UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
---
For the quarterly period ended September 29, 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: 0-17619
American Tax Credit Properties L.P.
(Exact name of Registrant as specified in its charter)
Delaware 13-3458875
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
Richman Tax Credit Properties L.P.
599 West Putnam Avenue, 3rd Floor
Greenwich, Connecticut
06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
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 filing requirements
for the past 90 days. Yes X No ___.
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AMERICAN TAX CREDIT PROPERTIES L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Table of Contents Page
<S> <C>
Balance Sheets as of September 29, 1996 (Unaudited) and March 30, 1996
(Unaudited)
Statements of Operations for the three and six month periods ended September 29,
1996 (Unaudited) and September 29, 1995 (Unaudited)
Statements of Cash Flows for the six months ended September 29, 1996 (Unaudited)
and September 29, 1995 (Unaudited)
Notes to Financial Statements as of September 29, 1996 (Unaudited)
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
BALANCE SHEETS
SEPTEMBER 29, 1996 AND MARCH 30, 1996
(UNAUDITED)
September 29, March 30,
Notes 1996 1996
----- ------------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 482,731 $ 397,120
Investments in bonds available-for-sale 2 2,981,708 3,112,049
Investment in local partnerships 3 8,427,884 9,464,434
Interest receivable 63,002 66,580
---------------- ----------------
$ 11,955,325 $ 13,040,183
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 52,631 $ 57,961
Payable to general partner 131,595 43,861
--------------- ----------------
184,226 101,822
--------------- ---------------
Partners' equity (deficit)
General partner (249,416) (238,223)
Limited partners, $1,000 stated value per unit (41,286 units of
limited partnership interest outstanding) 11,877,727 12,985,812
Unrealized gain on investments in bonds available-for-sale, net 2 142,788 190,772
--------------- ---------------
11,771,099 12,938,361
------------- -------------
$ 11,955,325 $ 13,040,183
============ ============
</TABLE>
See Notes to Financial Statements.
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF OPERATIONS
THREE AND SIX MONTH PERIODS ENDED SEPTEMBER 29, 1996 AND 1995
(UNAUDITED)
Three Months Six Months Ended Three Months Six Months Ended
Ended September September 29, Ended September September 29,
29, 29,
Notes 1996 1996 1995 1995
----- -------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE
Interest $ 63,332 $ 129,692 $ 63,451 $ 137,738
Other income from local partnerships 2,500 5,000
------------------------------------------------------ -----------------
TOTAL REVENUE 63,332 129,692 65,951 142,738
----------------- ----------------- ---------------- ---------------
EXPENSES
Administration fees 45,931 91,862 45,931 91,862
Management fee 43,867 87,734 43,867 87,734
Professional fees 24,808 41,333 11,159 24,885
Printing, postage and other 3,983 10,241 7,053 16,170
----------------- ----------------- ----------------- -----------------
TOTAL EXPENSES 118,589 231,170 108,010 220,651
--------------- ---------------- --------------- ----------------
Loss from operations (55,257) (101,478) (42,059) (77,913)
Equity in loss of investment in local
partnerships 3 (550,402) (1,017,800) (444,481) (1,062,218)
--------------- --------------- --------------- --------------
NET LOSS $ (605,659) $ (1,119,278) $ (486,540) $ (1,140,131)
============== ============== ============== =============
NET LOSS ATTRIBUTABLE TO
General partner $ (6,057) $ (11,193) $ (4,865) $ (11,401)
Limited partners (599,602) (1,108,085) (481,675) (1,128,730)
--------------- -------------- -------------- ------------
$ (605,659) $ (1,119,278) $ (486,540) $ (1,140,131)
============== ============== ============== =============
NET LOSS per unit of limited partnership
interest (41,286 units of limited
partnership interest) $ (14.52) $ (26.84) $ (11.67) $ (27.34)
================ ================= ================ ================
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 29, 1996 AND 1995
(UNAUDITED)
1996 1995
------------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 140,627 $ 153,142
Cash paid for
administration fees (76,380) (76,380)
professional fees (69,590) (48,641)
printing, postage and other expenses (2,796) (16,170)
-------------- ---------------
Net cash provided by (used in) operating activities (8,139) 11,951
-------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships (includes $5,000 of other income
from local partnerships for the six months ended September 29, 1995) 18,750 64,500
Maturity/redemption of bonds 75,000 134,000
--------------- ---------------
Net cash provided by investing activities 93,750 198,500
--------------- ---------------
Net increase in cash and cash equivalents 85,611 210,451
Cash and cash equivalents at beginning of period 397,120 342,688
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 482,731 $ 553,139
============= ==============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds available-for-sale, net $ (47,984) $ 160,335
============== ==============
- - -------------------------------------------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash provided by (used in) operating
activities on page 6.
