<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
AUDIT REPORT
DECEMBER 31, 1995, 1994 AND 1993
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended Commission File Number
December 31, 1995 0-11980
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
California 95-3887496
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3250 Ocean Park Blvd., Suite 380
Santa Monica, CA 90405
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code:
(310) 450-6866
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
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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.
Yes.....X.....No..........
The Registrant has no voting stock. The Registrant's outstanding securities
consist of units of limited partnership interest which have no readily
ascertainable market value since there is no immediate public trading market for
these securities on which to base a calculation of aggregate market value.
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I
Item 1. Business 1- 4
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of Security Holders 5
PART II
Item 5. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters 6
Item 6. Selected Financial Data 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6- 8
Item 8. Financial Statements 9-18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 19
PART III
Item 10 Directors and Executive Officers of the Partnership 19-21
Item 11. Executive Compensation 21-22
Item 12. Security Ownership of Certain Beneficial
Owners and Management 22
Item 13. Certain Relationships and Related Transactions 22-23
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 10-K 24-26
Signatures 27
</TABLE>
<PAGE>
PART I
ITEM 1 - BUSINESS
Venetian Park Associates, Ltd., a California limited partnership (the
"Registrant") was formed on October 31, 1983,to acquire, own and operate a 295-
unit rental housing project known as Venetian Park Apartments (the "Property")
on a parcel of real property located at 1540, 1555 and 1560 Mosaic Way and 4841
North Pershing Avenue, Stockton, California, for $10,925,000, in accordance with
Section 221(d) (4) of the National Housing Act, as amended, and the rules and
regulations of the Department of Housing and Urban Development pertaining
thereto. Norman Jacobson and Theodore J. Weill are the general partners (the
"General Partners") of Registrant.
Registrant's objective from the Property are to:
1) Generate sufficient cash flow from operations to (i) pay all expenses,
(ii) reduce the outstanding balances of loans secured by the Partnership
property, and (iii) thereafter, provide cash distributions to the Limited
Partners;
2) Have potential to appreciate in value in excess of the purchase price; and
3) To the extent possible, the Partners should not realize taxable income
with respect to a portion or all of distributions to the Limited Partners
of cash from operations. The fundamental objective was to acquire the
Property for its economic benefits.
Registrant's property is managed by Norman Jacobson Management Company, an
affiliate of one of the General Partners.
<PAGE>
ITEM 1 - BUSINESS:
GEOGRAPHICAL DATA
VENETIAN PARK APARTMENTS
The Venetian Park Apartments is on a 16.4 acre site in the city of Stockton,
California. Stockton is the county seat of San Joaquin Valley and is
approximately 45 miles south of Sacramento, California, the state capital. The
Property is one block west of Stockton's major regional shopping center which
includes Macy's, Sears, Weinstock's, JCPenney's and Ward's. Delta College is
immediately across the street, and the University of the Pacific is one mile to
the south. Interstate Highway 5 is approximately one mile to the west, and
downtown Stockton is approximately three miles due south. The Property is
located in northern Stockton where nearly all of the city's population growth
has occurred during the past four decades. Stockton's current population is
210,500, an increase of 48,400 since 1982 when the population was 162,100.
Agriculture is Stockton's largest industry and is the home of five of
California's major grower and producer associations. Major manufacturing firms
include American Forest Products, Gold Bond Building Products, H. J. Heinz
Company, Safeway Meat Processing, Libbey-Owens-Ford Glass Company and Sun
Diamond Growers of California. Honda Company's district automobile parts center
is located in Stockton. American Savings Bank, with offices throughout
California, is headquartered in Stockton and is the city's largest financial
institution. The Port of Stockton, with approximately 1,000 employees, has been
one of the county's leading employers since 1933. It serves all the world's
major ports.
Stockton Metropolitan Airport is 10 minutes from Venetian Park Apartments. The
city is 85 miles from San Francisco and approximately two and a half hours
driving time from South Lake Tahoe, and less than three hours from Reno, Nevada.
2
<PAGE>
ITEM 1 - BUSINESS:
PROPERTY DESCRIPTION
VENETIAN PARK APARTMENTS
1540, 1555 AND 1560 MOSAIC WAY AND 4841 N. PERSHING AVENUE
STOCKTON, CALIFORNIA
Number of Units: 295 (41 buildings)
Lot Size: 16.44 acres (716,126 square feet)
Zoning: R-3, Apartment District
Parking: 317 carports, 122 open spaces
Year Built: 1976 through 1978 in four phases
Construction: 2-story wood frame and stucco except 12 one-story
"villa" units
AMENITIES
- Clubhouse (includes exercise room with universal gym and sauna)
- Extensive network of canals, waterways and fountains
- Individually-metered central forced-air conditioning and heating in
each unit
- Built-in electric ranges and ovens
- Dishwashers in all apartments
- Refrigerators in all apartments
- Garbage disposals
- Washer and dryer in each apartment
- 209 units with fireplaces
- Dining rooms with wet bar in all villas and townhouses
- Three swimming pools
- One tennis court with access to seven additional courts and 18
night-lighted courts across Pershing Avenue
- Wall-to-wall carpets and drapes
- Large walk-in closets
- Outside storage units in each apartment
- Laundry rooms
APARTMENT MIX
<TABLE>
<CAPTION>
NUMBER TYPE SQ.FT.EA. TOTAL SQ.FT.
