<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, 1996 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, 1996, 1995 AND 1994
TABLE OF CONTENTS
PAGE
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 7 - 8
Item 8. Financial Statements 9 - 19
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 20
PART III
Item 10. Directors and Executive Officers of the Partnership 20 - 22
Item 11. Executive Compensation 23 - 24
Item 12. Security Ownership of Certain Beneficial
Owners and Management 24
Item 13. Certain Relationships and Related Transactions 25
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 10-K 26 - 28
Signatures 29
<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.
1
<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
NUMBER TYPE SQ.FT.EA. TOTAL SQ.FT.
- ------ ---- --------- ------------
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
3
<PAGE>
ITEM 1 - BUSINESS:
VENETIAN PARK APARTMENTS
SCHEDULED GROSS INCOME
BEGINNING JANUARY, 1997
RENTAL RATES
TYPE SQ. FT. EA. CURRENT
---- ----------- -------
RENTS
-----
Studio, 1 Bath 510 $375 - $426
1 Bedroom, 1 Bath 694 $391 - $515
2 Bedroom, 1 Bath 900 $450 - $556
2 Bedroom, 2 Bath 1,080 $499 - $656
2 Bedroom, 2 Bath (Villa) 1,282 $600 - $706
2 Bedroom, 2.5 Bath (Townhouse) 1,420 $650 - $706
SCHEDULED MONTHLY RENTS................................................$148,4138
SCHEDULED MONTHLY RENTS x 12 MONTHS...................................$1,780,956
LAUNDRY INCOME...........................................................$20,000
MISCELLANEOUS INCOME (1).................................................$41,000
INTEREST INCOME..........................................................$11,000
TOTAL SCHEDULED GROSS REVENUES........................................$1,852,956
- ----------
(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
totaling $5,555,954 at December 31, 1996. 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:..........$44,792
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
Phase Monthly Payment Interest Rate
----- --------------- -------------
I $14,951 8.0%
II 12,933 7.5%
III 15,894 7.5%
IV 1,013 7.5%
ITEM 3 - LEGAL PROCEEDINGS:
A former employee has filed a complaint claiming discrimination with the State
of California. The outcome of this filing is unknown at this time. The Company
believes the complaint is completely without merit and intends to vigorously
defend its position. Legal Council has been hired, but at the present time, is
unable to provide a reliable estimate of the claimed damages or costs of
defense.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
There were no matters submitted during the fourth quarter of 1996 to a vote of
security holders.
5
<PAGE>
PART II
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, 1996, 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 1996, the Registrant paid $0; during 1995, paid $0; and during 1994, paid
$60,410 or $10 per unit. Additionally, the Registrant paid the General Partners
the following distributions: $2,685, $0 and $0 for 1994, 1995 and 1996,
respectively.
ITEM 6 - SELECTED FINANCIAL DATA
YEAR OPERATIONAL DATA BALANCE SHEET DATA
- ---- ---------------- ------------------
NET INCOME TOTAL
NET INCOME (LOSS) PER LTD. LONG-TERM
NET REVENUES (LOSS) PARTNER UNIT TOTAL ASSETS DEBT
1996 $1,622,281 $ (13,062) $ (2.16) $7,757,031 $5,555,954
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
PER UNIT LIMITED PARTNER
CASH DISTRIBUTIONS
1996 $0
1995 0
1994 10.00
1993 34.00
1992 30.00
6
<PAGE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations:
Operating income for 1996 substantially increased on a year-to year basis:
$1,609,005 in 1996 vs. $1,542,887 in 1995, an increase of $66,118. Net
spendable last year was $159,060 vs. ($36,398) during 1995, an increase of
$195,458.
The scheduled gross monthly rent roll for December 1996 was $148,308 vs.
$146,469, an increase of $1,839. At the same time, vacancy losses for 1996 were
$202,739 vs. $192,127 for 1995, an increase of $10,612. Operating expenses and
replacements during 1996 were $884,245 vs. $1,013,049 the prior year a decrease
of $128,804. Repairs and maintenance were reduced by $56,839 when comparing
1996 and 1995.