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CASH FLOWS - (Continued)
SIX MONTHS ENDED SEPTEMBER 29, 1996 AND 1995
(UNAUDITED)
1996 1995
-------------------- ------------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net loss $ (1,119,278) $ (1,140,131)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities
Equity in loss of investment in local partnerships 1,017,800 1,062,218
Gain on redemption of investments in bonds available-for-sale (2,008)
Amortization of net premium on investments in bonds 15,509 15,895
Accretion of zero coupon bonds (8,152) (8,151)
Increase in payable to general partner 87,734 87,734
Decrease in accounts payable and accrued expenses (5,330) (4,891)
Decrease in interest receivable 3,578 1,285
----------------- -----------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
$ (8,139) $ 11,951
=============== ===============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 29, 1996
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. They do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. The results of operations are impacted significantly by the
combined results of operations of the Local Partnerships, which are
provided by the Local Partnerships on an unaudited basis during interim
periods. Accordingly, the accompanying financial statements are dependent
on such unaudited information. In the opinion of the General Partner, the
financial statements include all adjustments necessary to present fairly
the financial position as of September 29, 1996 and the results of
operations and cash flows for the interim periods presented. All
adjustments are of a normal recurring nature. The results of operations for
the three and six month periods ended September 29, 1996 are not
necessarily indicative of the results that may be expected for the entire
year.
Certain reclassifications of amounts have been made to conform to the
current period presentation.
2. Investments in Bonds Available-For-Sale
As of September 29, 1996, certain information concerning investments in
bonds available-for-sale is as follows:
Gross unrealized Gross
Amortized gains unrealized Estimated
cost losses fair value
<S> <C> <C> <C> <C>
Description and maturity
Corporate debt securities
Within one year $ 60,822 $ 123 $ (822) $ 60,123
After one year through five years 260,849 867 (225) 261,491
After five years through ten years 638,382 597 (23,271) 615,708
After ten years 453,294 307 (8,432) 445,169
------------- ------------- ------------ -------------
1,413,347 1,894 (32,750) 1,382,491
------------ ------------ ----------- ------------
U.S. Treasury debt securities
Within one year 52,924 1,004 -- 53,928
After one year through five years 242,973 23,081 -- 266,054
After five years through ten years 939,940 166,296 -- 1,106,236
------------ ------------ ----------------- ------------
1,235,837 190,381 -- 1,426,218
------------ ------------ ----------------- ------------
U.S. government and agency securities
After ten years 189,736 -- (16,737) 172,999
------------- ----------------- ------------ -------------
$ 2,838,920 $ 192,275 $ (49,487) $ 2,981,708
=========== ============ =========== ===========
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1996
(UNAUDITED)
3. Investment in Local Partnerships
The Partnership owns limited partnership interests in nineteen Local
Partnerships representing capital contributions in the aggregate amount of
$34,510,290. As of June 30, 1996, the Local Partnerships have outstanding
mortgage loans payable totaling approximately $83,272,000 and accrued
interest payable on such loans totaling approximately $4,484,000, which are
secured by security interests and liens common to mortgage loans on the
Local Partnerships' real property and other assets.
For the six months ended September 29, 1996, the investment in Local
Partnerships activity consists of the following:
<S> <C> <C>
Investment in Local Partnerships as of March 30, 1996 $ 9,464,434
Equity in loss of investment in Local Partnerships for the
three months ended
March 31, 1996 $ (467,398)
June 30, 1996 (550,402) (1,017,800) (A)
--------------
Cash distributions received from Local Partnerships during
the three months ended
June 29, 1996 (15,000)
September 29, 1996 (3,750) (18,750)
---------------- -------------
Investment in Local Partnerships as of September 29, 1996 $ 8,427,884
===========
</TABLE>
(A) Equity in loss of investment in Local Partnerships is limited to the
Partnership's investment balance in each Local Partnership; any excess
is applied to other partners' capital in any such Local Partnership.