- ------ ---- -------- ------------
<S> <C> <C> <C>
60 Studios 510 30,600
92 1-bedroom, 1 bath 694 63,848
48 2-bedroom, 1 bath 900 43,200
72 2-bedroom, 2 bath 1,080 77,760
12 2-bedroom, 2 bath (Villa) 1,282 15,384
11 2-bedroom, 2.5 bath (Townhouse) 1,420 15,620
- ----- -----------
295 TOTAL LIVABLE SQUARE FOOTAGE 246,412
</TABLE>
<PAGE>
ITEM 1 - BUSINESS:
VENETIAN PARK APARTMENTS
SCHEDULED GROSS INCOME
BEGINNING JANUARY, 1996
RENTAL RATES
<TABLE>
<CAPTION>
TYPE SQ. FT. EA. CURRENT RENTS
---- ---------- -------------
<S> <C> <C>
Studio, 1 Bath 510 $381 - $446
1 Bedroom, 1 Bath 694 $395 - $506
2 Bedroom, 1 Bath 900 $435 - $556
2 Bedroom, 2 Bath 1,080 $499 - $656
2 Bedroom, 2 Bath (Villa) 1,282 $600 - $685
2 Bedroom, 2.5 Bath (Townhouse) 1,420 $650 - $750
SCHEDULED MONTHLY RENTS. . . . . . . . . . . . . . . . . . . $146,701
SCHEDULED MONTHLY RENTS x 12 MONTHS. . . . . . . . . . . . . $1,760,412
LAUNDRY INCOME . . . . . . . . . . . . . . . . . . . . . . . $23,300
MISCELLANEOUS INCOME (1) . . . . . . . . . . . . . . . . . . $54,100
INTEREST INCOME. . . . . . . . . . . . . . . . . . . . . . . $9,600
TOTAL SCHEDULED GROSS REVENUES . . . . . . . . . . . . . . . $1,847,412
</TABLE>
_______
(1) Net security deposit forfeitures plus late charges and miscellaneous
income.
4
<PAGE>
ITEM 2 - PROPERTIES:
LOAN INFORMATION
VENETIAN PARK APARTMENTS
Registrant's only property is a 295-unit apartment complex (herein the
"Property") consisting of 41 buildings on a 16.44 acre site at 1540, 1555 and
1560 Mosaic Way and 4841 North Pershing Avenue, Stockton, California, and
commonly known as the Venetian Park Apartments. The Property is subject to
encumbrances, consisting of four (one for each parcel) first trust deed notes
totalling $5,663,545 at December 31, 1995. The General Partners believe that
the foregoing Property is adequately covered by insurance. Also, at this time
there are no proposed programs for renovation, improvements or further
development of the Property.
FIRST TRUST DEED INFORMATION
Monthly payments:. . . . . . . $44,791
Interest rate: . . . . . . . . 7.5% and 8%
Amortization schedule: . . . . 25 to 26 years
Year due and payable:. . . . . until paid (2017 to 2018)
Loan balance when due: . . . . $0
First trust deed holder: State Teachers' Retirement Board of Ohio and
Colonial Mortgage Service Co.
Assumption fee:. . . . . . . . $32,500
<TABLE>
<CAPTION>
Phase Monthly Payment Interest Rate
----- --------------- -------------
<S> <C> <C>
I $14,951 8.0%
II 12,933 7.5%
III 15,894 7.5%
IV 1,013 7.5%
</TABLE>
ITEM 3 - LEGAL PROCEEDINGS:
A former employee has filed a complaint claiming discrimination with the
Department of Fair Employment and Housing (DFEH). The outcome of this filing is
unknown at this time. At this time the former employee has not filed a right to
sue letter nor has the DFEH brought a lawsuit. The Company believes the
complaint is completely without merit and intends to vigorously defend its
position.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
There were no matters submitted during the fourth quarter of 1995 to a vote of
security holders.
5
<PAGE>
ITEM 5 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY [AND
RELATED STOCKHOLDERS MATTERS
The Limited Partnership Units have limited transferability and no established
public trade market has developed or is expected to develop in the future.
There were approximately 530 holders of Limited partnership Units at December
31, 1995, holding 6,041 Limited Partnership Units of Registrant. Although the
General Partners have an equity interest in Registrant, they were not issued
units. The general partners own 61 units, giving the partnership a total of
6,102 partner units.
During 1993, the Registrant paid a distribution aggregating $205,395 or $34 per
unit; during 1994, paid $60,410 or $10 per unit; and during 1995, paid $0.
Additionally, the Registrant paid the General Partners the following
distributions: $1,820, $2,685 and $0 for 1993, 1994 and 1995, respectively.
