FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year-ended December 31, 1996
OR
[ ] 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 33-18756
ASSISTED HOUSING FUND L.P. I
(Exact name of registrant as specified in its charter)
Washington 91-1391150
(State of organization) IRS Employer Identification No.)
1191 Second Avenue, Suite 904, Seattle, WA 98101
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (206) 461-4782
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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
The Exhibit Index appears at page
17 There are 17 pages.
<PAGE>
PART I
Item 1. Business
Assisted Housing Fund L.P. I (the Partnership) is a limited partnership formed
on November 2, 1987 and organized under the laws of the State of Washington.
The Partnership raised $3,511,000 from the sale of 703 units of limited
partnership through a public offering completed on April 14, 1989. The
Partnership has invested as a limited partner in eleven other limited
partnerships (Property Partnerships) which develop, own, and operate residential
apartment complexes located in small towns across the country. Each apartment
complex benefits from several forms of federal assistance programs and qualifies
for low-income housing credits (Tax Credits) pursuant to the Internal Revenue
Code by the Tax Reform Act of 1986. There are 332 partners in the Partnership.
The Partnership's general partner is Murphey Favre Properties, Inc., (MFP), a
wholly-owned subsidiary of WM Financial, Inc. which is a wholly-owned subsidiary
of Washington Mutual Bank (WMB), a wholly- owned subsidiary of Washington
Mutual, Inc.
Table A on page 4 lists the Property Partnerships in which the Partnership has
invested. Item 7 of this Report contains other significant information with
respect to such Property Partnerships.
Each Property Partnership has, as its general partner (developer), one or more
individuals or an entity not affiliated with the Partnership or MFP. In
accordance with the Partnership Agreements under which such entities are
organized, the Partnership depends on the developers for the management of each
Property Partnership. As of December 31, 1996, the Property Partnerships and
their developers were:
<PAGE>
PROPERTY PARTNERSHIP DEVELOPER GENERAL PARTNER
1. Fairview Apartments Company Limited Rural Housing Corporation
Partnership (Fairview)
2. Ionia Limited Divided Housing Rural Housing Corporation
Association (LDHA) Limited
Partnership (Ionia)
3. Logan Apartments Company Limited Rural Housing Corporation and
Partnership (Logan) Arthur H. Winer
4. Rolling Brook II LDHA Limited Rural Housing Corporation
Partnership (Rolling Brook)
5. Wexford Manor LDHA Limited Rural Housing Corporation
Partnership (Wexford
6. Blue Heron Apartment Associates Dujardin Development Co.
Limited Partnership (Blue Heron)
7. Glenwood Apartment Associates Limited Dujardin Development Co.
Partnership (Glenwood)
8. Pacific Place Apartment Associates Dujardin Development Co.
Limited Partnership (Pacific Place)
9. Cove LDHA Limited Partnership (Cove) Kenneth & Lowell Werth
10. Washington Street LDHA Limited Kenneth & Lowell Werth
Partnership (Washington)
11. Fayette Hills Limited Partnership LeRoy Eslinger and
(Fayette) Douglas E. Pauley
A wholly-owned subsidiary of MFP, Murphey Favre Housing Managers (MFHM), is a
special limited partner in each Property Partnership and has certain approval
rights over the actions by the developers of the Property Partnerships.
<PAGE>
Table A
SELECTED PROPERTY
PARTNERSHIP DATA
<TABLE>
<CAPTION>
Property Date Interest Number of
Partnerships Location Acquired Apt. Units
<S> <C> <C> <C>
Fairview Plymouth, WI December 1, 1989 40
Ionia Ionia, MI December 1, 1989 24
Logan Logan, OH December 1, 1989 32
Rolling Brook Algonac, MI December 1, 1989 24
Wexford Onsted, MI December 1, 1989 24
Blue Heron Bainbridge Island, WA March 20, 1989 40
Glenwood Lake Stevens, WA June 1, 1988 46
Pacific Place South Bend, WA October 4, 1988 24
Cove Big Rapids, MI July 12, 1989 48
Washington Perry, MI July 12, 1989 24
Fayette Fayetteville, WV December 1, 1989 68
----
394
</TABLE>
<PAGE>
Item 2. Properties
Rental property consists of apartment projects renting to low- and
moderate-income tenants.
As of December 31, 1996, the Property Partnerships had placed rental properties
into operation in the following locations:
Date Placed
Location In Service
Plymouth, WI June 13, 1990
Ionia, MI August 8, 1990
Logan, OH January 11, 1991
Algonac, MI March 8, 1990
Onsted, MI February 21, 1990
Bainbridge Island, WA May 1, 1990
Lake Stevens, WA April 1, 1989
South Bend, WA May 1, 1989
Big Rapids, MI March 1, 1990
Perry, MI January 1, 1990
Fayetteville, WV December 1, 1989
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
The Registrant's securities consist of 703 units of Limited Partnership
Interest, valued at $5,000 per unit, for which there is no market. Units may
only be sold, assigned, exchanged or otherwise transferred upon compliance with
the terms of the Limited Partnership Agreement.
