SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] Annual report pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the fiscal year ended March 31, 1998 or
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[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the transition period from ________ to ________
Commission file number 0-17696
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AMERICAN AFFORDABLE HOUSING II LIMITED PARTNERSHIP
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2992309
- ------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Boston Place, Suite 2100, Boston, MA 02108-4406
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code (617)624-8900
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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None None
- ----------------------------------- -------------------------
Securities registered pursuant to Section 12(g) of the Act:
Class A Limited Partner Interests
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(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 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
----- -----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K( 229.405 of this chapter)
is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. __
|xx|
DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Registrant are incorporated by
reference:
Form 10-K
Parts Documents
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Parts III and IV Prospectus of the registrant dated
September 22, 1988, as supplemented
AMERICAN AFFORDABLE HOUSING II LIMITED PARTNERSHIP
(a Massachusetts limited partnership)
FORM 10-K ANNUAL REPORT FOR THE YEAR ENDED
March 31,1998
TABLE OF CONTENTS
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote
of Security-Holders
PART II
Item 5. Market for the Registrant's Class A Limited Partner
Interests and Related Security-Holder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers
of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial
Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
Signatures
PART I
Item I. Business
American Affordable Housing II Limited Partnership (the
"Partnership") is
a limited partnership which was formed under the laws of the
Commonwealth of
Massachusetts on May 13, 1987. The general partners of the
Partnership are
Boston Capital Associates Limited Partnership, a Massachusetts
limited
partnership, and C & M Associates, d/b/a Boston Capital
Associates, a
Massachusetts general partnership (the "General Partners"). The
Partnership
was formed to acquire limited partner interests in limited
partnerships (the
"Operating Partnerships"), each of which was to own and operate
an apartment
complex for low- and moderate income tenants. Each apartment
complex
qualified for the low-income housing tax credit under Section 42
of the
Internal Revenue Code of 1986, as amended, (the "Code"), and some
apartment
complexes also qualified for the historic rehabilitation tax
credit under
Section 48 of the Code. Section 236 (f) (ii) of the National
Housing Act, as
amended, in Section 101 of the Housing and Urban Development Act
of 1965, as
amended, each provide for the making by HUD of rent supplement
payments to low
income tenants in properties which receive other forms of federal
assistance
such as Tax Credits. The payments for each tenant, which are
made directly to
the owner of their property, generally are in such amounts as to
enable the
tenant to pay rent equal to 30% of the adjusted family income.
Some of the
Apartment Complexes in which the Partnership has invested are
receiving such
rent supplements from HUD.
HUD has been in the process of converting rent supplement
assistance to
assistance paid not to the owner of the Apartment Complex, but
directly to
the individuals. At this time, the Partnership is unable to
predict whether
Congress will continue rent supplement programs payable directly
to owners of
the Apartment Complex.
The investment objectives of the Partnership are (i) to
provide Investors
with tax benefits during the first ten years of operations in the
form of (a)
low-income housing and historic rehabilitation tax credits which
may be
applied against the Investors' Federal income tax liability
arising from, in
the case of individuals, active and portfolio income on a limited
basis from
passive income, and in the case of corporations, against Federal
income tax
liability from active and passive income and, as to certain
corporations,
against all income and (b) passive losses which may be used to
reduce an
Investor's income in the same manner, (ii) to preserve and
protect the capital
of the Partnership, (iii) provide long-term capital appreciation
through
increases in the value of the Partnership's investments, and (iv)
provide cash
distributions from Capital Transaction proceeds. The General
Partners are
currently of the belief that the Partnership's investment
objectives will be
met. Current distributions are not an investment objective of
the
Partnership.
The offering of Class A Limited Partner interests (the
"Units") in the
Partnership (the "Public Offering") began on February 2, 1988 and
was
concluded on September 21, 1988. Investors purchasing 26,501
Units
contributed $26,501,000 to the Partnership. The Partnership held
interests in
50 Operating Partnerships at March 31, 1998. See Item 2.
1
Item 2. Properties
As of its fiscal year ending March 31, 1998, the Partnership
held Limited
Partnership interests in the Operating Partnerships described
below. In each
instance the Apartment Complex owned by the applicable Operating
Partnership
is eligible for the Federal Housing Tax Credit. Occupancy of a
unit in each
Apartment Complex which initially complied with the Minimum
Set-Aside Test
(i.e., occupancy by tenants with incomes equal to no more than a
certain
percentage of area median income) and the Rent Restriction Test
(i.e., gross
rent charged tenants does not exceed 30% of the applicable income
standards)
is referred to hereinafter as "Qualified Occupancy." Each of the
Operating
Partnerships and each of the respective Apartment Complexes are
described more
fully in the Prospectus or applicable report on Form 8-K. The
General
Partners believe that there is adequate casualty insurance on the
properties.
Please refer to Item 7. "Management's Discussion and Analysis
of Financial
Condition and Results of Operations" for a more detailed
discussion of
operational difficulties experienced by certain of the Operating
Partnerships.
2
American Affordable Housing II Limited Partnership
PROPERTY PROFILES AS OF March 31, 1998
Mortgage
Balance Construc-
Qualified Capital
As of tion
Occupancy Contrib-
Property Name Location Units 12/31/97 Completion
3/31/98 uted
- ----------------------------------------------------------------
- -------------
Anacapa Lake Havasu,
Apartments AZ 40 1,424,640 4/88
100% 348,915
Anthony Garden Green Valley,
Apartments AZ 100 3,864,835 3/89
97% 751,267
Blairview Blairsville, 42
Apartments PA 1,431,998 12/88
95% 308,388
Bloomfield Bloomfield,
Apartments MO 16 367,901 6/88
100% 62,878
Boardman Lake Travers City,
II Apartments MI 32 978,259 5/89
100% 202,700
Bowdoinham Bowdoinham,
Estates ME 25 1,295,583 5/89
100% 308,824
Brookhollow Brookshire,
Apartments TX 48 893,099 8/88
100% 160,000
Center Way Shelbyville,
Apartments TN 20 611,102 7/88
100% 136,620
Carthage Carthage,
Court NY 32 1,277,004 10/88
100% 270,000
Casa Belen,
Valencia NM 39 1,483,172 12/88
100% 303,000
Cedar Forest Brewton,
Apartments AL 33 971,471 6/88
100% 219,696
Charters Cove St. Ignace,
Apartments MI 24 772,183 5/88
100% 166,200
Deer Crossing Farmington,
Apartments ME 24 1,182,904 4/89
95% 312,920
3
American Affordable Housing II Limited
Partnership
PROPERTY PROFILES AS OF March 31, 1998
Continued
- --------- Mortgage
Balance Construc-
Qualified Capital
As of tion
Occupancy Contrib-
Property Name Location Units 12/31/97 Completion
3/31/98 uted
- -----------------------------------------------------------------
- -------------
East Ridge Southwest Harbor,
Estates ME 25 1,247,652 9/88
100% 294,771
Fairbanks Flats Beloit,
Apartments WI 24 542,098 12/88
100% 313,040
Fredericktown Fredericktown,
Apartments II MO 16 370,054 5/88
100% 79,670
Harbor Hill Bar Harbor,
Estates ME 25 1,246,995 2/89
100% 325,500
Harbour Oaks East China,
Apartments MI 32 897,902 11/88
100% 191,500
Harvest View Garden City,
MO 16 384,903 6/88
100% 86,785
Kersey Kersey,
Apartments CO 32 1,177,532 10/88
100% 226,000
Kingsley Park Essex,
Apartments MD 312 10,851,302 10/88
100% 1,750,000
Liberty Center Jacksonville,
FL 109 1,176,473 10/88
100% 1,014,770
Malone Senior Malone,
Housing NY 40 1,482,911 11/88
97% 309,000
Maple Tree Mapleton,
Estates ME 25 1,241,671 4/89
100% 325,500
Michelle Manor Green Valley,
Apartments AZ 24 905,633 9/88
100% 174,264
Middleburg Bluffs Middleburg,
FL 45 1,410,284 3/89
100% 375,283
4
American Affordable Housing II Limited Partnership
PROPERTY PROFILES AS OF March 31, 1998
Continued
- --------- Mortgage
Balance Construc-
Qualified Capital
As of tion
Occupancy Contrib-
Property Name Location Units 12/31/97 Completion
3/31/98 uted
- -----------------------------------------------------------------
- -------------
Nicollete Minneapolis,
Island Homes MN 22 1,113,991 12/88 100%
713,000
Paige Hall Minneapolis,
Apartments MN 69 2,253,150 4/89 100%
472,336
Partridge McMinnville,
Meadows TN 48 1,399,324 10/88 97%
296,461
Perramond Madawaska,
Estates ME 25 1,182,598 4/89 100%
287,000
Pine Knoll Smithfield,
Manor NC 33 1,360,267 5/89 100%
309,450
Pine Ridge Port St. Joe,
Apartments FL 50 1,509,522 6/88 100%
384,180
Pine Terrace Callahan,
Apts. Phase III FL 40 1,192,117 1/89 100%
309,500
Platteville Platteville,
Apartments CO 16 545,184 10/88 100%
120,000
River Place Holyoke,
Apartments MA 100 4,151,274 3/89 100%
1,824,000
Sara Pepper Dixfield,
Place ME 12 648,158 3/88 100%
171,189
Silver Pines Fryburg,
Apartments ME 25 1,407,600 8/88 100%
351,547
South Estates Nebraska City,
NE 15 434,528 7/88 100%
85,911
South View III Marionville,
MO 8 195,920 5/88 100%
42,100
5
American Affordable Housing II Limited Partnership
PROPERTY PROFILES AS OF March 31, 1998
Continued
- --------- Mortgage
Balance Construc-
Qualified Capital
As of tion
Occupancy Contrib-
Property Name Location Units 12/31/97 Completion
3/31/98 uted
- -----------------------------------------------------------------
- -------------
Southview Place Lovington,
Apts NM 48 1,092,500 2/89 100%
245,602
Spring Hollow Springfield,
Apartments GA 52 1,436,215 3/88 100%
321,860
Stokes Rowe Philadelphia,
PA 16 1,054,279 6/88 100%
673,000
Story Hill Washburn,
Estates ME 24 1,210,016 1/89 100%
322,425
Suncrest Newport,
Apartments TN 32 971,505 5/88 96%
210,960
Lodging House at Boston,
300 Shamut Ave., MA 15 640,172 12/88 100%
508,000
The
Village Chase Zephyrhills,
Apts FL 48 1,499,414 4/89 100%
386,368
Village Walk Zephyrhills,
Apartments FL 43 1,390,566 3/89 100%
362,500
Washington Mews Dorchester,
MA 20 879,223 12/88 100%
510,000
Wildwood Statesboro,
Villas II GA 58 1,480,847 9/88 100%
369,260
Willowbrook Immokalee,
Place FL 41 1,316,810 3/88 100%
328,711
6
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
7
PART II
Item 5. Market for the Registrant's Class A Limited Partner
Interests and Related Security-Holder Matters
There is no established public trading market for the
Units and it is
not anticipated that any public market will develop for the
purchase and sale
of any Units.
As of March 31, 1998, the Partnership had 2,363 registered
holders of
an aggregate of 26,501 Units.
The Partnership made no distributions to its Limited
Partners from
Operating Partnership cash flow from its inception on May 13,
1987 through
March 31, 1998. Because the Partnership invested in Operating
Partnerships
owning apartment complexes which receive government assistance,
the cash
distributions which may be made by the Operating Partnerships are
often
restricted. The Partnership does not anticipate that it will
provide
significant cash distributions to its Limited Partners in
circumstances other
than refinancing or sale of apartment complexes by the Operating
Partnerships.
8
Item 6. Selected Financial Data
The information set forth below presents selected
financial data of the
Partnership for each of the years in the five year period ended
March 31,
1998. Additional detailed financial information is set forth in
the audited
financial statements listed in Item 14 hereof.
March 31, March 31, March 31, March
31, March 31,
1998 1997 1996 1995
1994
-------- -------- -------- --------
- --------
Operations
- ----------
Interest Income $ 331 $ 743 $ 783 $ 520
$ 223
Other Income 6,355 1,470 - 1,650
1,050
Share of Losses
from Operating
Partnerships (383,653) (795,677) (1,047,309)
(1,392,030) (1,579,365)
Operating Expenses (478,740) (477,380) (516,882)
(503,107) (500,666)
--------- ---------- ---------- ----------
- ----------
Net Loss $ (855,707)$(1,270,844)
$(1,563,408)$(1,892,967)$(2,078,758)
========= ========== ========== ==========
==========
Net Loss per Unit of
Limited Partnership
Interest $ (31.97) $ (47.48) $ (58.40)$
(70.72)$ (77.66)
========= ========== ========== ==========
==========
March 31, March 31, March 31, March
31, March 31,
Balance Sheet 1998 1997 1996 1995
1994
- ------------- ------- -------- -------- --------
- ------
Total Assets $3,022,949 $ 3,409,282 $ 4,274,839 $ 5,344,896
$ 6,635,981
========= ========== ========== ==========
==========
Total Liabilities $4,012,055 $ 3,542,681 $ 3,137,394 $ 2,644,043
$ 2,042,161
========= ========== ========== ==========
==========
Partners' Equity $ (989,106)$ (133,399) $ 1,137,445 $ 2,700,853
$ 4,593,820
(Deficit) ========= ========== ========== ==========
==========
Other Data
- ----------
Credit Per BAC* $ 129.93 $ 130.05 $ 114.28 $ 131.60
$ 131.29
========= ========= ========== ==========
==========
* The credit per BAC data is reported for the calendar year
which ends in the
third quarter of the related fiscal year.
9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity
- ---------
The Partnership's primary source of funds was the proceeds of
its Public
Offering. Other sources of liquidity have included (i) interest
earned on
capital contributions held pending investment or held for working
capital
reserves and (ii) cash distributions, if any, from operations of
the Operating
Partnerships in which the Partnership has invested. Both of
these sources of
liquidity are available to meet the obligations of the
Partnership. The
Partnership is currently accruing the annual asset management
fees. Asset
management fees accrued during the year ended March 31, 1998 were
$436,961
and total asset management fees accrued as of March 31, 1998 were
$3,837,728.
Pursuant to the Partnership Agreement, such liabilities will be
deferred until
the Partnership receives sale or refinancing proceeds from
Operating
Partnerships, and at that time proceeds from such sales or
refinancing would
be used to satisfy such liabilities.
Affiliates of the General Partners have advanced $130,827 to
the
Partnership to pay certain operating expenses. This and any
additional
advances will be repaid, without interest, from available cash
flow, reporting
fees or the proceeds of sales or refinancing of the Partnership's
interests in
Operating Partnerships. The Partnership anticipates that as the
Operating
Partnerships continue to mature more cash flow and reporting fees
will be
generated. Cash flow and reporting fees will be added to the
Partnership's
Working Capital and will be available to meet future third party
obligations
of the Partnership. The Partnership is currently and will
continue to
aggressively pursue available cash flow and reporting fees. No
significant
distributions of cash flow from the Operating Partnerships are
anticipated on
a long term or short term basis due to the restrictions on rents
which
apply to low-income apartment complexes.
During 1995 an affiliate of the General Partners funded
$100,375,
interest free, to the Partnership so that it could make a
$100,375 loan to the
Operating Partnership Washington Mews. The loan enabled the
Operating
Partnership to refinance its mortgage at a more favorable rate,
and will be
repaid by the Operating Partnership with surplus cash from
operations over the
course of the next three years. As repayments are received from
Washington
Mews, they will be used to repay the funding, free of interest,
from the
General Partners' affiliate. As of March 31, 1998 Washington
Mews has paid
the Partnership $60,375. This has been repaid to the affiliate
leaving a
balance of $40,000 as of March 31, 1998.
Capital Resources
- -----------------
The Partnership received $26,501,000 in subscriptions for
Units (at $1,000
per Unit) during the period February 2, 1988 to September 21,
1988 pursuant to
the Public Offering, resulting in net proceeds available for
investment in
Operating Partnerships (after payment of acquisition fees and
expenses and
10
funding of a reserve) of approximately $18,550,700. As of March
31, 1998, the
Partnership had committed to investments requiring cash payments
of
$18,613,793, all of which has been paid. At March 31, 1998, the
Partnership
held working capital of $12,456. Since the Partnership has
completed funding
of all investments, it anticipates that there should be no
significant need
for capital resources in the future.