ITEM 6 - SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
OPERATIONAL DATA: BALANCE SHEET DATA:
NET INCOME
NET NET INCOME (LOSS) TOTAL TOTAL
REVENUES (LOSS) PER PARTNER UNIT ASSETS LONG-TERM DEBT
--------- ---------- ---------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
1995 $1,590,577 $(188,611) $ (31.22) $7,837,361 $5,663,545
1994 1,628,405 (98,415) (16.29) 8,139,694 5,763,051
1993 1,700,458 (79,447) (13.16) 8,399,527 5,855,221
1992 1,692,894 (5,335) (0.88) 8,788,391 5,942,549
1991 1,669,052 7,463 1.24 9,032,037 6,024,764
</TABLE>
PER UNIT LIMITED PARTNER CASH DISTRIBUTIONS:
<TABLE>
<S> <C>
1995 $ -0-
1994 10.00
1991 34.00
1990 30.00
1989 48.50
</TABLE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations:
Operating income for 1995 substantially declined on a year-to-year basis:
$1,590,577 in 1995 vs. $1,628,405 in 1994, a decrease of $37,828. Net spendable
last year was ($36,398) vs. $93,150 during 1994, a reduction of $129,548.
The scheduled gross monthly rent roll for December 1995 was $146,469 vs.
$147,741, a decrease of $1,272. At the same time, vacancy losses for 1995 were
$192,127 vs. $174,255 for 1994, an increase of $17,872. Operating expenses and
replacements during 1995 were $1,013,049 vs. $944,453 the prior year, an
increase of $68,596. Replacements were reduced by $1,848 when comparing 1995
and 1994.
6
<PAGE>
Results of Operations (continued):
Besides excessively high tenant turnover - which resulted in increased costs for
painting, draperies, cleaning and advertising - other factors contributed to
increased expenses. Payroll went up due to the following reasons:
(1) Increases in managers' salaries due to lease renewal bonuses and rental
commissions.
(2) Additional personnel were employed in 1995 to speed up the Property's
rehabilitation program and for cost savings made possible by performing
much of the work with on-site personnel in lieu of outside contractors.
(3) Additional leasing personnel were required to deal with the high number of
vacancies.
Variable expenses increased by $36,043 over the previous year ($166,923 vs.
$130,880) due to high vacancies and apartment preparation costs (advertising
increased by $5,686; credit verification, $5,162; and interior cleaning,
$3,161). In addition, legal fees went up by $2,889 due to higher eviction costs
and legal research for determining means, if any, of reducing accounting costs
by eliminating SEC requirements for 10-K and 10-Q forms. Landscaping expenses
also went up by $12,891 due to costs of correcting storm damage (removal and
replacement of trees, flowers and shrubbery) -- also, repairs and additions to
the sprinkler system.
Repairs and maintenance increased by $8,010 over the previous year ($110,398 vs.
$102,388) due in part to on-site exterior painting program and two bridge
replacements.
Replacement expenses in 1995 decreased by $1,848 ($62,772 vs. $64,621).
Cash on hand as of December 31, 1995, was $212,006 of which $84,034 consisted of
tenant refundable security deposits. At the same time the previous year, cash
on hand was $223,061. The Property's FHA replacement reserves as of December
31, 1995, stood at $116,065 substantially unchanged from the $113,204 on hand
the year before.
With Stockton's unemployment rate still in excess of 12%, we must continue the
task of bringing in financially qualified tenants from a smaller base. This
will require the continued use of two leasing consultants, heavy advertising and
ongoing expenditures for completion of the exterior work to say nothing of
anticipated costs in connection with repainting (and in some cases recarpeting
and replacing window coverings and vinyl floors) of vacated apartments.
ANALYSIS OF CASH FLOWS:
Operating Activities:
The Partnership had a positive cash flow from operating activities of $90,989,
$225,896 and $170,426 for each of the three years in the period ended December
31, 1995, respectively.
7
<PAGE>
The decrease in positive cash flow from operating was largely attributable to
the soft California rental market, excessively high tenant turnover and work
required by HUD to meet its standards.
Financing Activities:
The principal repayment of long-term debt remain consistent over the three-year
period. There were no capital distributions to partners in 1995 due to the soft
rental market. The distributions to partners were $0, $63,095 and $207,215 for
each of the three years in the period ended December 31, 1995, respectively.
8
<PAGE>
ITEM 8 - FINANCIAL STATEMENTS
The Registrant's Financial Statements for the periods ended December 31, 1995,
1994 and 1993 follow.
Page
Number
------
Independent Auditors' Report . . . . . .. . . . . . . . . . . . . . . 10
Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Statements of Operation . . . . . . . . . . . . . . . . . . . . . . . 12
Statements of Changes in Partners' Equity . . . . . . . . . . . . . . 13
Statements of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . 14
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 15 - 18
9
<PAGE>
[BLOCK, PLANT & EISNER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
TO VENETIAN PARK ASSOCIATES, LTD.
SANTA MONICA, CALIFORNIA
We have audited the accompanying balance sheets of VENETIAN PARK ASSOCIATES,
LTD. (A CALIFORNIA LIMITED PARTNERSHIP) as of December 31, 1995 and 1994, and
the related statements of operations, changes in partners' equity, and cash
flows for each of the three years in the period ended December 31, 1995. 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 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Venetian Park Associates, Ltd.
