Amendment No. 1 to
Development. Form S-11 Registration
Statement (File 2-90617)
*10.4 (h) Housing Assistance Payments Contract Exhibit 10.4 (h) to
dated April 9, 1981 between Surry Post-Effective
Manor, Ltd. and the Secretary of Amendment No. 1 to
Housing and Urban Development. Form S-11 Registration
Statement (File 2-90617)
10.5 Documents Relating to Partnership
Interest in Glendale Manor Apartments
*10.5 (a) Escrow Agreement dated August 31, 1984 Exhibit 10.5 (a) to
between Billy P. Shadrick, Bobby Ray Post-Effective
Badgett, Housing Projects, Inc. and Amendment No. 1 to
Liberty Housing Partners Limited Form S-11 Registration
Partnership. Statement (File 2-90617)
*10.5 (b) Amended and Restated Certificate and Exhibit 10.5 (b) to
Agreement of Limited Partnership of Post-Effective
Glendale Manor Apartments. Amendment No. 1 to Form S-11
Registration Statement
(File 2-90617)
104
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Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
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<S> <C> <C>
*10.5 (c) Promissory Notes dated August 31, 1984 Exhibit 10.5 (c) to
from Liberty Housing Partners Limited Post-Effective
Partnership to Billy P. Shadrick, from Amendment No. 1 to
Liberty Housing Partners Limited Form S-11
Partnership to Bobby Joe Davis and Regis-tration
from Liberty Housing Partners Limited Statement (File
Partnership to Bobby R. Badgett. 2-90617)
*10.5 (d) Purchase Money Notes dated August 31, Exhibit 10.5 (d) to
1984 from Liberty Housing Partners Post-Effective
Limited Partnership to Billy P. Amendment No. 1 to
Shadrick and from Liberty Housing Form S-11
Partners Limited Partnership to Bobby Registration
Joe Davis. Statement (File 2-90617)
*10.5 (e) Pledge Agreements dated August 31, Exhibit 10.5 (e) to
1984 between Billy P. Shadrick and Post-Effective
Liberty Housing Partners Limited Amendment No. 1 to
Partnership, between Bobby Joe Davis Form S-11
and Liberty Housing Partners Limited Regis-tration
Partnership and between Bobby R. Statement (File
Badgett and Liberty Housing Partners 2-90617)
Limited Partnership.
*10.5 (f) Mortgage Note dated April 11, 1979 Exhibit 10.5 (f) to
from Glendale Manor Apartments to Post-Effective
Cincinnati Mortgage Corporation and Amendment No. 1 to
related Mortgage dated April 11, 1979 Form S-11
between Glendale Manor Apartments and Registration
Cincinnati Mortgage Corporation. Statement (File 2-90617)
*10.5 (g) Regulatory Agreement dated April 11, Exhibit 10.5 (g) to
1979 between Glendale Manor Apartments Post-Effective
and the Secretary of Housing and Urban Amendment No. 1 to
Development. Form S-11
*10.5 (h) Housing Assistance Payments Contract Exhibit 10.5 (h) to
dated May 30, 1980 between Glendale Post-Effective
Manor Apartments and the Secretary of Amendment No. 1 to
Housing and Urban Development Form S-11
10.6 Documents Relating to Partnership
Interest in Fiddlers Creek Apartments
*10.6 (a) Escrow Agreement dated September 28, Exhibit 10.6 (a) To
1984 between Billy P. Shadrick, Bobby Post-Effective
Ray Badgett, J. Thomas Dotson and Amendment No. 1 to
Liberty Housing Partners Limited Form S-11 Registration
Partnership. Statement (File 2-90617)
105
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Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
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<S> <C> <C>
*10.6 (b) Amended and Restated Certificate and Exhibit 10.6 (b) to Post-Effective
Agreement of Limited Partnership of Amendment No. 1 to Form S-11
Fiddlers Creek Apartments. Registration Statement
(File 2-90617)
*10.6 (c) Promissory Note form dated September Exhibit 10.6 (c) to
28, 1984, Purchase Money Note form Post Effective
dated September 28, 1984, Pledge Amendment No. 1 to
Agreement form dated September 28, Form S-11 Registration
1984 and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Fiddlers Creek Apartments.