Besides high tenant turnovers which are believed to be on the decline, the
increase in operating income was achieved primarily through cuts in rental
incentives and delinquency losses. Operating expenses were significantly
reduced due to the elimination of apartment allowances for maintenance, leasing
and office personnel, along with a reduction of utility costs and variable
expenses.
Variable expenses decreased by $32,378 over the previous year ($134,546 vs.
$166,923 mostly due to the elimination of apartment allowances for maintenance
and leasing office personnel. 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 decreased by $56,239 over the previous year ($53,559 vs.
$110,398). Savings in repairs and maintenance were accomplished by performing a
substantial amount of work with on-site personnel resulting in expense
reductions.
Replacement expenses in 1996 increased by $1,442 ($64,214 vs. $62,772).
7
<PAGE>
Cash on hand as of December 31, 1996, was $376,368 of which $89,460 consisted of
tenant refundable security deposits. At the same time the previous year, cash
on hand was $212,007. The Property's FHA replacement reserves as of December
31, 1996 stood at $141,237 substantially increased from the $116,065 on hand the
year before.
With Stockton's unemployment rate still in excess of 10%, 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 $305,078,
$90,989 and $225,890 for each of the three years in the period ended December
31, 1996, respectively. The increase in positive cash flow from operations was
largely attributable to the decline in vacancies, delinquency losses, rent
concessions and a large cut in operating expenses.
Financing Activities:
The principal repayment of long-term debt remain consistent over the three-year
period. There were no capital distributions to partners in 1996 due to the soft
rental market. The Partnership declared and paid a distribution in January 1997
for the 1996 year. The distribution although relatively small at $60,410, it is
the first to be issued in some period of time indicating that the Property has
finally turned the corner after a long drought. The distributions to partners
were $0, $0 and $63,095 for each of the three years in the period ended December
31, 1996, respectively.
8
<PAGE>
ITEM 8 - FINANCIAL STATEMENTS
The Registrant's Financial Statements for the periods ended December 31, 1996,
1995 and 1994 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 - 19
9
<PAGE>
[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 LIMITED PARTNERSHIP) as of December 31, 1996 and 1995, 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, 1996. 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, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
/s/ Block, Plant, Eisner, Fiorito & Belak-Berger
Encino, California
FEBRUARY 27, 1997
10
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
1996 1995
------------ ------------
Current assets:
Cash $ 286,908 $ 127,972
Tenants' rents receivable 2,778 2,778
Tenants' security deposits 89,460 84,034
Prepaid expenses 24,886 24,086
------------ ------------
Total current assets 404,032 238,870
------------ ------------
Restricted deposits and funded reserves:
Mortgage escrow deposits 54,633 57,327
Reserve for replacements 141,237 116,065
------------ ------------
195,870 173,392
------------ ------------
Fixed assets, net 7,136,468 7,403,427
------------ ------------
Other assets:
Prepaid loan fees, net of accumulated
amortization of $12,684 in 1996 and
$11,731 in 1995 19,722 20,675
Deposits 939 997
------------ ------------
20,661 21,672
------------ ------------
$ 7,757,031 $ 7,837,361
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable - trade and accrued expenses $ 57,479 $ 32,259
Accrued interest 35,466 36,152
Tenants' prepaid rents 5,184 3,482
Tenants' security deposits 101,338 87,251
Current portion of long-term debt 115,920 107,392
------------ ------------
Total current liabilities 315,387 266,536
Other liabilities:
Long-term debt, net of current portion 5,440,034 5,556,153
Commitments and contingencies
Partners' equity 2,001,610 2,014,672
------------ ------------
$ 7,757,031 $ 7,837,361
------------ ------------
------------ ------------
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, 1996, 1995 AND 1994
1996 1995 1994
----------- ----------- -----------
Revenues:
Rental income $ 1,549,615 $ 1,503,619 $ 1,546,175
Other income 61,201 77,337 76,078
Interest income 11,465 9,621 6,152
----------- ----------- -----------
1,622,281 1,590,577 1,628,405
----------- ----------- -----------
Expenses:
Administrative 256,375 322,831 283,693
Utilities 171,759 182,018 176,210
Operating and maintenance 305,075 370,300 345,627
Taxes and insurance 162,612 154,989 165,389
Financial expense 457,423 464,950 472,866
Depreciation and amortization 281,299 283,300 282,235
----------- ----------- -----------
1,634,543 1,778,388 1,726,020
