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, 1999
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.)
1301 Fifth Avenue, Suite 2204, 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 18. There are 18 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 335 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, 1999, 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, 1999, 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 334 limited
partners and one general partner.
The Partnership has not made any distributions in 1997, 1998 and 1999 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
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C>
Rental Revenue $ 1,540,441 $ 1,505,575 $ 1,448,422 $ 1,415,977 $ 1,381,245
Interest
Revenue 24,068 24,835 24,538 21,800 21,158
Income (Loss) (513,222) (500,629) (535,351) (618,708) (615,345)
Income (Loss)
per Limited
Partnership
Unit (723) (705) (754) (871) (867)
Total Assets 11,431,980 11,949,410 12,514,876 13,022,213 13,620,436
Mortgage Notes
Payable
$12,319,268 12,348,628 $12,375,470 $12,399,750 $12,422,388
</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, 1999, five properties were 100% occupied, four were
between 92% and 96% occupied and two were between 84% and 88% occupied. Two
properties located in Michigan and one in West Virginia continue to have cash
flow problems. While the projects have improved vacancy and turnover, the
operating cash flow has not been sufficient to consistently pay property taxes
out of operations. As a result, property taxes for the three properties were
delinquent at December 31, 1999. Management expects that increased rents, lower
vacancy and continued monitoring of expenses will result in the ability of the
properties to pay property taxes from operating cash in the future.
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 for 1999, 1998
and 1997 was $122,277, $134,348 and $96,827, respectively. Rental revenues for
1999 were up 2.3% from 1998 as compared to increases of 3.9% from 1997 to 1998,
and 2.3% from 1996 to 1997. Rental operation expenses for 1999, including
depreciation, were up 2.9% over 1998, while rental operation expenses, including
depreciation, for 1998 and 1997 were up 0.6% and 1.1% over 1997 and 1996,
respectively.
The Partnership paid $23,000, $22,690 and $25,726, in accounting expenses for
the Partnership for 1999, 1998 and 1997, respectively.
Interest revenue for 1999 decreased 3.1% from 1998 and increased 1.2% from 1997
to 1998.
<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, 1999, 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, 1999, the cash reserves of the
Partnership totaled $25,101. 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 1999, the Partnership received $11,412 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 1999,
six properties generated positive cash flow and five 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, 1999, 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.
Capital expenditures on the properties are expected to increase over the initial
years' capital expenses due to the natural aging process of the newly
constructed (10 properties) or newly rehabilitated (1 property) projects at the
time of the formation of the Partnership. 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 $25,101 and
$13,276 held as deposits by the Partnership in WMB accounts as of December 31,
1999 and 1998, 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, 1999, 1998 and 1997, tax credits equal to 13.26%, 15.17% and
15.17%, respectively, of the limited partners' capital contributions have been
generated.
Impact of Year 2000
There was no significant impact from consequences of the Year 2000 to the
Partnership or the Property Partnerships. Management will continue to monitor
throughout the remainder of 2000.
Item 8. Financial Statements and Supplementary Data
The financial statements of Assisted Housing Fund L.P. I as of December 31,
1999, 1998 and 1997, 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
12/31/99 12/31/98 12/31/97
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 2204
1301 Fifth 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, 1999 is
($56,502).
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>
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, 1999 and 1998....... 2
Statements of Operations for each of the years ended
December 31, 1999, 1998 and 1997...................... 3
Statements of Partners' Equity (Deficit) for each of
the years ended December 31, 1999, 1998 and 1997...... 4
Statements of Cash Flows for each of the years ended
December 31, 1999, 1998 and 1997...................... 5
Notes to Financial Statements for each of the years
ended December 31, 1999, 1998 and 1997............... 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 1999.