*10.6 (d) Deed of Trust Note dated September 1, Exhibit 10.6 (d) to
1975 from Fiddlers Creek Apartments to Post-Effective
Guaranty Mortgage Company of Nashville Amendment No. 1 to
and related Deed of Trust dated Form S-11
September 1, 1975 between Fiddlers Registration
Creek Apartments and Guaranty Mortgage Statement (File
Company of Nashville. 2-90617)
*10.6 (e) Regulatory Agreement dated September Exhibit 10.6 (e) to Post-Effective
1, 1975 between Fiddlers Creek Amendment No. 1 to Form S-11
Apartments and the Secretary of Registration Statement
Housing and Urban Development. (File 2-90617)
10.7 Documents Relating to Partnership
Interest Fuquay-Varina Homes for the
Elderly, Ltd.
*10.7 (a) Escrow Agreement dated September 28, Exhibit 10.7 (a) to Post-Effective
1984 between Billy P. Shadrick, Bobby Amendment No. 1 to Form S-11
Ray Badgett and Liberty Housing Registration Statement
Partners Limited Partnership. (File 2-90617)
106
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<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
- ------- ----------- -------------------------------
<S> <C> <C>
*10.7 (b) Amended and Restated Certificate and Exhibit 10.7 (b) to
Agreement of Limited Partnership of Post-Effective
Fuquay-Varina Homes for the Elderly, Amendment No. 1 to
Ltd. Form S-11 Registration
Statement (File 2-90617)
*10.7 (c) Promissory Note form dated September Exhibit 10.7 (c) to
28, 1984, Purchase Money Note form Post-Effective
dated September 28, 1984, Pledge Amendment No. 1 to
Agreement form dated September 28, Form S-11 Registration
1984 and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Fuquay-Varina Apartments.
*10.7 (d) Deed of Trust Note dated May 23, 1977 Exhibit 10.7 (d) to
from Fuquay-Varina Homes for Elderly, Post-Effective
Ltd. to Cincinnati Mortgage Amendment No. 1 to
Corporation and related Deed of Trust Form S-11 Registration
dated May 23, 1977 between Statement (File
Fuquay-Varina Homes for the Elderly, 2-90617)
Ltd. and Cincinnati Mortgage
Corporation.
*10.7 (e) Regulatory Agreement dated May 23, Exhibit 10.7 (e) to Post-Effective
1977 between Fuquay-Varina Homes for Amendment No. 1 to Form S-11
the Elderly, Ltd. and the Secretary of Registration Statement
Housing and Urban Development. (File 2-90617)
*10.7 (f) Housing Assistance Payments Contract Exhibit 10.7 to
dated May 3, 1978 between Post-Effective
Fuquay-Varina Homes for the Elderly, Amendment No. 1 to
Ltd. and the Secretary of Housing and Form S-11 Registration
Urban Development. (File 2-90617)
10.8 Documents Relating to Partnership
Interest in Oxford Homes for the
Elderly, Ltd.
107
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<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
- ------- ----------- -------------------------------
<S> <C> <C>
*10.8 (a) Escrow Agreement dated September 28, Exhibit 10.8 (a) to Post-Effective
1984 between Billy P. Shadrick, Bobby Amendment No. 1 to Form S-11
Ray Badgett and Liberty Housing Registration Statement
Partners Limited Partnership. (File 2-90617)
*10.8 (b) Amended and Restated Certificate and Exhibit 10.8 (b) to Post-Effective
Agreement of Limited Partnership of Amendment No. 1 to Form S-11
Oxford Homes for the Elderly, Ltd. Registration Statement (File
2-90617)
*10.8 (c) Promissory Note form dated September Exhibit 10.8 (c) to
28, 1984, Purchase Money Note form Post-Effective
dated September 28, 1984, Pledge Amendment No. 1 to
Agreement form dated September 28, Form S-11 Registration
1984 and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Oxford Homes for the Elderly, Ltd.
*10.8 (d) Mortgage Note dated May 23, 1977 from Exhibit 10.8 (d) to
Oxford Homes for the Elderly, Ltd. to Post-Effective
Cincinnati Mortgage Corporation and Amendment No. 1 to
related Mortgage dated May 23, 1977 Form S-11 Registration
between Oxford Homes for the Elderly, Statement (File
Ltd. and Cincinnati Mortgage Corporation. 2-90617)
*10.8 (e) Regulatory Agreement dated May 23, Exhibit 10.8 (e) to Post-Effective
1977 between Oxford Homes for the Amendment No. 1 to
Elderly, Ltd. and the Secretary of Form S-11 Registration
Housing and Urban Development. Statement (File 2-90617)
*10.8 (f) Housing Assistance Payments Contract Exhibit 10.8 (f) to Post-Effective
dated July 3, 1978 between Oxford Amendment No. 1 to Form S-11
Homes for the Elderly, Ltd. and the Registration Statement
Secretary of Housing and Urban Development. (File 2-90617)
108
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<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
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<S> <C> <C>
10.9 Documents Relating to Partnership
Interest in Williamston Homes for the
Elderly, Ltd.