Results of Operations
- ---------------------
The Partnership was formed with the investment objectives set
forth above
under Item 1. The Partnership incurred an annual asset
management fee to
Boston Capital Asset Management Limited Partnership (formerly
Boston Capital
Communications Limited Partnership) in an amount equal to 0.5% of
the
aggregate cost of the apartment complexes owned by the Operating
Partnerships,
less the amount of certain partnership management and reporting
fees paid or
payable by the Operating Partnerships. The annual asset
management fee
incurred for the fiscal year ended March 31, 1998 and 1997 was
$427,161 and
$426,748, respectively. Because the Partnership is not expected
to receive
any significant cash flow from the Operating Partnerships in
subsequent years,
the annual asset management fee is currently being deferred and
is expected to
be paid from the proceeds of sales or refinancing of the
Partnership's
interests in Operating Partnerships. During the fiscal years
ended March 31,
1998 and 1997, the Partnership received $1,421 and $10,351 in
distributions
of cash flow and $9,800 and 15,110 of reporting fees from the
Operating
Partnerships, respectively.
The Partnership expects that all of its cash receipts will be
used to pay
operating expenses. The Partnership had interest income of $331
and $743 in
the fiscal years ended March 31, 1998 and 1997, respectively. No
other
significant source of income is anticipated.
As of December 31, 1997 and 1996 the Partnership held limited
partnership
interests in 50 Operating Partnerships. In each instance the
Apartment Complex owned by the applicable Operating Partnership
is eligible for the Federal Housing Tax Credit. Occupancy of a
unit in each Apartment Complex which initially complied with the
Minimum Set-Aside Test (i.e., occupancy
by tenants with incomes equal to no more than a certain
percentage of area median income) and the Rent Restriction Test
(i.e., gross rent
charged tenants does not exceed 30% of the applicable income
standards)
is referred to hereinafter as "Qualified Occupancy". Each of the
Operating
Partnerships and each of the respective Apartment Complexes are
described more
fully in the Prospectus or applicable report on Form 8-K. The
General
Partners believe that there is adequate casualty insurance on the
properties.
As of March 31, 1998 and 1997 the Qualified Occupancy for the
Partnership was 99.5% and 99.6%, respectively.
For the years ended December 31, 1997 and 1996 the Operating
Partnerships
reflected a net income (loss) of $590,279 and $(23,552),
respectively, when adjusted for depreciation which is a non-cash
item. The prior year loss is
the result of a one time non-cash impairment loss incurred by one
of the
11
Operating Partnerships. When adjusted for the impairment loss
the Operating Partnerships reflected a net income of $359,448 for
1996.
For the tax years ended December 31, 1997 and 1996 the
Partnership
generated $2,373,534 and $2,592,190, respectively, in passive
income tax losses that were passed through to the investors. The
Partnership also provided $130 in tax credits per BAC to the
investors for each of the tax years ended December 31, 1997 and
1996. The Partnership has fully invested in 50 Operating
Partnerships and as a result the operations of the Partnership
should remain relatively consistent on an annual basis going
forward.
Recent Accounting Statements Not Yet Adopted
- --------------------------------------------
On March 31, 1997, the partnership adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share" and SFAS No. 129, "Disclosure of Information about Capital
Structure." SFAS No. 128 provides accounting and reporting
standards for the amount of earnings per share. SFAS No. 129
requires the disclosure in summary form within the financial
statements of pertinent fights and privileges of the various
securities outstanding. The implementation of these standards
has not materially affected the partnership's financial
statements.
In June 1997, the Financial Accounting Standards Board issued
SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." In February 1998, the Financial Accounting
Standards Board issued SFAS No. 132, "Employees' Disclosures
about Pensions and Other Post-retirement Benefits." SFAS No. 130
is effective for years beginning after December 15, 1997. SFAS
No. 131 and No. 132 are effective for years beginning after
December 31, 1997 and early adoption is encouraged.
The partnership does not have any items of other
comprehensive income, does not have other segments of its
business or when to report, and does not have any pensions or
other post-retirement benefits. Consequently, these
pronouncements are expected to have no effect on the
partnership's financial statements.
Boston Capital and its management have reviewed the potential
computer problems that may arise from the century date change
known as the "Year 2000"or "Y2K" problem. We are currently in
the process of taking the necessary precautions to minimize any
disruptions. The majority of Boston Capital's systems are "Y2K"
compliant. For all remaining systems we have contacted the
vendors to provide us with the necessary upgrades and
replacements. Boston Capital is committed to ensuring that the
"Y2K" issue will have no impact on our investors.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Partnership are listed in
Item 14 as being
filed as a part of this Report and are incorporated herein by
reference.
12
Item 9. Changes in and Disagreements with Accountants on
Accounting and
Financial Disclosure
None.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
(a), (b), (c), (d) and (e)
The Partnership has no directors or executives officers of
its own. The
following biographical information is presented for the partners
of the
General Partners and affiliates of those partners (including
Boston Capital
Partners, Inc. ("Boston Capital")) with principal responsibility
for the
Partnership's affairs.
Herbert F. Collins, age 68, is co-founder and Chairman of the
Board of Boston Capital Corporation. Nominated by President
Clinton and confirmed by the United States Senate, Mr. Collins
served as the Republican private sector member of the Thrift
Depositor Protection Oversight Board. During 1990 and 1991 he
served as Chairman of the Board of Directors for the Federal Home
Loan Bank of Boston, a 314-member, $12 billion central bank in
New England. Mr. Collins is the co-founder and past President of
the Coalition for Rural Housing and Development. In the 1980s he
served as Chairman of the Massachusetts Housing Policy Commission
to evaluate current programs and recommend future housing policy.
Additionally, he served as a member of the Board of Directors of
the Metropolitan Boston Housing Partnership and on the Mitchell-
Danforth Task Force, which helped structure the 1990 federal Tax
Credit legislation. Mr. Collins also is a past Member of the
Board of Directors of the National Leased Housing Association and
has served as a member of the U. S. Conference of Mayors Task
Force on "HUD and the cities: 1995 and Beyond." Mr. Collins also
was a member of the Fannie Mae Housing Impact Advisory Council
and the Republican Housing Opportunity Caucus. He is Chairman of
the Business Advisory Council and a member of the National
Council of State Housing Agencies Tax Credit Commission. Mr.
Collins graduated from Harvard College. President Bush appointed
him to the President's Advisory Committee on the Arts at the John
F. Kennedy Center for the Performing Arts. He is a leader in the
civic community, serving on the Boards of Youthbuild Boston, the
Pine Inn and I Have a Dream Foundation.
John P. Manning, age 50, is co-founder, President and Chief
Executive Officer of Boston Capital Partners, Inc., where he is
responsible for strategic planning, business development and
corporate investor relations. In addition to his
responsibilities at Boston Capital, Mr. Manning is a proactive
leader in the industry. He served in 1990 as a member of the
Mitchell-Danforth Task Force, to review and reform the Low Income
Housing Tax Credit. He was the founding President of the
Affordable Housing Tax Credit Coalition, is a member of the board
of the National Leased Housing Association and sits on the
Advisory Board of the publication Housing and Development
Reporter. During the 1980s he served as a member of the
Massachusetts Housing Policy Committee, as an appointee of the
13
Governor of Massachusetts. In addition, Mr. Manning has
testified before the U.S. House Ways and Means Committee and the
U.S. Senate Finance Committee, on the critical role of the
private sector in the success of the Low Income Housing Tax
Credit Program. In 1996, President Clinton appointed him to the
President's Advisory Committee on the Arts at the John F. Kennedy
Center for the Performing Arts. Mr. Manning also is a leader in
the civic community, serving on the Boards of Youthbuild Boston
and the Pine Street Inn. Mr. Manning is a graduate of Boston
College.
Richard J. DeAgazio, age 53, is Executive Vice President of
Boston Capital Partners, Inc., and is President of Boston Capital
Services, Inc. Mr. DeAgazio serves on the national Board of
Governors of the National Association of Securities Dealers
(NASD), was the Vice Chairman of the NASD's District 11
Committee, and serves on the NASD's national Business Conduct
Committee, the State Liaison Committee and the Direct
Participation Program Committee. He is a founder and past
President of the National Real Estate Investment Association,
past President of the Real Estate Securities and Syndication
Institute (Massachusetts Chapter) and the Real Estate Investment
Association. Prior to joining Boston Capital in 1981, Mr.
DeAgazio was the Senior Vice President and Director of the
Brokerage Division of Dresdner Securities (USA), Inc., an
international investment banking firm owned by four major
European banks, and was a Vice President of Burgess &
Leith/Advest. He has been a member of the Boston Stock Exchange
since 1967. He is a leader in the community and serves on the
Business Leaders Council of the Boston Symphony, Board of
Advisors for the Ron Burton Training Village and is on the Board
of Corporators of Northeastern University. He graduated from
Northeastern University.
Christopher W. Collins, age 43, is an Executive Vice
President and a principal of Boston Capital Partners, Inc., and
is responsible for, among other areas, overseeing the investment
portfolio of funds sponsored by Boston Capital and the
acquisition of real estate investments on behalf of such funds.
Mr. Collins has had extensive experience in real estate
development activities, having founded and directed the American
Development Group, a comprehensive real estate development firm,
and has also had extensive experience in the area of acquiring
real estate investments. He is on the Board of Directors of the
National Multi-Housing Council and a member of the Massachusetts
Housing Finance Agency Multi-Family Advisory Committee. He
graduated from the University of New Hampshire.
Anthony A. Nickas, age 38, is Chief Financial Officer of
Boston Capital Partners, Inc., and serves on the firm's Operating
Committee. He has twelve years of experience in the accounting
and finance field and has supervised the financial aspects of
Boston Capital's project development and property management
affiliates. Prior to joining Boston Capital in 1987, he was
Assistant Director of Accounting and Financial Reporting for the
Yankee Companies, Inc., and was an Audit Supervisor for Wolf &
Company of Massachusetts, P.C., a regional certified public
accounting firm based in Boston. He graduated with honors from
Norwich University.
14
(f) Involvement in certain legal proceedings.
None.
(g) Promoters and control persons.
None.
Item 11. Executive Compensation
(a), (b), (c), (d) and (e)
The Partnership has no officers or directors. However, under
the terms of
the Amended and Restated Agreement and Certificate of Limited
Partnership of
the Partnership, the Partnership has paid or accrued obligations
to the
General Partners and their affiliates for the following fees
during the 1998
fiscal year:
1. An annual asset management fee based on .5 percent of the
aggregate
cost of all apartment complexes acquired by the Operating
Partnerships has
been accrued as payable to Boston Capital Asset Management
Limited Partnership (formerly Boston Capital Communications
Limited Partnership). The annual asset
management fee accrued during the year ended March 31, 1998 was
$436,961. The fee is payable without interest as sufficient
funds become available.
2. The Partnership has accrued as payable to affiliates of
the General Partners a total of $2,441 for amounts charged to
operations during the year ended March 31, 1998. The charges
include, but may not be limited to postage,
printing, travel, and overhead allocations.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The General Partners named in Item 1 own all of the
outstanding general
partner interests in the Partnership. The General Partners have
a 1% interest
in all profits, losses, tax credits and distributions of the
Partnership. No
person is known to own beneficially in excess of 5% of the
outstanding limited
partnership interests. In addition, no individuals listed in
Item 10 are
known to own any units.
Item 13. Certain Relationships and Related Transactions
The Partnership has no officers or directors. However, under
the terms of
the Public Offering, various kinds of compensation and fees are
payable to the
General Partners and their affiliates during the organization and
operation of
the Partnership. Additionally, the General Partners will receive
distributions from the Partnership if there is cash available for
distribution
or residual proceeds as defined in the Partnership Agreement.
The amounts and
kinds of compensation and fees are described on pages 9 to 11 of
the
Prospectus under the caption "Compensation of General Partners
and Affiliate",
which is incorporated herein by reference. See Note B of Notes
to Financial
Statements in Item 14 of this Annual Report on Form 10-K for
amounts accrued
or paid to the General Partners and their affiliates during the
period from
April 1, 1993 through March 31, 1998.
15
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form
8-K
(a) 1. Financial Statements
--------------------
American Affordable Housing II Limited Partnership
Independent Auditors' Report
Balance Sheets, March 31, 1998 and 1997
Statements of Operations, Years ended March 31, 1998, 1997
and 1996
Statements of Changes in Partners' Capital, Years ended
March 31,
1998, 1997, and 1996
Statements of Cash Flows, Years ended March 31, 1998, 1997
and 1996
Notes to Financial Statements, Years ended March 31, 1998,
1997
and 1996
Liberty Center, Ltd.
Independent Auditors' Report
Balance Sheets, December 31, 1997 and 1996
Statements of Operations, Years ended December 31, 1997 and
1996
Statements of Cash Flow, Years ended December 31, 1997 and
1996
Statements of Changes in Partners' Capital, Years ended
December 31,
1997 and 1996
Notes to Financial Statements, Years ended December 31,
1997 and
1996
16
Riverplace Apartments
Independent Auditors' Report
Balance Sheets, December 31, 1997 and 1996
Statements of Operations, Years ended December 31, 1997 and
1996
Statements of Changes in Partners' Capital, Years ended
December 31,
1997 and 1996
Statements of Cash Flow, Years ended December 31, 1997 and
1996
Notes to Financial Statements, Years ended December 31,
1997 and
1996
(a) 2. Financial Statement Schedules
-----------------------------
Schedule III - Real Estate and Accumulated Depreciation
Notes to Schedule III
Schedules not listed are omitted because of the absence of the
conditions
under which they are required or because the information is
included in the
financial statements or the notes hereto.
17
(a) 3. Exhibits
--------
(3) Amended and Restated Certificate and Agreement of
Limited
Partnership. (1)
(4) Instruments defining the rights of security holders,
including
indentures (same as Exhibit (3)).
(9) None.
(10) None.
(11) None.
(12) None.
(13) None.
(16) None.
(18) None.
(19) None.
(22) Subsidiaries of the Registrant.
(23) None.
(24) None.
(25) None.
(28) Independent Auditors' Reports for Operating
Partnerships.
(29) None.
(a) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the period
ending March
31, 1998.
(b) Exhibits
Same as Item 14(a)3. above.
(c) Financial Statement Schedules
See Items (a)1. and (a)2. above.
18
SIGNATURES
----------
Pursuant to the requirements of Section 13 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.
American Affordable Housing II
Limited Partnership
By: Boston Capital Associates Limited
Partnership, General Partner
By: Boston Capital Associates,
General Partner
By: /s/ John P. Manning
------------------------------
J. P. Manning, Partner
By: Boston Capital Associates, General
Partner
By:/s/ John P. Manning
------------------------------
John P. Manning, Partner
Date:
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:
SIGNATURE TITLE DATE
- --------- ----- ----
Boston Capital Associates General Partner June 30,
1998
Limited Partnership
By: Boston Capital Associates,
General Partner
By: /s/ John P. Manning
----------------------------
John P. Manning, Partner
19
SIGNATURE TITLE DATE
- --------- ----- ----
Boston Capital Associates General Partner
By: /s/ John P. Manning
------------------------ June 30,
1998
John P. Manning, Partner
- -------------
/s/ Herbert F. Collins
------------------------ June 30,
1998
Herbert F. Collins General Partner
- -------------
of Boston Capital
Associates, Principal
Executive Officer,
Principal Financial
Officer and Principal
Accounting Officer
/s/ John P. Manning
------------------------ June 30,
1998
John P. Manning General Partner
- -------------
of Boston Capital
20
INDEX TO EXHIBITS
-----------------
Exhibit Description of Exhibit
- ------- ----------------------
Page
- ----
(22) Subsidiary of the registrant
21
Exhibit (22)
22
Subsidiaries of the Registrant
------------------------------
Each of the Operating Partnerships listed in the chart included
in Item 2 may
be considered a subsidiary of the Partnership.
23
<PAGE>
FINANCIAL STATEMENTS AND INDEPENDENT
AUDITORS' REPORT
AMERICAN AFFORDABLE HOUSING II LIMITED
PARTNERSHIP
MARCH 31, 1998 AND 1997 <PAGE>
American Affordable Housing II Limited Partnership
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEETS 5
STATEMENTS OF OPERATIONS 6
STATEMENTS OF CHANGES IN PARTNERS CAPITAL 7
STATEMENTS OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9
SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION 19
Schedules not listed are omitted because of the
absence of the conditions under which they are
required or because
the information is included in the financial
statements or the
notes thereto.
<PAGE>
Reznick Fedder & Silverman
Certified Public Accountants * A Professional
Corporation
4520 East-West Highway * Suite 300 * Bethesda,
MD 20814-3319 (301) 652-9100 * Fax
(301) 652-1848
INDEPENDENT AUDITORS REPORT
To the Partners
American Affordable Housing II
Limited Partnership
We have audited the accompanying balance sheets
of American Affordable Housing II Limited
Partnership as of
March 31, 1998 and 1997, and the related
statements of operations, changes in partners
capital and cash flows for each of the three years in
the period ended March 31, 1998. These financial
statements are
the responsibility of the partnership's
management. Our responsibility is to express an
opinion on these financial statements based on
our audits. We did not audit the financial
statements of certain operating partnerships in
which American Affordable Housing II Limited
Partnership owns a limited partnership interest.