<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: 3/31/2000
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: 3/31/2000
Kerry K. Killinger
Its Director
By: David G. Murphy /s/ Date: 3/31/2000
David G. Murphy
Its Director
<PAGE>
INDEPENDENT AUDITOR'S REPORT ON SCHEDULES
Partners
Assisted Housing Fund L.P. I
Seattle, Washington
We have audited the consolidated financial statements of Assisted Housing Fund
L.P. I and its subsidiaries, as of and for the years ended December 31, 1999,
1998 and 1997 listed under Item 14(a)1 hereof and have issued our report thereon
dated March 24, 2000 (which report is incorporated by reference elsewhere in
this Form 10-K). In the course of our audits of such financial statements, we
have also audited the schedules listed under Item 14(a)2 for the years ended
December 31, 1999, 1998 and 1997. These schedules are the responsibility of the
Partnership's management. Our responsibility is to express an opinion based on
our audits. In our opinion, these schedules present fairly, in all material
respects, when read in conjunction with the related financial statements, the
information therein set forth.
Blume Loveridge & Co., PLLC
Bellevue, Washington
March 24, 2000
<PAGE>
ASSISTED HOUSING FUND LP I
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Year Ended December 31, 1999
<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 $ 1,273,893 $ 55,413 $ 1,580,336
Ionia 711,686 24,000 925,267
Logan 995,461 55,129 1,213,785
Rolling Brook 747,786 35,000 927,015
Wexford 725,956 22,000 949,507
Blue Heron 1,470,152 248,569 1,622,709
Glenwood 1,439,579 145,000 1,595,734
Pacific Place 757,691 30,000 893,030
Cove 1,432,315 47,000 1,718,133
Washington 715,475 8,000 875,004
Fayette 2,049,274 53,000 $1,779,270 $40,800 647,389
AHF 444,240
-----------------------------------------------------------------------------------
Total $12,319,268 $723,111 $2,223,510 $40,800 $12,947,909
===================================================================================
Construction in
Progress $0 $0
================== ====================
</TABLE>
<PAGE>
ASSISTED HOUSING FUND LP I
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(Continued) Year Ended December 31, 1999
<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 $ 1,418,319 $ 162,017 $ 1,635,749 $ 622,544 13-Jun-90 27.5/15/10
Ionia $ 24,000 812,947 112,320 949,267 360,499 08-Aug-90 27.5/15/10/7
Logan $ 55,129 1,022,974 187,211 1,265,314 468,220 11-Jan-91 27.5/15/10
Rolling Brook $ 35,000 794,263 132,752 962,015 379,710 08-Mar-90 27.5/15/10/7
Wexford $ 22,000 815,821 133,686 971,507 391,863 21-Feb-90 27.5/15/10
Blue Heron $248,569 1,890,967 90,217 2,229,753 740,802 01-May-90 27.5/10
Glenwood $145,000 1,701,975 47,676 1,894,651 709,204 01-Apr-89 27.5/10/7
Pacific Place $ 30,000 943,619 26,481 1,000,100 387,414 01-May-89 27.5/10/7
Cove $ 47,000 1,635,278 82,855 1,765,133 657,567 01-Mar-90 27.5/10/7
Washington $ 8,000 836,929 38,075 883,004 335,354 01-Jan-90 27.5/10
Fayette $ 53,000 2,341,984 117,775 2,512,759 951,354 01-Dec-89 27.5/15/10/7
AHF $ 0 444,240 444,240 160,364 Various
------------------------------------------------------------------
Total $723,111 $14,659,316 $1,131,065 $16,513,492 $6,164,895
====================================================================
Construction in
Progress 0
==============
</TABLE>
<PAGE>
ASSISTED HOUSING FUND LP I
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
(Continued) Year Ended December 31, 1999
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
REAL ESTATE December 31, 1997 December 31, 1998 December 31, 1999
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $16,434,240 $16,450,047 $16,492,085
Additions during period:
Property acquisitions $ 0 $ 0 $ 0
Acquisitions through foreclosure 0 0 0
Other acquisitions 0 0 0
Improvements etc. (New Construction) 15,807 42,038 32,707
Other (Acquisition Cost) 0 0 0
---------------------------------------------------------------------------