The amount of such excess losses applied to other partners' capital
for the three and six month periods ended June 30, 1996 was $618,588
and $1,340,411, respectively, as reflected in the combined statements
of operations of the Local Partnerships reflected herein Note 3.
The combined unaudited balance sheets of the Local Partnerships as of
June 30, 1996 and December 31, 1995 and the combined unaudited statements
of operations of the Local Partnerships for the three and six month periods
ended June 30, 1996 and 1995 are reflected on pages 9 and 10, respectively.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1996
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of June 30, 1996
and December 31, 1995 are as follows:
June 30, December 31,
1996 1995
-------------------- ------------
<S> <C> <C>
ASSETS
Cash and other investments $ 1,222,363 $ 1,304,492
Rental receivable 171,345 165,626
Escrow deposits and reserves 3,132,824 3,640,218
Land 4,476,955 4,476,955
Buildings and improvements (net of accumulated
depreciation of $29,826,054 and $27,836,776) 87,132,520 88,484,487
Intangible assets (net of accumulated amortization of
$786,943 and $736,962) 1,979,721 2,029,039
Other 792,240 862,904
---------------- -----------------
$ 98,907,968 $ 100,963,721
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 982,086 $ 1,175,581
Due to related parties 5,024,704 5,144,533
Mortgage loans 83,272,220 83,354,276
Notes payable 1,017,151 1,017,151
Accrued interest 4,484,470 3,744,233
Other 2,137,354 2,103,775
--------------- ---------------
96,917,985 96,539,549
-------------- --------------
Partners' equity (deficit)
American Tax Credit Properties L.P.
Capital contributions, net of distributions 33,975,139 34,007,639
Cumulative loss (25,543,505) (24,525,705)
------------- --------------
8,431,634 9,481,934
--------------- ----------------
General partners and other limited partners, including ATCP II
Capital contributions, net of distributions 362,230 362,230
Cumulative loss (6,803,881) (5,419,992)
-------------- ---------------
(6,441,651) (5,057,762)
-------------- ---------------
1,989,983 4,424,172
---------------- ----------------
$ 98,907,968 $ 100,963,721
============= =============
</TABLE>
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<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1996
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
three and six month periods ended June 30, 1996 and 1995 are as follows:
Three Months Six Months Ended Three Months Six Months Ended
Ended June 30, June 30, Ended June 30, June 30,
1996 1996 1995 1995
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Rental $ 3,914,166 $ 7,860,571 $ 3,840,786 $ 7,583,408
Interest and other 49,554 103,340 66,509 120,338
---------------- --------------- --------------- ---------------
Total Revenue 3,963,720 7,963,911 3,907,295 7,703,746
-------------- -------------- ------------- --------------
EXPENSES
Administrative 541,821 1,120,509 536,070 1,101,862
Utilities 320,194 734,432 303,295 661,367
Operating, maintenance and other 782,662 1,610,527 765,214 1,506,636
Taxes and insurance 496,942 1,015,086 433,286 895,765
Interest (including amortization of
$24,075, $49,981, $24,292 and $48,056) 2,026,274 3,895,768 1,879,189 3,779,096
Depreciation 998,803 1,989,278 973,327 1,947,304
-------------- -------------- -------------- --------------
Total Expenses 5,166,696 10,365,600 4,890,381 9,892,030
-------------- -------------- ------------- --------------
NET LOSS $ (1,202,976) $ (2,401,689) $ (983,086) $ (2,188,284)
============= ============= ============= =============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties L.P. $ (550,402) $ (1,017,800) $ (444,481) $ (1,062,218)
General partners and other limited
partners, including ATCP II, which
includes $618,588, $1,340,411,
$523,323 and $1,102,651 of American
Tax Credit Properties L.P. loss in
excess of investment (652,574) (1,383,889) (538,605) (1,126,066)
-------------- -------------- -------------- --------------
$ (1,202,976) $ (2,401,689) $ (983,086) $ (2,188,284)
============= ============= ============= =============
</TABLE>
The combined results of operations of the Local Partnerships for the three
and six month periods ended June 30, 1996 are not necessarily indicative of
the results that may be expected for an entire operating period.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
SEPTEMBER 29, 1996
(UNAUDITED)
3. Investment in Local Partnerships (continued)
The Partnership acquired a 99% limited partnership interest in B & V, Ltd.