As of the date of filing of this report, the Partnership has 331 limited
partners and one general partner.
The Partnership has not made any distributions in 1994, 1995 and 1996 and does
not anticipate making any significant distributions in the future.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92
<S> <C> <C> <C> <C> <C>
Rental Revenue
$1,415,977 $1,381,245 $1,336,598 $1,297,514 $1,269,593
Interest
Revenue 21,800 21,158 18,868 20,582 22,930
Income (Loss)
(618,708) (615,345) (600,996) (618,414) (565,005)
Income (Loss)
per Limited
Partnership
Unit
(871) (867( (846) (871) (796)
Total Assets 13,022,213 13,620,436 14,107,470 14,700,620 15,303,724
Mortgage Notes
Payable
$12,399,750 $12,422,388 $12,442,696 $12,461,471 $12,478,285
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
During the year, management's emphasis was on the continued operation of eleven
properties. At December 31, 1996, four properties were 100% occupied, six were
between 90% and 97% occupied and one was 78% occupied.
The properties are located in rural towns with populations of 14,000 or less.
Five properties are located in Michigan, three in Washington, and one each in
Ohio, West Virginia and Wisconsin. The properties range in size from 24 to 68
units for a total portfolio of 394 units.
Results of Operations
On a consolidated basis, net income (loss) before depreciation and amortization
for 1996, 1995 and 1994 was $12,241, $12,570 and $28,733 respectively. Rental
revenues for 1996 were up 3% from 1995 as compared to increases of 3% from 1994
to 1995, and 3% from 1993 to 1994. Expenses for 1996, including depreciation,
were up 1.8% over 1995, while expenses, including depreciation, for 1995 and
1994 were up 3.1% and 1.5% over 1994 and 1993, respectively.
The Partnership paid $22,226, $22,666 and $21,259, in accounting expenses for
the Partnership for 1996, 1995 and 1994, respectively.
Interest revenue for 1996 increased 3% from 1995 and increased 12% from 1994 to
1995.
<PAGE>
Liquidity and Capital Resources
The Partnership completed its public offering of units of limited partnership on
April 14, 1989, with proceeds totaling $3,511,000 from 339 limited partners. As
of December 31, 1996, the Partnership had invested $2,542,000 of offering
proceeds in eleven Property Partnerships.
Offering proceeds equal to $175,750 were reserved by the Partnership to fund its
operating expenses. As of December 31, 1996, the cash reserves of the
Partnership totaled $7,197. It is expected that the Partnership will draw on the
reserves in future years to fund accounting and other operating expenses of the
Partnership. Nominal cash distributions from the Property Partnerships will
supplement the cash reserves. In 1996, the Partnership received $18,895 in
distributions from the Property Partnerships. The expectation is that all cash
distributions received from the Property Partnerships will be used to defray the
operating expenses of the Partnership and thus it is not likely any distribution
will be made to the limited partners.
The Partnership is not required to fund additional amounts to the Property
Partnerships based on each Property Partnership agreement. Additionally, each
Property Partnership is operated as an individual project, and without any
contractual arrangements of any kind between the Property Partnerships. In 1996,
nine properties generated positive cash flow and two properties generated
deficit cash flow. The deficits were funded from rental operating cash and from
authorized withdrawals from the reserve accounts.
As of December 31, 1996, one developer general partner had advanced $14,209 to a
Property Partnership under the deficit funding agreement in place during the
guarantee period. The guarantee periods ended in 1991 and 1992. The developer
general partners are no longer obligated to fund operating deficits.
The Property Partnerships financed construction with a combination of bank
financing and funds from the Partnership. The permanent loans for the properties
were provided by the Farmers Home Administration, now known as Rural Housing
Service (RHS), under Section 515 of the National Housing Act of 1949, as
amended. RHS provides an interest credit to the Property Partnerships which
reduces the interest rates stated in the mortgage notes to an effective 1
percent rate over the lives of the mortgages. All property loans are current.
It is expected that capital expenditures on the properties will be low in the
initial years because the properties are recently constructed (10 properties) or
rehabilitated (1 property). As part of RHS loan requirements, a reserve account
is funded at an annual rate of 1% of the original property loan balance until
the balance equals 10% of the original loan balance. Additions to reserve
accounts are funded from property operations and are established for future
capital expenditures.
<PAGE>
Included in cash deposits on the consolidated balance sheets were $7,197 and
$8,037 held as deposits by the Partnership in WMB accounts as of December 31,
1996 and 1995, respectively. As discussed in Part I, Item 1, WMB is affiliated
with MFP.
There are no additional acquisitions nor any dispositions planned.
Regulatory Restrictions
Because the properties are operated under RHS loans and benefit from the federal
low-income housing tax credit program, the properties are restricted as to their
use and must comply with the requirements of the respective federal programs.
The tenants of all the properties must be tax credit and RHS eligible tenants.
It is management's goal to have all units, except for managers' units, occupied
by tax credit eligible tenants. In order to meet established income
requirements, tenants must not earn more than 60% of the median income for the
areas in which the properties are located. Seven of the eleven properties are
further restricted to renting apartment units only to senior citizens.
