<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended MARCH 31, 1999
Commission File Number 0-13808
HOUSING PROGRAMS LIMITED
(A California Limited Partnership)
I.R.S. Employer Identification No. 95-3906167
9090 WILSHIRE BLVD., SUITE 201
BEVERLY HILLS, CALIF. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
<PAGE> 2
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
<TABLE>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Balance Sheets, March 31, 1999 and December 31, 1998......................1
Statements of Operations,
Three Months Ended March 31, 1999 and 1998..........................2
Statement of Partners' Deficiency,
Three Months Ended March 31, 1999 ..................................3
Statements of Cash Flow,
Three Months Ended March 31, 1999 and 1998..........................4
Notes to Financial Statements.............................................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation................................11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ....................................................14
Item 6. Exhibits and Reports on Form 8-K .....................................14
Signatures ....................................................................15
</TABLE>
<PAGE> 3
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
CASH DUE FROM ESCROW (Note 2) $ -- $ 202,714
CASH AND CASH EQUIVALENTS (Note 1) 62,403 831,751
- ------------------------------------------------- ------------ ------------
TOTAL ASSETS $ 62,403 $ 1,034,465
============ ============
LIABILITIES AND PARTNERS' DEFICIENCY
LIABILITIES:
Notes payable (Notes 3) $ 4,600,000 $ 4,600,000
Accrued fees and expenses due general
partners (Note 4) 1,459,763 1,355,519
Accrued interest payable (Notes 3) 5,687,111 5,577,861
Accounts payable 82,104 300,309
------------ ------------
11,828,978 11,833,689
------------ ------------
COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 5)
PARTNERS' DEFICIENCY:
General partners (368,413) (358,739)
Limited partners (11,398,162) (10,440,485)
------------ ------------
(11,766,575) (10,799,224)
------------ ------------
TOTAL LIABILITIES AND PARTNERS'
DEFICIENCY $ 62,403 $ 1,034,465
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
INTEREST INCOME $ 6,872 $ 15,350
--------- ---------
OPERATING EXPENSES:
Management fees - general partner (Note 4) 104,244 123,240
General and administrative (Note 4) 30,697 18,192
Legal and accounting (Note 4) 27,318 51,362
Interest (Notes 3 and 4) 109,250 205,906
--------- ---------
Total operating expenses 271,509 398,700
--------- ---------
LOSS FROM OPERATIONS (264,637) (383,350)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED
AS INCOME 117,568
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) 92,000
NET LOSS $(264,637) $(173,782)
========= =========
NET LOSS PER LIMITED PARTNERSHIP INTEREST $ (21) $ (14)
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' DEFICIENCY
THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
PARTNERSHIP INTERESTS 12,368
===========
DEFICIENCY, January 1, 1999 $ (358,739) $(10,440,485) $(10,799,224)
Distributions (7,027) (695,687) (702,714)
Net loss for the three months
ended March 31, 1999 (2,646) (261,991) (264,637)
------------ ------------ ------------
DEFICIENCY, March 31, 1999 $ (368,413) $(11,398,162) $(11,766,575)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (264,637) $ (173,782)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Equity in income of limited partnerships -- (100,000)
Amortization of acquisition costs -- 8,000
Increase in accrued interest payable 109,250 205,906
Increase in accrued fees and expenses due general partners 104,244 73,241
Increase (decrease) in accounts payable (218,205) 333,077
----------- -----------
Net cash (used in) provided by operating activities (269,348) 346,442
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale proceeds 202,714 --
Distributions to partners (702,714) --
----------- -----------
Net cash used in investing activities (500,000) --
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (769,348) 346,442
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 831,751 1,162,398
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 62,403 $ 1,508,840
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual
audited financial statements; accordingly, the financial statements
included herein should be reviewed in conjunction with the financial
statements and related notes thereto contained in the Housing Programs
Limited (the "Partnership") annual report for the year ended December 31,
1998. National Partnership Investments Corp. ("NAPICO") is a general
partner for the Partnership. Accounting measurements at interim dates
inherently involve greater reliance on estimates than at year end. The
results of operations for the interim period presented are not
necessarily indicative of the results for the entire year.
In the opinion of NAPICO, the accompanying unaudited financial statements
contain all adjustments (consisting primarily of normal recurring
accruals) necessary to present fairly the financial position of the
Partnership at March 31, 1999 and the results of operations and changes
in cash flows for the three months then ended.