(A Limited Partnership) as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ Block, Plant & Eisner
ENCINO, CALIFORNIA
February 15, 1996
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
---------- ------------
<S> <C> <C>
Current assets:
Cash $ 127,972 $ 139,074
Tenants' rents receivable 2,778 6,126
Tenants' security deposits (Note 2) 84,034 83,987
Prepaid expenses 24,086 22,657
---------- ----------
Total current assets 238,870 251,844
---------- ----------
Restricted deposits and funded reserves:
Mortgage escrow deposits (Note 2) 57,327 61,258
Reserve for replacements (Note 2) 116,065 113,204
---------- ----------
173,392 174,462
---------- ----------
Fixed assets, net (Notes 3 and 4) 7,403,427 7,683,189
---------- ----------
Other assets:
Prepaid loan fees, net of accumulated
amortization of $11,731 in 1995 and
$10,645 in 1994 20,675 21,628
Deposits 997 8,571
---------- ----------
21,672 30,199
---------- ----------
$7,837,361 $8,139,694
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable - trade and accrued expenses $ 32,259 $ 54,280
Accrued interest 36,152 37,923
Tenants' prepaid rents 3,482 4,980
Tenants' security deposits 87,251 76,177
Current portion of long-term debt (Note 4) 107,392 99,464
---------- ----------
Total current liabilities 266,536 272,824
Other liabilities:
Long-term debt, net of current portion (Note 4) 5,556,153 5,663,587
Commitments and contingencies (Note 7)
Partners' equity 2,014,672 2,203,283
---------- ----------
$7,837,361 $8,139,694
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $1,503,619 $1,546,175 $1,633,153
Other income 77,337 76,078 59,362
Interest income 9,621 6,152 7,943
---------- ---------- ----------
1,590,577 1,628,405 1,700,458
---------- ---------- ----------
Expenses:
Administrative 322,831 283,693 293,118
Utilities 182,018 176,210 158,347
Operating and maintenance 370,300 345,627 381,449
Taxes and insurance 154,989 165,389 182,502
Financial expense 464,950 472,866 481,644
Depreciation and amortization 283,300 282,235 282,075
---------- ---------- ----------
1,778,388 1,726,020 1,779,135
---------- ---------- ----------
Loss before franchise tax (187,811) (97,615) (78,677)
Franchise tax 800 800 800
---------- ---------- ----------
Net loss $(188,611) $ (98,415) $ (79,477)
---------- ---------- ----------
---------- ---------- ----------
Net loss income per limited
partnership interest (6,041 units) $ (31.22) $ (16.29) $ (13.16)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 12
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
(61 UNITS) (6,041 UNITS) (6,102 UNITS)
---------- ------------- -------------
<S> <C> <C> <C>
Balance, January 1, 1993 $ 27,353 $2,624,132 $2,651,485
December 31, 1993:
Net loss (795) (78,682) (79,477)
Distribution to partners (1,820) (205,395) (207,215)
---------- ---------- ----------
Balance, December 31, 1993 24,738 2,340,055 2,364,793
December 31, 1994:
Net loss (984) (97,431) (98,415)
Distribution to partners (2,685) (60,410) (63,095)
---------- ---------- ----------
Balance, December 31, 1994 21,069 2,182,214 2,203,283
December 31, 1995:
Net loss (1,885) (186,726) (188,611)
Distribution to partners 0 0 0
---------- ---------- ----------
Balance, December 31, 1995 $ 19,184 $1,995,488 $2,014,672
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(188,611) $ (98,415) $ (79,477)
--------- --------- ---------
Adjustments to reconcile net (loss) to
net cash provided by operating activities:
Depreciation and amortization 283,300 282,235 282,075
Change in assets -(increase) decrease:
Tenants' rents receivable 3,348 0 0
Tenants' security deposits (47) 10,145 (1,921)
Prepaid expenses (1,429) 1,165 (1,864)
Restricted deposits and reserves 1,070 41,238 (13,762)
Deposits 7,574 (4,304) (256)
Change in liabilities - increase (decrease):
Accounts payable and accrued expenses (23,792) (3,189) 1,428
Tenants' prepaid rents (1,498) (5,730) (8,469)
Tenants' security deposit payable 11,074 2,751 (7,328)
--------- --------- ---------
Total adjustments 279,600 324,311 249,903
--------- --------- ---------
Net cash flow provided by
operating activities 90,989 225,896 170,426
--------- --------- ---------
Cash flows from investing activities:
Acquisition of fixed assets (2,585) (3,448) 0
--------- --------- ---------
Cash flows from financing activities:
Principal reduction of long-term debt (99,506) (92,148) (87,291)
Capital distributions to partners 0 (63,095) (207,215)
--------- --------- ---------
Net cash used by financing activities (99,506) (155,243) (294,506)
--------- --------- ---------
Net increase (decrease) in cash (11,102) 67,205 (124,080)
Cash at beginning of year 139,074 71,869 195,949
--------- --------- ---------
Cash at end of year $ 127,972 $ 139,074 $ 71,869
--------- --------- ---------
--------- --------- ---------
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest expense $ 438,015 $ 445,346 $ 452,202
State Franchise tax 800 800 800
</TABLE>
The accompanying notes are an integral part of these financial statements. 14
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. Organization and significant accounting policies:
Organization:
The partnership, organized as a limited partnership within California,
formed October 31, 1983 to acquire an interest in real property
located in Stockton, California. On October 31, 1983 the partnership
purchased an existing apartment complex with a total of 295 units
comprised of four separate apartment projects operated under Section
221(d) (4) of the National Housing Act. Such projects are regulated
by HUD as to operating methods. The partnership is economically
dependent on the Stockton, California rental market.