(the "B & V Local Partnership"), a 190-unit complex located in Homestead,
Florida in December, 1988. In August, 1992, much of Homestead, Florida was
devastated by Hurricane Andrew and the Property owned by the B & V Local
Partnership sustained substantial damage. The City of Homestead has taken,
but has not acted upon, administrative action threatening to demolish
approximately 100 rental units in the B & V complex unless reconstruction
immediately commences. If demolished, the rebuilding of all such rental
units would be subject to changes in zoning by the City of Homestead and
the results of litigation remedies being pursued by the B & V Local
Partnership, discussed below. The damage to the complex is covered by
property insurance. The Local General Partner of the B & V Local
Partnership, on behalf of the B & V Local Partnership and at the insistence
of the insurance company, entered into a contract with a particular
contractor to repair the damage. After some delay the insurance company
funded insurance proceeds to rebuild the complex and repairs commenced;
however, on or about March 30, 1994, the contractor discontinued the repair
work due to a dispute concerning costs and the refusal of the insurance
company to advance additional funds. The insurance carrier has ceased
making rental interruption insurance payments and the lender has declared a
default. The Local General Partner of the B & V Local Partnership has taken
the position that the insurance company has defaulted under its obligations
to fully fund the reconstruction of the property and make required rental
interruption insurance payments. Accordingly, the B & V Local Partnership
is pursuing a lawsuit against the insurance company in State court. The
Local General Partner of the B & V Local Partnership had agreed with the
lender and the Partnership to effect a plan of action. The objectives of
the plan were to seek the protection of the bankruptcy court, stop the City
of Homestead's demolition process, complete reconstruction of the
buildings, preserve the Low-income Tax Credits and avoid foreclosure by
working with the lender and allowing the B & V Local Partnership to pursue
litigation remedies against the insurance companies. According to the plan
of action, the B & V Local Partnership filed a petition of bankruptcy under
Chapter 11 of the Bankruptcy Code on November 21, 1994. The bankruptcy
court decided to have the action against the contractor and its bonding
company settled in binding arbitration rather than through a bankruptcy
proceeding. Accordingly, the B & V Local Partnership has commenced an
action directly against the contractor and the contractor's bonding
company. Each of the parties (the B & V Local Partnership, the insurance
company, the contractor and the contractor's bonding company) agreed to a
voluntary nonbinding mediation process (the "Mediation"). In addition, the
City of Homestead had filed an action in order to take four buildings
comprising 32 rental units by eminent domain proceeding. Effective April,
1996, the City of Homestead was awarded such buildings pursuant to a
quick-take proceeding and in June, 1996, the B & V Local Partnership
accepted a settlement offer from the City of Homestead in the amount of
$280,000 plus legal costs. Subject to lender approval, the B & V Local
Partnership intended to utilize such proceeds toward the rehabilitation of
the remaining rental units. However, the lender has recently expressed that
it is not in favor of utilizing the proceeds for such purposes. In
addition, the lender has moved the Bankruptcy Court for relief from the
bankruptcy stay. In response, the Bankruptcy Court modified the automatic
stay to allow the lender to commence a foreclosure action. On August 27,
1996 the lender filed its Complaint to Foreclose Mortgage and Securities
Interests in the Circuit Court for Dade County, Florida. Shortly
thereafter, the B & V Local Partnership filed its answer to the Complaint.