ORGANIZATION
Housing Programs Limited (the "Partnership"), formed under the California
Uniform Limited Partnership Act, was organized on May 15, 1984. The
Partnership was formed to invest primarily in other limited partnerships
which own or lease and operate federal, state or local
government-assisted housing projects. The general partners of the
Partnership are National Partnership Investments Corp. (NAPICO), and
Coast Housing Investment Associates (CHIA), a limited partnership and
Housing Programs Corporation II.
The general partners have a 1 percent interest in profits and losses of
the Partnership. The limited partners have the remaining 99 percent
interest which is allocated in proportion to their respective individual
investments. National Partnership Investments Corp. (NAPICO) is the
corporate general partner of the Partnership. Casden Properties Inc. owns
a 92.25% economic interest in NAPICO, with the balance owned by Casden
Investment Corporation ("CIC"). CIC, which is wholly owned by Alan I.
Casden, owns 95% of the voting common stock of NAPICO.
On December 30, 1998, the Partnership sold its limited partnership
interests in 7 local limited partnerships for net proceeds of $202,714 to
subsidiaries of Casden Properties Inc.
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 reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
5
<PAGE> 8
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
METHOD OF ACCOUNTING FOR INVESTMENT IN LIMITED PARTNERSHIPS
The investments in local limited partnerships are accounted for on the
equity method. Acquisition, selection fees and other costs related to the
acquisition of the projects have been capitalized to the investment
account and amortized on a straight line basis over the estimated lives
of the underlying assets, which is generally 30 years.
NET LOSS PER LIMITED PARTNERSHIP INTEREST
Net loss per limited partnership interest was computed by dividing the
limited partners' share of net loss by the number of limited partnership
interests outstanding during the year. The number of limited partnership
interests was 12,368 for all years presented.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and bank certificates of
deposit with an original maturity of three months or less. The
Partnership has its cash and cash equivalents on deposit primarily with
one money market mutual fund. Such cash and cash equivalents are
uninsured.
INCOME TAXES
No provision has been made for income taxes in the accompanying financial
statements since such taxes, if any, are the liability of the individual
partners.
IMPAIRMENT OF LONG-LIVED ASSETS
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable. If
the sum of the expected future cash flows is less than the carrying
amount of the assets, the Partnership recognizes an impairment loss.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 10 limited
partnerships as of March 31, 1999, after selling its interests in 7
limited partnerships. The limited partnerships owned as of March 31,
1999, residential low income rental projects consisting of 1,685
apartment units. The mortgage loans of these projects are payable to or
insured by various governmental agencies.
The Partnership, as a limited partner, is entitled to 99 percent of the
profits and losses of the limited partnerships.
6
<PAGE> 9
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Distributions from the limited partnerships are recognized as a reduction
of capital until the investment balance has been reduced to zero or to a
negative amount equal to further capital contributions required.
Subsequent distributions are recognized as income.
The Partnership has no equity investment in limited partnerships as of
March 31, 1999.
The following are unaudited combined estimated statements of operations
for the three months ended March 31, 1999 and 1998 for the limited
partnerships in which the Partnership has investments:
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
INCOME
Rental and Other $ 4,210,000 $ 4,408,000
----------- -----------
EXPENSES
Depreciation 841,000 860,000
Interest 813,000 862,000
Operating 2,709,000 2,809,000
----------- -----------
Total expenses 4,363,000 4,531,000
----------- -----------
NET LOSS $ (153,000) $ (123,000)
=========== ===========
</TABLE>
NAPICO, or one of its affiliates, is the general partner and property
management agent for certain of the limited partnerships included above.
Under recent adopted law and policy, the United States Department of
Housing and Urban Development ("HUD") has determined not to renew the
Housing Assistance Payment ("HAP") Contracts on a long term basis on the
existing terms. In connection with renewals of the HAP Contracts under
such new law and policy, the amount of rental assistance payments under
renewed HAP Contracts will be based on market rentals instead of above
market rentals, which was generally the case under existing HAP
Contracts. The payments under the renewed HAP Contracts are not expected
to be in an amount that would provide sufficient cash flow to permit
owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing
Administration of HUD ("FHA") unless such mortgage loans are
restructured. In order to address the reduction in payments under HAP
Contracts as a result of this new policy, the Multi-family Assisted
Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was
adopted in October 1997, provides for the restructuring of mortgage loans
insured by the FHA with respect to properties subject to the Section 8
program. Under MAHRAA, an FHA-insured mortgage loan can be restructured
into a first mortgage loan which will be amortized on a
7
<PAGE> 10
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
current basis and a low interest second mortgage loan payable to FHA
which will only be payable on maturity of the first mortgage loan. This
restructuring results in a reduction in annual debt service payable by
the owner of the FHA-insured mortgage loan and is expected to result in
an insurance payment from FHA to the holder of the FHA-insured loan due
to the reduction in the principal amount. MAHRAA also phases out
project-based subsidies on selected properties serving families not
located in rental markets with limited supply, converting such subsidies
to a tenant-based subsidy.