Investments in such partnerships comprise 37% and
35% of the assets as of March 31, 1998 and 1997, and
6%, 9% and 12% of the partnership loss for each of
the three years in the period ended March 31, 1998,
of American Affordable Housing II Limited
Partnership. The financial statements of these
partnerships were audited by other auditors, whose
reports have been furnished to us, and our opinion,
insofar as it relates to information relating to
these partnerships, is based solely on the reports of
the other auditors.
We conducted our audits in accordance
with generally accepted auditing standards.
Those standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the financial statements are free
of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall
financial statement presentation. We believe that
our audits and the reports of the other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the
reports of the other auditors referred to above,
the financial statements referred to above
present fairly, in all material respects, the
financial position of American Affordable
Housing II Limited Partnership as of March 31, 1998
and 1997, and the results of its operations and its
cash flows for each of the three years in the period
ended March 31, 1998, in conformity with
generally accepted accounting principles.
- 3 -
<PAGE>
We have also audited the related
financial statement schedule listed in Form 10-K,
item 14(a) of American Affordable Housing II
Limited Partnership as of March 31, 1998. In our
opinion, the schedule presents fairly the information
required to be set forth therein, in conformity
with generally accepted accounting principles.
Bethesda, Maryland
June 19, 1998
- 4 -
<PAGE>
Marshall & Shafer, P.C.
Certified Public Accountants
10497 Town & Country Way, Suite 420
Houston, Texas 77024
713 / 973-8378 FAX 713 / 973-8377
INDEPENDENT AUDITOR'S REPORT
February 23, 1998
To the Partners
Brookhollow Manor, Ltd.
We have audited the accompanying balance sheet of
Brookhollow Manor, Ltd. as of December 31, 1997 and
1996, and the related statements of operations,
partners' equity (deficit), and cash flow for the
years then ended. 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 and Government Auditing
Standards, issued by the Comptroller General of the
United States, and the U.S. Department of
Agriculture, Farmers Home Administration Audit
Program. Those standards require that we plan and
perform the audits 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 accompanying financial statements
referred to above present fairly, in all material
respects, the financial position of Brookhollow
Manor, Ltd. as of December 31, 1997 and 1996, and the
results of its operation and its cash flows for the
years then ended, in conformity with generally-
accepted accounting principles.
In accordance with Government Auditing Standards, we
have also issued our reports dated February 23, 1998,
on our consideration of Brookhollow Manor, Ltd.'s
internal control and on its compliance with laws and
regulations.
Marshall & Shafer, P.C.
Houston, Texas
INDEPENDENT AUDITORS' REPORT
To the Partners
Carthage Court Housing Company
We have audited the accompanying balance sheets of
FAIRBANKS FLATS, LIMITED PARTNERSHIP as of December
31, 1997, and the related statements of operations,
partners' deficit and cash flows for the years then
ended. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on the
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 Carthage Court Housing Company
as of December 31, 1997, and the results of its
operations and its cash flows for the year then ended
in conformity with generally accepted accounting
principles.
The 1996 financial statements of Carthage Court
Housing Company were audited by other accountants
whose report dated January 15, 1997, stated that they
were not aware of any material modifications that
should be made to those statements in order for them
to be in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards, we
have also issued reports dated February 2, 1998, on
our consideration of the Program's internal control
structure and it's compliance with laws and
regulations.
Fecteau & Company, P.C.
February 2, 1998
Albany, New York
Mueller, Walla & Albertson, P.C.
Certified Public Accountants
10714 Manchester Road Suite 202
Kirkwood, Missouri 63122
(314) 822-6575
INDEPENDENT AUDITORS' REPORT
The Partners
Fredericktown Associates II, L.P.
Fredericktown, Missouri
We have audited the accompanying balance sheets of
Fredericktown Associates II, L.P. (a limited
partnership) as of December 31, 1997 and 1996, and
the related statements of operations, partners'
capital and cash flows for the years then ended.
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 Fredericktown Associates II,
L.P. as of December 31, 1997 and 1996, and the
results of its operations, changes in partners'
capital and cash flows for the years then ended in
conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information included on page
12 is presented for purposes of additional analysis
and is not a required part of the basic financial
statements. Such information has been subjected to
the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated, in all material respects, in relation
to the basic financial statements taken as a whole.
Mueller, Walla & Albertson, P.C.
Certified Public Accountants
January 13, 1998
Members American Institute Of Certified Public
Accountants
Missouri Society Of Certified Public Accountants
Hunter & Associates, P.A.
4209 Baymeadows Road, Suite 2
Jacksonville, Florida 32217
Phone: (904) 731-9222
Fax: (904) 731-0352
May 19, 1998
INDEPENDENT AUDITOR'S REPORT
To the Partners
Liberty Center, Ltd.
We have audited the accompanying balance sheets of
Liberty Center, Ltd. As of December 31, 1997 and
1996, and the related statements of operations,
partners' equity and cash flows 'for the years then
ended. 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 audit.
We conducted our audit 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 audit provides 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 Liberty Center, Ltd. As of
December 31 1997 and 1996, and the results of its
operations and its cash flows for the year then ended
in conformity with generally accepted accounting
principles.
Certified Public Accountants
Kenneth C. Boothe & Company, P.C.
Certified Public Accountants
1001 East Farm Road 700, Big Spring, Texas 79720
915-263-1324 Fax 915-263-2124
INDEPENDENT AUDITORS' REPORT
To the Partners
Lovington Housing Associates Limited Partnership
dba Southview Place Apts.
We have audited the accompanying balance sheets of
Lovington Housing Associates Limited Partnership as
of December 31, 1997 and 1996, and the related
statements of operations, partners' equity, and cash
flows for the years then ended. 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 audit.
We conducted our audit in accordance with generally
accepted auditing standards and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that 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 audit provides 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 Lovington Housing Associates
Limited Partnership as of December 31, 1997 and 1996,
and the results of its operations and its cash flows
for the year then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards
issued by the Comptroller General of the United
States, we have also issued a report dated January
20, 1998, on our consideration of Lovington Housing
Associates Limited Partnership's internal control
structure and a report dated January 20, 1998, on its
compliance with laws and regulations.
Our audit was conducted for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The accompanying supplementary information
shown on Pages 19 through 20 is presented for
purposes of additional analysis and is not a required
part of the basic financial statements of the
Partnership. Such information has been subjected to
the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
KENNETH C. BOOTHE AND COMPANY, P.C.
January 20, 1998
Big Spring, Texas
Coopers & Lybrand L.L.P.
a professional services firm
Report of Independent Accountants
To the Partners
Malone Housing Redevelopment Company
We have audited the accompanying statements of
financial position of Malone Housing Redevelopment
Company (A Limited Partnership), as of December 31,
1997 and 1996, and the related statements of
operations, partners' capital and cash flows for the
years then ended. 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 and Government Auditing
Standards, issued by the comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Malone Housing Redevelopment
Company as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the
years then ended in conformity with generally
accepted accounting principles.
In accordance with Government Auditing Standards, we
have also issued our report dated January 19, 1998 on
its compliance with laws and regulations.
Rochester, New York
January 19, 1998
Larson, Allen, Weishair & Co., LLP
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
Partners
Nicollet Island Historic Homes,
(a Minnesota Limited Partnership)
St Paul, Minnesota
We have audited the accompanying balance sheets of
Nicollet Island Historic Homes, (a Minnesota Limited
Partnership) as of December 31, 1997 and 1996, and
the related statements of operations, partners'
equity (deficit) and cash flows for the years then
ended. 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, such financial statements present
fairly, in all material respects, the financial
position of Nicollet Island Historic Homes, A
Minnesota Limited Partnership as of December 31, 1997
and 1996, and the results of its operations and its
cash flows for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on page 12 is
presented for purposes of additional analysis and is
not a required part of the basic financial statements
and, in our opinion, is fairly stated in all material
respects in relation to the basic financial
statements taken as a whole.
LARSON, ALLEN, WEISHAIR & CO., LLP
Saint Paul, Minnesota
January 20, 1998
Certified Public Accountants
Mahoney, Ulbrich, Christiansen & Russ P.A.
Suite 800 Capital Centre
386 North Wabasha
Saint Paul, Minnesota 55102
Telephone 612-227-6695 Fax 612-227-9796
The Partners
Paige Hall Limited Partnership
Minneapolis, Minnesota
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheets of
Paige Hall Limited Partnership as of December 31,
1997 and 1996, and the related statements of
operations, partners' capital and cash flows for the
years then ended. 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 audits 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 Paige Hall Limited Partnership
as of December 31, 1997 and 1996, and the results of
its operations and its cash flows for the years then
ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on page 9 is
presented for the purposes of additional analysis and
is not a required part of the basic financial
statements. Such information has been subjected to
the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Saint Paul, Minnesota
January 15, 1998
Bernard Robinson & Company, L.L.P.
Certified Public Accountants since 1947
Mailing Address:
P.O. Box 19608
Greensboro, NC 27419-9608
Fax 336-547-0840
Offices:
109 Muirs Chapel Road
Greensboro, NC 24710
Telephone 336-294-4494
INDEPENDENT AUDITOR'S REPORT
To the Partners
Pine Knoll Development Company
D/B/A Pine Knoll Manor
Smithfield, North Carolina
We have audited the accompanying balance sheets of
Pine Knoll Development Company (a North Carolina
limited partnership) as of December 31, 1997 and
1996, and the related statements of operations,
partners' equity, and cash flows for the years then
ended. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Pine Knoll Development Company
as of December 31, 1997 and 1996, and the results of
its operations and its cash flows for the years then
ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards, we
have also issued a report dated January 22, 1998 on
our consideration of the Partnership's internal
control over financial reporting and our tests of its
compliance with certain provisions of laws,
regulations, contracts, and grants.
"Celebrating 50 Years of Excellence"
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplementary information listed in the
table of contents is presented for purposes of
additional analysis and is not a required part of the
basic financial statements of the Partnership. Such
information has been subjected to the auditing
procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly
stated in all material respects in relation to the
basic financial statements taken as a whole.
Bernard Roninson & Company, LLP
Certified Public Accountants
Greensboro, North Carolina
January 22, 1998
Page 2
GLOVER & GLOVER
Certified Public Accountants
206 Wilson Pike Circle
Brentwood, Tennessee 37027
(615) 370-0341 Fax 370-0342
M. Lawrence Glover, CPA
Byron L. Glover, CPA
Members: American Institute of CPAS - Tennessee
Society of CPAs
INDEPENDENT AUDITORS' REPORT
To the Partners
Shelbyville FH, Ltd.
We have audited the accompanying balance sheets of
Shelbyville FH, Ltd. (a Tennessee limited
partnership), RHS Project No.: 48 002 621246065, as
of December 31, 1997 and 1996, and the related
statements of operations, partners' capital and cash
flows for the years then ended. 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 and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Shelbyville FH, Ltd. as of
December 31, 1997 and 1996, and the results of its
operations, the changes in partners' capital, and
cash flows for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on pages 16 and
17 Is presented for purposes of additional analysis
and is not a required part of the basic financial
statements. Such information has been subjected to
the audit procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Brentwood, Tennessee
March 25, 1998
GLOVER & GLOVER
Certified Public Accountants
206 Wilson Pike Circle
Brentwood, Tennessee 37027
(615) 370-0341 Fax 370-0342
To the Partners
Suncrest, Ltd.
We have audited the accompanying balance sheets of
Suncrest, Ltd. (a Tennessee limited partnership), RHS
Project No.: 48 015 621251107, as of December 31,
1997 and 1996, and the related statements of
operations, partners' capital and cash flows for the
years then ended. 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 and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Suncrest, Ltd. as of December
31, 1997 and 1996, and the results of its operations,
the changes in partners' capital, and cash flows for
the years then ended in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on pages 15 and
16 is presented for purposes of additional analysis
and is not a required part of the basic financial
statements. Such information has been subjected to
the audit procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Brentwood, Tennessee
March 25, 1998
GLOVER & GLOVER
Certified Public Accountants
206 Wilson Pike Circle
Brentwood, Tennessee 37027
To the Partners
Warren Properties, Ltd.
We have audited the accompanying balance sheets of
Warren Properties, Ltd. (a Tennessee limited
partnership), FmHA Project No.: 48 089 621237357, as
of December 31, 1997 and 1996, and the related
statements of operations, partners' capital and cash
flows for the years then ended. 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 and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Warren Properties, Ltd. as of
December 31, 1997 and 1996, and the results of its
operations, the changes in partners' capital, and
cash flows for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on pages 16 and
17 is presented for purposes of additional analysis
and Is not a required part of the basic financial
statements. Such information has been subjected to
the audit procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Brentwood, Tennessee
March 25, 1998
Bernard, Johnson & Company, P.C.
Certified Public Accountants and Business Advisors
INDEPENDENT AUDITORS' REPORT
To the Partners
Washington Mews Limited Partnership
We have audited the accompanying balance sheet of
Washington Mews Limited Partnership as of December
31, 1997 and 1996, and the related statements of
income and partners' equity and cash flows for the
years then ended. 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 audit.
We conducted our audit 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 audit 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 Washington Mews Limited
Partnership as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the
years then ended in conformity with generally
accepted accounting principles.
Our audits were conducted for the purpose of forming
an opinion on the basic financial statements taken as
a whole. The supplemental information on page 9 are
presented for purposes of additional analysis and is
not a required part of the basic financial
statements. Such information has been subjected to
the audit procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Topsfield, Massachusetts
February 7, 1998
15 Main Street Topsfield, MA 01983 Tel (508) 887-
2220 Fax (508) 887-5443
54 Court Street Portsmouth, NH 03801 Tel (603)427-
0888 Fax (603) 436-3784
Marshall & Shafer, P.C.
Certified Public Accountants
10497 Town & Country Way, Suite 420
Houston, Texas 77024
713 / 973-8378 FAX 713 / 973-8377
INDEPENDENT AUDITOR'S REPORT
March 10, 1997
To the Partners
Brookhollow Manor, Ltd.
We have audited the accompanying balance sheet of
Brookhollow Manor, Ltd. as of December 31, 1996 and
1995, and the related statements of operations,
partners' equity (deficit), and cash flow for the
years then ended. 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 and Government Auditing
Standards, issued by the Comptroller General of the
United States, and the U.S. Department of
Agriculture, Farmers Home Administration Audit
Program. Those standards require that we plan and
perform the audits 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 accompanying financial statements
referred to above present fairly, in all material
respects, the financial position of Brookhollow
Manor, Ltd. as of December 31, 1996 and 1995, and the
results of its operation and its cash flows for the
years then ended, in conformity with generally-
accepted accounting principles.
In accordance with Government Auditing Standards, we
have also issued our reports dated March 10, 1997, on
our consideration of Brookhollow Manor, Ltd.'s
internal control and on its compliance with laws and
regulations.
Marshall & Shafer, P.C.
Houston, Texas
Humiston, Skokan, Warren & Eichenberger
A Professional Corporation
Certified Public Accountants
West Des Moines, Iowa
INDEPENDENT AUDITORS' REPORT
To the Partners
Fairbanks Flats, Limited Partnership
West Des Moines, Iowa
We have audited the accompanying balance sheets of
FAIRBANKS FLATS, LIMITED PARTNERSHIP as of December
31, 1996 and 1995, and the related statements of
operations, partners' deficit and cash flows for the
years then ended. 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 Fairbanks Flats, Limited .
Partnership as of December 31, 1996 and 1995 and the
results of its operations and its cash flows for the
years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been
prepared assuming that the Partnership will continue
as a going concern. As discussed in Note H to the
financial statements, the Partnership has suffered
recurring losses from operations and has a net
partnership deficiency, which raise substantial doubt
about its ability to continue as a going concern.
Management's plans regarding those matters also are
described in Note H. The financial statements do not
include any adjustments that might result from the
outcome of this uncertainty.
January 24, 1997
Mueller, Walla & Albertson, P.C.
Certified Public Accountants
10714 Manchester Road Suite 202
Kirkwood, Missouri 63122
(314) 822-6575
INDEPENDENT AUDITORS' REPORT
The Partners
Fredericktown Associates II, L.P.
Fredericktown, Missouri
We have audited the accompanying balance sheets of
Fredericktown Associates II, L.P. (a limited
partnership) as of December 31, 1996 and 1995, and
the related statements of operations, partners'
capital and cash flows for the years then ended.