----------- ----------- -----------
Loss before franchise tax (12,262) (187,811) (97,615)
Franchise tax 800 800 800
----------- ----------- -----------
Net loss $ (13,062) $ (188,611) $ (98,415)
----------- ----------- -----------
----------- ----------- -----------
Net (loss) per limited
partnership interest (6,041 units) $ (2.16) $ (31.22) $ (16.29)
----------- ----------- -----------
----------- ----------- -----------
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, 1996, 1995 AND 1994
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
(61 UNITS) (6,041 UNITS) (6,102 UNITS)
----------- ----------- -----------
Balance, December 31, 1994 $ 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
December 31, 1996:
Net loss (131) (12,931) (13,062)
Distribution to partners 0 0 0
---------- ---------- ----------
Balance, December 31, 1996 $ 19,053 $1,982,557 $2,001,610
---------- ---------- ----------
---------- ---------- ----------
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, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (13,062) $ (188,611) $ (98,415)
----------- ----------- -----------
Adjustments to reconcile net (loss) to
net cash provided by operating activities:
Depreciation and amortization 281,299 283,300 282,235
Change in assets -(increase) decrease:
Tenants' rents receivable 0 3,348 0
Tenants' security deposits (5,426) (47) 10,145
Prepaid expenses (800) (1,429) 1,165
Restricted deposits and reserves (22,478) 1,070 41,238
Deposits 58 7,574 (4,304)
Change in liabilities - increase (decrease):
Accounts payable and accrued expenses 24,526 (23,792) (3,189)
Tenants' prepaid rents 1,702 (1,498) (5,730)
Tenants' security deposit payable 14,087 11,074 2,751
----------- ----------- -----------
Total adjustments 292,968 279,600 324,311
----------- ----------- -----------
Net cash flow provided by
operating activities 279,906 90,989 225,896
----------- ----------- -----------
Cash flows from investing activities:
Acquisition of fixed assets (13,379) (2,585) (3,448)
----------- ----------- -----------
Cash flows from financing activities:
Principal reduction of long-term debt (107,591) (99,506) (92,148)
Capital distributions to partners 0 0 (63,095)
----------- ----------- -----------
Net cash used by financing activities (107,591) (99,506) (155,243)
----------- ----------- -----------
Net increase (decrease) in cash 158,936 (11,102) 67,205
Cash at beginning of year 127,972 139,074 71,869
----------- ----------- -----------
Cash at end of year $ 286,908 $ 127,972 $ 139,074
----------- ----------- -----------
----------- ----------- -----------
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest expense $ 430,114 $ 438,015 $ 445,346
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, 1996, 1995 AND 1994
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 Wells Fargo 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.
Income taxes:
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, 1996, 1995 AND 1994
(CONTINUED)
1. Organization and significant accounting policies:
Advertising costs:
The Partnership's policy is to expense advertising costs when
incurred.
Use of estimates:
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 revenues and expenses during the reporting
period. Although actual results could differ from those
estimates, management believes that any differences would be
immaterial to the financial statements as a whole.
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, 1996 and 1995 was
$89,460 and $84,034, 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:
1996 1995
------------ -----------
Balance, beginning of year $ 116,065 $ 113,204
Deposits 25,168 25,172
Interest earned 3,322 3,260
Interest withdrawals (3,318) (1,773)
Replacement expenditures 0 (23,798)
------------ -----------
Balance, end of year $ 141,237 $ 116,065
------------ -----------
------------ -----------
16
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(CONTINUED)
2. Restricted cash (continued):
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:
1996 1995
------------ -----------
Balance, beginning of year $ 57,327 $ 61,258
Deposits 160,152 153,858
Disbursements:
Property taxes (109,417) (104,528)
Hazard insurance (25,499) (28,455)
Mortgage insurance (27,930) (24,806)
------------ -----------
Balance, end of year $ 54,633 $ 57,327
------------ -----------
------------ -----------
3. Fixed assets, net:
Fixed assets consist of the following:
1996 1995
------------ ------------
Land $ 1,158,278 $ 1,158,278
Buildings 9,562,017 9,550,330
Furniture and fixtures 310,957 309,265
------------ ------------
11,031,252 11,017,873
Less accumulated depreciation 3,894,784 3,614,446
------------ ------------
$ 7,136,468 $ 7,403,427
------------ ------------
------------ ------------
4. Mortgage payable:
The mortgages payable, first 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.