The Bankruptcy Court has limited the progress of this action solely to the
filing of pleadings. In addition, the lender has moved the Bankruptcy Court
for a complete dismissal of the bankruptcy proceeding. The Bankruptcy Court
denied this motion provided that a plan of reorganization was filed on
behalf of the B & V Local Partnership by September 17, 1996. On September
17, 1996, both the lender and the Partnership filed proposed plans of
reorganization and accompanying disclosure statements. The Bankruptcy Court
considered the sufficiency of the disclosure statements at a hearing on
November 7, 1996, and both parties are in the process of amending the
disclosure statements to provide additional financial and factual
information. The Bankruptcy Court will further consider the sufficiency of
the disclosure statements after it determines the value of the lender's
interest in the Property on or about November 15, 1996. As a result of
these recent developments concerning the lender's position, the Mediation
was postponed. As a result of the quick-take of the 32 rental units by the
City of Homestead, the Partnership will incur a recapture of Low-income Tax
Credits taken through December, 1995 of approximately $163,000
(representing approximately $4 per Unit) and will be unable to utilize
future Low-income Tax Credits associated with such apartments of
approximately $188,000 (representing approximately $5 per Unit) for the
period January, 1996 through 1998. Because of the outstanding matters,
including those associated with the lender and the bankruptcy proceeding,
there can be no assurance that the Local General Partner of the B & V Local
Partnership will eventually be successful in implementing this plan and
reconstructing the remaining rental units. If it is not successful, the
partners of the Partnership could suffer additional partial recapture of
previous Low-income Tax Credits and a reduction of future Low-income Tax
Credits generated by the B & V Local Partnership. As of November 1, 1996,
52 rental units are completed and occupied. A disaster of this scale is an
unusual event. Because the magnitude of destruction caused by Hurricane
Andrew in Southern Florida has limited precedent it is not possible to
determine at this time the final economic impact resulting from Hurricane
Andrew on the B & V Local Partnership, even if reconstructed.
The General Partner has taken the position that temporary vacancies do not
result in either a loss or delay of Low-income Tax Credits while attempts
to conduct repairs are being made and, except for the rental units taken
through eminent domain, the Partnership may continue to utilize the
Low-income Tax Credits without interruption. However, the Partnership's tax
professionals have informed the Partnership that, based upon a 1995 revenue
procedure, the Internal Revenue Service could challenge the position taken
by the Partnership concerning the uninterrupted utilization of the
Low-income Tax Credits, with respect to rental units not completed, as of
December 31, 1994. In addition, if any of the rental units were to be sold
or not reconstructed, it would result in a reduction of future Low-income
Tax Credits and partial recapture of previous Low-income Tax Credits with
respect to those rental units. In addition, the management agent was
notified on June 14, 1996 by the monitoring agent for the Florida Housing
Finance Agency that, as a result of rental units not in service, a portion
of the property is considered to be in non-compliance which could result in
additional recapture or the inability to utilize future Low-income Tax
Credits. Of the Partnership's total annual Low-income Tax Credits,
approximately $387,000 was allocated from the B & V Local Partnership
(prior to the loss of rental units taken through eminent domain) which
represent approximately 6.4% of the total annual Low-income Tax Credits.
Although these matters are complicated and the law is unclear, the
Partnership has calculated an estimate of the potential effect to limited
partners, exclusive of the rental units discussed above in connection with
the eminent domain proceeding, of approximately $39 per Unit representing
recapture of Low-income Tax Credits on rental units not rebuilt and
approximately $8 per Unit per annum representing the loss of future
Low-income Tax Credits through 1998. The Low-income Tax Credits with
respect to the B & V Local Partnership are scheduled to expire in 1998.
The B & V Local Partnership has deferred the recognition of the proceeds of
the rental interruption insurance (principally received in 1993) (see
discussion above), while recognizing expenses currently. In addition, the B
& V Local Partnership is not recognizing full depreciation expense while
the complex is in the process of being reconstructed. The Partnership's
investment balance in the B & V Local Partnership, after the allocation of
cumulative equity losses, is zero as of September 29, 1996.
As part of the overall plan and arrangement with the Local General Partner
of the B & V Local Partnership (see discussion above), during the year
ended March 30, 1995, the Partnership acquired a 98% limited partnership
equity interest in B & V Phase I, Ltd. (the "B & V Phase I Local
Partnership"), which owns a 97-unit, Section 8 assisted apartment complex
located in Homestead, Florida, from principals of the Local General Partner
of the B & V Local Partnership. The purpose of acquiring an interest in the
B & V Phase I Local Partnership was to mitigate potential adverse
consequences of a loss of Low-income Tax Credits in the event that the
rebuilding of the apartment complex owned by the B & V Local Partnership is
not completed. Under the terms of the limited partnership agreement between
the Partnership and the B & V Phase I Local Partnership, the Partnership
made its full capital contribution of $140,000 (by utilizing reserves) in
October, 1994 with total Low-income Tax Credits expected to be allocated to
the Partnership over the period 1994 through 1998 of approximately
$499,000. In August, 1992, the B & V Phase I Local Partnership was also
damaged by Hurricane Andrew. Since May 1, 1996, all 97 of the rental units
were complete and occupied. Under an agreement with the lender, the B & V
Phase I Local Partnership was to commence paying debt service in January,
1995 which was to coincide with the completion of construction. However,
due to construction delays, the B & V Phase I Local Partnership has not
commenced making such payments. As a result, the lender has declared a
default under the terms of the mortgage and the Local General Partner of
the B & V Phase I Local Partnership is having discussions with the lender
regarding a loan restructuring. The Partnership's investment balance in the
B & V Phase I Local Partnership, after the allocation of cumulative equity
losses, is zero as of September 29, 1996.