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 Fredericktown Associates II,
L.P. as of December 31, 1996 and 1995, and the
results of its operations, changes in partners'
capital and cash flows for the years then ended in
conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information included on page
12 is presented for purposes of additional analysis
and is not a required part of the basic financial
statements. Such information has been subjected to
the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated, in all material respects, in relation
to the basic financial statements taken as a whole.
Mueller, Walla & Albertson, P.C.
Certified Public Accountants
January 14, 1997
Members American Institute Of Certified Public
Accountants
Missouri Society Of Certified Public Accountants
Hunter & Pleiman, PA
Certified Public Accountants
4209 Baymeadows Road, Suite I
Jacksonville, Florida 32217
Lewis B. Hunter, Jr., CPA
Thomas C. Pleiman, Jr., CPA
Phone: (904) 367-0852 Fax: (904) 731-0352
INDEPENDENT AUDITOR'S REPORT
To the Partners
Liberty Center, Ltd.
We have audited the accompanying balance sheets of
Liberty Center, Ltd. as of December 31, 1996 and
1995, and the related statements of operations,
partners' equity and cash flows 'for the years then
ended. 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 audit.
We conducted our audit 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 audit provides 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 Liberty Center. Ltd. as of
December 31 1996 and 1995, and the results of its
operations and its cash flows for the year then ended
in conformity with generally accepted accounting
principles.
As we discussed in Note J to the financial
statements, certain expenses have been decreased due
to a change in the method of calculation by
management resulting in an overstatement of
previously reported loss. The financial statements
for the year 1995 have been revised and restated to
reflect these changes.
May 10, 1997
Larson, Allen, Weishair & Co., LLP
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
Partners
Nicollet Island Historic Homes,
(a Minnesota Limited Partnership)
St Paul, Minnesota
We have audited the accompanying balance sheets of
Nicollet Island Historic Homes, (a Minnesota Limited
Partnership) as of December 31, 1996 and 1995, and
the related statements of operations, partners'
equity (deficit) and cash flows for the years then
ended. 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, such financial statements present
fairly, in all material respects, the financial
position of Nicollet Island Historic Homes, A
Minnesota Limited Partnership as of December 31, 1996
and 1995, and the results of its operations and its
cash flows for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on page 12 is
presented for purposes of additional analysis and is
not a required part of the basic financial statements
and, in our opinion, is fairly stated in all material
respects in relation to the basic financial
statements taken as a whole.
LARSON, ALLEN, WEISHAIR & CO., LLP
Saint Paul, Minnesota
January 14, 1997
Certified Public Accountants
Mahoney, Ulbrich, Christiansen & Russ P.A.
Suite 800 Capital Centre
386 North Wabasha
Saint Paul, Minnesota 55102
Telephone 612-227-6695 Fax 612-227-9796
The Partners
Paige Hall Limited Partnership
Minneapolis, Minnesota
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheets of
Paige Hall Limited Partnership as of December 31,
1996 and 1995, and the related statements of
operations, partners' capital and cash flows for the
years then ended. 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 audits 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 Paige Hall Limited Partnership
as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for the years then
ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on page 9 is
presented for the purposes of additional analysis and
is not a required part of the basic financial
statements. Such information has been subjected to
the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Saint Paul, Minnesota
January 18, 1997
Bernard Robinson & Company, L.L.P.
Certified Public Accountants since 1947
Mailing Address:
P.O. Box 19608
Greensboro, NC 27419-9608
Fax 910-547-0840
Offices:
109 Muirs Chapel Road
Greensboro, NC 24710
Telephone 910-294-4494
INDEPENDENT AUDITOR'S REPORT
To the Partners
Pine Knoll Development Company
D/B/A Pine Knoll Manor
Smithfield, North Carolina
We have audited the accompanying balance sheets of
Pine Knoll Development Company (a North Carolina
limited partnership) as of December 31, 1996 and
1995, and the related statements of operations,
partners' equity, and cash flows for the years then
ended. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Pine Knoll Development Company
as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for the years then
ended in conformity with generally accepted
accounting principles.
In accordance with Government Auditing Standards, we
have also issued a report dated January 23, 1997 on
our consideration of the internal control system of
Pine Knoll Development Company and a report dated
January 23, 1997 on its compliance with laws and
regulations.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplementary information listed in the
table of contents is presented for purposes of
additional analysis and is not a required part of the
basic financial statements of the Partnership. Such
information has been subjected to the auditing
procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly
stated in all material respects in relation to the
basic financial statements taken as a whole.
Greensboro, North Carolina
January 23, 1997
FEGLEY & ASSOCIATES
A Professional Corporation
Certified Public Accountant
2250 Hickory Road, Suite 20
Plymouth Meeting, PA 19462
Phone (610) 825-7400 Fax (610) 825-1297
INDEPENDENT AUDITORS' REPORT
To the Partners
The Stokes Rowe Partnership
We have audited the accompanying balance sheets of
The Stokes Rowe Partnership as of December 31, 1995
and 1994, and the related statements of operations,
partners I equity, and cash flows for the years then
ended. 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 The Stokes Rowe Partnership as
of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then
ended in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on pages 20 and
21 is presented for purposes of additional analysis
and is not a required part of the basic financial
statements. Such information has been subjected to
the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
January 26, 1996
GLOVER & GLOVER
Certified Public Accountants
206 Wilson Pike Circle
Brentwood, Tennessee 37027
(615) 370-0341 Fax 370-0342
M. Lawrence Glover, CPA
Byron L. Glover, CPA
Members: American Institute of CPAS - Tennessee
Society of CPAs
INDEPENDENT AUDITORS' REPORT
To the Partners
Shelbyville FH, Ltd.
We have audited the accompanying balance sheets of
Shelbyville FH, Ltd. (a Tennessee limited
partnership), RHS Project No.: 48 002 621246065, as
of December 31, 1996 and 1995, and the related
statements of operations, partners' capital and cash
flows for the years then ended. 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 and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Shelbyville FH, Ltd. as of
December 31, 1996 and 1995, and the results of its
operations, the changes in partners' capital, and
cash flows for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on pages 16 and
17 Is presented for purposes of additional analysis
and is not a required part of the basic financial
statements. Such information has been subjected to
the audit procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Brentwood, Tennessee
March 17, 1997
GLOVER & GLOVER
Certified Public Accountants
206 Wilson Pike Circle
Brentwood, Tennessee 37027
(615) 370-0341 Fax (370-0342
To the Partners
Suncrest, Ltd.
We have audited the accompanying balance sheets of
Suncrest, Ltd. (a Tennessee limited partnership), RHS
Project No.: 48 015 621251107, as of December 31,
1996 and 1995, and the related statements of
operations, partners' capital and cash flows for the
years then ended. 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 and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Suncrest, Ltd. as of December
31, 1996 and 1995, and the results of its operations,
the changes in partners' capital, and cash flows for
the years then ended in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on pages 15 and
16 is presented for purposes of additional analysis
and is not a required part of the basic financial
statements. Such information has been subjected to
the audit procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Brentwood, Tennessee
March 17, 1997
GLOVER & GLOVER
Certified Public Accountants
206 Wilson Pike Circle
Brentwood, Tennessee 37027
To the Partners
Warren Properties, Ltd.
We have audited the accompanying balance sheets of
Warren Properties, Ltd. (a Tennessee limited
partnership), FmHA Project No.: 48 089 621237357, as
of December 31, 1996 and 1995, and the related
statements of operations, partners' capital and cash
flows for the years then ended. 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 and Government Auditing
Standards issued by the Comptroller General of the
United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements are free of
material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Warren Properties, Ltd. as of
December 31, 1996 and 1995, and the results of its
operations, the changes in partners' capital, and
cash flows for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The supplemental information on pages 16 and
17 is presented for purposes of additional analysis
and Is not a required part of the basic financial
statements. Such information has been subjected to
the audit procedures applied in the audits of the
basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
Brentwood, Tennessee
March 17, 1997
Bernard, Johnson & Company
Certified Public Accountants, Inc.
15 Main Street
Topsfield, MA 01983
Tel (508) 887-2220
Fax (508) 887-5443
501 Islington Street
Portsmouth, NH 03801
Tel (603)427-0888
Fax (603) 436-3784
INDEPENDENT AUDITORS' REPORT
To the Partners
Washington Mews Limited Partnership
We have audited the accompanying balance sheet of
Washington Mews Limited Partnership as of December
31, 1995, and the related statements of operations,
partners' equity and cash flows for the year then
ended. 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 audit.
We conducted our audit 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 audit 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 Washington Mews Limited
Partnership as of December 31,1995, and the results
of its operations and cash flows for the years then
ended in conformity with generally accepted
accounting principles.
The accompanying financial statements for the year
ended December 31, 1994 were compiled by us. A
compilation is limited to presenting in the form of
financial statements information that is the
representation of management. We have not audited or
reviewed the 1994 financial statements and,
accordingly, do not express an opinion or any other
form of assurance on them.
Topsfield, Massachusetts
January 12, 1996
American Affordable Housing II Limited Partnership
BALANCE SHEETS
March 31,
<TABLE>
1998 1997
- ---------------- ----------------
<S>
<C> <C>
ASSETS
INVESTMENTS IN OPERATING LIMITED PARTNERSHIPS
(notes A and D) $ 2,962,644 $ 3,347,143
OTHER ASSETS
Cash
12,456 14,290
Note receivable (note C)
40,000 40,000
Other assets
7,849 7,849
- --------------- ---------------
$ 3,022,949 $ 3,409,282
=============== ===============
LIABILITIES AND PARTNERS
CAPITAL
LIABILITIES
Due to affiliates (note B)
$ 4,008,555 $ 3,539,181
Accounts payable
3,500 3,500
- --------------- ---------------
4,012,055 3,542,681
- --------------- ---------------
PARTNERS CAPITAL
Limited partners
Units of limited partnership interest, consisting
of 50,000 authorized units, $1,000 stated
value per unit; issued and outstanding -
26,501 units
(749,309) 97,841
General partners
(239,797) (231,240)
- --------------- ---------------
(989,106) (133,399)
- --------------- ---------------
$ 3,022,949 $ 3,409,282
=============== ===============
</TABLE>
See notes to financial
statements
- 5 -
<PAGE>
American Affordable Housing II Limited
Partnership
STATEMENTS OF OPERATIONS
Year ended March 31,
<TABLE>
1998 1997
1996
- --------------- --------------- ---------------
<S>
<C>
<C> <C>
Income
Interest income
$
331 $ 743 $ 783
Miscellaneous income
6,355 1,470 -
- --------------- --------------- --------
- -------
6,686 2,213 783
- --------------- --------------- --------
- -------
Share of losses from operating limited
partnerships (note A)
(383,653) (795,677)
(1,047,309)
Expenses
Professional fees
31,208 36,450 39,192
General and administrative expense
(note B) 20,371 14,182 16,661
Asset management fee (note B)
427,161 426,748 461,029
- --------------- --------------- -------------
- --
(862,393) (1,273,057) (1,564,191)
- --------------- --------------- -------------
- --
NET LOSS
$
(855,707) $ (1,270,844) $ (1,563,408)
=============== ===============
===============
Net loss allocated to general partners
$ (8,557) $ (12,708) $ (15,634)
=============== ===============
===============
Net loss allocated to limited partners
$ (847,150) $ (1,258,136) $ (1,547,774)
=============== ===============
===============
Net loss per unit of limited partnership
interest $ (31.97) $ (47.48) $ (58.40)
=============== ===============
===============
</TABLE>
See notes to financial
statements
- 6 -
<PAGE>
American Affordable Housing II Limited Partnership
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
Years ended March 31, 1998, 1997 and 1996
<TABLE>
General
Limited partners
partners Total
- ---------------- --------------- ---------------
<S> <C>
<C> <C>
Partners capital (deficit), March 31, 1995 $
2,903,751 $ (202,898) $ 2,700,853
Net loss
(1,547,774) (15,634) (1,563,408)
- --------------- --------------- ---------------
Partners capital (deficit), March 31, 1996
1,355,977 (218,532) 1,137,445
Net loss
(1,258,136) (12,708) (1,270,844)
- --------------- --------------- ---------------
Partners capital (deficit), March 31, 1997
97,841 (231,240) (133,399)
Net loss
(847,150) (8,557) (855,707)
- --------------- --------------- ---------------
Partners deficit, March 31, 1998 $
(749,309) $ (239,797) $ (989,106)
=============== =============== ===============
</TABLE>
See notes to financial statements
- 7 -
<PAGE>
American Affordable Housing II Limited Partnership
STATEMENTS OF CASH FLOWS
Year ended March 31,
<TABLE>
1998 1997
1996
- ---------------- --------------- ---------------
<S>
<C>
<C> <C>
Cash flows from operating activities
Net loss
$
(855,707) $ (1,270,844) $ (1,563,408)
Adjustments to reconcile net loss to net cash
used in operating activities
Cash flows from operating limited partnerships
846 10,351 14,441
Share of losses from operating limited
partnerships
383,653 795,677 1,047,309
Increase in accounts payable
- - - 3,029
Increase in due to affiliates
469,374 405,287 490,322
- --------------- --------------- -------------
- --
Net cash used in operating activities
(1,834) (59,529) (8,307)
- --------------- --------------- -------------
- --
Cash flows from investing activities
Repayment by an operating limited partnership
- - 38,875 16,500
- --------------- --------------- -------------
- --
Net cash provided by investing
activities
- - 38,875 16,500
- --------------- --------------- -------------
- --
NET INCREASE (DECREASE) IN CASH
(1,834) (20,654) 8,193
Cash, beginning
14,290 34,944 26,751
- --------------- --------------- -------------
- --
Cash, end
$
12,456 $ 14,290 $ 34,944
=============== ===============
===============
</TABLE>
See notes to financial statements
- 8 -
<PAGE>
American Affordable Housing II Limited
Partnership
NOTES TO FINANCIAL STATEMENTS
March 31, 1998, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
A m erican Affordable Housing II Limited
Partnership (the "partnership") was formed under
the laws of the Commonwealth of Massachusetts on
May 13, 1987, for the purpose of acquiring,
holding, and disposing of limited partnership
interests in operating limited partnerships
which were established to acquire, develop,
rehabilitate, operate and own newly
constructed, existing or rehabilitated
apartment complexes which qualify for the Low-
Income Housing Tax Credit established by the Tax
Reform Act of 1986. Certain of the apartment
complexes may also qualify for the Historic
Rehabilitation Tax Credit for their
rehabilitation of certified historic
structures; accordingly, the apartment complexes
are restricted as to rent charges and operating
methods and are subject to the provisions of
Section 42(g)(20) of the Internal Revenue Code
relating to the rehabilitation investment credit.
The general partners of the partnership are
Boston Capital Associates Limited Partnership and
Boston Capital Associates.
In accordance with the limited partnership
agreement, profits, losses and cash flow (subject
to certain priority allocations and distributions)
and tax credits are allocated 99% to the limited
partners and 1% to the general partners.
Pursuant to the Securities Act of 1933, the
partnership filed a Form S-11 Registration
Statement with the Securities and Exchange
Commission, effective September 21, 1987,
which covered the offering (the
"Public Offering") of the
partnership s units of limited partnership
interest, as well as the units of limited
partnership interest offered by American Affordable
Housing I, III, IV and V Limited Partnerships. The
partnership registered 50,000 units of limited
partnership interest at $1,000 each unit for
sale to the public. During 1988, the partnership
sold 26,501 units of limited partnership interest,
representing $26,501,000 of capital contributions.
Income Taxes
------------
No provision or benefit for income taxes has been
included in these financial statements since
taxable income or loss passes through to, and is
reportable by, the partners individually.
- 9 -
<PAGE>
American Affordable Housing II Limited
Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Investments in Operating Limited Partnerships -----
----------------------------------------
The partnership accounts for its investments in
operating
limited partnerships using the equity method of
accounting. Under the equity method of accounting,
the partnership adjusts its investment cost
for its share of each operating
partnership s results of operations and for any
distributions received or accrued. However, the
partnership recognizes an individual operating
partnership's losses only to the extent that the
partnership s share of losses of the
operating partnership does not exceed the
carrying amount of its investment.
Unrecognized losses will be suspended and offset
against future individual operating partnership s
income.
A loss in value of an investment in an operating
partnership other than a temporary decline
would be recorded as an impairment loss.
Impairment is measured by comparing the
investment carrying amount to the sum of the
total amount of the remaining tax credits
allocated to the partnership and the estimated
residual value of the investment.
Capital contributions to operating partnerships are
adjusted by tax credit adjusters. Tax credit
adjusters are defined as adjustments to operating
partnership capital contributions due to
reductions in actual tax credits from those
originally projected. The partnership records
tax credit adjusters as a reduction in investment
in operating partnerships and capital contributions
payable.
The operating partnerships maintain their
financial statements based on a calendar year and
the partnership utilizes a March 31 year end.
