SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the period ended March 31, 1994 Commission file number 0-15725
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 52-1449733
(State of organization) (I.R.S. Employer Identification No.)
218 North Charles Street, Suite 500, Baltimore, Maryland 21201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 962-0595
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 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>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
| | | | | Total | Total | |
Mortgaged | | | Occupancy | Occupancy | Operating |Operating | Total | Total
Property Name & | Loan | Total | as of | as of | Revenues | Revenues | Expenses | Expenses
Location | Amount | Units | 03/31/94 | 03/31/93 | 1/94-3/94 |1/93-3/93 |1/94-3/94 |1/93-3/93
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SERIES I | | | | | | | |
Alban Place | 10,500,000 | 194 | 97.4%| 97.4%| 378,608 | 362,054 | 198,221 | 163,786
Frederick, MD | | | | | | | |
Barkley Place | 9,630,000 | 156 | 98.1%| 100.0%| 690,325 | 627,467 | 471,014 | 451,630
Fort Myers, FL | | | | | | | |
Creekside Village | 11,985,000 | 296 | 97.3%| 92.6%| 385,042 | 358,987 | 218,197 | 180,648
Sacramento, CA | | | | | | | |
Lakeview Garden | 9,307,500 | 179 | 87.7%| 87.2%| 277,283 | | 137,701 |
Dade County, FL | | | | | | | |
The Montclair | 15,465,000 | 159 | 96.2%| 97.5%| 591,130 | 541,245 | 333,447 | 279,563
Springfield, MO | | | | | | | |
Newport Village | 10,880,000 | 220 | 94.5%| 99.1%| 356,522 | 324,397 | 198,622 | 182,349
Thornton, CO | | | | | | | |
Newport on Seven | 10,800,000 | 167 | 98.8%| 93.4%| 361,086 | 329,274 | 219,032 | 209,135
St. Louis Park, MN| | | | | | | |
Nicollet Ridge | 20,340,000 | 339 | 92.6%| 96.5%| 629,361 | 653,776 | 428,786 | 422,429
Burnsville, MN | | | | | | | |
North Pointe | 25,850,000 | 540 | 84.4%| 80.9%| 709,809 | 678,326 | 418,010 | 411,637
San Bernardino, CA| | | | | | | |
Northridge Park II | 8,950,000 | 128 | 93.0%| 92.2%| 261,325 | 246,009 | 91,499 | 94,151
Salinas, CA | | | | | | | |
Riverset Apartments | 6,535,000 | 120 | 100.0%| 94.9%| 202,697 | 193,872 | 64,291 | 58,479
Memphis, TN | | | | | | | |
Steeplechase Falls | 18,100,000 | 450 | 94.0%| 96.4%| 682,950 | 643,405 | 311,132 | 332,130
Knoxville, TN | | | | | | | |
Villa Hialeah | 10,250,000 | 245 | 100.0%| 100.0%| 428,695 | 404,734 | 247,217 | 214,384
Hialeah, FL | | | | | | | |
Willowgreen | 9,450,000 | 241 | 91.7%| 96.3%| 332,076 | 338,616 | 174,426 | 173,043
Fife, WA | | | | | | | |
- - ---------------------------------------------------------------|---------------|------------------------------------------------
TOTALS: | 178,042,500 | 3,434 |---------------|---------------| 6,286,909 |5,702,162 |3,511,595 |3,173,364
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------
| | 1/94-3/94 | 1/94-3/94 | 1/94-3/94 | 1/94-3/94 |
Mortgaged | 1/94-3/94 | Base | Base Interest | Base Interest | Paid From |
Property Name & |Base Interest| Interest | Paid From | Paid From |Other Sources/ |
Location | Due ($) | Paid ($) |Operations ($) | Reserves ($) | Guarantors($) |
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SERIES I | | | | | |
Alban Place | 206,719 | 206,719 | 206,719 | 0 | 0 |
Frederick, MD | | | | | |
Barkley Place | 192,601 | 226,856 | 226,856 | 0 | 0 |
Fort Myers, FL | | | | | |
Creekside Village | 224,719 | 239,967 | 166,000 | 0 | 73,967 |
Sacramento, CA | | | | | |
Lakeview Garden | 180,333 | 180,335 | 180,335 | 0 | 0 |
Dade County, FL | | | | | |
The Montclair | 304,467 | 277,082 | 277,082 | 0 | 0 |
Springfield, MO | | | | | |
Newport Village | 214,200 | 155,089 | 155,089 | 0 | 0 |
Thornton, CO | | | | | |
Newport on Seven | 219,375 | 146,073 | 146,073 | 0 | 0 |
St. Louis Park, MN| | | | | |
Nicollet Ridge | 400,444 | 255,565 | 255,565 | 0 | 0 |
Burnsville, MN | | | | | |
North Pointe | 508,922 | 282,645 | 256,000 | 0 | 26,645 |
San Bernardino, CA| | | | | |
Northridge Park II | 167,811 | 167,813 | 167,813 | 0 | 0 |
Salinas, CA | | | | | |
Riverset Apartments | 128,658 | 128,658 | 128,658 | 0 | 0 |
Memphis, TN | | | | | |
Steeplechase Falls | 356,344 | 324,808 | 324,808 | 0 | 0 |
Knoxville, TN | | | | | |
Villa Hialeah | 201,797 | 201,795 | 189,795 | 12,000 | 0 |
Hialeah, FL | | | | | |
Willowgreen | 189,000 | 168,199 | 168,199 | 0 | 0 |
Fife, WA | | | | | |
- - -----------------------------------------------------------------------------------------------|
TOTALS: | 3,495,390 | 2,961,604 | 2,848,992 | 12,000 | 100,612 |
- - ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
| | | | | Total | Total | |
Mortgaged | | | Occupancy | Occupancy | Operating |Operating | Total | Total
Property Name & | Loan | Total | as of | as of | Revenues | Revenues | Expenses | Expenses
Location | Amount | Units | 03/31/94 | 03/31/93 | 1/94-3/94 |1/93-3/93 |1/94-3/94 |1/93-3/93
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SERIES II | | | | | | | |
Emerald Hills | 7,250,000 | 130 | 98.0%| 93.8%| 241,377 | 229,484 | 121,213 | 134,763
Issaquah, WA | | | | | | | |
Gilman Meadows | 7,100,000 | 125 | 90.4%| 94.4%| 237,161 | 234,502 | 110,730 | 124,860
Issaquah, WA | | | | | | | |
Hamilton Chase | 13,975,000 | 300 | 94.3%| 94.0%| 494,850 | 482,260 | 310,410 | 177,350
Chattanooga, TN | | | | | | | |
Mallard Cove I | 2,610,000 | 63 | 92.1%| 93.6%| 82,942 | 84,067 | 61,639 | 56,151
Everett, WA | | | | | | | |
Mallard Cove II | 6,740,000 | 135 | 91.9%| 92.6%| 215,800 | 221,304 | 137,087 | 119,821
Everett, WA | | | | | | | |
The Meadows | 7,200,000 | 200 | 97.0%| 93.5%| 271,837 | 255,431 | 139,046 | 119,160