Additionally, the properties cannot be sold without prior approval of the RHS,
cannot make more than an 8% cash distribution annually to its owner (as
described in Note 6 to the Partnership's financial statements), and must remain
under the low-income housing tax credit program for 15 years to avoid any
recapture of the low-income housing tax credits. Furthermore, pursuant to RHS
loan agreements, RHS may refuse prepayment of the loans and require the
properties be used for the purpose of providing housing to eligible tenants for
a minimum period of 20 years.
Inflation
Operating expenses and rental revenues of each property are subject to
inflationary factors. Low rates of inflation could result in rental revenues
remaining constant or increasing at slower rates than in periods of high
inflation. High rates of inflation raise the operating expenses of the
properties, and to the extent the increased operating expenses are not passed on
to the tenants by rental increases, the properties' operation could be adversely
affected.
<PAGE>
Tax Credit
As of December 31, 1996, 1995 and 1994, tax credits equal to 15.17%, 15.17% and
15.17%, respectively, of the limited partners' capital contributions have been
generated.
Item 8. Financial Statements and Supplementary Data
The financial statements of Assisted Housing Fund L.P. I as of December 31,
1996, 1995 and 1994, together with the independent auditors' reports thereon,
are filed herewith in Part IV, Item 14 of this Form 10-K.
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
Murphey Favre Properties, Inc. (MFP) is the managing general partner of the
Partnership. The Registrant has no employees.
Item 11. Executive Compensation
Name of Individual Capacities
or Number of in Which Cash
Persons in Group Served Compensation
Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94
None
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Owner of Class
General Murphey Favre (1) 100%
Partner's Properties, Inc.
Interest Suite 904
1191 Second Avenue
Seattle, WA 98101
(1) The General Partner's interest is owned of record and beneficially by
Murphey Favre Properties, Inc. Its capital interest as of December 31, 1996 is
($41,010).
Item 13. Certain Relationships and Related Transactions
The Property Partnerships have entered into certain agreements with the
developer or its affiliates under which the developer or its affiliates receive
compensation, perform services, or make loans. Note 2 of the Notes to Financial
Statements, which are filed in Part IV, Item 14 of this Form 10-K, provides
additional information pertaining to the individual Property Partnerships.
<PAGE>
11
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K
(a) 1. The following financial statements of Assisted Housing Fund L.P. I
and subsidiaries are incorporated by reference in Part II and are
attached as pages 1 to 13 of Exhibit 13.
Page of Annual
Report
Independent Auditor's Report.......................... 1
Balance Sheets as of December 31, 1996 and 1995....... 2
Statements of Operations for each of the years ended
December 31, 1996, 1995 and 1994...................... 3
Statements of Partners' Equity (Deficit) for each of
the years ended December 31, 1996, 1995 and 1994...... 4
Statements of Cash Flows for each of the years ended
December 31, 1996, 1995 and 1994...................... 5
Notes to Financial Statements for each of the years
ended December 31, 1996, 1995 and 1994............... 6-12
2. Financial statement schedules Page of Form 10-K
Independent Auditor's Report on Schedules............. 13
Schedule III - Real Estate and Accumulated
Depreciation.......................................... 14-16
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are omitted because either they are not applicable or the required
information is shown in the financial statements or notes thereto.
3. Exhibits: All exhibits to this report are listed in the
Schedule Index at page 17.
(b) No reports on Form 8K were filed during 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASSISTED HOUSING FUND L.P. I
Registrant
By: Murphey Favre Properties, Inc.
Its Managing General Partner
By: Date: 3/31/97
Herbert F. Fox, Vice President
and Principal Financial Officer
Pursuant to the requirements of the Securities and 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:
By: Murphey Favre Properties, Inc.
By: Date: 3/31/97
Kerry K. Killinger
Its Director
By: Date: 3/31/97
David G. Murphy
Its Director
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASSISTED HOUSING FUND L.P. I
Registrant
By: Murphey Favre Properties, Inc.
Its Managing General Partner
By: Herbert F. Fox /s/ Date: 3/31/97
Herbert F. Fox, Vice President
and Principal Financial Officer
Pursuant to the requirements of the Securities and 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:
By: Murphey Favre Properties, Inc.
By: Kerry K. Killinger /s/ Date: 3/31/97
Kerry K. Killinger
Its Director
By: David G. Murphy /s/ Date: 3/31/97
David G. Murphy
Its Director
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SCHEDULES
General Partner and Limited Partners
Assisted Housing Fund L.P. I
Seattle, Washington
We have audited the financial statements of Assisted Housing Fund L.P. I and its
subsidiaries, as of and for the years ended December 31, 1996, 1995 and 1994,
listed under Item 14(a) 1 hereof and have issued our report thereon dated March
21, 1997 (which report is incorporated by reference elsewhere in this Form
10-K). In the course of our audit of such financial statements we have also
audited the schedules listed under Item 14(a)2 for the years ended December 31,
1996, 1995 and 1994. These schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion based on our audit. In
our opinion, these schedules present fairly, in all material respects, when read
in conjunction with the related consolidated financial statements, the
information therein set forth.