The partnership records losses and income from the
operating partnerships on a calendar year basis
which is not materially different from losses
and income generated if the operating partnerships
utilized a March 31 year end.
The partnership records capital contributions
payable to the operating partnerships once there
is a binding obligation to fund a specified
amount. The operating partnerships record capital
contributions from the partnership when received.
The partnership records acquisition costs as an
increase in its investment in operating
partnerships. Certain operating partnerships
have not recorded the acquisition costs as a
capital contribution from the partnership. These
differences are shown as reconciling items in note
D.
- 10 -
<PAGE>
American Affordable Housing II Limited
Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Fiscal Year
-----------
For financial reporting purposes, the partnership
uses a March 31 year end, whereas for income
tax reporting purposes, the partnership uses a
calendar year. The operating limited
partnerships use a calendar year for both
financial and income tax reporting.
Net Loss per Unit of Limited Partnership Interest -
------------------------------------------------
Net loss per unit of limited partnership interest
is calculated based upon the number of units
outstanding. For each of the three years in the
period ended March 31, 1998, 26,501 units were
outstanding.
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 revenue and expenses during the reporting
period. Actual results could differ from those
estimates.
Adoption of Accounting Standard
-------------------------------
On March 31, 1997, the partnership adopted
Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share" and SFAS
No. 129, "Disclosure of Information about
Capital Structure." SFAS No. 128 provides
accounting and reporting standards for the amount
of earnings per share. SFAS No. 129 requires
the disclosure in summary form within the
financial statements of pertinent rights and
privileges of the various securities outstanding.
The implementation of these standards has not
materially affected the partnership s financial
statements.
In June 1997, the Financial Accounting Standards
Board issued SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and
Related Information." In February 1998,
the Financial Accounting
Standards Board issued SFAS No. 132, "Employees
Disclosures about Pensions and Other Post-
retirement Benefits." SFAS No. 130 is effective
for years beginning after December 15, 1997. SFAS
No. 131 and No. 132 are effective for years
beginning after December 31, 1997 and early
adoption is encouraged.
- 11 -
<PAGE>
American Affordable Housing II Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Adoption of Accounting Standard (Continued) -------
------------------------
The partnership does not have any items of other
comprehensive income, does not have other segments
of its business or when to report, and does not
have any pensions or other post-retirement
benefits. Consequently, these pronouncements are
expected to have no effect on the partnership s
financial statements.
NOTE B - RELATED PARTY TRANSACTIONS
During the years ended March 31, 1998, 1997
and 1996, the partnership entered into several
transactions with various affiliates of the
general partners, including Boston Capital
Partners, Inc., Boston Capital Holdings Limited
Partnership, and Boston Capital Asset
Management Limited Partnership (formerly Boston
Capital Communications Limited Partnership), as
follows:
General and administrative expenses of $2,441,
$2,303 and $3,665 incurred by Boston Capital
Asset Management Limited Partnership Boston
Capital Holdings Limited Partnership, and Boston
Capital Partners, Inc. were charged to operations
during the years ended March 31, 1998, 1997 and
1996, respectively. At M arch 31, 1998 and
1997, the unpaid general and
administrative expenses totaled $130,827
and $98,415, respectively.
During fiscal year ended March 31, 1995, Boston
Capital Asset Management Limited Partnership
advanced the partnership $95,375 in order to
fund an advance made to an operating limited
partnership as more fully described in note C.
The advance is noninterest bearing and due upon
demand. The amount still outstanding at the end
of fiscal year 1998 and 1997 was $40,000.
An annual asset management fee based on 0.5% of
the aggregate cost of all apartment complexes
acquired by the operating limited partnerships
has been accrued as payable to Boston Capital
Asset Management Limited Partnership. The
aggregate cost is comprised of the capital
contributions made by the partnership to the
operating limited partnership and 99% of the
permanent financing at the operating limited
partnership level. At March 31, 1998 and 1997,
the unpaid asset management fees totaled
$3,837,728 and $3,400,766, respectively. The fee
is payable without interest as sufficient funds
become available. The asset management fees
charged to operations during the years ended
March 31, 1998, 1997 and 1996 were $436,961,
$441,858 and $471,241, respectively, which are
netted with reporting fees paid by the
operating limited partnerships. During the years
ended March 31, 1998, 1997 and 1996, the amount
of reporting fees paid by the operating
limited partnership was $9,800, $15,110 and
$10,212, respectively.
- 12 -
<PAGE>
American Affordable Housing II Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE C - NOTE RECEIVABLE
Note receivable is an advance made to an
operating limited partnership during the fiscal
year ended March 31, 1995. The note, secured by a
second mortgage on the property owned by the
operating limited partnership, bears interest at
6% per annum and is due December 31, 1997. The
carrying amount of the note receivable approximates
fair value as of March 31, 1997.
NOTE D - INVESTMENTS IN OPERATING LIMITED
PARTNERSHIPS
At March 31, 1998 and 1997, the partnership
has limited partnership equity interests in
50 operating limited partnerships, which own
apartment complexes.
Under the terms of the partnership's
investment in each operating limited
partnership, the partnership was required to make
capital contributions to the operating
limited
partnerships. These contributions were payable in
installments over several years upon each
operating limited partnership achieving specified
levels of construction and/or operations. All
contributions have been made to the operating
limited partnerships as of March 31, 1998 and
1997. The partnership has no further obligation to
make any additional contributions.
- 13 -
<PAGE>
American Affordable Housing II Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE D - INVESTMENTS IN OPERATING LIMITED
PARTNERSHIPS (Continued)
The partnership s investments in operating limited
partnerships
at March 31, 1998 and 1997 are summarized as
follows:
<TABLE>
1998 1997
- --------------- ---------------
<S>
<C> <C>
Capital contributions paid to operating limited
partnerships, net of
tax credit adjusters of $213,468 and $213,468,
respectively
$ 19,473,665 $ 19,473,665
Acquisition costs of operating limited partnerships
2,492,705 2,492,705
Cumulative losses from operating limited partnerships
(18,934,875) (18,551,222)
Cumulative distributions from operating limited
partnerships (68,851) (68,005)
- --------------- ---------------
Investment per balance sheet
2,962,644 3,347,143
Acquisition costs not included in net assets of
operating limited partnerships (see note A)
122,748 122,748
Loss from operating limited partnerships of $253,315
and $875,460 for the three months ended March 31,
1990 and 1989 which the
operating limited partnerships have not included
in partners capital (see note A)
1,128,775 1,128,775
Tax credit adjusters not accounted for in net assets
of operating limited partnerships (see note A)
121,349 121,349
Loss of operating limited partnerships not recognized
under the equity method of accounting (see note
A)
(7,141,631) (5,367,151)
Other adjustments
(623,057) (623,838)
- --------------- ---------------
Equity per operating limited partnerships combined
financial statements
$ (3,429,172) $ (1,270,974)
=============== ===============
</TABLE>
- 14
- -
<PAGE>
American Affordable Housing II Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE D - INVESTMENTS IN OPERATING LIMITED PARTNERSHIPS
(Continued)
The combined summarized balance sheets of the
operating limited partnerships at December 31, 1997 and 1996
are as follows:
COMBINED SUMMARIZED BALANCE SHEETS
<TABLE>
1997 1996
- --------------- ---------------
<S>
<C> <C>
ASSETS
Buildings and improvements, net of accumulated
depreciation of $28,427,132 and $25,600,972
$ 62,399,625 $ 64,412,398
Land
4,407,517 4,399,669
Other assets
5,761,425 5,551,097
- --------------- ---------------
$ 72,568,567 $ 74,363,164
=============== ===============
LIABILITIES AND PARTNERS
DEFICIT
Mortgages payable
$ 69,854,741 $ 69,637,032
Accounts payable and accrued expenses
2,828,164 2,474,611
Other liabilities
2,406,012 2,468,177
- --------------- ---------------
75,088,917 74,579,820
- --------------- ---------------
PARTNERS DEFICIT
American Affordable Housing II Limited
Partnership (3,429,172) (1,270,974)
Other partners
908,822 1,054,318
- --------------- ---------------
(2,520,350) (216,656)
- --------------- ---------------
$ 72,568,567 $ 74,363,164
=============== ===============
</TABLE>
-
15 -
<PAGE>
American Affordable Housing II Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE D - INVESTMENTS IN OPERATING LIMITED PARTNERSHIPS
(Continued)
The combined summarized statements of
operations of the operating limited partnerships for the
years ended December 31,
1997, 1996 and 1995 are as follows:
COMBINED SUMMARIZED
STATEMENTS OF OPERATIONS
<TABLE>
1997 1996
1995
- --------------- --------------- ---------------
<S>
<C>
<C> <C>
Revenue
Rental
$
10,648,605 $ 10,513,559 $ 9,835,175
Interest and other
430,683 356,532
551,831
- --------------- --------------- ---
- ------------
11,079,288 10,870,091
10,387,006
- --------------- --------------- ---
- ------------
Expenses
Interest
3,924,370 3,937,805
3,215,662
Depreciation and
amortization
2,886,227 2,998,290 3,054,807
Taxes and insurance
1,387,190 1,420,744 1,458,100
Repairs and
maintenance
1,754,632 1,595,969 1,707,222
Operating expenses
3,422,817 3,929,125 3,491,717
- --------------- --------------- ---------------
13,375,236 13,881,933 12,927,508
- --------------- --------------- ---------------
NET LOSS
$
(2,295,948) $ (3,011,842) $ (2,540,502)
=============== =============== ===============
Net loss allocated to American Affordable Housing
II Limited Partnership *
$ (2,158,133) $ (2,929,058) $ (2,342,459)
=============== =============== ===============
Net income (loss) allocated to other partners $
(137,815) $ (82,784) $ (198,043)
=============== =============== ===============
</TABLE>
* Amount includes $1,774,480, $2,133,381 and
$1,295,150 for the years ended December 31, 1997, 1996
and 1995, respectively,
of loss not recognized under the equity method of
accounting
as described in note A.
- 16 -
<PAGE>
American Affordable Housing II Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE E - RECONCILIATION OF FINANCIAL STATEMENT NET LOSS TO
TAX RETURN
The partnership s net loss for financial
reporting and tax return purposes are reconciled as
follows:
<TABLE>
Year ended March 31,
- -----------------------------------------------------
1998 1997
1996
- --------------- ---------------- ---------------
<S>
<C>
<C> <C>
Net loss for financial reporting purposes
$
(855,707) $ (1,270,844) $ (1,563,408)
Operating limited partnership rents received in
advance
4,359 1,993 2,695
Related party expenditures
72,243 19,424
78,092
Asset management fee not
deductible for tax purposes
until paid
436,961 441,858 452,569
Excess of tax depreciation over book
depreciation on operating limited
partnership assets
(423,900) (394,135) (435,751)
Difference due to fiscal year for
book purposes and calendar year
for tax purposes
149,012 142 463,144
Operating limited partnership net loss not
allowed for financial reporting under
equity
method
(1,774,480) (2,133,381) (1,295,150)
Other
(5,996) 716,565 360,055
- --------------- --------------- ---------------
Net loss for income tax purposes $
(2,397,508) $ (2,618,378) $ (1,937,754)
=============== =============== ===============
</TABLE>
- 17 <PAGE>
American Affordable Housing II Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
March 31, 1998, 1997 and 1996
NOTE E - RECONCILIATION OF FINANCIAL STATEMENT NET
LOSS TO TAX RETURN (Continued)
The difference between the investments in
operating limited partnerships for tax purposes
and financial statement purposes are primarily
due to the differences in the losses not
recognized under the equity method of
accounting, the three month period due to fiscal
year reporting and the historic tax credits taken
for income tax purposes. At March 31, 1998 and
1997, the differences are as follows:
<TABLE>
1998 1997
- ---------------- ---------------
<S>
<C> <C>
Investment in operating limited partnerships - tax basis
$ (4,488,085) $ (2,126,023)
Add back losses not recognized under the equity method
7,141,631 5,367,151
Estimated share of loss of $253,315 and $875,460 for the
three months ended March 31, 1990 and 1989 due to
fiscal year
reporting
(1,128,775)
(1,128,775)
Historic tax
credits 651,016 651,016
Other
786,857
583,774
- --------------- ---
- ------------
Investment in operating limited partnerships - as reported $
2,962,644 $ 3,347,143
=============== ===============
</TABLE>
- 18 -
LIBERTY CENTER, LTD.
Financial Statements
December 31, 1997 and 1996
Hunter & Associates, P.A.
4209 Baymeadows Road, Suite 2
Jacksonville, Florida 32217
Phone: (904) 731-9222
Fax: (904) 731-0352
May 19, 1998
INDEPENDENT AUDITOR'S REPORT
To the Partners
Liberty Center, Ltd.
We have audited the accompanying balance sheets of Liberty
Center, Ltd. As of December 31, 1997 and 1996, and the related
statements of operations, partners' equity and cash flows 'for
the years then ended. 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 audit.
We conducted our audit 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 audit provides 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 Liberty Center, Ltd. As of December 31 1997 and 1996, and the
results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting
principles.
Certified Public Accountants
Liberty Center, Ltd.
Balance Sheets
December 31, 1997 and 1996
Assets
1997 1996
Current assets: ---- ----
Cash and cash equivalents $106,173 $
99,584
Accounts Receivable 16,680 14,516
--------- ---------
Total Current Assets 122,853 114,100
--------- ---------
Property and Equipment, at cost:
Land 198,000 198,000
Building and improvements 2,487,005 2,487,005
Equipment 6,174 6,174
Less Accumulated Depreciation (579,418) (516,959)
--------- ---------
2,111,761 2,174,220
--------- ---------
Other Assets 522 6,400
--------- ---------
Total Assets: $2,235,136 $2,294,720
========= =========
See Independent Auditors' Report and Notes to Financial
Statements.
Liabilities and Partners' Equity
Current Liabilities
Current portion of notes payable $ 204,246 $ 187,718
Accrued interest, due within one year 3,948 3,948
Accounts payable and accrued expenses 43,493 54,525
--------- ---------
Total current liabilities 251,687 246,191
--------- ---------
Long-Term Liabilities
Notes payable - net of current portion 972,227 1,089,661
Accrued interest, due after one year 488,747 423,956
Advances from affiliates 92,491 96,278
Tenant security deposits 4,999 1,372
--------- ---------
Total long-term liabilities 1,558,464 1,611,267
--------- ---------
Total Liabilities 1,810,151 1,857,458
--------- ---------
Partners' Equity
General partner (13,056) (12,933)
Limited partner 438,041 450,195
--------- ---------
Total partners' equity 424,985 437,262
--------- ---------
Total liabilities and partners'
equity $2,235,136 $2,294,720
========= =========
See Independent Auditors' Report and Notes to Financial
Statements.
Liberty Center, Ltd.
Statements of Operation
For the Years ended December 31, 1997 and 1996
1997 1996
Rental revenues $466,947 $489,333
Interest and dividends 1,902 2,028
------- -------
468,849 491,361
------- -------
Expenses
Depreciation and amortization 62,459 62,822
General and administrative 35,937 11,466
Insurance 45,375 44,867
Interest 118,760 120,484
Legal and professional services 10,956 14,954
Maintenance and repairs 24,354 27,453
Management fees 20,020 21,600
Salaries - operations 69,372 91,540
Security - outside services 33,237 9,111
Taxes 22,985 22,740
Utilities 37,671 34,001
------- -------
Total expenses 481,126 461,038
------- -------
Net income (loss) from operations $ (12,277) $ 30,323
======= =======
See Independent Auditors' Report and Notes to Financial
Statements.
Liberty Center, Ltd.
Statement of Partners' Equity
For the Years ended December 31, 1997 and 1996
Investor
General Limited
Partner Partner
Total
------- --------
- -----
Partners' equity December 31, 1995 ($13,236) $420,175
$406,939
Loss (loss) ($303) $ 30,020 $
30,323
Distributions $0 $0
$0
Partners' equity December 31, 1996 ($12,933) $450,195
$437,262
Loss (loss) (123) (12,154)
($12,277)
Distributions 0 0
$0
- ---------------------------------
Partners' equity December 31, 1997 ($13,056) $438,041
$424,985
=================================
See Independent Auditors' Report and Notes to Financial
Statements.
Liberty Center, Ltd.