Memphis, TN | | | | | | | |
Riverset Apartments | 12,640,000 | 232 | 100.0%| 94.9%| 392,071 | 376,361 | 124,357 | 113,518
Memphis, TN | | | | | | | |
Southfork Village | 10,550,000 | 200 | 98.5%| 98.5%| 422,345 | 401,946 | 188,953 | 181,935
Lakeville, MN | | | | | | | |
Whispering Lake | 18,190,000 | 384 | 90.0%| 87.2%| 482,839 | 462,527 | 288,036 | 308,499
Kansas City, MO | | | | | | | |
- - ---------------------------------------------------------------|---------------|------------------------------------------------
TOTALS: | 86,255,000 | 1,769 |---------------|---------------| 2,841,222 |2,747,882 |1,481,471 |1,336,057
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------
| | 1/94-3/94 | 1/94-3/94 | 1/94-3/94 | 1/94-3/94 |
Mortgaged | 1/94-3/94 | Base | Base Interest | Base Interest | Paid From |
Property Name & |Base Interest| Interest | Paid From | Paid From |Other Sources/ |
Location | Due ($) | Paid ($) |Operations ($) | Reserves ($) | Guarantors($) |
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SERIES II | | | | | |
Emerald Hills | 140,469 | 140,469 | 136,469 | 4,000 | 0 |
Issaquah, WA | | | | | |
Gilman Meadows | 142,000 | 110,000 | 110,000 | 0 | 0 |
Issaquah, WA | | | | | |
Hamilton Chase | 279,500 | 147,902 | 147,902 | 0 | 0 |
Chattanooga, TN | | | | | |
Mallard Cove I | 47,633 | 27,349 | 27,349 | 0 | 0 |
Everett, WA | | | | | |
Mallard Cove II | 136,384 | 69,097 | 69,097 | 0 | 0 |
Everett, WA | | | | | |
The Meadows | 137,250 | 137,250 | 137,250 | 0 | 0 |
Memphis, TN | | | | | |
Riverset Apartments | 248,850 | 248,850 | 248,850 | 0 | 0 |
Memphis, TN | | | | | |
Southfork Village | 207,703 | 207,703 | 207,703 | 0 | 0 |
Lakeville, MN | | | | | |
Whispering Lake | 346,747 | 253,082 | 215,000 | 0 | 38,082 |
Kansas City, MO | | | | | |
- - -----------------------------------------------------------------------------------------------|
TOTALS: | 1,686,536 | 1,341,702 | 1,299,620 | 4,000 | 38,082 |
- - ------------------------------------------------------------------------------------------------
<FN>
FOOTNOTES:
"Total Expenses" include normal operating expenses (excluding depreciation)
plus escrows for real estate taxes and insurance, reserve for replacement
payments, servicing fees, bond issuer fees, and capital improvements.
Total Operating Revenues and Total Expenses for the first quarter of 1993
as reported in this quarter may differ from those reported in last year's first
quarter report due to revisions to property operating statements or
reclassification of certain expenses.
"Base Interest Paid" equals, generally, cash receipts from property operations,
property level reserves and other sources during the quarter. For purposes of
this table, these receipts are compared to base interest due in the same quarter.
Therefore, the cumulative base interest shortfall for a property may exceed
the shortfall for this quarter.
In August of 1992, Hurricane Andrew did approximately $3 million in damage
to Lakeview Apartments (Refer to the 1992 Annual Report for more detail).
Lakeview's operations for the first quarter 1993 are not reported here
because the results would not be comparable to the first quarter of 1994.
</TABLE>
<PAGE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Business
The SCA Tax Exempt Fund Limited Partnership (the Partnership) was
organized in 1986 and had two public offerings of Beneficial
Assignee Certificates (BACs) representing the assignment of
limited partnership interests. The Partnership was organized for
the purpose of acquiring a portfolio of tax-exempt mortgage
revenue bonds issued by various state or local governments or
their agencies or authorities. The portfolio is made up of two
distinct pools of investments (Series I and Series II). The
Partnership separately reports the operating activity of each
series by preparing separate financial statements.
The bonds are secured by nonrecourse participating first mortgage
loans on multifamily residential properties. The payment of
interest to the Partnership is generally dependent upon the net
cash flow and the net capital appreciation of the underlying
properties. Therefore, the rate of return to the Partnership
depends upon the economic performance of the underlying
properties collateralizing the mortgage loans, which are in
competition with other income-producing properties of the same
type in the same geographic area, and which are affected by
prevailing market conditions.
Over the past several years, the effects of the recession and the
modest recovery together with over building have significantly
affected general property performance. Most real estate markets
experienced some period of higher vacancies and stagnant or
declining market rents along with widely marketed rental
concessions. In many markets there is evidence of recovery and
increasing value of multi-family residential real estate.
However, in some of the markets where the Partnership's bond
financed properties are located, rents have continued to be
unchanged or are growing only slightly. In these locations,
should the market conditions and property operating results
remain unchanged for an extended period of time, it is probable
that the full amount of BAC Holder invested capital may not be
recoverable on some of the bonds through net sale or refinancing
proceeds at the end of the originally anticipated holding period.
Consequently, the Managing General Partner will consider the
feasibility of improving the recovery of BAC Holder capital
through an extension of individual mortgage revenue bond holding
periods.