Ruljancich, Blume, Loveridge and Co., P.L.L.C.
Bellevue, Washington
March 21, 1997
<PAGE>
ASSISTED HOUSING FUND LP I
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Year Ended December 31, 1996
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
- --------------------------------------------------------------------------------------------------------
Costs Capitalized
Subsequent
Description Encumbrances Initial Cost to Partnership to Acquisition
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Buildings & Personal
Land Improvements Property Improvements
-----------------------------------------------------------------
Fairview $1,282,064 $55,413 $1,580,336
Ionia 716,147 24,000 915,896
Logan 1,001,559 55,129 1,208,945
Rolling Brook 753,055 35,000 920,330
Wexford 731,109 22,000 922,925
Blue Heron 1,480,589 248,569 1,967,829
Glenwood 1,449,942 145,000 1,749,651
Pacific Place 762,320 30,000 965,151
Cove 1,442,235 47,000 1,713,304
Washington 720,592 8,000 875,004
Fayette 2,060,138 53,000 1,815,992 40,800 590,726
AHF 444,240
-----------------------------------------------------------------------------------
Total $12,399,750 $723,111 $2,260,232 $40,800 $13,410,097
================================================================================
Construction in
Progress $0 $0
============= ===========
</TABLE>
<PAGE>
ASSISTED HOUSING FUND LP I
SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION (Continued) Year Ended
December 31, 1996
<TABLE>
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
- ---------------------------------------------------------------------------------------------------------------------------------
Description Gross Amount at Which Carried at End of Period Accumulated Date of Date of Life on
Depreciation Construction Acquisition Which
Depreciation
in Latest
Income
Statement
is Computed
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Land Buildings Land Total
Improvements
and Personal
Property
------------------------------------------------------
Fairview $55,413 $1,418,320 $162,016 $1,635,749 $425,502 13-Jun-90 27.5/15/10
Ionia $24,000 805,590 110,306 939,896 244,590 08-Aug-90 27.5/15/10/7
Logan $55,129 1,022,974 185,971 1,264,074 313,908 11-Jan-91 27.5/15/10
Rolling Brook $35,000 794,263 126,067 955,330 261,844 08-Mar-90 27.5/15/10/7
Wexford $22,000 815,821 107,104 944,925 266,832 21-Feb-90 27.5/15/10
Blue Heron $248,569 1,890,967 76,862 2,216,398 509,662 01-May-90 27.5/10
Glenwood $145,000 1,701,975 47,676 1,894,651 510,895 01-Apr-89 27.5/10/7
Pacific Place $30,000 943,619 21,532 995,151 278,904 01-May-89 27.5/10/7
Cove $47,000 1,635,278 78,026 1,760,304 454,447 01-Mar-90 27.5/10/7
Washington $8,000 836,929 38,075 883,004 232,631 01-Jan-90 27.5/10
Fayette $53,000 2,333,019 114,499 2,500,518 662,431 01-Dec-89 27.5/15/10/7
AHF $0 444,240 444,240 111,895 Various
----------------------------------------------------------------
Total $723,111 $14,642,995 $1,068,134 $16,434,240 $4,273,541
================================================================
Construction in
Progress 0
============
</TABLE>
<PAGE>
ASSISTED HOUSING FUND LP I
SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION (Continued) Year
Ended December 31, 1996
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
REAL ESTATE December 31, 1994 December 31, 1995 December 31, 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $16,273,979 $16,315,766 $16,410,747
Additions during period:
Property acquisitions $ 0 $0 $0
Acquisitions through foreclosure 0 0 0
Other acquisitions 0 0 0
Improvements etc. (New Construction) 41,787 96,135 23,493
Other (Acquisition Cost) 0 0 0
-------------------------------------------------------------------------------
$16,315,766 $16,411,901 $16,434,240
Deductions during period:
Cost of real estate sold $0 $1,154 $0
Other (describe) 0 0 0 1,154 0 0
-------------------------------------------------------------------------------
Balance at close of period $16,315,766 $16,410,747 $16,434,240
============== =============== ==============
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
ACCUMULATED DEPRECIATION December 31, 1994 December 31, 1995 December 31, 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $2,391,713 $3,015,935 $3,642,593
Existing property: 622,259 625,908 629,472
Depreciation on additions:
Property acquisitions $ 0 $ 0 $ 0
Acquisitions through foreclosure 0 0 0
Other acquisitions 0 0 0
Improvements etc. (New Construction) 1,963 1,308 1,476
Other (Acquisition Costs) 0 0 0
-------------------------------------------------------------------------------
$3,015,935 $3,643,151 $4,273,541
Depreciation on deductions:
Cost of real estate sold $ 0 $ 558 $ 0
Other (describe) 0 0 0 558 0 0
-------------------------------------------------------------------------------
Balance at close of period $3,015,935 $3,642,593 $4,273,541
============== =============== ==============
</TABLE>
<PAGE>
Exhibit Incorporated by
No. Reference From
3 Certificate of Limited Partnership Exhibit C to Form S-11
Registration Statement
No. 91-1391150
13 Annual Report to Security Holders Attached hereto
<PAGE>
ASSISTED HOUSING FUND L.P. I
AND SUBSIDIARIES
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEARS ENDED DECEMBER 31,
1996, 1995 AND 1994
<PAGE>
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT............................................1
FINANCIAL STATEMENTS:
Balance Sheets..........................................................2
Statements of Operations................................................3
Statements of Partners' Equity (Deficit)................................4
Statements of Cash Flows................................................5
Notes to Financial Statements...........................................6-12
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Partners
Assisted Housing Fund L.P. I
Seattle, Washington
We have audited the accompanying balance sheets of Assisted Housing Fund L.P. I
and its subsidiaries, as of December 31, 1996 and 1995, and the related
statements of operations, partners' equity (deficit) and cash flows for the
years ended December 31, 1996, 1995 and 1994. 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 an 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 Assisted Housing Fund L.P. I
and its subsidiaries, as of December 31, 1996 and 1995, and the results of their
operations and cash flows for the years ended December 31, 1996, 1995 and 1994,
in conformity with generally accepted accounting principles.