*10.9 (a) Escrow Agreement dated September 28, Exhibit 10.9 (a) to Post-Effective
1984 between Billy P. Shadrick, Bobby Amendment No. 1 to Form S-11
Ray Badgett and Liberty Housing Registration Statement
Partners Limited Partnership. (File 2-90617)
*10.9 (b) Amended and Restated Certificate and Exhibit 10.9 (b) to Post-Effective
Agreement of Limited Partnership of Amendment No. 1 to
Williamston Homes for the Elderly, Form S-11 Registration
Ltd. Statement (File 2-90617)
*10.9 (c) Promissory Note form dated September Exhibit 10.9 (c) to
28, 1984, Purchase Money Note form Post-Effective
dated September 28, 1984, Pledge Amendment No. 1 to
Agreement form dated September 28, Form S-11 Registration
1984 and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Williamston Homes for the
Elderly, Ltd.
*10.9 (d) Deed of Trust Note dated May 24, 1977 Exhibit 10.9 (d) to
from Williamston Homes for the Post-Effective
Elderly, Ltd. and Cincinnati Mortgage Amendment No. 1 to
Corporation and related Deed of Trust Form S-11 Registration
between Williamston Homes for the Statement (File
Elderly, Ltd. and Cincinnati Mortgage Corporation. 2-90617)
*10.9 (e) Regulatory Agreement dated May 24, Exhibit 10.9 (e) to Post-Effective
1977 between Williamston Homes for the Amendment No. 1 to Form S-11
Elderly, Ltd. and the Secretary of Registration Statement
Housing and Urban Development. (File 2-90617)
*10.9 (f) Housing Assistance Payments Contract Exhibit 10.9 (f) to
dated September 19, 1978 between Post-Effective
Williamston Homes for the Elderly, Amendment No. 1 to
Ltd. and the Secretary of Housing and Form S-11 Registration
Urban Development. Statement (File 2-90617)
109
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<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
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<S> <C> <C>
10.10 Documents Relating to Partnership
Interest in Austintown Associates
*10.10 (a) Escrow Agreement dated October 30, Exhibit 10.10 (a) to
1984 between James P. Manchi, Robert Post-Effective
P. Baker, First March Realty Amendment No. 1 to
Corporation and Liberty Housing Form S-11 Registration
Partners Limited Partnership. Statement (File 2-90617)
*10.10 (b) Amended and Restated Certificate of Exhibit 10.10 (b) to Post-Effective
Formation and Agreement of Limited Amendment No. 1 to Form S-11
Partnership of Austintown Associates. Registration Statement (File 2-90617)
*10.10 (c) Promissory Note form dated October Exhibit 10.10 (c) to
30, 1984, Purchase Money Note form Post-Effective
dated October 30, 1984, Pledge Amendment No. 1 to
Agreement form dated October 30, 1984 Form S-11 Registration
and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Austintown Associates.
*10.10 (d) Mortgage Note dated February 22, 1973 Exhibit 10.10 (d) to
from Austintown Associates to Post-Effective
Metropolitan Mortgage Corporation of Amendment No. 1 to
Ohio, Supplementary Mortgage Note Form S-11 Registration
dated November, 1975 from Austintown Statement (File
Associates to The Cleveland Trust 2-90617)
Company, Supplementary Mortgage Note
dated March 24, 1978 from Austintown
Associates to Diversified Financial &
Mortgage Services, Inc. and the
related Mortgage dated February 22,
1973 between Austintown Associates
and Metropolitan Mortgage Corporation
of Ohio.