The Managing General Partner continues to pursue ways to provide
BAC Holders with additional income and enhanced value with a
prudent level of additional risk. The potential of creating a
joint venture and raising new capital from a senior interest
holder is being explored. The new capital would be used to
expand the Partnership's bond portfolio or to acquire additional
multi-family properties which would further collateralize the
currently held bonds. Considerable progress has been made by the
Managing General Partner in developing the joint venture
technology. It is believed that a joint venture transaction may
be feasible and therefore, the raising of capital and the
identification of potential bond and property acquisitions is
being pursued. However, the ability to proceed will be
determined by the interest rate environment at the time of the
senior interest offering. The Managing General Partner will take
action only if it is likely that BAC Holder returns will be
meaningfully improved. During 1993 and the first quarter of
1994, approximately $180,000 was spent on legal fees associated
with evaluating these options.
Financial Condition and Liquidity
The Partnership's capital remains invested in 23 mortgage revenue
bonds and related working capital loans. Of these investments,
14 (totalling $178,042,500) were acquired with Series I proceeds
while nine (totalling $86,255,000) were acquired with Series II
proceeds. To the extent that offering proceeds exceeded
organization and offering expenses and initial project
investments, the Managing General Partner created Partnership
working capital reserves.
The Series I working capital reserves, as a result of
supplementing distributions to BAC Holders and providing
additional working capital loans to the properties, are
exhausted. Series II working capital reserves approximated
$300,000 at March 31, 1994. The remaining Series II working
capital reserves are available at the Managing General Partner's
discretion to make additional working capital loans to Series II
borrowers, to pay unanticipated and unusual costs of operating
and administering Series II and to reduce fluctuations in cash
distributions to Series II investors. There were no reserves
used in either Series during the three months ended March 31,
1994.
Distributions are affected by the Partnership's ability to
collect base and contingent interest from the cash flow of the
properties securing the mortgage revenue bonds and the ability of
the Managing General Partner to control operating expenses. Cash
collected by the Partnership does not necessarily reflect
property operating results to the extent that debt service can be
paid from property reserves and/or guarantees. Similarly, some
of the cash generated by property operations may not be available
to pay debt service as it may have been utilized for capital
expenditures, escrows or prepaid expenses. It should be noted
that as available debt service payments from secondary sources
such as property reserves, guarantors and others decrease, the
level of debt service collected by the Partnership will more
closely approximate property performance.
On February 13, 1994, the Managing General Partner paid semi-
annual distributions of $25.00 and $30.00 per BAC in Series I and
Series II, respectively. These amounts represent an annualized
primarily tax-exempt distribution rate of 5.00% in Series I and
6.00% in Series II, which is consistent with the two previous
semi-annual distributions.
At March 31, 1994, the Partnership's liquid assets approximated
$2,793,000 in Series I and $1,636,000 in Series II. These funds
primarily consist of undistributed funds generated from
operations during the first quarter of 1994.
Results of Operations
During the quarter ended March 31, 1994 Series I properties paid
$2,962,000 of interest to the Partnership of which $2,849,000 was
generated from property operations. This represents an increase
of approximately 10% in interest paid and 9% in cash generated
from operations over the quarter ended March 31, 1993. During
the quarter ended March 31, 1994, Series II properties paid
$1,342,000 of interest to the Partnership of which $1,300,000 was
generated from property operations. This represents a decrease
of approximately 2% in interest paid and an increase of 3% in
cash generated from operations over the quarter ended March 31,
1993. The differences between the interest paid and the cash
generated from operations are due to payments from property level
reserves, guarantees and other miscellaneous sources. The table
at the beginning of this report should be referenced for more
information regarding the specific property interest payment
information.
Partnership operating expenses have decreased by 9% in Series I
while increasing by only 2% in Series II as compared to the first
quarter of 1993. Both Series operating expenses reflect the cost
of efforts to pursue the joint venture. In Series I, those costs
are more than offset by decreases in legal fees resulting from
negotiations with Series I defaulted borrowers.
Adverse market conditions continue to impact the revenue stream
of many of the properties in each series. Accordingly, during
the first quarter of 1994, 12 properties (seven from Series I and
five from Series II) were unable to pay full base interest. Cash
flows from all properties have been insufficient to support the
payment of contingent interest during the first quarter of 1994,
however, Barkley Place (Series I) has begun to repay its
delinquent base interest.
When base interest payments cannot be fully satisfied by an
original borrower through property level cash flow, reserves or
guarantee payments, the Managing General Partner evaluates
various courses of action, including sale, refinancing, deed-in-
lieu of foreclosure or foreclosure. As discussed in previous
reports, in cases where there have been monetary defaults in the
payment of full base interest, the properties collateralizing the
mortgage revenue bonds have been or are expected to be
transferred by foreclosure or deed-in-lieu of foreclosure to "New
Borrowers." These New Borrowers are partnerships whose general
partner is SCA Successor, Inc., a corporation which is an
affiliate of the Managing General Partner.
As required by generally accepted accounting principles, the
Partnership reclassifies investments in mortgage revenue bonds to
investments in real estate partnerships whenever it becomes
apparent that the underlying properties are unable to continue to
support their entire debt service obligation and that the other
sources of debt service, including property level reserves and
operating deficit guarantees, are considered insufficient to meet
mortgage loan obligations. Under this method of accounting,
interest collected from the investments in real estate
partnerships is recorded not as interest income, but as a
distribution from the investment which decreases the investment's
carrying value. Consequently, for financial reporting purposes,
as reclassifications occur, there is a corresponding decrease in
interest income from investments in mortgage revenue bonds and
working capital loans. Further, income is recorded by the
Partnership as "Equity in property net income" and the carrying
value of the investment in real estate partnerships is adjusted
as income or loss is recognized by the properties. This
accounting treatment is for financial reporting purposes only and
is not used to determine the income reported for federal income
tax purposes, the amount of distributions to investors or the
Managing General Partner's intentions related to other matters
including ongoing legal actions, if any.
As of March 31, 1994, nine Series I properties and six Series II
properties which secure mortgage revenue bonds and working
capital loans totalling $132,500,000 and $55,815,000,
respectively, were classified as investments in real estate
partnerships. As of March 31, 1994, the carrying values of these
investments in real estate partnerships, net of accumulated
depreciation and valuation adjustments, approximated $107,338,000
for Series I and $49,098,000 for Series II. As the partnership
reclassified all of the current investments in real estate
partnerships prior to 1994, prior reports should be referenced
for further details.