Statements of Cash Flows
For the Years ended December 31, 1997 and 1996
1997
1996
Cash flow from operating activities ----
- ----
Net income (loss) $ (12,277) $
30,323
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 62,459
62,822
Changes in asset and liabilities:
Decrease (increase) in tenant receivables (2,164)
(14,516)
Decrease (increase) in prepaid expenses
and other assets 5,878
(909)
Increase (decrease) in accounts payable
and accrued expenses (11,032)
8,440
Increase (decrease) in net security
deposits 3,627
(4,078)
Net cash (used for) provided -------
- -------
by operations 46,941
82,082
-------
- -------
Cash flows from investing activities
Increase in accrued interest 64,791
62,491
Net cash provided by investing -------
- -------
activities 64,791
62,491
-------
- -------
Cash flows from financing activities
Repayment of long-term debt (100,906)
(177,023)
Increase in advances from affiliates (3,787)
31,233
Net cash used for financing -------
- -------
activities (104,693)
(145,790)
-------
- -------
Net decrease in cash and cash equivalents 6,589
(1,217)
Cash and cash equivalents at beginning of year 99,584
100,801
-------
- -------
Cash and cash equivalents at end of year $ 106,173 $
99,584
=======
=======
Liberty Center, Ltd.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
A summary of the significant accounting policies consistently
applied in the
preparation of the accompanying financial statements follows.
Capitalization and Depreciation
- --------------------------------
Land, buildings and improvements are recorded at cost.
Depreciation is
provided for in amounts sufficient to relate the cost of
depreciable assets to
operations over their estimated service lives using the
straight-line method.
Improvements are capitalized, while expenditures for maintenance
and repairs
are charged to expense as incurred. Upon disposal of depreciable
property,
the appropriate property accounts are to be reduced by the
related costs and
accumulated depreciation. The resulting gains and losses are to
be reflected
in the statement of operations.
Income Taxes
- ------------
No provision or benefit for income taxes has been included in
these financial
statements since taxable income or loss passes through to, and is
reportable
by, the partners individually.
Cash and Cash Equivalents
- -------------------------
The partnership considers all highly liquid investments with a
maturity of
three months or less when purchased to be cash equivalents. Cash
equivalents
include $99,605 in money market deposits (Note C) at December 31,
1997 and
1996, respectively.
NOTE B - ORGANIZATION
------------
Liberty Center, Ltd. was organized under the laws of the State of
Florida on
June 28, 1988, for the purpose of constructing and operating a
109-unit low
income residential apartment project known as Liberty Center.
NOTE C - CERTIFICATES OF DEPOSIT, MONEY MARKETS AND
------------------------------------------
MARKETABLE EQUITY SECURITIES
----------------------------
Prior to amending the operating reserve agreement June 29, 1993,
certificates
of deposit, money market funds and marketable equity securities
have been
established under an agreement between the limited an genera
partners which
provides that such funds are available to fund any excess of
operating
expenses over operating income for a period of sixth (60) months.
Interest
earned on these funds is allocated and distributed to the general
partner
annually.
The operating reserve agreement was amended June 29, 1993,
establishing an
operating reserve of $100,000 and allowing for a distribution to
the general
partner of part of the operating reserve. The purpose was
substantially the
same as that of the prior agreement. A distribution to the
general partner of
this operating reserve is allowed if certain profitability
objectives are met.
The operating reserve account totaled $99,605 and $97,736 at
December 31, 1997.
NOTE D - PARTNERS' CAPITAL CONTRIBUTIONS
-------------------------------
The partnership has one general partner, The Harris Group, Inc.
one investor
limited partner - American Affordable Housing II. As of December
31, 1997,
the general partner and the investor limited partner have made
capital
contributions of $1,014,521 and $1,220,553, respectively.
NOTE E - ACCRUED INTEREST
----------------
The second mortgage provides for deferral of interest payments
based upon
projected cash flow as determined annually by the lender. In
addition, a
portion of the deferred interest payable on the second mortgage
may be
forgiven based upon the project maintaining a very low income
set-aside for a
period longer than that required. Interest forgiven increases
with each year
the project is extended. No interest has been forgiven at
December 31, 1997.
The following is a schedule of accrued interest payable:
December 31
1997
1996
----
- ----
First mortgage payable (Note F) $ 3,948 $
3,948
Second mortgage payable (Note F) 488,747
423,956
-------
- -------
492,695
427,904
Less amount due within one year (3,948)
(3,948)
-------
- -------
$488,747
$423,956
=======
=======
NOTE F - NOTES PAYABLE
------------- December
31
The following is a schedule of notes payable:
- -----------
1997
1996
Mortgage note payable to a bank monthly at ----
- ----
$18,710 including interest at 8.5% until
August, 1999, secured by first mortgage on
apartment project. $ 456,574 $
557,480
Mortgage note payable at 9% to The Florida
Housing Finance Agency; interest payments
only as determined by lender annually based
on cash flow, with a balloon payment in 2004;
secured by second mortgage on apartment
project. (Note E) 719,899
719,899
---------
- ---------
$1,176,473
$1,277,379
Less amount due in one year (204,246)
(187,718)
---------
- ---------
$ 972,227
$1,089,661
=========
=========
Aggregate maturities of long-term debt for the next five year are
estimated as
follows:
1998 204,246
1999 165,516
---------
Total $ 369,762
Later years 719,899
---------
$1,089,661
=========
NOTE G - TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES
------------------------------------------------
Annual Investor Service Fee
- ---------------------------
An annual investor service fee of $8,000 is payable to Boston
Capital
Communication, Inc., an affiliate of American Affordable Housing
II Limited
Partnership, an investor limited partner which holds a 99%
interest in the
partnership, for services to be rendered in reporting to the
investor limited
partner.
Management Fees
- ---------------
In accordance with the partnership agreement, the partnership
pays management
fees for services rendered in connection with the leasing and
operation of the
project. Fees are paid to Liberty Center for the Homeless, Inc.
and Harris
Group, Inc. Management fees charged to operations for the year
ended December
31, 1997 and 1996, $20,200 and $21,600, respectively.
NOTE H - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
------------------------------------------------
All profits and losses prior to the first date on which an
investor limited
partner was admitted (December 1, 1988) were allocated 100% to
the general
partner. Upon admission of the investor limited partner, the
interest of the
general partner was reduced to 1%.
Distributable cash flow is defined in the partnership agreement
as the sum of
all cash receipts less disbursements for operating activities,
including the
annual investor service fee.
Distributable cash flow is payable annually as follows:
1) 50% to the investor limited partner and 50% to the general
partner.
Gain, if any, from a sale or refinancing is allocable as follows:
1) To all partners having negative balances in their capital
accounts prior
to the distribution of any sale or refinancing proceeds, an
amount of such
gain to increase their negative balance to zero.
2) To partners who have received or will receive a distribution
of sale or
refinancing proceeds in excess of their capital accounts, an
amount of such
gain, if any, equal to such excess; and
3) The remainder of such gain, if any, 50% to the limited
partner and 50% to
the general partners.
Loss from refinancing is allocable 50% to the limited partner and
50% to the
general partners.
Interest earned on certificates of deposit, marketable securities
and money
market funds is allocable 100% to the general partner. (Note C)
The partnership agreement provides for a special distribution to
the general
partner in the amount of $100,000.
NOTE I - CHANGE IN CALCULATION OF EXPENSES
---------------------------------
In the years ended December 31, 1995, the management of the
partnership agreed
to share and allocate expenses incurred by the partnership and
another
residential apartment project located contiguous to the
partnership's project.
Management upon making more complete analysis, determined that a
better method
of allocation was appropriate. The financial statements for 1995
reflect this
new allocation and have been revised and restated from the
financial
statements previously issued dated May 2, 1996. The losses from
operation in
the previously issued statements were $45,486 for the year ended
December 31,
1995.
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
REPORT ON AUDITS OF FINANCIAL STATEMENTS
AND ADDITIONAL INFORMATION
DECEMBER 31, 1997 AND 1996
C O N T E N T S
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
BALANCE SHEETS 2-3
STATEMENT OF OPERATIONS 4
STATEMENT OF PARTNERS' EQUITY (DEFICIT) 5
STATEMENT OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7-14
SUPPLEMENTAL INFORMATION
SCHEDULES OF RENTING, ADMINISTRATIVE,
OPERATING, MAINTENANCE, TAXES AND
INSURANCE, AND INTEREST EXPENSE 15-16
Robert Ercolini & Company LLP
Certified Public Accountants Business ConsultantsINDEPENDENT
AUIDITOR'S REPORTTo the Partners ofRiverplace Apartments Limited
PartnershipHolyoke, Massachusetts
We have audited the accompanying balance sheet of Riverplace
Apartments Limited Partnership as of December 31, 1997, and the
related statements of operations, partners' capital, and cash flows
for the year then ended. 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
audit. The financial statements of Riverplace Apartments Limited
Partnership as of December 3 1, 1996, were audited by other
auditors whose report dated January 3 1, 1997, expressed an
unqualified opinion on those financial statements.
We conducted our audit 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
assess' the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 1997 financial statements referred to above
present fairly, in all material respects, the financial position of
Riverplace Apartments Limited Partnership as of December 3 1, 1997,
and the results of its operations, changes in partners' capital,
and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 1997 taken as
a whole, The additional information related to the 1997 financial
statements included in this report (shown on pages 15 and 16) is
presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements
for the year ended December 31, 1997 taken as a whole. The
additional information related to the 1996 financial statements
included in a report (shown on pages 15 and 16) was audited by
other auditors whose report dated January 31, 1997, stated that, in
their opinion, such information was fairly stated in all material
respects in relation to the basic financial statements for the year
ended December 31, 1996 taken as a whole.
January 27, 1998
Fifty Five Summer Street - BOSTON, MA 021 10-100-1 - TELEPHONE 617-482-
5511 - FAX 617.426-5252
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
1997 1996
CURRENT ASSET ---- ----
Cash $ 1,471 $ 760
Accounts Receivable - Tenants 9,438 7,151
Accounts Receivable Subsidy 30,848 23,625
Prepaid Expenses 5,183 20,713
--------- ---------
Total Current Assets 46,940 52,249
--------- ---------
Tenants' Security Deposits 13,461 12,685
RESTRICTED DEPOSITS AND FUNDED RESERVES
Reserve for Replacements 2,802 195
--------- ---------
RENTAL PROPERTY - AT COST
Land 175,260 175,260
Buildings and Improvements 6,604,141 6,604,142
Personal Property 161,963 133,576
--------- ---------
6,941,364 6,912,978
Less Accumulated Depreciation (1,663,878) (1,470,992)
--------- ---------
5,277,486 5,441,986
--------- ---------
Deferred financing costs, net of accumulated
amortization of $27,147 and $23,998 43,431 46,580
--------- ---------
$5,384,120 $5,553,695
========= =========
See notes to financial statements.
2
LIABILITIES AND PARTNERS' EQUITY
1997 1996
CURRENT LIABILITIES -------- -------
Current Portion of Mortgage Note Payable $ 57,350 $ 48,000
Accounts Payable 12,064 33,268
Payables Affiliates 18,048 107,680
Accrued Mortgage Interest Payable 34,603 35,043
Accrued Expenses Other 66,753 74,734
Prepaid Rents 5,222 -
--------- ---------
Total Current Liabilities 194,040 298,725
--------- ---------
DEPOSIT LIABILITY
Tenants' Security Deposits 12,881 12,748
--------- ---------
LONG-TERM LIABILITIES
Mortgage Note Payable, 4,093,924 4,155,973
less current portion
Accrued fees payable - affiliate 44,000 38,500
--------- ---------
4,137,924 4,194,473
--------- ---------
Total Liabilities 4,344,845 4,505,946
PARTNERS' EQUITY 1,039,275 1,047,749
--------- ---------
$5,384,120 $5,553,695
========= =========
See notes to financial statements. 3
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
DECEMBER 31, 1997 AND 1996
1997 1996
Revenue ---- ----
Rents $ 1,209,638 $ 1,094,610
Less Vacancy Losses 26,660 48,060
--------- ---------
1,182,978 1,046,550
Interest Income 306 314
Other Income 4,405 3,037
--------- ---------
1,187,689 1,049,901
--------- ---------
Expenses
Administrative 89,041 86,315
Utilities 161,180 165,197
Management Fee 71,119 62,985
Operating and Maintenance 127,046 147,515
Taxes 26,644 28,074
Insurance 99,950 94,666
Interest on Mortgage 419,648 423,985
Depreciation and Amortization 196,035 191,988
--------- ---------
1,190,663 1,200,725
--------- ---------
LOSS BEFORE MORTGAGE ENTITY EXPENSE (2,974) (150,824)
MORTGAGE ENTITY EXPENSE:
Partnership Reporting Fee Affiliate (5,500) (5,500)
NET LOSS $ ( 8,474)$( 156,324)
========= =========
See notes to financial statements
4
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' EQUITY
DECEMBER 31, 1997 AND 1996
General Limited
Partner Partner Total
------- -------- -------
Balance (deficiency)
January 1, 1996 $ (121,648)$1,325,721 $ 1,204,073
Net Loss for Year (1,563) (154,761) (156,324)
Balance (deficiency)
December 31, 1996 ( 123,211) 1,170,960 1,047,749
Net Loss for Year ( 85) ( 8,389) ( 8,474)
--------- ------- ---------
Balance (deficiency)
December 31, 1997 $ (123,296)$1,162,571 $1,039,275
========== ========= =========
Percentage Interest at
December 31, 1997 and 1996 1% 99% 100%
==== ==== ====
See notes to financial statements
5
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997
1996
Cash Flow From Operating Activities ----
- ----
Net Loss $ (8,474)
$(156,324)
Adjustments to Reconcile Net Loss
to Net Cash Provided (Used) By
Operating Activities
Depreciation 192,886
188,839
Amortization 3,149
3,149
Mortgage Entity Expense 5,500
5,500
Changes in Assets and Liabilities:
(Increase) Decrease in Tenants' Rents
Receivables ( 2,287)
1,875
(Increase) Decrease in Tenants' Rent
Subsidies Receivable ( 7,223)
213
Decrease in Prepaid Expenses 15,530
1,760
Decrease in Accounts Payable (21,204)
(3,451)
Increase (Decrease) in Payables/Affiliates (89,632)
40,593
Decrease in Accrued Mortgage Interest Payable (440)
(395)
Decrease in Accrued Expenses Other (7,981)
(4,586)
Increase (Decrease) in Tenants' Security
Deposits
Increase in Prepaid Rents 5,222
- -
Increase (Decrease) in Tenants' Security (776)
1,524
Deposits
Increase in Tenants' Security Deposit
Liabilities 133
367
Net Cash Provided (Used) by -------
- -------
Operating Activities 84,403
79,064
-------
- -------
Cash Flows From Investing Activities
Purchase of Rental Property ( 28,386) (
31,935)
Reserve for Replacements Funded,
Including Interest Earned ( 21,158) (
21,170)
Reserve for Replacement Releases 18,551
21,434
-------
- -------
Net Cash Used In
Investing Activities (30,993)
(31,671)
------- ----
- ---
Cash Flows From Financing Activities
Payment on Mortgage Note Payable (52,699)
(47,720)
------- ----
- ---
Net Increase (Decrease) in Cash 711
(327)
Cash, Beginning of Year 760
1,087
-------
- -------
Cash, End of Year $ 1,471 $
760
Supplemental Disclosure of Cash Flow =======
=======
Information:
Cash Paid During the Year for Interest $ 420,088 $
424,379
=======
=======
See notes to financial statements
6
RIVERPLACE APARTMENTS LIMITED PARTNERSIHP
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31,1997 AND 1996
1.
Organization and summary of significant accounting policies:
Organization:
Riverplace Apartments Limited Partnership ("the Partnership"),
organized as a Massachusetts Limited Partnership on February 29,
1988, was formed to acquire and operate an affordable residential
apartment complex consisting of 100 units located at various
scattered locations in Holyoke, Massachusetts ("the Property") as
follows: 298, 300, 302, 304 Chestnut Street; 294, 298 Elm Street;
82, 82@ R. Clemente Street; 44 Lyman S@; 22, 24 Northeast Street;
532 South Bridge Street; 527 South Summer Street; and 177, 183,
185 West Street. The project is currently operating under the
name Riverplace Apartments. The Partnership Agreement was last
amended and restated on September 1, 1988.
Summary of significant accounting policies:
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 income and expenses during the reporting
period. Actual results could differ from those estimates.
Method of accounting:
The financial statements of the Partnership have been prepared on
the accrual basis of accounting, consistent with generally
accepted accounting principles.
Rental income:
Rental income is recognized under the operating method as the
rentals become due. Rental payments received in advance are
deferred until earned. Residential units are principally on
short-term leases.
Rental property:Rental property 's recorded at cost.
Depreciation is provided for in amounts sufficient to relate the
cost of depreciable assets to operations over their estimated
useful lives of 40 years for buildings, 12 years for certain
improvements and 3 to 15 years for personal property using both
straight-line and accelerated methods. For federal 'income tax
purposes, depreciation is being calculated using the Modified
Accelerated Cost Recovery System (MACRS).