MAHRAA provides that properties begin the restructuring process in
federal fiscal year 1999 (beginning October 1, 1998). On September 11,
1998, HUD issued interim regulations implementing MAHRAA and final
regulations are expected to be issued in 1999. With respect to the local
limited partnerships' expiring HAP Contracts, it is expected that the HAP
payments will be reduced or terminated pursuant to the terms of MAHRAA.
When the HAP Contracts are subject to renewal, there can be no assurance
that the local limited partnerships in which the Partnership has an
investment will be permitted to restructure its mortgage indebtedness
under MAHRAA. In addition, the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA is
uncertain.
As a result of the foregoing, the Partnership in 1997 undertook an
extensive review of disposition, refinancing or re-engineering
alternatives for the properties in which the limited partnerships have
invested and are subject to HUD mortgage and rental subsidy programs. The
Partnership has incurred expenses in connection with this review by
various third party professionals, including accounting, legal,
valuation, structural and engineering costs, which amounted to $43,096
through December 31, 1998.
On December 30, 1998, the Partnership sold its limited partnership
interests in 7 local limited partnerships to the Operating Partnership.
The sale resulted in cash proceeds to the Partnership of $202,714 and a
net gain of $5,398,973, after being relieved of notes and interest
payable and deducting selling costs. The cash proceeds were held in
escrow at December 31, 1998 and were collected in 1998. In March 1999,
the Partnership made cash distributions of $695,687 to the limited
partners and $7,027 to the general partners, which included using
proceeds from the sale of the partnership interests.
The Operating Partnership purchased such limited partner interests for
cash, which it raised in connection with a private placement of its
equity securities. The purchase was subject to, among other things, (i)
the purchase of the general partner interests in the local limited
partnerships by the Operating Partnership; (ii) the approval of HUD and
certain state housing finance agencies; and (iii) the consent of the
limited partners to the sale of the local limited partnership interests
held for investment by the Partnership.
In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the
limited partners' interests held for investment by the Partnership,
together
8
<PAGE> 11
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
with certain amendments to the Partnership Agreement and other
disclosures of various conflicts of interest in connection with the
proposed transaction. Prior to the sale of the partnership interests, the
consents of the limited partners to the sale and amendments to the
Partnership Agreement were obtained.
NOTE 3 - NOTES PAYABLE
Certain of the Partnership's investments involved purchases of
partnership interests from partners who subsequently withdrew from the
operating partnership. The Partnership is obligated for non-recourse
notes payable of $4,600,000 to the sellers of the partnership interests,
bearing interest at 9.5 percent per annum to the various sellers of the
partnership interests. The Partnership was relieved of notes payable in
the amount of $4,069,743 in connection with the sale of the Partnership
interests to Casden Properties Inc. The notes have principal maturity
dates ranging from December 31, 1999 to December 2001 or upon sale or
refinancing of the underlying partnership properties. These obligations
and the related interest are collateralized by the Partnership's
investment in the investee limited partnerships and are payable only out
of cash distributions from the investee partnerships, as defined in the
notes. Unpaid interest is due at maturity of the notes.
NOTE 4 - FEES AND EXPENSES DUE TO GENERAL PARTNERS
Under the terms of the Restated Certificate and Agreement of the Limited
Partnership, the Partnership is obligated to the general partners for an
annual management fee equal to 0.5 percent of the original invested
assets of the limited partnerships. Invested assets is defined as the
costs of acquiring project interests including the proportionate amount
of the mortgage loans related to the Partnership's interests in the
capital accounts of the respective limited partnerships.
As of March 31, 1999, the fees and expenses due the general partners
exceeded the Partnership's cash. The general partners, during the
forthcoming year, will not demand payment of amounts due in excess of
such cash or such that the Partnership would not have sufficient
operating cash; however, the Partnership will remain liable for all such
amounts.