As of February 1994 eight of the nine investments in real estate
in Series I and five of the six investments in real estate in
Series II had been transferred to New Borrowers. The transfers
to the New Borrowers were accomplished through the acceptance of
deeds-in-lieu of foreclosure, or otherwise settled by SCA
Successor, Inc. replacing the original managing general partner
of the original borrowing partnership. The two remaining
investments in real estate partnerships, Willowgreen (Series I)
and Hamilton Chase (Series II), continue to be owned and managed
by the original borrowers, however, an agreement was executed on
February 24, 1994 with the Hamilton Chase original borrower which
would allow for SCA Successor, Inc. to replace the managing
general partner of the original borrowing partnership. See
further discussion of Hamilton and Willowgreen below.
Despite the financial reporting treatment of the investments, the
Managing General Partner has taken the position that these
transfers and reclassifications do not affect the tax-exempt
nature of the income received by the Partnership on any of the
loans, nor does it change the character of the Partnership's
income for tax purposes. This position is consistent with
industry practice, and the Managing General Partner is not aware
of any contrary rulings. As with all federal income tax matters,
the Internal Revenue Service may choose to review and rule on the
subject at a later date.
The Managing General Partner monitors all of the properties in
both series of the Partnership. Management will continue to
periodically assess the estimated net realizable value and fair
value of the properties to determine whether further valuation
adjustments are appropriate due to, among other factors, a change
of market conditions or the physical condition of the properties.
During the three months ended March 31, 1994, there were no
valuation adjustments in either series.
The following is a discussion of events which occurred during the
first quarter of 1994 which affected the properties that
collateralize the Partnership's investments. The discussion
relates to investments in real estate partnerships. If a
property is not mentioned, its status has remained unchanged,
prior reports should be referenced for further details.
Series I
Creekside Village: On February 9, 1994, the Managing General
Partner successfully transferred the Creekside deed to a New
Borrower pursuant to the terms of a settlement agreement
negotiated with the original borrower. In addition, a settlement
agreement was reached with the guarantor. Under the terms of the
agreement, the guarantor will pay the Partnership $75,000,
$45,000 of which was collected in February of 1994. As
collateral for the payment of the $30,000 balance, the guarantor
has consented to a voluntary judgment which will be filed with
the court in the event of the guarantor's non-payment or
bankruptcy.
North Pointe: As discussed in previous reports, a settlement
agreement was signed on November 23, 1992 whereby SCC and
Winnipeg Financial and Management, Inc., the third party
guarantors, are to perform fully under the terms of the limited
operating deficit guarantee. During the first quarter of 1994,
scheduled payments totalling $33,000 were received by the
Partnership as payment in accordance with the settlement
agreement. In addition, the settlement agreement provides for
the accrual of interest compounded quarterly on the unpaid
balance. The December 31, 1992 report on Form 10-K should be
referenced for additional information on the terms of the
settlement agreement.
Willowgreen: Willowgreen's original borrower used the last of
its property level reserves to supplement its debt service
payment due September 1, 1993. In October 1993, Willowgreen's
debt service payments became delinquent. The Managing General
Partner, in anticipation of the pending default, initiated
workout discussions with the borrower during the third quarter of
1993 in an effort to induce the principals of the borrower to
either make advances to cover the anticipated base interest
shortfalls or to transfer the property's deed to a New Borrower
as quickly as possible. The borrower did not make the necessary
advances and the mortgage is now in default. Therefore, the
Willowgreen bond was reclassified from an investment in mortgage
revenue bonds to an investment in a real estate partnership
effective September 30, 1993. The Managing General Partner
continues to negotiate with the Borrower to secure the deed.
Series II
Hamilton Chase: On February 24, 1994, the Managing General
Partner entered into an agreement with the original borrower
which provides for SCA Successor, Inc. to take the place of the
original borrowing partnership's managing general partner. This
agreement results from the borrower's failure to pay its full
debt service obligation. Prior to the default, the borrower
fully performed on its limited operating deficit guarantee and
voluntarily supplemented debt service payments for over a year.
The execution of the amended partnership agreement is expected to
occur during the second quarter of 1994.
Whispering Lake: As discussed in previous reports, a settlement
agreement was signed on November 23, 1992 whereby SCC, the third
party guarantor, is to perform fully under the terms of the
limited operating deficit guarantee. During the first quarter of
1994, scheduled payments totalling $47,000 were received by the
Partnership as payment in accordance with the settlement
agreement. In addition, the settlement agreement provides for
the accrual of interest on the unpaid balance compounded
quarterly. The December 31, 1992 report on Form 10-K should be
referenced for additional information on the terms of the
settlement agreement.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
BALANCE SHEETS
SERIES I
March 31, 1994
(Unaudited) December 31, 1993
-------------- -----------------
ASSETS
Cash and cash equivalents $2,793,045 $5,032,089
Interest receivable 296,038 296,040
Investment in mortgage revenue bonds 44,607,900 44,607,900
(Note 1)
Investment in parity working capital loans 934,600 934,600
(Note 1)
Investment in real estate partnerships 107,337,848 107,970,711
(Note 2)
Other assets 18,325 18,060
------------- --------------
TOTAL ASSETS $155,987,756 $158,859,400
============= ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $82,874 $71,793
Distributions payable ---- 5,052,141
Due to affiliates (Note 3) 29,352 16,051
------------- --------------
TOTAL LIABILITIES 112,226 5,139,985
------------- --------------
Partners' Capital
General Partners (242,409) (263,970)
Limited Partners (beneficial assignee 156,117,939 153,983,385
certificates - issued and outstanding ------------ -------------
200,000 certificates)
TOTAL PARTNERS' CAPITAL 155,875,530 153,719,415
------------- -------------
COMMITMENTS AND CONTINGENCIES
(Notes 1, 2 & 3)
TOTAL LIABILITIES AND PARTNERS' $155,987,756 $158,859,400
CAPITAL
============ =============
The accompanying notes are an integral part of these financial statements.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF INCOME - (UNAUDITED)