Improvements to rental property are capitalized, while
expenditures for maintenance and repairs are charged to expense
as incurred. Upon disposal of depreciable property, the
appropriate property accounts are reduced by
the related costs and accumulated depreciation. The resulting
gains and losses are reflected in the statement of operations.
7
RIVERPLACE APARTMENTS LIMTED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED DECEMBER 31,1997 AND 19961. Organization and summary
of significant accounting policies - continued:
Deferred financing costs:
Deferred financing costs consist of costs associated with
obtaining the mortgage on the Property. These costs are being
amortized on a straight-line basis over the life of the related
debt.
Income taxes:
Federal and state income taxes are not included in the
accompanying financial statements because these taxes, if any,
are the responsibility of the individual Partners.
The Project is eligible for low-income housing tax credits for a
ten-year
period, beginning in 1988, which are calculated at between 9.12%
- 9.22% of
qualified rehabilitation costs - The um annual credit is $364,094
and it is a
pass-through credit to the partners. The actual credit amount
may vary
annually based on the low income occupancy of the buildings. The
credits for
1997 and 1996 were $364,094 each year.
Provisions of the enabling legislation regarding the tax credit
restrict occupancy of all 100 apartments to qualified low-income
tenants for a fifteen-year period. Recapture provisions of the
legislation could result in a required repayment by the partners
of a portion of the tax credits if relevant provisions are not
adhered to.
Reclassifications:
Certain reclassifications have been made to the 1996 financial
statements to conform with the 1997 presentation.
2. Partners' capital contributions:
The general partners of the Partnership are Mark A. Berezin,
Herbert G. Berezin, and Stephen L. Berezin. As of December 31,
1997 and 1996, the general partners have made aggregate capital
contributions of $3.
The investment limited partner of the Partnership is American
Affordable Housing II Limited Partnership. As of December 31,
1997 and 1996, the investment limited partner has made capital
contributions of $2,186,118.
3. Allocation of benefits:
In accordance with the Partnership Agreement, as last amended,
all profits and losses from operations and tax credits are
allocated as follows:
Investment Limited Partner 99%
General Partners 1
100%
8
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED DECEMBER 31,1997 AND 1996
3. Allocation of benefits - continued:Distributable cash flow
is defined in the Partnership Agreement, as last amended, to
include all profits and losses of the Partnership from operating
activities subject to the following adjustments:
(a) Depreciation of rental property and amortization of deferred
costs shall not be deducted;
(b) Mortgage principal payment shall be deducted-,
(c) Payments to reserves for working capital needs,
improvements, replacements and any other contingencies shall
be deducted;
(d) Amounts paid for capital expenditures shall be deducted,
unless paid from a replacement reserve or funded through
insurance.
(e) Proceeds from a capital transaction shall not be included;
(f) Any rent or interest subsidies received shall be included;
(g) Certain fees to the General Partners and others, as defined
in the Partnership Agreement, shall not be deducted;
(h) The reporting fee shall be deducted only when and to the
extent paid-, and
(i) Deposits to or releases of funds, letters of credit or other
security (and the interest, if any, thereon) provided in
connection with any mortgage by the General Partners and their
affiliates shall not be included.
Distributable cash flow from operations shall be applied, subject
to governmental agency and lender approvals (if required), as
follows (all terms are as defined in the Partnership Agreement,
as last amended) -.
(a) First, to the repayment of Subordinated Loans and interest
thereon-,
(b) Second the balance there of shall be distributed 5O% to the
Investment Limited Partner and 5O% to the General Partners.
Distributable cash flow from operations in respect to any fiscal
year may not exceed such amounts as governmental agency
regulations and lender regulations permit to be distributed.
Further, the Partnership Agreement provides that until September
1, 2003 all distributable cash flow from operations be paid into
a reserve account to fund the costs of paying increased debt
service on the Partnership's mortgage note due to interest rate
'increases and the costs of refinancing the mortgage as may be
applicable. On September 1, 2003 or such earlier time as
approved by the General Partners and the designated affiliate of
the Investment Limited Partner, any funds remaining in the
reserve account shall be disbursed to the partners.
9
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED DECEMBER 31, 1997 AND 1996
3. Allocation of benefits - continued:
Profits from a capital transaction, as defined in the Partnership
Agreement, as last amended, are allocated to the partners as
follows:
(a) First, to restore the negative capital accounts of all
partners to zero in proportion to each partner's negative
capital account balance;
(b) Second to the partners to the extent of their invested
amounts not previously distributed and
(c) Third the balance, if any, of such profits shall be
allocated, 50% to the investment Limited Partner and 50% to
the General Partners.
Losses from a capital transaction are allocated to the partners
as follows:
(a) First, losses shall be allocated to all partners having
positive capital accounts until their capital accounts have
been reduced to zero; and
(b) Second, the balance of such losses shall be allocated to the
General
Partners.4.Cash, restricted deposits and funded reserves:
The Partnership maintains certain operating, security deposit and
replacement
reserve cash balances in two financial institutions located in
Massachusetts.
The balances are measured by the Federal Deposit Insurance
Corporation
("FDIC") up to $100,000. At December 31, 1997 and 1996, the
Partnership's
cash balances were fully insured.
5.Mortgage note payable:
The mortgage note payable consists of a note in the original
amount of
$4,500,000, dated March 11, 1988 and last amended on May 23,
1989, with Fleet National Bank as successor in interest to Bank
of New England-West, N.A. The note is secured by the real estate
and related personal property of the Partnership and an
assignment of rents and leases. Interest is currently payable on
the note at a rate of 10% per annum. This rate was fixed at the
conversion date (August 1, 1989), as defined in the loan
agreement. The lender has the right to adjust the interest, rate
every three years subsequent to the conversion date to a rate
that is equal to 2 1/2% per annum above the three year Treasury
note rate in effect on the interest rate adjustment dates. The
next scheduled interest rate adjustment date is August 1, 1998.
Based upon the current interest rate, the note requires monthly
'installments of principal and interest of $39,240. The note
matures on July 1, 2019. However, the lender has the right to
demand repayment of the loan in full on September 19, 2003 which
is the date fifteen years following the execution of the first
Housing Assistance Payments contract for the Property. The
mortgage note may be prepaid by the Partnership without premium
or penalty.
10
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED DECEMBER 31,1997 AND 1996
5. Mortgage note payable - continued:
In connection the execution of the note agreement, the General
Partners entered into a Negative Cash Flow Commitment agreement
with the lender. Pursuant to the agreement, the General Partners
were required to fund any operating deficits, as defined, until
the later to occur of August 1, 1992 or when net income, as
defined, from the Property at least equaled 120% of debt service
on the mortgage note. The Negative Cash Flow Commitment was
limited to a maximum amount of $250,000. For the year ended
December 3 1, 1997, the Partnership met the requirement that net
'income equal at least 120% of debt service on the mortgage note.
Accordingly, pursuant to its provisions, the Negative Cash Flow
Commitment terminated as of December 3 1, 1997.
Aggregate principal maturities on the mortgage loan for each of
the next five years, based on the current effective interest
rate, are as follows:
Year Amount
1998 $57,350
1999 63,355
2000 69,990
2001 77,318
2002 85,415
The liability of the Partnership under the mortgage note is
limited to the underling value of the real estate collateral plus
any amounts that may be deposited with the lender.
6. Rental housing assistance agreement:
The Partnership has a contract with the Housing Authority of the
City of Holyoke, Massachusetts to receive HUD Section 8 rental
assistance funds for the benefit of qualified tenants. The
program restricts assistance to those who meet certain HUD
established criteria including maximum income limitations. The
Housing Authority is responsible for determining tenant
eligibility for participation 'm the program. This Housing
Assistance Payments ("HAP") contract was awarded in stages
covering all 100 apartment units and it expires m corresponding
stages from September 19, 2003 through March 20, 2004. During
the years ended December 31, 1997 and 1996, rental assistance
income organized under the contract amounted to $904,401 and
$692,959, respectively.
7. Rental income:
During 1997, the Partnership received $96,262 from the Holyoke
Housing Authority for retroactive rent adjustments
and special clams payments related to years prior to 1997. This
amount has been included in rental income for the year ended
December 31, 1997. The Partnership still has a request pending
with the Holyoke Housing Authority for additional adjustments
related to a prior year. The Housing Authority has not yet acted
upon this request as of December 31, 1997. At this time, no
estimate can be made of the amount, if any, of additional
adjustments that will actually be received by the Partnership.
11
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED DECEMBER 31, 1997 AND 1996
8. Transactions with related parties:
Marken Properties, Inc. ("Marken"), an affiliate of the General
Partners, is the project management agent. Marken receives a
base management fee calculated at 6% of gross revenues from the
Property. Management fees expensed in 1997 and 1996 amounted to
$71,119 and $62,985, respectively. Of these amounts, $8,120 and
$15,795 remained unpaid at December 31, 1997 and 1996,
respectively.
Personnel working at the project site are employees of Marken and
therefore the Project reimbursed Marken for the actual salaries
and related benefits, as reflected in the accompanying financial
statements. Such salaries and related benefit costs expensed
during 1997 and 1996 amounted to $99,465 and $112,578,
respectively. Of these amounts, $5,448 and $41,274 remained
unpaid at December 31, 1997 and 1996, respectively.
The Partnership incurred accounting and data processing fees of
$7,200 to Marken in each of the years ended December 3 1, 1997
and 1996. As of December 31, 1996, fees in the amount of $1,800
remained unpaid.
Marken allocates certain office and administrative expenses among
multiple properties under its management. For the year ended
December 31, 1997, the Partnership's allocable share of these
costs amounted to $10,982. In addition, the Partnership
purchases various operating and maintenance supplies and services
as well as its fuel oil and heating service contract from
companies (Interstate Plumbing & Heating Supply Corp., Key
Contractors, Inc., and Hampden Contractors, Inc.) affiliated with
the General Partners. For the year ended December 3 1, 1997, the
Partnership incurred costs to Interstate Plumb' & Heating Supply
Corp. and Key Contractors, Inc. for operating and maintenance
supplies and services in the amounts of $34,490 and $2,525,
respectively. Costs incurred to Hampden Contractors, Inc. for
fuel Oil and heating seances and to maintain the laundry
concession aggregated $71,949 in 1997. For the year ended
December 31, 1996, the Partnership incurred aggregate costs of
$133,405 for all of the above purchases and services. As of
December 31, 1997, the Partnership had payables to these
affiliates totaling $4,480. As of December 31, 1996, the
Partnership had payables to Marken of $1,025 and to the other
affiliates total' $15,013.
At December 31, 1996, the Partnership had an aggregate liability
of $34,282 to various affiliated real estate limited partnerships
for insurance premiums paid on behalf of the Partnership. The
Partnership reimbursed these entities in 1997 for these costs.
At December 31, 1996, the Partnership had a miscellaneous
receivable from
Marken in the amount of $1,509 which has been netted against
payables to Marken in the accompanying 1996 balance sheet. This
receivable was collected in 1997.
Pursuant to the Partnership Agreement, as last amended, a
reporting fee is payable to an affiliate of the Investment
Limited Partner for its services in assisting with the
preparation of tax returns and other reports to the partners as
required by the Partners Agreement. The fee is in an annual
amount of $5,500 and is payable from available cash flow from
operations. Any unpaid fees shall accrue and be payable on a
cumulative basis in the first year in which there is sufficient
cash flow from operations or from the proceeds of a capital
transaction. A reporting fee in the amount of $5,5 00 was
expensed in the years ended December 3 1, 1997 and 1996. No fees
were paid in 1997 or 1996. The Partnership's cumulative
liability to the affiliate for these fees at December 31, 1997
and 1996 amounted to $44,000 and $38,500, respectively.
12
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED DECEMBER 31, 1997 AND 1996
8. Transactions with related parties - continued:
In accordance with the provisions of the Partnership Agreement,
as last amended if the Partnership is required to obtain loans to
fund increased debt service under its mortgage note on account
of interest rate increases during the fifteen year period ending
on September 1, 2003, the General Partners are required to either
guarantee such loans or to make such loans to the Partnership.
Any such loans made to the Partnership by the General Partners
will be Subordinated Loans. These loans will bear interest at
the prime rate of Fleet National Bank. The loans and related
interest thereon may only be repaid from available cash flow from
operations or from the proceeds of a capital transaction.
Pursuant to the Partnership Agreement, as last amended, the
General Partners are entitled to receive a sales preparation fee
in the amount of 3 % of the gross sales price upon any sale of
the Property.
9. Contingencies:
The Partnership is required to maintain compliance with the Low-
Income Housing Tax Credit Program as a condition to receiving low-
income housing tax credits. Failure to comply with the
requirements of the Low-income Housing Tax Credit Program can
result in a recapture of a portion of the tax credits previously
taken and can jeopardize the ability of the Partnership to claim
any future low-income tax credits.
The Partnership is involved in a dispute with the City of
Holyoke, Massachusetts related to water meter readings and sewer
use charges at the Property's 304 Chestnut Street location. In
March 1994, the Holyoke Water Department determined that its
meter reader had been incorrectly reading the water meter at this
location since December 1989. As a result, the City has alleged
that the Partnership had only been billed for a small portion of
the total water consumption and sewer use charges at this
location for the period from December, 1989 to March, 1994. The
City billed the Partnership an amount of approximately $83,000
for the previously unbilled water and sewer use charges allegedly
incurred for this period of time. The Partnership has contested
the City's actions in this matter. As a consequence, on June 6,
1995, the City placed a lien on the Property for the unpaid water
bill, sewer
charges and accumulated interest thereon totaling $94,503.
Management is
currently attempting to settle this matter with the City. A
liability in the amount of approximately $43,000 has been accrued
in the accompanying financial statements for 1997 and 1996 and it
has been included with accrued expenses other. Management
believes, based in part upon the opinion of legal counsel, that
the Partnership may be able to settle this matter with the City
for an amount approximating the liability recorded in the
accompanying financial statements. The ultimate resolution of
this matter cannot be determined at the present time.
Nevertheless, due to uncertainties in the settlement process, it
is at least reasonably possible that management's view of the
outcome will change in the near term.
10. Concentrations:
The Partnership's operations are concentrated in the multifamily
real estate market. In addition, the Partnership operates in a
heavily regulated environment. The operations of the Partnership
are subject to the administrative directives, rules and
regulations of federal, state and local regulatory agencies,
including, but not limited to, HUD. Such administrative
directives, rules and regulations are subject to change by an act
of Congress or an administrative change mandated by HUD. Such
changes may occur with little notice or inadequate funding to pay
for the related costs, including the additional administrative
burden, to comply with a change.