$16,450,047 $16,492,085 $16,524,792
Deductions during period:
Cost of real estate sold $ 0 $ 0 $ 0
Other - retired fixed assets 0 0 0 0 11,300 11,300
---------------------------------------------------------------------------
Balance at close of period $16,450,047 $16,492,085 $16,513,492
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
ACCUMULATED DEPRECIATION December 31, 1997 December 31, 1998 December 31, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $4,273,541 $4,905,719 $5,540,696
Existing property: 632,178 634,977 635,499
Depreciation on additions:
Property acquisitions $ 0 $0 $0
Acquisitions through foreclosure 0 0 0
Other acquisitions 0 0 0
Improvements etc. (New Construction) 0 0 0
Other (Acquisition Costs) 0 0 0
--------------------------------------------------------------------------
$4,905,719 $5,540,696 $6,176,195
Depreciation on deductions:
Cost of real estate sold $ 0 $0 $0
Other - retired fixed assets 0 0 0 0 11,300 11,300
--------------------------------------------------------------------------
Balance at close of period $4,905,719 $5,540,696 $6,164,895
========== ========== ==========
</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
CONSOLIDATED FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEARS ENDED DECEMBER 31,
1999, 1998 AND 1997
<PAGE>
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT....................................... 1
FINANCIAL STATEMENTS:
Consolidated Balance Sheets........................................ 2
Consolidated Statements of Operations.............................. 3
Consolidated Statements of Partners' Equity (Deficit).............. 4
Consolidated 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 consolidated balance sheets of Assisted Housing
Fund L.P. I and its subsidiaries, as of December 31, 1999 and 1998, and the
related consolidated statements of operations, partners' equity (deficit) and
cash flows for the years ended December 31, 1999, 1998 and 1997. 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 consolidated 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, 1999 and 1998, and the
results of their operations and cash flows for the years ended December 31,
1999, 1998 and 1997, in conformity with generally accepted accounting
principles.
Blume Loveridge & Co., PLLC
Bellevue, Washington
March 24, 2000
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1999 1998
ASSETS
<S> <C> <C>
Rental property and equipment, at cost:
Buildings and equipment $15,790,381 $15,768,974
Accumulated depreciation (6,164,895) (5,540,696)
----------- -----------
9,625,486 10,228,278
Land 723,111 723,111
----------- -----------
10,348,597 10,951,389
Cash:
Rental operation 190,299 150,756
Partnership 25,101 13,276
----------- -----------
215,400 164,032
Restricted deposits:
Tenant trust - security deposits 116,122 108,063
Reserve accounts 699,706 678,773
----------- -----------
815,828 786,836
Other assets:
Accounts receivable 36,304 33,715
Accounts receivable - DGP's 1,072 5,671
Prepaid expenses 14,779 7,767
----------- -----------
52,155 47,153
----------- -----------
$11,431,980 $11,949,410
============ ============
</TABLE>
Continued on page 2A.
Page 2
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (CONTINUED)
<TABLE>
<CAPTION>
December 31,
1999 1998
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
<S> <C> <C>
Liabilities:
Mortgage notes payable $12,319,268 $12,348,628
Assessment payable 41,141 47,998
Accounts payable 249,143 251,672
Due to affiliates 640,961 609,100
Accrued liabilities 129,615 107,926
Security deposits payable 113,902 106,620
----------- -----------
13,494,030 13,471,944
Minority interests in property
partnerships 467,452 493,746
Contingency
Partners' equity (deficit):
Limited partners (2,473,000) (1,964,910)
General partner (56,502) (51,370)
----------- -----------
(2,529,502) (2,016,280)
----------- -----------
$11,431,980 $11,949,410
=========== ===========
</TABLE>
See accompanying notes to financial statements.