SERIES I
For the three For the three
months ended months ended
March 31, 1994 March 31, 1993
-------------- ---------------
INCOME
Interest on mortgage revenue bonds $867,141 $1,052,641
Interest on parity working capital loans 18,178 21,678
Non-Taxable interest on short-term 8,331 6,525
investments
Taxable interest on short-term investments 13,226 16,501
Equity in property net income (Note 2) 1,445,928 1,214,882
-------------- --------------
TOTAL INCOME 2,352,804 2,312,227
-------------- --------------
EXPENSES
OPERATING EXPENSES (Note 3) 196,689 216,653
------------- --------------
NET INCOME $2,156,115 $2,095,574
============= ==============
NET INCOME ALLOCATED TO GENERAL PARTNERS $21,561 $20,956
============= ==============
NET INCOME ALLOCATED TO LIMITED PARTNERS $2,134,554 $2,074,618
============= ==============
NET INCOME PER BAC $10.67 $10.37
============= ==============
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS - (UNAUDITED)
SERIES I
For the three For the three
months ended months ended
March 31, 1994 March 31, 1993
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,156,115 $2,095,574
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in property net income (1,445,928) (1,214,882)
Other changes in investment in real
estate partnerships 143 (85)
Interest distributions from investment in
real estate partnerships 2,078,648 1,676,700
(Increase) decrease in interest receivable 2 (153,572)
(Increase) decrease in other assets (265) 7,136
Increase in accounts payable and
accrued expenses 11,081 41,563
Increase (decrease) in due to affiliates 13,301 (29,536)
-------------- -------------
Net cash provided by operating activities 2,813,097 2,422,898
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners (5,052,141) (5,053,619)
-------------- -------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (2,239,044) (2,630,721)
-------------- -------------
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 5,032,089 4,931,455
-------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,793,045 $2,300,734
============= =============
The accompanying notes are an integral part of these financial statements.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SERIES I
FOR THE PERIOD DECEMBER 31, 1990 THROUGH MARCH 31, 1994
<TABLE>
LIMITED PARTNERS
BENEFICIAL INITIAL
ASSIGNEE LIMITED GENERAL
CERTIFICATES PARTNER PARTNERS TOTAL
------------ -------- ---------- ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1990 $173,622,850 $-- ($76,297) $173,546,553
Net income 7,242,370 -- 73,155 7,315,525
Distribution to partners (10,500,000) -- (98,983) (10,598,983)
------------ -------- ---------- ------------
Balance, December 31, 1991 170,365,220 -- (102,125) 170,263,095
Net income 1,032,891 -- 10,433 1,043,324
Distribution to partners (10,250,000) -- (98,581) (10,348,581)
------------ -------- ---------- ------------
Balance, December 31, 1992 161,148,111 -- (190,273) 160,957,838
Net income 2,835,274 -- 28,639 2,862,913
Distribution to partners (10,000,000) -- (102,336) (10,102,336)
------------ -------- ---------- ------------
Balance, December 31, 1993 153,983,385 -- (263,970) 153,719,415
Net income (unaudited) 2,134,554 -- 21,561 2,156,115
------------ -------- ---------- ------------
Balance, March 31, 1994 $156,117,939 $-- ($242,409) $155,875,530
(unaudited)
============ ======== ========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
BALANCE SHEETS
SERIES II
March 31, 1994
(Unaudited) December 31, 1993
-------------- ---------------
ASSETS
Cash and cash equivalents $1,385,928 $2,984,869
Short-term investments 250,000 300,000
Interest receivable 198,907 200,107
Investment in mortgage revenue bonds 29,624,600 29,624,600
(Note 1)
Investment in parity working capital 815,400 815,400
loans (Note 1)
Investment in real estate partnerships 49,097,535 49,417,599
(Note 2)
Other assets 13,540 8,140
-------------- ---------------
TOTAL ASSETS $81,385,910 $83,350,715
============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $36,152 $41,804
Distributions payable --- 2,915,280
Due to affiliates (Note 3) 13,691 7,291
-------------- ---------------
TOTAL LIABILITIES 49,843 2,964,375
-------------- ---------------
Partners' Capital
General Partners (60,127) (69,624)
Limited Partners (beneficial assignee
certificates - issued and outstanding 81,396,194 80,455,964
96,256 certificates) -------------- ---------------
TOTAL PARTNERS' CAPITAL 81,336,067 80,386,340
-------------- ---------------
COMMITMENTS AND CONTINGENCIES
(Notes 1, 2 & 3)
TOTAL LIABILITIES AND PARTNERS' $81,385,910 $83,350,715
CAPITAL
============== ===============
The accompanying notes are an integral part of these financial statements.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF INCOME - (UNAUDITED)
SERIES II
For the three For the three
months ended months ended
March 31, 1994 March 31, 1993
-------------- --------------
INCOME
Interest on mortgage revenue bonds $581,133 $858,633
Interest on parity working capital loans 15,889 17,889
Non-taxable interest on short-term 6,435 11,006
investments
Taxable interest on short-term investments 6,815 8,944
Equity in property net income (Note 2) 433,686 343,194
------------- --------------
TOTAL INCOME 1,043,958 1,239,666
------------- --------------
EXPENSES
OPERATING EXPENSES (Note 3) 94,231 92,449
------------- --------------
NET INCOME $949,727 $1,147,217
============= ==============
NET INCOME ALLOCATED TO GENERAL PARTNERS $9,497 $11,472
============= ==============
NET INCOME ALLOCATED TO LIMITED PARTNERS $940,230 $1,135,745
============= ==============
NET INCOME PER BAC $9.77 $11.80
============= ==============
The accompanying notes are an integral part of these financial statements.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS - (UNAUDITED)
SERIES II
For the three For the three
months ended months ended
March 31, 1994 March 31, 1993
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $949,727 $1,147,217
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in property net income (433,686) (343,194)
Interest distributions from investment in
real estate partnerships 753,750 473,371
(Increase) decrease in interest receivable 1,200 (100,424)
Increase in other assets (5,400) ---
Increase (decrease) in accounts payable
and accrued expenses (5,652) 15,807
Increase (decrease) in due to affiliates 6,400 (15,632)
--------------- --------------
Net cash provided by operating activities 1,266,339 1,177,145
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of short-term 50,000 ---
investments
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners (2,915,280) (2,913,528)
--------------- --------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (1,598,941) (1,736,383)
--------------- --------------
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,984,869 3,503,766
--------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,385,928 $1,767,383
=============== ==============
The accompanying notes are an integral part of these financial statements.