With HUD approval, the financial statements have been prepared on a
consolidated basis encompassing the following four separate HUD
projects:
PROJECT NAME HUD PROJECT NUMBER
---------------------------- ------------------
Venetian Park Apartments I 136-35387-PM
Venetian Park Apartments II 136-35409-PM
Venetian Park Apartments III 136-35450-PM
Venetian Park Apartments IV 136-35518-PM
Cash:
The partnership maintains cash balances in excess of the current FDIC
limit, at First Interstate Bank.
Fixed assets and depreciation:
Fixed assets are stated at cost. Depreciation is provided on the
straight-line and accelerated methods over estimated useful lives
which range from 5 to 35 years. The fixed assets are pledged as
collateral for the mortgage note payable. Maintenance, repairs and
minor renewals are expensed as incurred.
Amortization:
Prepaid loan fees are being amortized on a straight-line basis over
the term of the loans, 33-1/3 years.
Franchise tax:
Income or loss of the partnership is allocated 1% to the general
partners and 99% to the limited partners, which represents their
respective ownership interests in the partnership. 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. The State of
California imposes a minimum franchise tax per year for limited
partnerships.
15
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(CONTINUED)
2. Restricted cash:
Tenant security deposits:
The Federal Housing Administration requires that all tenants' security
deposits collected be restricted to repayment of extraordinary damages
caused by the tenants or repayment to the tenants at the end of their
leases. These deposits are to be held in separate bank accounts in
the name of the project. The balance in these bank accounts at
December 31, 1995 and 1994 was $84,034 and $83,987, respectively.
Reserve for replacements:
The FHA also requires reserve for replacement funds to be maintained
by the mortgagee for the mortgagor to cover major expenditures of the
project for replacements. The payments are included with the mortgage
payments and amount to $2,098 per month. The disbursements from this
fund require the approval of HUD. The activity was as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Balance, beginning of year $ 113,204 $ 137,113
Deposits 25,172 25,172
Interest earned 3,260 2,259
Interest withdrawals (1,773) (3,800)
Replacement expenditures (23,798) (47,540)
---------- ----------
Balance, end of year $ 116,065 $ 113,204
---------- ----------
---------- ----------
</TABLE>
Mortgage escrow deposits account:
The mortgage escrow deposits account is also maintained by the
mortgagee for the mortgagor for the future payment of insurance and
taxes. Payments to the account are included with the monthly mortgage
payments. The activity was as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Balance, beginning of year $ 61,258 $ 78,587
Deposits 153,858 139,088
Disbursements:
Property taxes (104,528) (103,782)
Hazard insurance (28,455) (23,693)
Mortgage insurance (24,806) (28,942)
---------- ----------
Balance, end of year $ 57,327 $ 61,258
---------- ----------
---------- ----------
</TABLE>
16
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(CONTINUED)
3. Fixed assets, net:
Fixed assets consist of the following:
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Land $ 1,158,278 $ 1,158,278
Buildings 9,550,330 9,550,330
Furniture and fixtures 309,265 306,680
----------- -----------
11,017,873 11,015,288
Less accumulated depreciation 3,614,446 3,332,099
----------- -----------
$ 7,403,427 $ 7,683,189
----------- -----------
----------- -----------
</TABLE>
4. Long-term debt:
The mortgages payable - lst Trust Deeds are 40-year notes which are
insured by HUD under Section 221(d)(4) of the National Housing Act. The
notes are secured by first trust deeds on the land and buildings. The
interest rates, monthly installments and outstanding balances due are as
follows:
<TABLE>
<CAPTION>
MATURITY INTEREST MONTHLY BALANCE
DATE RATES INSTALLMENTS 12/31/95
-------- -------- ------------ --------
<S> <C> <C> <C> <C>
I 2017 8.0% $ 14,951 $1,813,913
II 2017 7.5% 12,933 1,659,754
III 2017 7.5% 15,894 2,058,260
IV 2018 7.5% 1,013 131,618
---------- ----------
$ 44,791 $5,663,545
---------- ----------
---------- ----------
</TABLE>
Long-term debt maturing in the next five years consists of:
<TABLE>
<S> <C>
1996 $ 107,392
1997 115,920
1998 127,095
1999 135,064
2000 145,792
Beyond five years and thereafter 5,032,282
----------
Total long-term debt 5,663,545
Less current portion (107,392)
----------
$5,556,153
----------
----------
</TABLE>
17
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(CONTINUED)
5. Related party transactions:
During the years ended December 31, 1995 and 1994, the General Partners
received management fees of $30,858 in 1995 and $32,084 in 1994, for
their services equal to 2% of the Project's cash receipts for each year.