Ruljancich, Blume, Loveridge & Co., P.L.L.C.
Bellevue, Washington
March 21, 1997
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1996 1995
ASSETS
<S> <C> <C>
Rental property and equipment, at cost:
Buildings and equipment $15,711,129 $15,687,636
Accumulated depreciation (4,273,541) (3,642,593)
----------- -----------
11,437,588 12,045,043
Land 723,111 723,111
----------- -----------
12,160,699 12,768,154
Cash:
Rental operation 139,121 160,098
Partnership 7,197 8,037
----------- ------------
146,318 168,135
Restricted deposits:
Tenant trust - security deposits 106,501 108,020
Reserve accounts 552,746 528,498
----------- ------------
659,247 636,518
Other assets:
Accounts receivable 28,869 36,951
Prepaid expenses 27,080 10,678
----------- ------------
55,949 47,629
----------- ------------
$13,022,213 $13,620,436
=========== ===========
</TABLE>
Continued on page 2A.
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
BALANCE SHEETS - (CONTINUED)
<TABLE>
<CAPTION>
December 31,
1996 1995
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
<S> <C> <C>
Liabilities:
Mortgage notes payable $12,399,750 $12,422,388
Assessment payable 61,712 68,569
Accounts payable 260,146 240,771
Due to affiliates 554,534 491,992
Accrued liabilities 75,487 78,284
Security deposits 104,531 107,080
----------- -----------
13,456,160 13,409,084
Minority interests in partnerships 546,353 572,944
Partners' equity (deficit):
Limited partners (939,290) (326,769)
General partner (41,010) (34,823)
----------- -----------
(980,300) (361,592)
----------- -----------
$13,022,213 $13,620,436
=========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 2A
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Revenue:
Rent $1,415,977 $1,381,245 $1,336,598
Miscellaneous 88,400 87,496 83,178
---------- ---------- ----------
1,504,377 1,468,741 1,419,776
Expenses:
Operating and maintenance 208,656 212,139 168,768
Utilities 254,135 245,383 247,296
General and administrative 347,471 321,975 317,922
Taxes and insurance 251,468 254,947 248,767
Interest 336,895 334,529 326,185
Depreciation 630,949 627,216 624,223
---------- ---------- ----------
2,029,574 1,996,189 1,933,161
---------- ---------- ----------
(525,197) (527,448) (513,385)
Other revenues (expenses):
Interest earned on
partnership cash 280 505 975
Minority interest
in operations 26,435 26,465 26,334
Accounting and auditing (22,226) (22,666) (21,259)
General and administrative (18,081) (11,684) (8,187)
Partnership management fees (74,517) (74,517) (74,517)
Amortization of
organization costs - (699) (5,506)
Incentive management fees (3,952) (3,660) (2,685)
Miscellaneous (1,450) (1,641) (2,766)
---------- ---------- ----------
(93,511) (87,897) (87,611)
---------- ---------- ----------
Net income (loss) $ (618,708) $ (615,345) $ (600,996)
========== ========== ==========
Net income (loss) per
unit of limited
partnership interest $ (871) $ (867) $ (846)
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
Page 3
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
Profit/loss percentage 99.0% 1.0% 100.0%
========== ======== ========
Balance - January 1, 1994 $ 877,409 $(22,660) $ 854,749
Net income (loss) for 1994 (594,986) (6,010) (600,996)
---------- -------- ----------
Balance - December 31, 1994 282,423 (28,670) 253,753
Net income (loss) for 1995 (609,192) (6,153) (615,345)
---------- -------- ----------
Balance - December 31, 1995 (326,769) (34,823) (361,592)
Net income (loss) for 1996 (612,521) (6,187) (618,708)
---------- -------- ----------
Balance - December 31, 1996 $ (939,290) $(41,010) $ (980,300)
========== ======== ==========
</TABLE>
See accompanying notes to financial statements.