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
SERIES II
FOR THE PERIOD DECEMBER 31, 1990 THROUGH MARCH 31, 1994
<TABLE>
LIMITED PARTNERS
BENEFICIAL INITIAL
ASSIGNEE LIMITED GENERAL
CERTIFICATES PARTNER PARTNERS TOTAL
------------ -------- ---------- ----------
<S> <C> <C> <C> <C>
Balance, December 31, 1990 $89,868,462 $-- ($1,522) $89,866,940
Net income 2,590,010 -- 26,162 2,616,172
Distribution to partners (6,737,920) -- (56,831) (6,794,751)
------------ -------- ---------- -----------
Balance, December 31, 1991 85,720,552 -- (32,191) 85,688,361
Net income 3,720,799 -- 37,584 3,758,383
Distribution to partners (6,016,000) -- (50,224) (6,066,224)
------------ -------- ---------- -----------
Balance, December 31, 1992 83,425,351 -- (44,831) 83,380,520
Net income 2,805,974 -- 28,343 2,834,317
Distribution to partners (5,775,361) -- (53,136) (5,828,497)
------------ -------- ---------- -----------
Balance, December 31, 1993 80,455,964 -- (69,624) 80,386,340
Net income (unaudited) 940,230 -- 9,497 949,727
----------- -------- ---------- -----------
Balance, March 31, 1994 $81,396,194 $-- ($60,127) $81,336,067
(unaudited)
=========== ======== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
[/TEXT]
[/DOCUMENT]
</DOCUMENT
<PAGE>
SCA TAX EXEMPT FUND LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
(SERIES I AND SERIES II)
NOTE 1 - INVESTMENT IN MORTGAGE REVENUE BONDS AND PARITY WORKING
CAPITAL LOANS
The Partnership has invested in various mortgage revenue bonds,
whose proceeds were used to make nonrecourse participating first
mortgage loans on multifamily housing developments. The
Partnership's rights and specific terms are defined by the
various loan documents which were negotiated at the time of
settlement. The basic terms and structure of each transaction
were described in Note 3 to the December 31, 1993 financial
statements included in Form 10-K.
As of March 31, 1994, Series I held 14 mortgage revenue bonds,
five of which are treated as investments in mortgage revenue
bonds aggregating $44,607,900. Series II held nine mortgage
revenue bonds at March 31, 1994, three of which are treated as
investments in mortgage revenue bonds aggregating $29,624,600.
The remaining Series I and Series II mortgage revenue bonds are
treated as investments in real estate partnerships as required by
generally accepted accounting principles (see also Note 2).
Descriptions of the various mortgage revenue bonds and working
capital loans owned by the Partnership at March 31, 1994 are as
follows:
<PAGE>
<TABLE>
<CAPTION>
Series I
Investment in Mortgage Date of In- Base First Tier
Revenue Bonds and Parity Substance Interest Contingent Maturity Face Carrying
Working Capital Loans (Note 1) Foreclosure Rate Rate Date Amount Amount
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alban Place Apartments
Frederick, MD
Alban Place Limited Partnership 7.875 2.375 Oct. 2008 $10,500,000 $10,500,000
Northridge Park Apartments
Salinas, CA
Northridge Park Phase II 7.500 2.000 June 2012 8,950,000 8,950,000
Lakeview Garden Apartments
Dade Co., FL
Lakeview Garden Apartments
Limited Partnership 7.750 2.500 Aug. 2007 9,307,500 9,307,500
Riverset Apartments
Memphis, TN
Auction Street Associates
Limited Partnership 7.875 2.100 Nov. 1999 6,535,000 6,535,000
Villa Hialeah
Hialeah, FL
Shelter Group South East -
Hialeah, A Limited Partnership 7.875 2.375 Oct. 2009 10,250,000 10,250,000
------------- -------------
Series I Mortgage Revenue
Bond and Parity Working
Capital Loan Investment Total 45,542,500 45,542,500 (1)
------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Date of In- Base First Tier
Series I Investment in Real Substance Interest Contingent Maturity Face Carrying
Estate Partnerships (Note 2) Foreclosure Rate Rate Date Amount Amount
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Barkley Place
Fort Myers, FL
Barkley Place Limited Partnership Sept. 7, 1988 8.000 2.250 May 2011 9,630,000 7,459,986
The Montclair
Springfield, MO
Montclair Limited Partnership Mar. 3, 1989 7.875 2.375 Dec. 2015 15,465,000 9,524,533
Newport Village
Thornton, CO
Newport Village Limited
Partnership Aug. 31, 1989 7.875 2.375 Dec. 2010 10,880,000 8,953,108
Nicollet Ridge
Burnsville, MN
Nicollet Ridge Limited
Partnership Sept. 1, 1990 7.875 2.375 Dec. 2010 20,340,000 15,844,676
Newport-on-Seven
St. Louis Park, MN
St. Louis Park Housing Partners,
A Limited Partnership Dec. 1, 1991 8.125 2.375 Aug. 2008 10,800,000 7,851,029
Steeplechase Falls Apartments
Knoxville, TN
Steeplechase Falls Limited
Partnership Feb. 1, 1991 7.875 2.375 Dec. 2008 18,100,000 17,186,558
North Pointe Apartments
San Bernardino, CA
Cal-Shel Limited Partnership Dec. 31, 1991 7.875 2.375 Aug. 2006 25,850,000 20,508,039
Creekside Village Apartments
Sacramento, CA
Creekside Village Limited
Partnership Dec. 31, 1992 7.500 2.250 Nov. 2009 11,985,000 10,622,434
Willowgreen Apartments
Tacoma, WA
Willowgreen Associates
Limited Partnership Sep. 30, 1993 8.000 2.250 Dec. 2010 9,450,000 9,387,485
------------- -------------
Series I Investment in
Real Estate Partnerships Total 132,500,000 107,337,848
------------- -------------
Series I Total $178,042,500 $152,880,348
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Series II
Investment in Mortgage Date of In- Base First Tier
Revenue Bonds and Parity Substance Interest Contingent Maturity Face Carrying
Working Capital Loans (Note 1) Foreclosure Rate Rate Date Amount Amount
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Riverset Apartments
Memphis, TN
Auction Street Associates
Limited Partnership 7.875 2.100 Nov. 1999 12,640,000 12,640,000
Southfork Village Apartments
Lakeville, MN
Southfork Apartments
Limited Partnership 7.875 2.375 Jan. 2009 10,550,000 10,550,000
Emerald Hills Apartments
Issaquah, WA
Axelrod Emerald Hills Association
Limited Partnership 7.750 2.500 Apr. 2008 7,250,000 7,250,000
------------- -------------
Series II Mortgage Revenue
Bond and Working Capital
Loan Investment Total 30,440,000 30,440,000 (2)
------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Date of In- Base First Tier
Series II Investment in Real Substance Interest Contingent Maturity Face Carrying
Estate Partnerships (Note 2) Foreclosure Rate Rate Date Amount Amount
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mallard Cove I
Everett, WA
Mallard Cove I Limited
Partnership June 1, 1991 7.300 2.375 Jan. 2006 2,610,000 2,182,985
Mallard Cove II
Everett, WA
Mallard Cove II Limited
Partnership June 1, 1991 8.094 2.376 Jan. 2006 6,740,000 6,303,025
Gilman Meadows Apartments
Issaquah, WA
Gilman Meadows Limited
Partnership June 1, 1991 8.000 2.250 Apr. 2007 7,100,000 6,844,012
The Meadows Apartments
Memphis, TN
Meadows Limited Partnership Sept. 30, 1991 7.625 2.500 Jan. 2008 7,200,000 6,922,397
Whispering Lake
Kansas City, MO
Whispering Lake Limited
Partnership Dec. 31, 1991 7.625 2.250 Dec. 2007 18,190,000 13,874,552
Hamilton Chase
Chattanooga, TN
Hamilton Grove Limited
Partnership Dec. 31, 1993 8.000 2.250 Aug. 2006 13,975,000 12,970,564
------------- -------------
Series II Investment in
Real Estate Partnerships Total 55,815,000 49,097,535
------------- -------------
Series II Total $86,255,000 $79,537,535
============= =============
<FN>
(1) Amount includes $44,607,900 of mortgage revenue bonds and $934,600 of parity working capital loans.