NOTE 5 - CONTINGENCIES
NAPICO is a plaintiff in various lawsuits and has also been named as
defendant in other lawsuits arising from transactions in the ordinary
course of business. In the opinion of NAPICO, the claims will not result
in any material liability to the Partnership.
The Partnership has assessed the potential impact of the Year 2000
computer systems issue on its operations. The Partnership believes that
no significant actions are required to be taken by the Partnership to
address the issue and that the impact of the Year 2000 computer systems
issue will not materially affect the Partnership's future operating
results or financial condition.
9
<PAGE> 12
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, when it is practicable to
estimate that value. The notes payable are collateralized by the
Partnership's investments in investee limited partnerships and are
payable only out of cash distributions from the investee partnerships.
The cash flow generated by operations of the investee limited
partnerships, which account for the Partnership's primary source of
revenues, are subject to various government rules, regulations and
restrictions which make it impracticable to estimate the fair value of
the notes payable and related accrued interest. The carrying amount of
other assets and liabilities reported on the balance sheets that require
such disclosure approximates fair value due to their short-term maturity.
10
<PAGE> 13
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of funds include interest income on
money market accounts and certificates of deposit and distributions from
limited partnerships in which the Partnership has invested. It is not
expected that any of the local limited partnerships in which the
Partnership has invested will generate cash flow sufficient to provide
for distributions to the Partnership's limited partners in any material
amount. The Partnership made a distribution to the investors in March
1999, which included using proceeds from disposition of its investments
in certain limited partnerships.
RESULTS OF OPERATIONS
Partnership revenues consist primarily of interest income earned on
certificates of deposit and other temporary investment of funds. The
Partnership also receives distributions from the lower-tier limited
partnerships in which it has invested.
Distributions received from limited partnerships are recognized as return
of capital until the investment balance has been reduced to zero or to a
negative amount equal to future capital contributions required.
Subsequent distributions received are recognized as income.
Except for certificates of deposit and money market funds, the
Partnership's investments consist entirely of interests in other limited
partnerships owning government assisted housing projects. Available cash
is invested to provide interest income as reflected in the statements of
operations. These funds can be converted to cash to meet obligations as
they arise. The Partnership intends to continue investing available funds
in this manner.
A recurring partnership expense is the annual management fee. The fee is
payable to the General Partners of the Partnership and is calculated at
.5 percent of the Partnership's invested assets. The management fee is
paid to the General Partners for their continuing management of
partnership affairs. The fee is payable beginning with the month
following the Partnership's initial investment in a local limited
partnership. Management fees were $104,244 and $123,240 for the three
months ended March 31, 1999 and 1998, respectively. The fees have
decreased due to the sale of a property owned by a local partnership in
1997, which reduced the invested assets.
The Partnership is obligated on non-recourse notes payable of $4,600,000
at March 31, 1999 and December 31, 1998, which bear interest at 9.5
percent per annum and mature on December 31, 1999. The Partnership was
relieved of notes payable in the amount of $4,069,743 in connection with
the sale of the partnership interests to Casden Properties Inc. The notes
and related interest are payable from cash flow generated from operations
of the related rental properties as defined in the notes. These
obligations are collateralized by the Partnership's investments in the
limited partnerships. Unpaid interest is due at maturity of the notes.
11
<PAGE> 14
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATION (CONTINUED)
Operating expenses, other than management fees and interest expense,
consist of legal and accounting fees for services rendered to the
Partnership and administrative expenses, which were generally consistent
for periods presented. Legal and accounting fees were $27,318 and $51,362
for the three months ended March 31, 1999 and 1998, respectively. General
and administrative expenses were $30,697 and $18,192 for the periods
ended March 31, 1999 and 1998, respectively.
The Partnership accounts for its investments in the local limited
partnerships on the equity method, thereby adjusting its investment
balance by its proportionate share of the income or loss of the local
limited partnerships. Losses incurred after the limited partnership
investment account is reduced to zero are not recognized.