Page 4
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $(618,708) $(615,345) $(600,996)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation 630,948 626,658 624,223
Amortization of organization
costs - 698 5,506
Minority interests in
operations (26,435) (26,465) (26,333)
Changes in certain assets
and liabilities:
Accounts receivable 8,082 (11,148) (1,402)
Prepaid expenses (16,402) 3,916 8,374
Accounts payable 19,375 47,949 29,600
Accrued liabilities (2,797) (2,032) 8,317
Due to affiliates 62,542 53,129 42,608
Security deposits (1,030) (41) 211
--------- --------- ---------
Net cash provided by
operating activities 55,575 77,319 90,108
Cash flows from investing activities:
Purchase of depreciable
property (23,493) (26,412) (41,787)
Deposits to reserve accounts (140,217) (140,172) (129,854)
Withdrawals from
reserve accounts 115,969 120,266 66,099
--------- --------- ---------
Net cash provided (used) by
investing activities (47,741) (46,318) (105,542)
</TABLE>
Continued on page 5A.
Page 5
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS - (CONTINUED)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Years Ended December 31,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from financing activities:
Minority partners' capital
contributions $ (156) $ 128 $ (79)
Mortgage principal payments (22,638) (20,308) (18,775)
Assessment principal payments (6,857) - -
Advances from affiliates - - (32,383)
-------- -------- --------
Net cash provided (used) by
financing activities (29,651) (20,180) (51,237)
-------- --------- --------
Net increase (decrease)
in cash (21,817) 10,821 (66,671)
Cash - beginning of year 168,135 157,314 223,985
-------- -------- --------
Cash - end of year $146,318 $168,135 $157,314
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest $340,001 $331,729 $326,237
======== ======== ========
Supplemental disclosure of noncash investing and financing activities:
Land improvements purchased
with assessment $ - $ 68,569 $ -
======== ======== =======
</TABLE>
See accompanying notes to financial statements.
Page 5A
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES
General
Assisted Housing Fund L.P. I (the Partnership) is a limited partnership which
was organized November 2, 1987 under the laws of the state of Washington to
acquire limited partnership interests in other partnerships (the Property
Partnerships), each of which has been organized to develop or purchase a low- or
moderate-income apartment project. The Partnership's general partner is Murphey
Favre Properties, Inc. (MFP), a wholly-owned subsidiary of WM Financial, Inc.,
which is a wholly-owned subsidiary of Washington Mutual Bank (WMB), a
wholly-owned subsidiary of Washington Mutual, Inc. As of December 31, 1996, 331
limited partners held the 703 units of limited partnership interests
outstanding.
The Partnership has invested as a limited partner in eleven Property
Partnerships. The developer of each apartment project serves as the general
partner (DGP) of the respective Property Partnership.
The properties owned by the Property Partnerships are located in Michigan,
Wisconsin, Ohio, West Virginia and Washington. The properties were financed and
constructed under Section 515 of the National Housing Act, as amended
(administered by the U.S. Department of Agriculture, Rural Housing Service
(RHS)). Under this program, the Property Partnerships provide housing to low-
and moderate-income tenants. Lower rental charges to tenants are recovered by
the Property Partnerships through an interest reduction program which reduces
the effective interest rate over the lives of the mortgages to 1 percent and a
rental assistance program whereby RHS pays the Property Partnerships for a
portion of qualified tenant rents. Construction of the rental properties began
between June, 1988 and May, 1990 and rental operations began between April, 1989
and February, 1991.
Additionally, in exchange for an allocation of federal low-income housing tax
credits under Section 42 of the Internal Revenue Code, each Property Partnership
has entered into an agreement with an agency of the state in which the apartment
project is located, whereby the Property Partnership has agreed to maintain all
apartment units as both rent restricted and occupied by low-income tenants for a
minimum period of 15 years.
During the years ended December 31, 1996, 1995 and 1994, rental revenue from RHS
totaled $408,796, $407,684, and $403,456, representing 27.2 percent, 27.8
percent and 28.4 percent of total revenue, respectively.
Page 6
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES
(CONTINUED)
Principles of Consolidation
The financial statements include the financial statements of the Partnership and
the following eleven Property Partnerships in which it has invested as a limited
partner:
Fairview Apartments Company Limited Partnership (Fairview)
Ionia Limited Dividend Housing Association Limited Partnership (Ionia)
Logan Apartments Company Limited Partnership (Logan)
Rolling Brook II Limited Dividend Housing Association Limited
Partnership (Rolling Brook)
Wexford Manor Limited Dividend Housing Association Limited Partnership
(Wexford)
Blue Heron Apartment Associates Limited Partnership (Blue Heron)
Glenwood Apartment Associates Limited Partnership (Glenwood)
Pacific Place Apartment Associates Limited Partnership (Pacific Place)
Cove Limited Dividend Housing Association Limited Partnership (Cove)
Washington Street Limited Dividend Housing Association Limited
Partnership (Washington)
Fayette Hills Limited Partnership (Fayette)
The financial statements are presented on a consolidated basis because the
Partnership holds approximately 99 percent of the profit and loss interests and
approximately 55 percent of the equity interests in each Property Partnership.