13
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
YEARS ENDED DECEMBER 31, 1997 AND 1996
11. Reconciliation to taxable loss:
Reconciliation's of financial statement net loss to taxable loss
of the Partnership for the years ended December 31, 1997 and 1996
are as follows:
1997 1996
Net loss per financial statement ($8,474)
($156,324)
Adjustments:
Excess of tax depreciation ( 64,713)
(71,754)
over book depreciation
Rents collected in advance 5,222
-
Miscellaneous other - (
1,761)
-------- -------
- -
Taxable loss per tax return ($67,965)
($229,839)
========
========
14
ADDITIONAL INFORMATION
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
SCHEDULES OF RENTING, ADMINISTRATIVE, OPERATING,
MAINTENANCE,
TAXES AND INSURANCE, AND INTEREST EXPENSES
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
Administrative Expenses
Advertising and Promotion $ 752 $ 354
Office Salaries 24,687 28,382
Employee Benefits 14,860 17,226
Legal 5,721 2,050
Auditing 7,500 7,500
Telephone 3,410 4,208
Office Expense 11,725 10,760
Data Processing Fees/ Bank Charges 8,582 8,727
Licenses and Permits 413 400
Miscellaneous 11,391 6,708
-------- --------
Total Administrative Expenses $ 89,041 $ 86,315
======== ========
Utilities
Fuel oil $ 61,087 $ 65,765
Electricity 12,414 10,540
Water and Sewer 75,037 75,901
Gas 12,642 12,991
-------- --------
Total Utilities $ 161,180 $ 165,197
======== ========
Operating Expenses
Maintenance Salaries $ 29,788 $25,887
Cleaning Salaries 11,000 20,440
Decorating Salaries 117 723
Trash Removal 8,885 11,089
Exterminating 10,195 12,200
Cleaning Supplies 2,522 2,889
Snow Removal 1,673 928
HVAC Repairs and Maintenance 15,275 12,614
Repairs Material 38,730 43,400
Decorating Supplies and Contract 8,861 17,345
-------- --------
Total Operating and Maintenance Expenses $ 127,046 $ 147,515
======== ========
See independent auditor's report on additional information on
page 1. 15
RIVERPLACE APARTMENTS LIMITED PARTNERSHIP
SCHEDULES OF RENTING, ADMINISTRATIVE, OPERATING, MAINTENANCE,
TAXES AND INSURANCE, AND INTEREST EXPENSES - CONTINUED
YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
Taxes
Real Estate Taxes $ 18,870 $ 19,174
Payroll Taxes 7,649 8,867
Other Taxes 125 33
-------- --------
$ 26,644 $ 28,074
======== ========
Insurance Expense
Property and Liability $ 88,064 $ 80,888
Workers' Compensation 2,944 3,413
Employee Health 8,942 10,365
-------- --------
Total Insurance Expenses $ 99,950 $ 94,666
======== ========
Interest Expense
Interest on Mortgage $ 417,740 $ 422,765
Other Interest 1,908 1,220
-------- --------
Total Interest Expense $ 419,648 $ 423,985
======== ========
See independent auditor's report on additional information on page 1. 16
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
American Affordable Housing II
Limited Partnership
Schedule III - Real Estate and
Accumulated Depreciation
March 31, 1998
Subsequent
Initial capitalized Gross amount at
which
cost to company Costs** carried at close
of period
--------------- -----------
- --------------------------
Buildings
Buildings Accum. Con- Acq- Depre-
Encum- and im- Improve- and im-
Depre- struct uired ciation
Description brances Land provements ments Land
provements Total ciation Date Date Life
- --------------------------------------------------------------------------------
- ----------------------------------------------
Anthony Garden
Apartments 3,864,835 501,332 2,632,779 1,727,786 501,322 4,360,565
4,861,887 1,083,541 3/89 10/88 5-50
Belen Apts. 1,483,172 54,000 1,468,653 518,194 87,960 1,986,847
2,074,807 679,274 12/88 12/88 5-27.5
Blairview
Associates 1,431,998 80,814 1,705,626 6,399 80,814 1,712,025
1,792,839 715,209 12/88 3/89 5-27.5
Bloomfield
Associates 367,901 11,500 466,419 1,013 17,473 467,432
484,905 175,169 6/88 6/88 5-27.5
Boardman Lake
Apartments 978,259 60,200 590,096 672,641 60,200 1,262,737
1,322,937 474,556 5/89 10/88 5-27.5
Bowdoinham
Associates 1,295,583 95,132 966,112 698,337 65,132 1,664,449
1,729,581 519,647 5/89 11/88 5-27.5
Brewton Ltd. 971,471 72,500 1,211,379 4,023 72,500 1,215,402
1,287,902 452,081 6/88 8/88 5-27.5
- 19 -
American Affordable Housing II
Limited Partnership
Schedule III - Real Estate and
Accumulated Depreciation
March 31, 1998
Subsequent
Initial capitalized Gross amount at
which
cost to company Costs** carried at close
of period
--------------- -----------
- --------------------------
Buildings Buildings
Accum. Con- Acq- Depre-
Encum- and im- Improve- and im-
Depre- struct uired ciation
Description brances Land provements ments Land
provements Total ciation Date Date Life
- --------------------------------------------------------------------------------
- ----------------------------------------------
Bridgeview 772,183 12,000 1,012,110 13,623 12,000 1,025,733
1,037,733 417,744 5/88 8/88 5-27.5
Brookhollow
Manor, Ltd. 893,099 25,080 1,003,839 179,657 25,080 1,183,496
1,208,576 408,792 8/88 10/88 5-27.5
Carthage Court
Housing 1,277,004 18,000 1,568,266 49,798 18,000 1,618,064
1,636,064 571,835 10/88 12/88 5-27.5
Deer Crossing
Associates 1,182,904 73,102 1,565,336 24,443 73,102 1,589,779
1,662,881 389,748 4/89 4/89 5-27.5
East China
Township 897,902 52,039 1,140,464 18,921 52,039 1,159,385
1,211,424 459,957 11/88 8/88 5-27.5
East Ridge
Associates 1,247,652 70,000 1,602,988 5,763 70,000 1,608,751
1,678,751 548,831 9/88 8/88 5-27.5
Fairbanks Flats 542,098 40,000 883,522 (352,620)b 40,000 530,902
570,902 243,173 12/88 7/88 5-27.5
Fredericktown
Associates 370,054 20,000 456,784 13,296 20,000 470,080
490,080 169,860 5/88 6/88 5-27.5
- 20 -
American Affordable Housing II
Limited Partnership
Schedule III - Real Estate and
Accumulated Depreciation
March 31, 1998
Subsequent
Initial capitalized Gross amount at
which
cost to company Costs** carried at close
of period
--------------- -----------
- --------------------------
Buildings
Buildings Accum. Con- Acq- Depre-
Encum- and im- Improve- and im-
Depre- struct uired ciation
Description brances Land provements ments Land provements
Total ciation Date Date Life
- --------------------------------------------------------------------------------
- ---------------------------------------------
Garden City
Family Hsg. 384,903 14,775 483,300 4,000 14,775 487,300
502,075 148,905 6/88 6/88 5-35
Harbor Hill
Associates 1,246,995 65,132 1,443,798 156,852 65,132 1,600,650
1,665,782 518,521 2/89 11/88 5-27.5
Immokalee
RRH, Ltd. 1,316,810 107,000 1,573,636 17,690 107,000 1,591,326
1,698,326 452,025 3/88 5/88 5-27.5
Kersey Apts. 1,177,532 90,000 1,270,768 231,101 92,040 1,501,869
1,593,909 491,430 10/88 10/88 5-27.5
Kingsley Park
Associates 10,851,302 521,725 12,281,821 145,089 521,725 12,426,910
12,948,635 4,331,449 10/88 3/88 5-27.5
Lake Havasu
Invsmt. Grp. 1,424,640 176,845 1,595,306 0 176,845 1,595,306
1,772,151 455,987 4/88 3/88 5-50
Liberty Center,
Ltd. 1,176,473 198,000 2,480,840 12,339 198,000 2,493,179
2,691,179 579,418 10/88 12/88 5-27.5
Lovington
Housing Assoc. 1,092,500 30,000 1,464,954 62,943 30,000 1,527,897
1,557,897 343,259 2/89 2/89 5-27.5
- 21 -
American Affordable Housing II
Limited Partnership
Schedule III - Real Estate and
Accumulated Depreciation
March 31, 1998
Subsequent
Initial capitalized Gross amount at
which
cost to company Costs** carried at close
of period
--------------- -----------
- --------------------------
Buildings Buildings
Accum. Con- Acq- Depre-
Encum- and im- Improve- and im-
Depre- struct uired ciation
Description brances Land provements ments Land provements
Total ciation Date Date Life
- --------------------------------------------------------------------------------
- ----------------------------------------------
Malone Housing
Redevelopment 1,482,911 64,900 1,788,215 70,288 64,900 1,858,503
1,923,403 636,242 11/88 12/88 5-27.5
Maple Tree
Associates 1,241,671 65,132 1,464,954 155,138 65,132 1,620,092
1,685,224 511,761 4/89 5/89 5-27.5
Marionville
Family Hsg. 195,920 19,825 230,104 0 19,825 230,104
249,929 63,004 5/88 6/88 5-35
Michelle Manor
Apartments 905,633 131,945 1,009,687 (14,586)a 131,945 995,101
1,127,046 249,122 9/88 10/88 5-50
Middleburg
Assoc. Ltd. 1,410,284 104,000 1,155,947 261,514 104,000 1,417,461
1,521,461 505,412 3/89 10/88 5-27.5
Nebraska City
Senior Hsg. 434,528 27,119 516,617 0 27,119 516,617
543,736 161,409 7/88 6/88 5-35
Nicollet Island
Historic Homes 1,113,991 0 1,875,059 81,255 0 1,956,314
1,956,314 549,220 12/88 11/88 7-27.5
Paige Hall Ltd. 2,253,150 633,666 2,544,140 706,485 0 3,250,625
3,250,625 873,077 4/89 3/89 7-27.5
- 22 -
American Affordable Housing II
Limited Partnership
Schedule III - Real Estate and
Accumulated Depreciation
March 31, 1998
Subsequent
Initial capitalized Gross amount at
which
cost to company Costs** carried at close
of period
--------------- -----------
- --------------------------
Buildings Buildings
Accum. Con- Acq- Depre-
Encum- and im- Improve- and im-
Depre- struct uired ciation
Description brances Land provements ments Land
provements Total ciation Date Date Life
- --------------------------------------------------------------------------------
- ----------------------------------------------
Perramond
Associates 1,182,598 88,813 1,487,597 77,341 28,000 1,564,938
1,592,938 384,970 4/89 4/89 7-27.5
Pine Knoll
Devpmt. Co. 1,360,267 45,000 803,220 769,565 199,301 1,572,785
1,772,086 538,491 5/89 10/88 5-27.5
Pine Ridge Ltd. 1,509,522 110,000 1,899,826 11,601 110,000 1,911,427
2,021,427 703,821 6/88 7/88 5-27.5
Pine Terrace
Ltd. 1,192,117 61,500 1,188,396 326,353 61,500 1,514,749
1,576,249 532,497 1/89 12/88 5/27.5
Plattevill
Apartments 545,184 45,000 659,035 56,028 46,301 715,063
761,364 244,478 10/88 10/88 5-27.5
Riverplace
Apts. 4,151,274 175,260 6,463,578 302,526 175,260 6,766,104
6,941,364 1,663,878 3/89 9/88 5-27.5
Sara Pepper
Associates 648,158 67,200 740,378 56,257 22,000 796,635
818,635 215,687 3/88 5/88 5-27.5
Shawmut Ave 640,172 69,325 1,145,503 60,576 69,325 1,206,079
1,275,404 345,088 12/88 11/88 5-34
- 23 -
American Affordable Housing II
Limited Partnership
Schedule III - Real Estate and
Accumulated Depreciation
March 31, 1998
Subsequent
Initial capitalized Gross amount at
which
cost to company Costs** carried at close
of period
--------------- -----------
- --------------------------
Buildings Buildings
Accum. Con- Acq- Depre-
Encum- and im- Improve- and im-
Depre- struct uired ciation
Description brances Land provements ments Land
provements Total ciation Date Date Life
- --------------------------------------------------------------------------------
- ----------------------------------------------
Shelbyville FH,
Ltd. 611,102 13,000 736,830 0 13,000 736,830
749,830 201,269 7/88 10/88 5-27.5
Silver Pines
Associates 1,407,600 170,050 1,684,846 20,278 171,317 1,705,124
1,876,441 456,851 8/88 8/88 5-27.5
Springfield Ltd.1,436,215 66,000 1,864,463 30,170 66,000 1,894,633
1,960,633 708,385 3/88 5/88 5-27.5
Stokes Rowe
Ltd. Ptnrshp. 1,054,279 7,321 1,914,238 5,168 7,321 1,919,406
1,926,727 463,455 6/88 6/88 5-27.5
Suncrest, Ltd. 971,505 50,000 1,141,518 4,176 50,000 1,145,694
1,195,694 304,728 5/88 10/88 5-27.5
Village Chase of
Zephyrhills,
Ltd. 1,499,414 151,350 490,589 1,332,111 151,350 1,822,700
1,974,050 636,221 4/89 12/88 7-27.5
Village Walk of
Zephyrhills,
Ltd. 1,390,566 133,650 619,248 1,077,169 133,650 1,696,417
1,830,067 585,028 3/89 12/88 7-27.5
- 24 -
American Affordable Housing II
Limited Partnership
Schedule III - Real Estate and
Accumulated Depreciation
March 31, 1998
Subsequent
Initial capitalized Gross amount at
which
cost to company Costs** carried at close
of period
--------------- -----------
- --------------------------
Buildings Buildings
Accum. Con- Acq- Depre-
Encum- and im- Improve- and im-
Depre- struct uired ciation
Description brances Land provements ments Land provements
Total ciation Date Date Life
- --------------------------------------------------------------------------------
- ---------------------------------------------
Warren
Properties,
Ltd. 1,399,324 70,000 1,648,427 9,720 70,000
1,658,147 1,728,147 463,704 10/88 10/88 5-27
Washington
Mews LP. 879,223 55,225 1,921,104 (106,804) 55,225
1,814,300 1,869,525 614,540 12/88 8/88 5-27.5
Wilder
Associates 1,210,016 62,947 1,519,472 62,085 62,947
1,581,557 1,644,504 508,581 1/89 11/88 5-27.5
Wildwood Villas 1,480,847 100,960 1,872,065 7,203 100,960
1,879,268 1,980,228 675,802 9/88 9/88 5-27.5
---------- --------- ---------- --------- --------- ---------
- - ---------- ----------
69,854,741 4,978,364 81,253,852 9,572,905 4,407,517
90,826,757 95,234,274 28,427,132
========== ========= ========== ========= =========
========== ========== ==========
Since the Operating Partnerships maintain a calendar year end the information
reported on this schedule is as of December 31, 1997.
a Decrease due to reallocation of acquistion costs.
b Decrease due to impairment.
**There were no carrying costs as of December 31, 1997. The column has been
ommitted for presentation purposes
- 25 -
</TABLE>
Notes to Schedule III
American Affordable Housing II Limited Partnership
Reconciliation of Land, Building & Improvements current year changes
Balance at beginning of period-04/01/92..........................$100,538,670
Additions during period:
Acquisitions through foreclosure..................$ 0
Other acquisitions................................ 0
Improvements, etc................................. 37,387
Other............................................. 0
----------
$ 37,387
Deductions during period:
Cost of real estate sold..........................$ 0
Other............................................. 0
----------
$ 0
-----------
Balance at close of period - 03/31/93............................$100,576,057
Additions during period:
Acquisitions through foreclosure..................$ 0
Other acquisitions................................ 0
Improvements, etc................................. 230,965
Other............................................. 0
----------
$ 230,965
Deductions during period:
Cost of real estate sold..........................$ 0
Other............................................. 0
----------
$ 0
-----------
Balance at close of period - 03/31/94............................$100,807,022
Additions during period:
Acquisitions through foreclosure..................$ 0
Other acquisitions................................ 0
Improvements, etc................................. 237,425
Other............................................. 0
----------
$ 237,425
Deductions during period:
Cost of real estate sold..........................$ 0
Other............................................. 0
----------
$ 0
-----------
Balance at close of period - 03/31/95............................$101,044,447
- 26 -
Notes to Schedule III-Continued
American Affordable Housing II Limited Partnership
Reconciliation of Land, Building & Improvements current year changes-Continued
Balance at close of period - 03/31/95............................$101,044,447
Additions during period:
Acquisitions through foreclosure.................$ 0
Other acquisitions............................... 0
Improvements, etc................................ 367,972
Other............................................ 0
-----------
$ 367,972
Deductions during period:
Cost of real estate sold.........................$(6,044,508)
Other............................................ (818,769)
----------
$ (6,863,277)
-----------
Balance at close of period - 03/31/96............................$ 94,549,142
Additions during period:
Acquisitions through foreclosure.................$ 0
Other acquisitions............................... 0
Improvements, etc................................ 246,897
Other............................................ 0
-----------
$ 246,897
Deductions during period:
Cost of real estate sold.........................$ 0
Other............................................ (383,000)
----------
$ (383,000)
-----------
Balance at close of period - 03/31/97............................$ 94,413,039
Additions during period:
Acquisitions through foreclosure.................$ 0
Other acquisitions............................... 0
Improvements, etc................................
Other............................................ 821,235
-----------
$ 821,235
Deductions during period:
Cost of real estate sold.........................$ 0
Other............................................ 0
----------
$ 0
-----------
Balance at close of period - 03/31/98............................$ 95,234,274
===========
- 27 -
Notes to Schedule III - Continued
American Affordable Housing II Limited Partnership
Reconciliation of Accumulated Depreceiation current year changes
Balance at beginning of period -
04/01/92............................$11,032,545
Current year expense.....................................$3,313,285
---------
Balance at close of period -
3/31/93.................................$14,345,830
Current year expense.....................................$3,266,272
---------
Balance at close of period -
3/31/94.................................$17,612,102
Current year expense.....................................$3,206,264
---------
Balance at close of period -
3/31/95.................................$20,818,366
Current year expense.....................................$1,831,578
---------
Balance at close of period -
3/31/96.................................$22,649,944
Current year expense.....................................$2,951,028
---------
Balance at close of period -
3/31/97.................................$25,600,972
Current year expense.....................................$2,826,160
---------
Balance at close of period -
3/31/98.................................$28,427,132
==========
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<TABLE> <S> <C>
<ARTICLE> CT
<CIK> 0000815024
<NAME> AMERICAN AFFORDABLE HOUSING II LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<TOTAL-ASSETS> 3,022,949
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,022,949
<TOTAL-REVENUES> 6,686
<INCOME-TAX> 0
<INCOME-CONTINUING> (862,393)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (855,707)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