110
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<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
- ------- ----------- -------------------------------
<S> <C> <C>
*10.10 (e) Regulatory Agreement dated February Exhibit 10.10 (e) to Post-Effective
22, 1973 between Austintown Amendment No. 1 to Form S-11
Associates and the Secretary of Registration Statement
Housing and Urban Development. (File 2-90617)
*10.10 (f) Housing Assistance Payments Contracts Exhibit 10.10 (f) to
dated December 1, 1983 and June 1, Post-Effective
1984 between Austintown Associates Amendment No. 1 to
and the Secretary of Housing and Form S-11 Registration
Urban Development. Statement (File 2-90617)
10.11 Documents Relating to Partnership
Interest in Meadowwood, Ltd.
*10.11 (a) Second Amended and Restated Exhibit 10.11 (a) to Post-Effective
Certificate and Agreement of Limited Amendment No. 1 to Form S-11
Partnership of Meadowwood, Ltd. Registration Statement (File 2-90617)
*10.11 (b) Promissory Note form dated October Exhibit 10.11 (b) to
30, 1984, Purchase Money Note form Post-Effective
dated October 30, 1984, Pledge Amendment No. 1 to
Agreement form dated October 30, 1984 Form S-11 Registration
and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Meadowwood, Ltd.
*10.11 (c) Promissory Notes dated October 3, Exhibit 10.11 (c) to
1977 and October 25, 1978 from Post-Effective
Meadowwood, Ltd. to Farmers Home Amendment No. 1 to
Administration and related Deed to Form S-11 Registration
Secure Debt dated October 25, 1978 Statement (File
between Meadowwood, Ltd. and Farmers 2-90617)
Home Administration.
*10.11 (d) Farmers Home Administration Loan Exhibit 10.11 (d) to Post-Effective
Agreement between Meadowwood, Ltd. Amendment No. 1 to Form S-11
and Farmers Home Administration. Registration Statement (File 2-90617)
111
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<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
- ------- ----------- -------------------------------
<S> <C> <C>
*10.11 (e) Interest Credit and Rental Assistance Exhibit 10.11 (e) to Post-Effective
Agreement dated October 1, 1983 Amendment No. 1 to Form S-11
between Meadowwood, Ltd. and the Registration Statement
Farmers Home Administration. (File 2-90617)
*10.12 Documents Relating to Partnership
Interest in Brierwood, Ltd.
*10.12 (a) Second Amended and Restated Exhibit 10.12 (a) to Post-Effective
Certificate and Agreement of Limited Amendment No. 1 to Form S-11
Partnership of Brierwood, Ltd. Registration Statement (File 2-90617)
*10.12 (b) Promissory Note form dated October Exhibit 10.12 (b) to
30, 1984, Purchase Money Note form Post-Effective
dated October 30, 1984, Pledge Amendment No. 1 to
Agreement form dated October 30, 1984 Form S-11 Registration
and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Brierwood, Ltd.
*10.12 (c) Promissory Note dated May 4, 1979 Exhibit 10.12 (c) to
from Brierwood, Ltd. to Farmers Home Post-Effective
Administration and related Deed to Amendment No. 1 to
Secure Debt dated May 4, 1979 between Form S-11 Registration
Brierwood, Ltd. and Farmers Home Administration. Statement (File 2-90617)
*10.12 (d) Farmers Home Administration Loan Exhibit 10.12 (d) to Post-Effective
Agreement dated June 15, 1978 between Amendment No. 1 to Form S-11
Brierwood, Ltd. and Farmers Home Registration Statement
Administration. (File 2-90617)
*10.12 (e) Interest Credit and Rental Assistance Exhibit 10.12 (e) to Post-Effective
Agreement dated October 1, 1980 Amendment No. 1 to Form S-11
between Brierwood, Ltd. and the Registration Statement
Farmers Home Administration. (File 2-90617)
112
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Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
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<S> <C> <C>
10.13 Documents Relating to Partnership
Interest in Pine Forest Apartments,
Ltd.
*10.13 (a) Second Amended and Restated Exhibit 10.13 (a) to Post-Effective
Certificate and Agreement of Limited Amendment No. 1 to Form S-11
Partnership of Pine Forest Registration Statement
Apartments, Ltd. (File 2-90617)
*10.13 (b) Promissory Note form dated October Exhibit 10.13 (b) to
30, 1984, Purchase Money Note form Post-Effective
dated October 30, 1984, Pledge Amendment No. 1 to
Agreement form dated October 30, 1984 Form S-11 Registration
and Schedule of Promissory Notes, Statement (File
Purchase Money Notes and Pledge 2-90617)
Agreements between Liberty Housing
Partners Limited Partnership and the
partners of Pine Forest Apartments, Ltd.