Through an affiliate, who is a special limited partner in each of the 11
Property Partnerships, the Partnership controls certain fundamental decisions
affecting the operation of the Property Partnerships. These fundamental
decisions include significant purchases of assets, material borrowings or
creation of liens on the underlying properties, entering into material
contracts, making tax elections and any act that would cause termination of the
Property Partnership. All material interpartnership transactions and balances
have been eliminated. For the years ended December 31, 1996, 1995 and 1994, net
losses allocable to the minority partners were $26,435, $26,465 and $26,334,
respectively.
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES
(CONTINUED)
Method of Accounting
The accrual method of accounting is used for both financial statement and income
tax purposes.
Cost Overruns
The partnership agreements for the Property Partnerships required the DGP's to
fund cost overruns on the development of the rental properties. Such cost
overruns, totaling $589,462, have been recorded as minority interests in
partnerships and have been included in the cost basis of the rental property.
All depreciation related thereto has been specially allocated to the respective
DGP's.
Depreciation
Depreciation is computed for financial statement purposes using the
straight-line method over the estimated useful lives of the related assets as
follows:
Building shell and components.............. 27.5 years
Land improvements...... ..................... 15 years
Appliances............................... 7 - 10 years
Carpets and draperies.................... 7 - 10 years
Depreciation is computed for income tax purposes using the modified-accelerated-
cost-recovery-system (MACRS).
Income Taxes
No income tax provision has been included in the financial statements since
income or loss of a Partnership is required to be reported by the respective
partners on their income tax returns.
Cash Equivalents
For purposes of the statement of cash flows, all investment instruments
purchased with a maturity of three months or less are considered to be cash
equivalents. At December 31, 1996 and 1995, there were no cash equivalents.
Amortization
Costs aggregating $71,934 incurred in connection with organization of the
partnerships have been capitalized and were amortized on a straight-line basis
over a five-year period.
Page 8
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES
(CONTINUED)
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumption that
affect certain reported amounts and disclosures.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
In connection with the acquisition and development of rental property and the
management of both the rental property and the Partnership, the Partnership and
Property Partnerships have paid or accrued the following amounts to certain
affiliates:
Years Ended December 31,
1996 1995 1994
Murphey Favre Properties, Inc.
Partnership services fee $ 7,500 $ 7,500 $ 7,500
Partnership administration 44,710 44,710 44,710
Developer general partners
and affiliates
Property management fees 119,365 109,910 106,842
The Partnership maintains deposits in certain of WMB's interest-bearing accounts
which aggregated $7,197 and $8,037 at December 31, 1996 and 1995, respectively.
Interest earned on such deposits totaled $280, $505 and $975 during the years
ended December 31, 1996, 1995 and 1994, respectively.
Terms of the RHS Loan Agreements require each DGP to provide interest-free
advances of stipulated amounts as initial operating capital to the Property
Partnerships. Due to affiliates includes $152,107 of such advances at December
31, 1996 and 1995. In addition, these balances include DGP advances of $35,468
for land improvements and $14,209 to fund operating deficits. The remainder of
the balances include property management fees and reimbursements payable to MFP
for partnership services and administration.
Page 9
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - TRANSACTIONS WITH AFFILIATES - (CONTINUED)
Advances from the DGPs may only be repaid from the proceeds of future sales of
the respective properties. Property management fees are paid out of rental
operations. Partnership fees and services are payable from future sales of the
properties, to the extent they are not paid from distributions of rental
operation cash (Note 6).
Under the terms of management services agreements, affiliates of the DGP's
provide management services for the rental properties and receive compensation
for such services in amounts approximating 9.1% of rental receipts.
NOTE 3 - CASH IN RESERVE ACCOUNTS
The Loan Agreements between the Property Partnerships and RHS require the
Property Partnerships to deposit $126,889 annually into separate reserve
accounts until the reserve accounts reach $1,268,211. Subject to RHS approval,
these funds may be used for various purposes, as further described in the Loan
Agreements. The Property Partnerships are in compliance with the minimum funding
requirements as set forth by RHS for the years ended December 31, 1996 and 1995,
and all withdrawals were approved by RHS and used for their intended purposes.
NOTE 4 - MORTGAGE NOTES PAYABLE
The mortgage notes are payable to RHS in monthly installments totaling $26,550.
In accordance with provisions of Interest Credit Agreements, RHS provides
monthly interest credits totaling $69,199 which reduce the interest rates stated
in the mortgage notes to effective rates of 1 percent over the lives of the
mortgages. Amortization of principal is based on the stated rates of 8.75% to
10.75% under RHS's Predetermined Amortization Schedule System (PASS). The
mortgage notes mature May, 2039 through January, 2040. Substantially all of the
rental property and equipment is pledged as collateral on the mortgages. No
partner is personally liable on the mortgage notes.
Page 10
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - MORTGAGE NOTES PAYABLE - (CONTINUED)
The mortgage notes are regulated by the U.S. Government and therefore, have no
market price. Accordingly, management has determined that users of the financial
statements would derive no benefit from any estimate of fair value and
performing such an analysis would not be practicable.