4. Additional Information
Additional information, including the audited March 30, 1996 Financial
Statements and the Organization, Purpose and Summary of Significant
Accounting Policies, is included in the Partnership's Annual Report on Form
10-K for the fiscal year ended March 30, 1996 on file with the Securities
and Exchange Commission.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Material Changes in Financial Condition
As of September 29, 1996, Registrant has not experienced a significant change in
financial condition as compared to March 30, 1996. Principal changes in assets
are comprised of periodic transactions and adjustments and anticipated equity in
loss from operations of the Local Partnerships. During the six months ended
September 29, 1996, Registrant received cash from interest earnings and
distributions from Local Partnerships and utilized cash for normal operating
expenses. During the six months ended September 29, 1996, Registrant recorded a
net unrealized loss on bonds available-for-sale of approximately $48,000,
resulting in a net unrealized gain of approximately $143,000 reflected in
Registrant's partners' equity (deficit) as of September 29, 1996. In addition,
during the six months ended September 29, 1996, Registrant recorded amortization
of net premium on investments in bonds of approximately $16,000, which was
partially offset by accretion of zero coupon bonds of approximately $8,000. In
addition, during the six months ended September 29, 1996, Registrant received
$75,000 from the maturity of investments in bonds held for working capital
purposes. During the six months ended September 29, 1996, the investment in
Local Partnerships decreased as a result of Registrant's equity in the Local
Partnerships' net loss for the six months ended June 30, 1996 of $1,017,800 and
by cash distributions received from Local Partnerships of $18,750.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. The rents of the Properties, virtually all of which receive rental
subsidy payments, including payments under Section 8 of Title II of the Housing
and Community Development Act of 1974 ("Section 8"), are subject to specific
laws, regulations and agreements with federal and state agencies. The subsidy
agreements expire at various times during and after the Compliance Periods of
the Local Partnerships. Registrant cannot reasonably predict legislative
initiatives and governmental budget negotiations, the outcome of which could
result in a reduction in funds available for the various federal and state
administered housing programs including the Section 8 program. Such changes
could adversely affect the future net operating income and debt structure of any
or all Local Partnerships currently receiving such subsidy or similar subsidies.
Two Local Partnerships' Section 8 contracts are scheduled to expire in 1997
after being extended for one year and one Local Partnership's Section 8 contract
is scheduled to expire during 1996. In addition, the Local Partnerships have
various financing structures which include (i) required debt service payments
("Mandatory Debt Service") and (ii) debt service payments which are payable only
from available cash flow subject to the terms and conditions of the notes, which
may be subject to specific laws, regulations and agreements with appropriate
federal and state agencies ("Non-Mandatory Debt Service or Interest"). During
the six months ended June 30, 1996, revenue from operations, Local General
Partner advances and reserves of the Local Partnerships have generally been
sufficient to cover the operating expenses and Mandatory Debt Service. Certain
Local Partnerships are effectively operating at or near break even levels,
although such Local Partnerships' accounting information reflects operating
deficits that do not represent cash deficits due to their mortgage and financing
structure and the required deferral of property management fees. As discussed
below, certain Local Partnerships' operating information indicates below break
even operations after taking into account their mortgage and financing structure
and the required deferral of property management fees.