*10.13 (c) Promissory Note dated August 6, 1980 Exhibit 10.13 (c) to
from Pine Forest Apartments, Ltd. to Post-Effective
Farmers Home Administration and Amendment No. 1 to
related Deed to Secure Debt dated Form S-11 Registration
August 6, 1980 between Pine Forest Statement (File
Apartments, Ltd. and Farmers Home Administration. 2-90617)
*10.13 (d) Farmers Home Administration Loan Exhibit 10.13 (d) to Post-Effective
Agreement dated May 10, 1979 between Amendment No. 1 to Form S-11
Pine Forest Apartments, Ltd. and Registration Statement
Farmers Home Administration. (File 2-90617)
*10.13 (e) Interest Credit and Rental Assistance Exhibit 10.13 (e) to Post-Effective
Agreement dated June 1, 1982 between Amendment No. 1 to Form S-11
Pine Forest Apartments, Ltd. and the Registration Statement
Secretary of Housing and Urban Development. (File 2-90617)
10.14 Documents Relating to Partnership
Interest in Osuna Apartments Company
113
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<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
- ------- ----------- -------------------------------
<S> <C> <C>
*10.14 (a) Amended and Restated Certificate of Exhibit 10.14 (a) to Post-Effective
Formation and Agreement of Limited Amendment No. 2 To Form S-11
Partnership of Osuna Apartments Registration Statement
Company. (File 2-90617)
*10.14 (b) Promissory Note form dated November Exhibit 10.14 (b) to
27, 1984, Purchase Money Note form Post-Effective
dated November 27, 1984, Pledge Amendment No. 2 to
Agreement dated November 27, 1984 Form S-11 Registration
between Liberty Housing Partners Statement (File
Limited Partnership, Liberty LGP 2-90617)
Limited Partnership and the Sovereign
Corporation, and Schedule of
Promissory Notes and Purchase Money
Notes between Liberty Housing
Partners Limited Partnership and the
partners of Osuna Apartments Company.
*10.14 (c) Mortgage Note dated March 5, 1974 Exhibit 10.14 (c) to
from Osuna Apartments Company to Post-Effective
Housing America Mortgage Co., Inc. Amendment No. 2 to
and related Mortgage dated March 5, Form S-11 Registration
1974 from Osuna Apartments Company to Statement (File
Housing Mortgage Co., Inc. 2-90617)
*10.14 (d) Regulatory Agreement dated March 5, Exhibit 10.14 (d) to Post Effective
1974 between Osuna Apartments Company Amendment No. 2 to Form S-11
and the Secretary of Housing and Registration Statement
Urban Development. (File 2-90617)
*10.14 (e) Housing Assistance Payments Contracts Exhibit 10.14 (e) to Post-Effective
dated August 7, 1984 between Osuna Amendment No. 2 to Form S-11
Apartments Company and the Secretary Registration Statement
of Housing and Urban Development. (File 2-90617)
10.15 Documents Relating to Partnership Interest in Linden
Park Associates Limited Partnership
114
<PAGE>
<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
- ------- ----------- -------------------------------
<S> <C> <C>
*10.15 (a) Certificate and Agreement of Limited Exhibit 10.15 (a) to Post-Effective
Partnership of Linden Park Associates Amendment No. 2 to Form S-11
Limited Partnership. Registration Statement (File 2-90617)
*10.15 (b) Promissory Note form dated December Exhibit 10.15 (b) to
11, 1984, Purchase Money Note form Post-Effective
dated December 11, 1984, Pledge Amendment No. 2 to
Agreement dated December 11, 1984 by Form S-11 Registration
and between Liberty LGP Limited Statement (File
Partnership, John L. Wagner, Liberty 2-90617)
Housing Partners Limited Partnership
and Graham Park Venture, and Schedule
of Promissory Notes and Purchase
Money Notes between Linden Park
Associates Limited Partnership and
Graham Park Venture.
*10.15 (c) Deed of Trust Note and related Deed Exhibit 10.15 (c) to
of Trust both dated December 5, 1972 Post-Effective
and Allonge of January 29, 1976, Amendment No. 2 to
Supplemental Deed of Trust both dated Form S-11 Regis-
December 17, 1974 and Allonge of tration Statement
January 29, 1976, and Second (File 2-90617)
Supplemental Deed of Trust Note and
related Second Supplemental Deed of
Trust both dated January 29, 1976 all
documents between Graham Park Venture
and Loyola Federal Savings and Loan
Association.