Page 2A
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Revenue:
Rent 1,540,441 $1,505,575 $1,448,422
Miscellaneous 79,864 73,344 84,211
---------- ---------- ----------
1,620,305 1,578,919 1,532,633
Expenses:
Operating and maintenance 274,252 235,793 222,944
Utilities 262,656 243,754 257,935
General and administrative 364,916 359,323 344,847
Taxes and insurance 268,517 270,871 264,774
Interest 318,595 319,192 329,756
Depreciation 635,499 634,977 632,178
---------- ---------- ----------
2,124,435 2,063,910 2,052,434
---------- ---------- ----------
(504,130) (484,991) (519,801)
Other revenues (expenses):
Interest earned on
partnership cash 414 92 253
Minority interest
in operations 26,206 26,022 26,384
Accounting and auditing (23,000) (22,690) (25,726)
General and administrative (8,862) (13,685) (10,991)
Incentive management fees (870) (2,434) (3,329)
Miscellaneous (2,980) (2,943) (2,141)
---------- ---------- ----------
(9,092) (15,638) (15,550)
---------- ---------- ----------
Net income (loss) $(513,222) $ (500,629) $ (535,351)
========== ========== ==========
Net income (loss) per
unit of limited
partnership interest $ (723) $ (705) $ (754)
========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
Page 3
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
Years Ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
Profit/loss percentage 99.0% 1.0% 100.0%
=========== ======== =========
Balance - January 1, 1997 $ (939,290) $(41,010) $ (980,300)
Net income (loss) for 1997 (529,997) (5,354) (535,351)
----------- -------- -----------
Balance - December 31, 1997 (1,469,287) (46,364) (1,515,651)
Net income (loss) for 1998 (495,623) (5,006) (500,629)
----------- -------- -----------
Balance - December 31, 1998 (1,964,910) (51,370) (2,016,280)
Net income (loss) for 1999 (508,090) (5,132) (513,222)
----------- -------- -----------
Balance - December 31, 1999 $(2,473,000) (56,502) (2,529,502)
=========== ======== ===========
</TABLE>
See accompanying notes to financial statements.
Page 4
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $(513,222) $(500,629) $(535,351)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation 635,499 634,977 632,178
Minority interests in
operations (26,206) (26,022) (26,384)
Changes in certain assets
and liabilities:
Accounts receivable 2,010 2,436 (12,953)
Prepaid expenses (7,012) 13,733 5,580
Accounts payable (2,529) (8,989) 515
Accrued liabilities 21,689 (27,926) 60,365
Due to affiliates 31,861 31,435 23,131
Security deposits (777) (4,053) 4,580
--------- --------- ---------
Net cash provided by
operating activities 141,313 114,962 151,661
Cash flows from investing activities:
Purchase of depreciable
property (32,707) (42,038) (15,807)
Deposits to reserve accounts (142,031) (158,018) (132,444)
Withdrawals from
reserve accounts 121,098 124,020 40,415
------- ------- ---------
Net cash provided (used) by
investing activities (53,640) (76,036) (107,836)
</TABLE>
Continued on page 5A.
Page 5
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998 1997
<S> <C> <C> <C>
Cash flows from financing activities:
Minority partners' capital
contributions $ (88) $ (84) $ (117)
Mortgage principal payments (29,360) (26,842) (24,280)
Assessment principal payments (6,857) (6,857) (6,857)
-------- -------- -------
Net cash provided (used) by
financing activities (36,305) (33,783) (31,254)
-------- -------- --------
Net increase in cash 51,368 5,143 12,571
Cash - beginning of year 164,032 158,889 146,318
-------- -------- --------
Cash - end of year $215,400 $164,032 $158,889
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest $318,806 $319,363 $327,080
======== ======== ========
Fixed assets retired
(fully depreciated) $ 11,300 $ - $ -
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
Page 5A
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
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, 1999, 334
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 apartment projects 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 apartment projects 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, 1999, 1998 and 1997, rental revenue from RHS
totaled $462,125, $451,730 and $435,076, representing 28.5 percent, 28.6
percent, and 28.4 percent of total revenue, respectively.
Page 6
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
(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, 1999, 1998 and 1997, net
losses allocable to the minority partners were $26,206, $26,002 and $26,384,
respectively.