Under agreements with the mortgage lender and FHA, the Project is
required to make monthly escrow deposits for property insurance,
mortgage insurance, property taxes and reserve for replacement of
fixed assets. The interest rates, monthly installments and
outstanding balances due are as follows:
17
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(CONTINUED)
4. Mortgage payable (continued):
<TABLE>
<CAPTION>
INTEREST MONTHLY BALANCE
DATE RATES INSTALLMENTS 12/31/96
---- ----- ------------ --------
<S> <C> <C> <C> <C>
I 2017 8.0% $ 14,951 $ 1,778,324
II 2017 7.5% 12,933 1,627,961
III 2017 7.5% 15,894 2,020,621
IV 2018 7.5% 1,013 129,048
--------- -----------
$ 44,791 $ 5,555,954
--------- -----------
--------- -----------
</TABLE>
Mortgage payable maturing in the next five years consists of:
1997 $ 115,920
1998 127,095
1999 135,064
2000 145,792
2001 157,672
Beyond five years and thereafter 4,874,411
----------
Total long-term debt 5,555,954
Less current portion (115,920)
----------
$5,440,034
----------
----------
5. Related party transactions:
Norman Jacobson, a general partner of the partnership, is also an
officer and stockholder of Norman Jacobson Realty Resources, Inc.
Norman Jacobson Realty Resources, Inc. (NJRR) received a management
fee for its services equal to 3% of the project's cash receipts for
the current year. NJRR was paid management fees and reimbursed out of
pocket expenses totaling $58,918 during the year ended December 31,
1996, $56,493 during the year ended December 31, 1995 and $53,999
during the year ended Decemberr 31, 1994.
The General Partners received cash compensation from the partnership
totaling $32,180 in 1996 and $30,858 in 1995 and $32,084 in 1994
consisting of project management fees equal to 2% of the project's
cash receipts for each year.
6. Distributions to Limited and General Partners:
The partnership declared and paid no distributions for the years ended
December 31, 1996 and 1995. For the year ended December 31, 1994, the
partnership declared and paid distributions in the amount of $63,095.
18
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(CONTINUED)
7. Commitments and contingencies:
A former employee has filed a complaint claiming discrimination with
the State of California. The outcome of this filing is unknown at
this time. It is the position of the Company that the action lacks
merit in its entirety and requires a vigorous defense. Council has
been hired but at the present time is unable to provide a reliable
estimate of the claimed damages or costs of defense.
19
<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
20
<PAGE>
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 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.
21
<PAGE>
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.
22
<PAGE>
ITEM 11 - EXECUTIVE COMPENSATION
During the year ended December 31, 1996, the General Partners (see Item 13)
received cash compensation from Registrant totaling $32,180 consisting of
project management fees. Norman Jacobson received $21,320 and Theodore J. Weill
received $10,860.
Also, during the year ended December 31, 1996, one of the General Partners and
his affiliate, Norman Jacobson Management Co. (see Item 13) received cash
compensation from Registrant totaling $58,918 consisting of project management
fees and reimbursement for out-of-pocket expenses.
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, 1997:
<TABLE>
<CAPTION>
Person Receiving Type of Compensation Amount Paid
- ---------------- -------------------- -----------
Compensation
- ------------
<S> <C> <C>
General Partners: Interest in distributions from An interest equal to 1% of cash
operations distributions from operations.
Norman Jacobson None
Theodore Weill None
General Partners Subordinated interests in ESTIMATED MAXIMUM AMOUNTS An
distributions 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.
<CAPTION>
23
<PAGE>
<S> <C> <C>
General Partners Subordinated Real Estate Equal to an amount not to exceed
or one or more real Commissions (payable if one-half of the acquisition fees
estate brokers recipient performs services which could be paid during the
affiliated with the related to resales of Acquisition Period, but only after
General Partners Partnership Properties) 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 provides for
Norman Jacobson 5% of the gross revenues of the
Theodore J. Weill Property. The Partnership paid
approximately 2% of gross revenues,
$32,180 for the year ended
December 31, 1996, which was paid
to the General Partners: $21,320 to
Norman Jacobson and $10,860 to
Theodore J. Weill; and
Norman Jacobson 3% of gross revenues ($48,270 for
Management Co., an the year ended December 31, 1996)
affiliate of one of the to Norman Jacobson Management
General Partners Co.
responsible for
management of the
property
</TABLE>
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, 1996, 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.