Under recent adopted law and policy, the United States Department of
Housing and Urban Development ("HUD") has determined not to renew the
Housing Assistance Payment ("HAP") Contracts on a long term basis on the
existing terms. In connection with renewals of the HAP Contracts under
such new law and policy, the amount of rental assistance payments under
renewed HAP Contracts will be based on market rentals instead of above
market rentals, which was generally the case under existing HAP
Contracts. The payments under the renewed HAP Contracts are not expected
to be in an amount that would provide sufficient cash flow to permit
owners of properties subject to HAP Contracts to meet the debt service
requirements of existing loans insured by the Federal Housing
Administration of HUD ("FHA") unless such mortgage loans are
restructured. In order to address the reduction in payments under HAP
Contracts as a result of this new policy, the Multi-family Assisted
Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was
adopted in October 1997, provides for the restructuring of mortgage loans
insured by the FHA with respect to properties subject to the Section 8
program. Under MAHRAA, an FHA-insured mortgage loan can be restructured
into a first mortgage loan which will be amortized on a current basis and
a low interest second mortgage loan payable to FHA which will only be
payable on maturity of the first mortgage loan. This restructuring
results in a reduction in annual debt service payable by the owner of the
FHA-insured mortgage loan and is expected to result in an insurance
payment from FHA to the holder of the FHA-insured loan due to the
reduction in the principal amount. MAHRAA also phases out project-based
subsidies on selected properties serving families not located in rental
markets with limited supply, converting such subsidies to a tenant-based
subsidy.
MAHRAA provides that properties begin the restructuring process in
federal fiscal year 1999 (beginning October 1, 1998). On September 11,
1998, HUD issued interim regulations implementing MAHRAA and final
regulations are expected to be issued in 1999. With respect to the local
limited partnerships' expiring HAP Contracts, it is expected that the HAP
payments will be reduced or terminated pursuant to the terms of MAHRAA.
12
<PAGE> 15
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATION (CONTINUED)
When the HAP Contracts are subject to renewal, there can be no assurance
that the local limited partnerships in which the Partnership has an
investment will be permitted to restructure its mortgage indebtedness
under MAHRAA. In addition, the economic impact on the Partnership of the
combination of the reduced payments under the HAP Contracts and the
restructuring of the existing FHA-insured mortgage loans under MAHRAA is
uncertain.
As a result of the foregoing, the Partnership in 1997 undertook an
extensive review of disposition, refinancing or re-engineering
alternatives for the properties in which the limited partnerships have
invested and are subject to HUD mortgage and rental subsidy programs. The
Partnership has incurred expenses in connection with this review by
various third party professionals, including accounting, legal,
valuation, structural and engineering costs, which amounted to $43,096
through December 31, 1998.
On December 30, 1998, the Partnership sold its limited partnership
interests in 7 local limited partnerships to the subsidiaries of Casden
Properties Inc. The sale resulted in cash proceeds to the Partnership of
$202,714 and a net gain of $5,398,973, after deducting selling costs. The
cash proceeds were held in escrow at December 31, 1998 and were collected
subsequent to year-end. In March 1999, the Partnership made cash
distributions of $695,687 to the limited partners and $7,027 to the
general partners, primarily using proceeds from the sale of the
partnership interests.
Casden Properties Inc. purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity
securities. The purchase was subject to, among other things, (i) the
purchase of the general partner interests in the local limited
partnerships by Casden Properties Inc.; (ii) the approval of HUD and
certain state housing finance agencies; and (iii) the consent of the
limited partners to the sale of the local limited partnership interests
held for investment by the Partnership.
In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the
limited partners' interests held for investment by the Partnership,
together with certain amendments to the Partnership Agreement and other
disclosures of various conflicts of interest in connection with the
proposed transaction. Prior to the sale of the partnership interests, the
consents of the limited partners to the sale and amendments to the
Partnership Agreement were obtained.
13
<PAGE> 16
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1999
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of March 31, 1999, NAPICO was a plaintiff or defendant in several lawsuits.
None of these suits are related to the Partnership. In the opinion of NAPICO,
the claims will not result in any material liability to the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No reports on Form 8-K were filed during the quarter ended March 31,
1999.
14
<PAGE> 17
HOUSING PROGRAMS LIMITED
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOUSING PROGRAMS LIMITED
(a California limited partnership)
By: National Partnership Investments Corp.
General Partner
/s/ BRUCE NELSON
----------------------------------------
Bruce Nelson
President
Date: May 20, 1999
------------------------------------
/s/ CHARLES H. BOXENBAUM
----------------------------------------
Charles H. Boxenbaum
Chief Executive Officer
Date: May 20, 1999
------------------------------------
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 62,403
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 62,403
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 62,403
<CURRENT-LIABILITIES> 82,104
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (11,766,575)
<TOTAL-LIABILITY-AND-EQUITY> 62,403
<SALES> 0
<TOTAL-REVENUES> 6,872
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 271,509
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (264,637)
<INCOME-TAX> 0
<INCOME-CONTINUING> (264,637)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (264,637)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