The terms of the partnership agreement of 4611 South Drexel Limited Partnership
(the "South Drexel Local Partnership") require the Local General Partner of the
South Drexel Local Partnership to cause the management agent to defer property
management fees in order to avoid a default under the mortgages. The South
Drexel Local Partnership incurred an operating deficit for the six months ended
June 30, 1996 of approximately $21,000 which includes property management fees
of approximately $7,000. Accordingly, the net operating deficit was
approximately $14,000. The Local General Partner of the South Drexel Local
Partnership reports that all required payments under the mortgages and real
estate taxes are current. Of Registrant's total annual Low-income Tax Credits,
approximately 1.12% is allocated from the South Drexel Local Partnership.
The terms of the partnership agreement of Erie Associates Limited Partnership
(the "Erie Local Partnership") require the Local General Partners of the Erie
Local Partnership to cause the management agent to defer property management
fees in order to avoid a default under the mortgage. The Erie Local Partnership
incurred an operating deficit for the six months ended June 30, 1996 of
approximately $5,000 which includes property management fees of approximately
$3,000.
Accordingly, the net operating deficit was approximately $2,000. The Erie Local
Partnership is operating pursuant to an amended and restated note (the "Amended
Note") dated December 1, 1994 which matures on December 31, 1997. The original
financing called for Mandatory Debt Service of $7,647 per month, while the
Amended Note requires monthly Mandatory Debt Service of $5,883. The Local
General Partner of the Erie Local Partnership reports that the Erie Local
Partnership is one month in arrears under the terms of the Amended Note as of
June 30, 1996 and that management fees are currently being paid. The Local
General Partner of the Erie Local Partnership further reports that the Erie
Local Partnership has not received a notice of default from the lender. Of
Registrant's total annual Low-income Tax Credits, approximately 2.40% is
allocated from the Erie Local Partnership.
Registrant acquired a 99% limited partnership interest in B & V, Ltd. (the "B &
V Local Partnership"), a 190-unit complex located in Homestead, Florida in
December, 1988. In August, 1992, much of Homestead, Florida was devastated by
Hurricane Andrew and the Property owned by the B & V Local Partnership sustained
substantial damage. The City of Homestead has taken, but has not acted upon,
administrative action threatening to demolish approximately 100 rental units in
the B & V complex unless reconstruction immediately commences. If demolished,
the rebuilding of all such rental units would be subject to changes in zoning by
the City of Homestead and the results of litigation remedies being pursued by
the B & V Local Partnership, discussed below. The damage to the complex is
covered by property insurance. The Local General Partner of the B & V Local
Partnership, on behalf of the B & V Local Partnership and at the insistence of
the insurance company, entered into a contract with a particular contractor to
repair the damage. After some delay the insurance company funded insurance
proceeds to rebuild the complex and repairs commenced; however, on or about
March 30, 1994, the contractor discontinued the repair work due to a dispute
concerning costs and the refusal of the insurance company to advance additional
funds. The insurance carrier has ceased making rental interruption insurance
payments and the lender has declared a default. The Local General Partner of the
B & V Local Partnership has taken the position that the insurance company has
defaulted under its obligations to fully fund the reconstruction of the property
and make required rental interruption insurance payments. Accordingly, the B & V
Local Partnership is pursuing a lawsuit against the insurance company in State
court. The Local General Partner of the B & V Local Partnership had agreed with
the lender and Registrant to effect a plan of action. The objectives of the plan
were to seek the protection of the bankruptcy court, stop the City of
Homestead's demolition process, complete reconstruction of the buildings,
preserve the Low-income Tax Credits and avoid foreclosure by working with the
lender and allowing the B & V Local Partnership to pursue litigation remedies
against the insurance companies. According to the plan of action, the B & V
Local Partnership filed a petition of bankruptcy under Chapter 11 of the
Bankruptcy Code on November 21, 1994. The bankruptcy court decided to have the
action against the contractor and its bonding company settled in binding
arbitration rather than through a bankruptcy proceeding. Accordingly, the B & V
Local Partnership has commenced an action directly against the contractor and
the contractor's bonding company. Each of the parties (the B & V Local
Partnership, the insurance company, the contractor and the contractor's bonding
company) agreed to a voluntary nonbinding mediation process (the "Mediation").
In addition, the City of Homestead had filed an action in order to take four
buildings comprising 32 rental units by eminent domain proceeding. Effective
April, 1996, the City of Homestead was awarded such buildings pursuant to a
quick-take proceeding and in June, 1996, the B & V Local Partnership accepted a
settlement offer from the City of Homestead in the amount of $280,000 plus legal
costs. Subject to lender approval, the B & V Local Partnership intended to
utilize such proceeds toward the rehabilitation of the remaining rental units.