Their respective shares were as follows: Norman Jacobson, $15,429 and
$16,042 and Theodore J. Weill, $15,429 and $16,042.
Beginning in May of 1988, Norman Jacobson Management Co., took over the
property management and bookkeeping functions from an unrelated entity
which had previously performed this function. Norman Jacobson Management
Co., received a management fee for its services equal to 3% of the
project's cash receipts. The property management fees and reimbursed
expenses were $56,493, $53,999 and $50,234 for the years ended December
31, 1995, 1994 and 1993, respectively.
6. Distributions to Limited and General Partners:
The partnership declared and paid no distributions for the year ended
December 31, 1995.
7. Commitments and contingencies:
A former employee has filed a complaint claiming discrimination with the
Department of Fair Employment and Housing (DFEH). The outcome of this
filing is unknown at this time. At this time the former employee has not
filed a right to sue letter nor has the DFEH brought a lawsuit. The
Company believes the complaint is completely without merit and intends to
vigorously defend its position.
18
<PAGE>
ITEM 9 - DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with accountants on any matters of financial
statement presentation or related disclosures.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS
Registrant has no directors or executive officers but is managed by the
General Partners.
The General Partners are described below:
NORMAN JACOBSON. Mr. Jacobson co-founded WAGNER/JACOBSON CO., INC. in 1958.
That firm engaged primarily in real estate brokerage of income-producing
multifamily residential real estate and served as general partner for a
number of public and private syndications. Because Mr. Jacobson's time is
devoted to property management and syndication activities and serving the
interests of the investors in the syndications formed by him, his involvement
with WAGNER/JACOBSON CO., INC., has ceased. In 1982, Mr. Jacobson, formed
NORMAN JACOBSON REALTY RESOURCES, INC. Mr. Jacobson is also President of
NORMAN JACOBSON MANAGEMENT CO, which acts as property manager for various
apartment complexes and commercial properties in Los Angeles, Orange,
Sacramento, San Joaquin, Solano and Contra Costa Counties.
In 1981 Mr. Jacobson co-formed Jacobson/Weill Income Realty Fund, a publicly
offered real estate fund, which purchased the Chateau Apartments, a 104-unit
apartment complex located at 1503 Fulton Avenue, Sacramento, California. In
1982 Mr. Jacobson and Mr. Ted Weill were co-general partners with Bateman
Eichler, Hill Richards Realty in Parkfair Associates, Ltd., a publicly
offered limited partnership, formed for the purpose of purchasing the
120-unit Parkfair Apartments and Parkfair Professional Building in
Sacramento. In 1983, Mr. Jacobson and Mr. Weill formed Venetian Park
Associates, Ltd. which purchased the 295-unit Venetian Park Apartments in
Stockton, California.
Mr. Jacobson is also General Partner for Hilltop Associates, Ltd. (formed in
1983 to purchase the 70-unit Hilltop Apartments), Hillsdale Investors, Ltd.
(formed in 1984 to purchase the 48-unit Hillsdale Garden Apartments),
Jefferson Place Investors (formed in 1985 to purchase the 66-unit Jefferson
Place Apartments) and Cottage Bell Investors (formed in 1985 to purchase the
160-unit Cottage Bell Apartments). These properties are all in Sacramento.
In addition, Mr. Jacobson is General Partner for Muir Creek Investors (formed
in 1986 to purchase the 108-unit Muir Creek Apartments in Martinez,
California), and Med Village Investors (formed in 1988 for the purpose of
constructing the 106-unit Mediterranean Village Apartments in Fairfield,
California).
Norman Jacobson Realty Resources, Inc., of which Mr. Jacobson is a principal
and the sole owner, is general partner of Palm Mesa, Ltd. (formed in 1970 to
purchase the 147-unit Palm Mesa Apartments) and Parkwood Village, Ltd.
(formed in 1971 to purchase the 276-unit Newport Village Apartments). Both
of these properties are in Costa Mesa, California.
In 1977, Mr. Jacobson was president of the Los Angeles Board of Realtors.
Formerly he
19
<PAGE>
was president of the Venice Board of Realtors. He has been a director
of the California Association of Realtors (CAR) periodically since 1963 and
was elected regional vice-president of the CAR in 1978. In 1971-72 he was
vice-chairman of the CAR's Syndication Division and was founding editor of
the Syndication Division's official publication, THE CALIFORNIA SYNDICATOR.
Mr. Jacobson lectures and writes extensively in the fields of real estate
investments. He has periodically instructed for University of California
Extension since 1961, lectures from time to time for the UCLA Graduate School
of Management and is one of 80 real estate professionals in the United States
invited to write a Chapter for THE REAL ESTATE HANDBOOK published by
Dow-Jones, Irwin.
Mr. Jacobson holds a degree in business administration from UCLA, where he
graduated in 1952.
THEODORE J. WEILL. Mr. Weill is a general partner in numerous ongoing
private and public syndications, and is active in real estate development and
other activities. From December, 1969 to February, 1977, Mr. Weill served as
principal in the development of recreational communities and became Executive
Vice President of the Resort Development Group of Dart/Kraft Industries in
1970. From January, 1963, to November, 1969, he was President and Chairman of
a privately held real estate and brokerage company specializing in
commercial, industrial and income property with annual sales of $50 million,
and a property management company with managed assets of $100 million. Mr.