*10.15 (d) Loan Assumption Agreement dated March Exhibit 10.15 (d) to Post-Effective
23, 1976 between Pennamco, Inc. and Amendment No. 2 to Form S-11
Virginia Housing Development Authority. Registration Statement (File 2-90617)
*10.15 (e) Regulatory Agreement dated December Exhibit 10.15 (e) to Post-Effective
12, 1984 between Linden Park Amendment No. 2 to Form S-11
Associates Limited Partnership and Registration Statement
the Secretary of Housing and Urban Development. (File 2-90617)
115
<PAGE>
<CAPTION>
Exhibit Page Number or Filing from
Numbers Description which Incorporated by Reference
- ------- ----------- -------------------------------
<S> <C> <C>
*10.15 (f) Regulatory Agreement dated January Exhibit 10.15 (f) to Post-Effective
31, 1976 between Graham Park Venture Amendment No. 2 to
and Virginia Housing Development Form S-11 Registration Statement
Authority. (File 2-90617)
10.16 Documents Relating to Partnership
Interest Brierwood II, Ltd.
*10.16 (a) Amended and Restated Certificate and Exhibit 10.16 (a) to Post-Effective
Agreement of Limited Partnership of Amendment No. 2 to Form S-11
Brierwood II, Ltd. Registration Statement (File 2-90617)
*10.16 (b) Promissory Note form dated January 4, Exhibit 10.16 (b) to
1985, Pledge Agreement form dated Post-Effective
January 4, 1985 and Schedule of Amendment No. 2 to
Promissory Notes and Pledge Form S-11 Registration
Agreements between Liberty Housing Statement (File
Partners Limited Partnership and the 2-90617)
partners of Brierwood II, Ltd.
*10.16 (c) Promissory Note dated January 4, 1985 Exhibit 10.16 (c) to
from Brierwood II, Ltd. to Farmers Post-Effective
Home Administration and related Deed Amendment No. 2 to
to Secure Debt dated January 4, 1985 Form S-11 Registration
between Brierwood II, Ltd. and Statement (File
Farmers Home Administration. 2-90617)
*10.16 (d) Farmers Home Administration Loan Exhibit 10.16 (d) to Post-Effective
Agreement dated June 30, 1983 between Amendment No. 2 to Form S-11
Brierwood II, Ltd. and Farmers Home Registration Statement
Administration. (File 2-90617)
*10.16 (e) Interest Credit and Rental Assistance Exhibit 10.16 (e) to Post-Effective
Agreement dated January 4, 1985 Amendment No. 2 to Form S-11
between Brierwood II, Ltd. and the Registration Statement
Farmers Home Administration. (File 2-90617)
<FN>
*Incorporated by Reference as noted
</FN>
</TABLE>
116
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By: LIBERTY HOUSING PARTNERS LIMITED
PARTNERSHIP
(Registrant)
By: TNG Properties, Inc.,
Managing General Partner
Date: 3/26/98 By: /s/ Michael A. Stoller
Michael A. Stoller
President, CEO, and Director of
TNG Properties, Inc.
Managing General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Signature Title Date
Vice President, Treasurer
and Director (principal
financial and accounting officer)
of TNG Properties, Inc. Managing
General Partner
/s/ Wilma R. Brooks 3/26/98
Wilma R. Brooks
117
<PAGE>
Signatures, continued
Signature Title Date
President, CEO and Director of
TNG Properties, Inc. Managing
General Partner
/s/ Michael A. Stoller 3/26/98
Michael A. Stoller
Director of TNG Properties, Inc.
Managing General Partner
/s/ Stephen D. Puliafico 3/26/98
Stephen D. Puliafico
Director of TNG Properties, Inc.
Managing General Partner
/s/ James C. Coughlin 3/26/98
James C. Coughlin
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements of Liberty Housing Partners Limited Partnership
at and for the period ended December 31, 1997 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 65,685
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 65,685
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,228,945
<CURRENT-LIABILITIES> 462,846
<BONDS> 11,544,195
0
0
<COMMON> 0
<OTHER-SE> (9,778,096)
<TOTAL-LIABILITY-AND-EQUITY> 2,228,945
<SALES> 0
<TOTAL-REVENUES> 142,373
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 145,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,214,122
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,217,613)
<EPS-PRIMARY> (101.75)
<EPS-DILUTED> 0
</TABLE>