Principal payments on the mortgage notes for the next 5 years are as follows:
Year Amounts
1997 24,562
1998 26,868
1999 29,388
2000 32,144
2001 35,113
2002 and later years 12,251,675
-----------
$12,399,750
NOTE 5 - ASSESSMENT PAYABLE
In September, 1995, the city of Bainbridge Island issued an assessment for Blue
Heron's share of street and utility improvements in the amount of $68,569. The
assessment is payable in 10 equal annual installments together with interest at
the rate of 5.6 percent. At December 31, 1996, the fair value of the assessment
approximates the amount recorded in the financial statements.
Principal payments on the assessment for the next 5 years are as follows:
Year Amount
1997 $ 6,857
1998 6,857
1999 6,857
2000 6,857
2001 6,857
2002 and later years 27,427
-------
$61,712
Page 11
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - RENTAL OPERATION CASH
RHS regulations limit the distribution of rental operation cash to a maximum of
$38,090 annually. Any distribution to the Partnership from rental operation cash
is to be made in accordance with the respective partnership agreements. Whether
or not a Property Partnership makes any limited distribution is based on the
results of its own operations and is at the discretion of the DGP.
NOTE 7 - GUARANTEES
Each of the DGP's has made a guarantee to the respective Property Partnership
that they will compensate the Partnership in the event the actual low-income
housing tax credit is less than 85% to 90% of the available credit. Through
December 31, 1996, no payments have been made under these guarantee agreements.
NOTE 8 - RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 and 1994 financial
statements to conform with the 1996 financial statement presentation. Such
reclassification had no effect on net income as previously reported.
Page 12
<PAGE>
March 21, 1997
Ruljancich, Blume, Loveridge & Company
Certified Public Accountants
11100 NE Eighth Street, Suite 410
Bellevue, WA 98004-4441
RE: Assisted Housing Fund L.P. I and subsidiaries
The following representations are made to the best of our knowledge and belief.
They are being provided to you in connection with your audit of the balance
sheet of Assisted Housing Fund L.P. I and subsidiaries as of December 31, 1996
and the related statements of operations, changes in partners' equity (deficit)
and cash flows for the year then ended. Your audit is for the purpose of
expressing an opinion as to whether the financial statements present fairly the
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles.
1. In the financial statements, we are responsible for the fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles.
2. We have made available to you all -
a. Financial records and related data.
b. Amendments to the partnership agreement.
3. There have been no -
a. Irregularities involving management or employees who have significant
roles in the internal control structure.
b. Irregularities involving other employees that could have a material
effect on the financial statements.
c. Communications from regulatory agencies concerning noncompliance with,
or deficiencies in, financial reporting practices that could have a
material effect on the financial statements.
4. We have no plans or intentions that may materially affect the carrying
value or classification of assets and liabilities.
5. The following have been properly recorded or disclosed in the financial
statements:
a. Related party transactions and related amounts receivable or payable,
including sales, purchases, loans, transfers, leasing arrangements, and
guarantees.
b. Arrangements with financial institutions involving compensating
balances or other arrangements involving restrictions on cash balances
and line-of-credit or similar arrangements.
<PAGE>
Representation Letter
Page Two
c. Agreements to repurchase assets previously sold.
6. There are no -
a. Violations or possible violations of laws or regulations whose effects
should be considered for disclosure in the financial statements or as a
basis for recording a loss contingency.
b. Other material liabilities or gain or loss contingencies that are
required to be accrued or disclosed.
7. We are not aware of any pending or threatened litigation, claims or
assessments or unasserted claims or assessments that are required to be
disclosed in the financial statements and we have not consulted a lawyer
concerning litigation, claims or assessments.
8. There are no material transactions that have not been properly recorded in
the accounting records underlying the financial statements.
9. The Partnerships have satisfactory title to all owned assets, and there are
no liens or encumbrances on such assets nor has any asset been pledged as
security for any liability (other than the mortgage notes payable and the
assessment payable).
10. We have complied with all aspects of laws, regulations and contractual
agreements that would have a material effect on the financial statements in
the event of noncompliance.
11. No events have occurred subsequent to the balance sheet date that would
require adjustment to, or disclosure in, the financial statements.
12. We have identified all accounting estimates that could be material to the
financial statements including the key factors and significant assumptions
underlying those estimates, and we believe the estimates are reasonable in
the circumstances.
13. We agree with all closing and adjusting journal entries made subsequent to
the close of the books which are included in the financial statements as of
December 31, 1996.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 146,318
<SECURITIES> 0
<RECEIVABLES> 28,869
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 202,267
<PP&E> 16,434,240
<DEPRECIATION> 4,273,541
<TOTAL-ASSETS> 13,022,213
<CURRENT-LIABILITIES> 364,677
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,022,213
<SALES> 0
<TOTAL-REVENUES> 1,504,377
<CGS> 0
<TOTAL-COSTS> 2,029,574
<OTHER-EXPENSES> 93,511
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 296,137
<INCOME-PRETAX> (618,708)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (618,708)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