Weill has served as a consultant to Dart/Kraft Industries, SRI International
and ITT Corporation. In March, 1977, he founded Weill Financial Corporation,
a Los Angeles real estate investment organization.
Mr. Weill has a Bachelor's degree in marketing and finance from the
University of Pennsylvania, Wharton School of Finance and Commerce in 1956,
and in 1977 graduated with honors from the Pepperdine University
Presidential/Key Executive MBA program.
PROPERTY MANAGEMENT
The Partnership Agreement provides that J/W Management Corp., a California
Corporation organized by the General Partners, will be responsible, through
its own personnel and/or through subcontracted management services, for the
management of the Property, for a fee of 5% of the gross income of the
Property, which fee is generally charged in the Stockton area. Historically,
J/W Management has subcontracted the off-site property management to firms
specializing in apartment house management and has paid 3% of the gross
income to such firms while retaining the remaining 2% as compensation for
overseeing the subcontractor's work. J/W Management Corp. was dissolved in
1990, and the General Partners individually continue to oversee the
subcontractor's work and receive the 2% compensation.
Presently, the off-site management of the property is subcontracted to Norman
Jacobson Management Co., an affiliate of one of the General Partners.
20
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
During the year ended December 31, 1995, the General Partners (see Item 13)
received cash compensation from Registrant totalling $30,858 consisting of
project management fees. Norman Jacobson received $15,429 and Theodore J.
Weill received $15,429.
Also, during the year ended December 31, 1995, one of the General Partners
and his affiliate, Norman Jacobson Management Co. (see Item 13) received cash
compensation from Registrant totalling $56,493 consisting of project
management fees.
The following table summarizes the types, estimated amounts and recipients of
compensation that will or may be paid to the General Partners or their
affiliates from and after January 1, 1995:
Person Receiving
Compensation Type of Compensation Amount Paid
--------------- -------------------- -----------
General Partners: Interest in distributions An interest equal to 1%
from operations of cash distributions
from operations.
Norman Jacobson None
Theodore Weill None
General Partners Subordinated interests in ESTIMATED MAXIMUM AMOUNTS
distributions An interest equal to 25%
(less amounts received by
the General Partners by
virtue of their 1%
interest in the
Partnership) of the
undistributed cash
amounts resulting from
the sale or refinance of
the Partnership Property
remaining after payment
to investors of an amount
equal to 100% of their
original capital
contributions plus an 8%
cumulative annual,
noncompounded return
thereon less prior
distributions from the
Partnership.
21
<PAGE>
General Partners or Subordinated Real Estate Equal to an amount not to
one or more real Commissions (payable if exceed one-half of the
estate brokers recipient performs acquisition fees which
affiliated with the services related to could be paid during the
General Partners resales of Partnership Acquisition Period, but
Properties) only after return of the
Limited Partners' capital
contributions and (unless
previously paid through
distributions) 6% per
annum cumulative non-
compounded return
thereon.
General Partners: Property management fee HUD approval contract
Norman Jacobson provides for 5% of the
Theodore J. Weill gross revenues of the
Property. The
Partnership paid
approximately 2% of gross
revenues, $30,858 for the
year ended December 31,
1995, which was paid to
the General Partners:
$15,429 to Norman
Jacobson and $15,429 to
Theodore J. Weill; and
Norman Jacobson 3% of gross revenues
Management Co., ($46,287 for the year
an affiliate of ended December 31, 1995)
one of the General to Norman Jacobson
Partners responsible Management Co.
for management of
the property
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Registrant has no directors or officers but is managed by the General
Partners. At December 31, 1995, neither of the General Partners owned any of
the outstanding Limited Partnership Units nor did any person known to the
General Partners own 5% or more of the outstanding Limited Partnership Units.
ITEM 13 - CERTAIN RELATIONSHIPS
The General Partners, either personally or through affiliated entities, are
General Partners in other real estate limited partnerships, some of which may
be comparable in certain respects to the Partnership. The General Partners
have organized other partnerships in the
22
<PAGE>
past and will organize other partnerships in thefuture, including
partnerships which may have investment objectives similar to those of the
Partnership. Such General Partner will have legal and financial obligations
with respect to those other partnerships which are similar to his obligations
with respect of the Partnership, including contingent liability, for the
obligations of such partnerships.
The General Partners are prohibited from entering into any transaction on
behalf of the Partnership with any other limited partnership in which the
General Partners or any affiliate of the General Partners has an interest.
The General Managers may engage in the real estate business or in other
businesses for their own account for the accounts of others or otherwise, and
neither the Partnership nor any Limited Partners shall be entitled to any
interest therein. There may be conflicts of interest on the part of the
General Partners between the Partnership and other limited partnerships with
which they are affiliated at such time as the Partnership attempts to sell or
rent realty or employ resident and building managers, as well as under other
circumstances.