(2) Amount includes $29,624,600 of mortgage revenue bonds and $815,400 of parity working capital loans.
</TABLE>
<PAGE>
The Managing General Partner periodically evaluates the carrying
values of investments in mortgage revenue bonds and working
capital loans. There were no valuation adjustments for the
quarters ended March 31, 1994 and 1993, as the Managing General
Partner's estimate of net realizable value exceeded the
respective carrying value for each investment. The Managing
General Partner will continue to evaluate the need for valuation
allowances in the future as circumstances change.
NOTE 2 - INVESTMENT IN REAL ESTATE PARTNERSHIPS
As previously discussed in Note 4 to the December 31, 1993
financial statements included in Form 10-K, the Partnership
accounts for certain investments in mortgage revenue bonds as
investments in real estate partnerships. This accounting
treatment is for financial reporting purposes only and does not
affect the income reported for federal income tax purposes, the
amount of distributions to investors or the Managing General
Partner's intentions related to other matters including ongoing
legal actions, if any. The Partnership reclassified all of the
current investments in real estate partnerships (nine in Series I
and six in Series II) prior to 1994.
The Partnership continues to share in earnings of properties
treated as investments in real estate partnerships in accordance
with the original terms of the mortgage loans collateralizing the
mortgage revenue bonds. For those properties owned by
partnerships controlled by SCA Successor, Inc., the Partnership
has not waived default, however, the Managing General Partner has
no plans or intentions to accelerate the maturity of the mortgage
loans. In addition, the Partnership is responsible for all post-
transfer operating deficits incurred. No operating deficits were
funded by the Partnership during the first quarters of 1994 and
1993.
For investments accounted for as investments in real estate
partnerships, Series I recognized operating income of
approximately $1,446,000 and $1,215,000 and collected
approximately $2,079,000 and $1,677,000 in interest payments for
the quarters ended March 31, 1994 and 1993, respectively. For
those same periods Series II recognized operating income of
approximately $434,000 and $343,000 and collected approximately
$754,000 and $473,000 in interest payments, respectively.
Legal and Other
The following summarizes the status of legal and other matters
affecting the investments in real estate partnerships since
December 31, 1993.
Series I
Creekside Village: On February 9, 1994, the Managing General
Partner successfully transferred the Creekside deed to a New
Borrower pursuant to the terms of a settlement agreement
negotiated with the original borrower. In addition, a settlement
agreement was reached with the guarantor. Under the terms of the
agreement, the guarantor will pay the Partnership $75,000,
$45,000 of which was collected in February of 1994. As
collateral for the payment of the $30,000 balance, the guarantor
has consented to a voluntary judgment which will be filed with
the court in the event of the guarantor's non-payment or
bankruptcy.
Willowgreen: Willowgreen's original borrower used the last of
its property level reserves to supplement its debt service
payment due September 1, 1993. In October 1993, Willowgreen's
debt service payments became delinquent. The Managing General
Partner, in anticipation of the pending default, initiated
workout discussions with the borrower during the third quarter of
1993 in an effort to induce the principals of the borrower to
either make advances to cover the anticipated base interest
shortfalls or to transfer the property's deed to a New Borrower
as quickly as possible. The borrower did not make the necessary
advances and the mortgage is now in default. Therefore, the
Willowgreen bond was reclassified from an investment in mortgage
revenue bonds to an investment in a real estate partnership
effective September 30, 1993. The Managing General Partner
continues to negotiate with the Borrower to secure the deed.
Series II
Hamilton Chase: On February 24, 1994, the Managing General
Partner entered into an agreement with the original borrower
which provides for SCA Successor, Inc. to take the place of the
original borrowing partnership's managing general partner. This
agreement results from the borrower's failure to pay its full
debt service obligation. Prior to the default, the borrower
fully performed on its limited operating deficit guarantee and
voluntarily supplemented debt service payments for over a year.
The execution of the amended partnership agreement is expected to
occur during the second quarter of 1994.
Summarized Financial Information
Combined financial information for the nine Series I and six
Series II investments in real estate noted above are presented
below. This summary includes the results of operations of the
properties subsequent to their respective effective dates for
reclassification to investments in real estate. The table in
Note 1 should be referenced for the effective dates of
reclassification.