Page 7
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
(CONTINUED)
Method of Accounting
The accrual method of accounting is used for financial statement purposes.
Cost Overruns
The partnership agreements for the Property Partnerships required the DGP's to
fund cost overruns on the development of the apartment projects. Such cost
overruns, totaling $589,462, have been recorded as minority interests in
property 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............................... 5 - 10 years
Carpets and draperies.................... 5 - 10 years
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, 1999 and 1998, there were no cash equivalents.
Concentration of Credit
The Property Partnerships maintain cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Property Partnerships have not
experienced any losses in such accounts. Management believes the Property
Partnerships are not exposed to any significant credit risk on cash in such bank
deposit accounts.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures.
Page 8
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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,
1999 1998 1997
Murphey Favre Properties, Inc. -
Partnership services fee $ 7,500 $ 7,500 $ 7,500
Developer general partners
and affiliates -
Property management fees $126,573 $124,027 $121,887
As of December 31, 1999 and 1998, related party payables consisted of the
following:
1999 1998
Advances from DGP's $201,784 $201,784
Partnership management fees 326,726 326,726
Partnership services fees 37,500 30,000
Advances from general partner 74,951 50,590
-------- --------
$640,961 $609,100
======== ========
During 1999 and 1998, the general partner advanced $24,361 and $23,935,
respectively, to the Partnership for administrative expenses.
The Partnership maintains deposits in certain of WMB's interest-bearing accounts
which aggregated $25,101 and $13,276 and at December 31, 1999 and 1998,
respectively. Interest earned on such deposits totaled $414, $92 and $253 during
the years ended December 31, 1999, 1998 and 1997, 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, 1999 and 1998. 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 CONSOLIDATED 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 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, seven of the eleven Property
Partnerships have affiliates of the DGP's which provide management services for
the rental properties and receive compensation for such services in amounts
approximating 8.3% of rental receipts. Three of the eleven Property Partnerships
are co-managed by affiliates of the DGP's which provide management services for
the rental properties and receive compensation for such services in amounts
approximating 2.9% 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. Ten of the eleven Property Partnerships are in compliance with the
minimum annual funding requirements as set forth by RHS for the year ended
December 31, 1999 and all of the Property Partnerships are in compliance for the
year ended December 31, 1998. All withdrawals were approved by RHS and used for
the 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 individually liable on the mortgage notes.
Page 10
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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
2000 32,115
2001 35,128
2002 38,422
2003 42,029
2004 46,303
2005 and later years 12,125,271
$12,319,268
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, 1999, 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
2000 6,857
2001 6,857
2002 6,857
2003 6,857
2004 6,857
2005 and later years 6,856
$41,141
Page 11
<PAGE>
ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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, 1999, no payments have been made under these guarantee agreements.
NOTE 8 - CONTINGENCY
The Partnership has ceased accrual of the annual partnership administration fee,
payable in part to the general partner. Management has determined that the
source of payment, a future sale or refinance of one or more of the Property
Partnerships, may not be sufficient to pay fees accrued in excess of the
$544,540 payable at December 31, 1996. Management has elected to treat fees for
years subsequent to 1996 as a contingent liability. At December 31, 1999 and
1998 the contingent liability for partnership administration fees totaled
$223,551 and $149,034, respectively.
Page 12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 215,400
<SECURITIES> 0
<RECEIVABLES> 37,376
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 267,555
<PP&E> 16,513,492
<DEPRECIATION> 6,164,895
<TOTAL-ASSETS> 11,431,980
<CURRENT-LIABILITIES> 417,730
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,431,980
<SALES> 0
<TOTAL-REVENUES> 1,620,305
<CGS> 0
<TOTAL-COSTS> 2,124,435
<OTHER-EXPENSES> 9,092
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 318,595
<INCOME-PRETAX> (513,222)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (513,222)
<EPS-DILUTED> 0
<EPS-BASIC> 0
</TABLE>