It is the policy of the Partnership that the Limited Partners may not engage
directly or indirectly in any capacity for monetary gain. Generally the
Limited Partners participate in the profits, losses and distributions and
have certain limited partner voting rights. No Limited Partner shall have
any right to be active in the conduct or management of the Partnership
business, nor have any power to bind the Partnership by contract, agreement,
compromise or undertaking; provided, however, that Limited Partners shall
have the right to vote on Partnership matters, as set forth in the
Partnership Agreement, which affects its basic structure.
Limited Partners holding 10% of the Units may call (in the General
Partnership notice) a meeting as provided in the Rules of the Commissioner of
Corporations of the State of California, and an affirmative vote of the
majority interest of the Limited Partners shall be required to take action
upon certain matters as provided in the Partnership Agreement.
23
<PAGE>
PART IV
ITEM 14 - FINANCIAL STATEMENTS AND EXHIBITS
(a) EXHIBITS
None
(b) FINANCIAL STATEMENTS
The following financial statements are included in Item 8:
Report of Independent Accountants
Balance Sheets as of December 31, 1995 and 1994
Statements of Operation for the years ended December
31, 1995, December 31, 1994 and December 31, 1993.
Statements of changes in partners' equity for the years
ended December 31, 1995, December 31, 1994, and
December 31, 1993
Statements of cash flows for the years ended December
31, 1995, December 31, 1994, and December 31, 1993
Notes to Financial Statements
The following financial statement schedules follow:
Page
----
Independent auditors' report on financial statement
schedules . . . . . . . . . . . . . . . . . . . . . . . . 25
Schedule XI - Real Estate and Accumulated Depreciation. . . 26
<PAGE>
[BLOCK, PLANT & EISNER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON SUPPORTING SCHEDULES
TO VENETIAN PARK ASSOCIATES, LTD.
SANTA MONICA, CALIFORNIA
Under date of February 15, 1996, we reported on the balance sheets of VENETIAN
PARK ASSOCIATES, LTD. (A CALIFORNIA LIMITED PARTNERSHIP) as of December 31, 1995
and 1994 and the related statements of operations, changes in partners' equity
and cash flows for each of the years in the three-year period ended December 31,
1995, which are included in Item 8 of this annual report on Form 10-K. In
connection with our audits of the aforementioned financial statements, we also
have audited the related financial statement schedule as listed in Item 14 of
this annual report on Form 10-K. The financial statement schedule is the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on the financial statement schedule based on our audits.
In our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
/S/ Block, Plant, & Eisner
Encino, California
FEBRUARY 15, 1996
25
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COSTS
CAPITALIZED
SUBSEQUENT
INITIAL COST TO
TO PARTNERSHIP (A) ACQUISITION
----------------- ----------
BUILDING
AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Apartment complex $ 5,663,545 $ 1,158,278 $ 9,768,873 $ 90,722
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
GROSS AMOUNT OF WHICH WAS
CARRIED AT CLOSE OF PERIOD (D)
------------------------------------------------------------
BUILDINGS
AND ACCUMULATED
LAND IMPROVEMENTS TOTAL DEPRECIATION
------------- ------------- ------------- -------------
<S> <C> <C> <C>
$ 1,158,278 $ 9,859,595 $ 11,017,873 $ 3,614,446
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
Year of construction 1976-1978
Fiscal year acquired 1983
Life on which depreciation in latest
statement of operations is computed 5-35 years
(A) The initial cost to the Partnership represents the original
purchase price of the property.
(B) Reconciliation of real estate owned for 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period $11,015,288 $11,011,840 $11,011,840
Additions during period 2,585 3,448 0
----------- ----------- -----------
Balance at close of period $11,017,873 $11,015,288 $11,011,840
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
(C) Reconciliation of accumulated depreciation for 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of year $ 3,332,099 $ 3,050,810 $ 2,769,688
Additions during period:
Depreciation expense 282,347 281,289 281,122
----------- ----------- -----------
3,614,446 3,332,099 3,050,810
Deductions during period:
Accumulated depreciation
on real estate sold or
improvements written off 0 0 0
----------- ----------- -----------
Balance at close of year $ 3,614,446 $ 3,332,099 $ 3,050,810
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
(D) Aggregate cost of real estate at December 31, 1995 for Federal
income tax purposes is $11,018,716.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) or the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
VENETIAN PARK ASSOCIATES, LTD.
A California Limited Partnership
Date: 3/13/96 By: /s/ Theodore J. Weill
---------------------------- -----------------------------------
Theodore J. Weill
General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates as indicated.
Date: 3/13/96 By: /s/ Norman Jacobson
------------------------------ -----------------------------------
Norman Jacobson,
General Partner
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 385,398
<SECURITIES> 0
<RECEIVABLES> 48,536
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 433,934
<PP&E> 11,017,873
<DEPRECIATION> 3,614,446
<TOTAL-ASSETS> 7,837,361
<CURRENT-LIABILITIES> 266,536
<BONDS> 5,556,153
0
0
<COMMON> 0
<OTHER-SE> 2,014,672
<TOTAL-LIABILITY-AND-EQUITY> 7,837,361
<SALES> 0
<TOTAL-REVENUES> 1,590,577
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,313,438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 464,950
<INCOME-PRETAX> (187,811)
<INCOME-TAX> 0
<INCOME-CONTINUING> (187,811)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (187,811)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