<PAGE>
<TABLE>
<CAPTION>
Series I
March 31, December 31,
Combined Financial Position - (unaudited) 1994 1993
(in 000's) ----------- -----------
<S> <C> <C>
Land, buildings and equipment,
net of accumulated depreciation $ 115,480 $ 116,212
Other assets 2,964 2,342
----------- -----------
Total assets $ 118,444 $ 118,554
=========== ===========
Liabilities due to the Partnership
including bonds $ 148,766 $ 148,070
Other liabilities 2,564 2,566
Partners' deficit (32,886) (32,082)
----------- -----------
Total liabilities and partners' deficit $ 118,444 $ 118,554
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Periods ended March 31,
Combined Results of Operations - (unaudited) 1994 1993
(in 000's) ----------- -----------
<S> <C> <C>
Revenues $ 4,745 $ 4,205
Operating expenses 2,556 2,308
----------- -----------
Net operating income $ 2,189 $ 1,897
Depreciation 743 682
----------- -----------
Net income $ 1,446 $ 1,215
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Series II
March 31, December 31,
Combined Financial Position - (unaudited) 1994 1993
(in 000's) ----------- -----------
<S> <C> <C>
Land, buildings and equipment,
net of accumulated depreciation $ 46,726 $ 47,097
Other assets 1,442 998
----------- -----------
Total assets $ 48,168 $ 48,095
=========== ===========
Liabilities due to the Partnership
including bonds $ 56,074 $ 55,729
Other liabilities 1,493 1,473
Partners' deficit (9,399) (9,107)
----------- -----------
Total liabilities and partners' deficit $ 48,168 $ 48,095
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
Periods ended March 31,
Combined Results of Operations - (unaudited) 1994 1993
(in 000's) ----------- -----------
<S> <C> <C>
Revenues $ 1,894 $ 1,259
Operating expenses 1,090 710
----------- -----------
Net operating income $ 804 $ 549
Depreciation 370 206
----------- -----------
Net income $ 434 $ 343
=========== ===========
</TABLE>
<PAGE>
NOTE 3 - RELATED PARTY TRANSACTIONS
The Managing General Partner and its affiliates are entitled to
reimbursement for all costs and expenses paid by them on behalf
of the Partnership for administrative services necessary for the
prudent operation of the Partnership. The Partnership does not
employ any personnel. All staff required by the Partnership are
employees of the Managing General Partner or its affiliates which
receive direct reimbursement from the Partnership for all costs
related to such personnel including payroll taxes, workers'
compensation and health insurance and other fringe benefits, as
summarized in the table below.
<TABLE>
<CAPTION>
Period ending March 31,
1994 1993
---------- ----------
<S> <C> <C>
Series I - (unaudited)
Salaries of noncontrolling
persons & related
expenses $ 67,456 $ 64,241
Other administrative expenses 18,502 18,937
---------- ----------
Expenses reimbursed $ 85,958 $ 83,178
========== ==========
Series II - (unaudited)
Salaries of noncontrolling
persons & related
expenses $ 32,464 $ 30,846
Other administrative expenses 8,904 8,180
---------- ----------
Expenses reimbursed $ 41,368 $ 39,026
========== ==========
</TABLE>
The accompanying balance sheets include amounts payable to the
Managing General Partner and its affiliates at March 31, 1994
and December 31, 1993 as follows:
<TABLE>
<CAPTION>
March 31,
1994 December 31,
(unaudited) 1993
------------- ------------
<S> <C> <C>
Series I $ 29,352 $ 16,051
Series II $ 13,691 $ 7,291
</TABLE>
<PAGE>
As previously detailed in the Partnership's Prospectus,
affiliates of the Managing General Partner receive fees for
mortgage servicing from the limited partnerships owning the
mortgaged properties. With respect to the investments in real
estate partnerships (See Note 2), the payment of these fees has
continued after the reclassification from investments in mortgage
revenue bonds, since the bonds are still owned by the Partnership
and there has been no modification of the individual loan terms.
The fees paid by all borrowing partnerships approximated $370,000
for the quarters ended March 31, 1994 and 1993 irrespective of
any ownership changes in the underlying partnership.
During the quarters ended March 31, 1994 and 1993, the operating
expenses for several properties included property management fees
paid to affiliates of the Managing General Partner. During the
quarters ended March 31, 1994 and 1993, these fees approximated
$128,000 for seven properties and $124,000 for six properties,
respectively.
Shelter Corporation of Canada (SCC), a general partner of the
Associate General Partner, is contractually obligated to the
nonaffiliated borrowers of North Pointe and Whispering Lake to
fund operating deficits under guarantees. The unpaid balances
due under the limited operating deficit guarantees, including
accrued interest as of March 31, 1994, totalled $344,000 and
$485,000 for North Pointe and Whispering Lake, respectively.
Scheduled payments totalling $33,000 and $30,000 were received on
the North Pointe obligation during the first quarters of 1994 and
1993, respectively. Under the Whispering Lake obligation,
$47,000 and $42,000 were received during the first quarters of
1994 and 1993, respectively.
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
On March 5, 1991, SCA Associates 86 Limited Partnership, the
Partnership's Associate General Partner, filed a request for the
appointment of a Receiver in the Superior Court of the State of
California for the Creekside Village property. The Partnership
presented evidence to the Court that the borrower, Creekside
Ventures, Ltd., had a monetary default totalling $119,389. On
March 22, 1991, the Court ruled in favor of the Partnership and
appointed Hank Fisher, president of an experienced Sacramento
property management company, as Receiver for Creekside Village.
Mr. Fisher took over the operations of the property on March 23,
1991. The Associate General Partner initiated foreclosure
proceedings and filed suit against the guarantors to obtain
funding under their limited operating deficit guarantee. On
February 9, 1994, the Managing General Partner successfully
transferred the Creekside deed to a New Borrower pursuant to the
terms of a settlement agreement negotiated with the original
borrower. In addition, a settlement agreement was reached with
the guarantor. Under the terms of the agreement, the guarantor
will pay the Partnership $75,000, $45,000 of which was collected
in February of 1994. As collateral for the payment of the
$30,000 balance, the guarantor has consented to a voluntary
judgment which will be filed with the court in the event of the
guarantor's non-payment or bankruptcy.
Items 2 through 5 are not applicable.
Item 6 - The Partnership filed no reports on Form 8-K for the
period covered by this report.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SCA TAX EXEMPT FUND
LIMITED PARTNERSHIP
(Registrant)
By: SCA REALTY I, INC.
Managing General Partner
By: Thomas R. Hobbs
Thomas R. Hobbs
Senior Vice President
Signing on behalf of registrant and as acting chief financial
officer.
DATED: May 16, 1994