24
<PAGE>
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 past and will organize other partnerships in
the future, 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.
25
<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, 1996 and 1995
Statements of Operation for the years ended December 31, 1996,
December 31, 1995 and December 31, 1994.
Statements of changes in partners' equity for the years ended December
31, 1996, December 31, 1995, and December 31, 1994.
Statements of cash flows for the years ended December 31, 1996,
December 31, 1995, and December 31, 1994.
Notes to Financial Statements
The following financial statement schedules follow:
Page
----
Independent auditors' report on financial statement schedules..... 27
Schedule XI - Real Estate and Accumulated Depreciation............ 28
26
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON SUPPORTING SCHEDULES
TO VENETIAN PARK ASSOCIATES, LTD.
SANTA MONICA, CALIFORNIA
Under date of February 27, 1997, we reported on the balance sheets of VENETIAN
PARK ASSOCIATES, LTD. (A CALIFORNIA LIMITED PARTNERSHIP) as of December 31, 1996
and 1995 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,
1996, 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, Fiorito & Belak-Berger
Encino, California
FEBRUARY 27, 1997
<PAGE>
VENETIAN PARK ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<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 $ 5,555,954 $ 1,158,278 $ 9,768,873 $ 104,101
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
GROSS AMOUNT OF WHICH WAS
CARRIED AT CLOSE OF PERIOD (D)
-------------------------------------------------------------------
BUILDINGS
AND ACCUMULATED
LAND IMPROVEMENTS TOTAL DEPRECIATION
------------ ------------- ------------ ------------
$ 1,158,278 $ 9,872,974 $ 11,031,252 $ 3,894,784
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
Year of construction 1976-1978
Fiscal year acquired 1983
Life on which depreciation in latest
statement of operations is computed 5-35 years
</TABLE>
(A) The initial cost to the Partnership represents the original purchase price
of the property.
(B) Reconciliation of real estate owned for 1996, 1995 and 1994:
1996 1995 1994
----------- ----------- -----------
Balance at beginning of period $11,017,873 $11,015,288 $11,011,840
Additions during period 13,379 2,585 3,448
----------- ----------- -----------
Balance at close of period $11,031,252 $11,017,873 $11,015,288
----------- ----------- -----------
----------- ----------- -----------
(C) Reconciliation of accumulated depreciation for 1996, 1995 and 1994:
1996 1995 1994
----------- ----------- -----------
Balance at beginning of year $ 3,614,446 $ 3,332,099 $ 3,050,810
Additions during period:
Depreciation expense 280,338 282,347 281,289
----------- ----------- -----------
3,894,784 3,614,446 3,332,099
Deductions during period:
Accumulated depreciation on
real estate sold or
improvements written off 0 0 0
----------- ----------- -----------
Balance at close of year $ 3,894,784 $ 3,614,446 $ 3,332,099
----------- ----------- -----------
----------- ----------- -----------
(D) Aggregate cost of real estate at December 31, 1996 for Federal income tax
purposes is $11,032,095.
<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: 3/7/97 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 indicated.
Date: 3/7/97 By: /s/ Norman Jacobson
------------ -------------------------------------
Norman Jacobson,
General Partner
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 572,238
<SECURITIES> 0
<RECEIVABLES> 48,325
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 620,563
<PP&E> 11,031,252
<DEPRECIATION> 3,894,784
<TOTAL-ASSETS> 7,757,031
<CURRENT-LIABILITIES> 315,387
<BONDS> 5,440,034
0
0
<COMMON> 0
<OTHER-SE> 2,001,610
<TOTAL-LIABILITY-AND-EQUITY> 7,757,031
<SALES> 0
<TOTAL-REVENUES> 1,622,281
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,177,120
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 457,423
<INCOME-PRETAX> (12,262)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,262)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,262)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