However, the lender has recently expressed that it is not in favor of utilizing
the proceeds for such purposes. In addition, the lender has moved the Bankruptcy
Court for relief from the bankruptcy stay. In response, the Bankruptcy Court
modified the automatic stay to allow the lender to commence a foreclosure
action. On August 27, 1996 the lender filed its Complaint to Foreclose Mortgage
and Securities Interests in the Circuit Court for Dade County, Florida. Shortly
thereafter, the B & V Local Partnership filed its answer to the Complaint. The
Bankruptcy Court has limited the progress of this action solely to the filing of
pleadings. In addition, the lender has moved the Bankruptcy Court for a complete
dismissal of the bankruptcy proceeding. The Bankruptcy Court denied this motion
provided that a plan of reorganization was filed on behalf of the B & V Local
Partnership by September 17, 1996. On September 17, 1996, both the lender and
Registrant filed proposed plans of reorganization and accompanying disclosure
statements. The Bankruptcy Court considered the sufficiency of the disclosure
statements at a hearing on November 7, 1996, and both parties are in the process
of amending the disclosure statements to provide additional financial and
factual information. The Bankruptcy Court will further consider the sufficiency
of the disclosure statements after it determines the value of the lender's
interest in the Property on or about November 15, 1996. As a result of these
recent developments concerning the lender's position, the Mediation was
postponed. As a result of the quick-take of the 32 rental units by the City of
Homestead, Registrant will incur a recapture of Low-income Tax Credits taken
through December, 1995 of approximately $163,000 (representing approximately $4
per Unit) and will be unable to utilize future Low-income Tax Credits associated
with such apartments of approximately $188,000 (representing approximately $5
per Unit) for the period January, 1996 through 1998. Because of the outstanding
matters, including those associated with the lender and the bankruptcy
proceeding, there can be no assurance that the Local General Partner of the B &
V Local Partnership will eventually be successful in implementing this plan and
reconstructing the remaining rental units. If it is not successful, the partners
of Registrant could suffer additional partial recapture of previous Low-income
Tax Credits and a reduction of future Low-income Tax Credits generated by the B
& V Local Partnership. As of November 1, 1996, 52 rental units are completed and
occupied. A disaster of this scale is an unusual event. Because the magnitude of
destruction caused by Hurricane Andrew in Southern Florida has limited precedent
it is not possible to determine at this time the final economic impact resulting
from Hurricane Andrew on the B & V Local Partnership, even if reconstructed.
The General Partner has taken the position that temporary vacancies do not
result in either a loss or delay of Low-income Tax Credits while attempts to
conduct repairs are being made and, except for the rental units taken through
eminent domain, Registrant may continue to utilize the Low-income Tax Credits
without interruption. However, Registrant's tax professionals have informed
Registrant that, based upon a 1995 revenue procedure, the Internal Revenue
Service could challenge the position taken by Registrant concerning the
uninterrupted utilization of the Low-income Tax Credits, with respect to rental
units not completed as of December 31, 1994. In addition, if any of the rental
units were to be sold or not reconstructed, it would result in a reduction of
future Low-income Tax Credits and partial recapture of previous Low-income Tax
Credits with respect to those rental units. In addition, the management agent
was notified on June 14, 1996 by the monitoring agent for the Florida Housing
Finance Agency that, as a result of rental units not in service, a portion of
the property is considered to be in non-compliance which could result in
additional recapture or the inability to utilize future Low-income Tax Credits.
Of Registrant's total annual Low-income Tax Credits, approximately $387,000 was
allocated from the B & V Local Partnership (prior to the loss of rental units
taken through eminent domain) which represents approximately 6.4% of the total
annual Low-income Tax Credits. Although these matters are complicated and the
law is unclear, Registrant has calculated an estimate of the potential effect to
limited partners, exclusive of the rental units discussed above in connection
with the eminent domain proceeding, of approximately $39 per Unit representing
recapture of Low-income Tax Credits on rental units not rebuilt and
approximately $8 per Unit per annum representing the loss of future Low-income
Tax Credits through 1998. The Low-income Tax Credits with respect to the B & V
Local Partnership are scheduled to expire in 1998.
The B & V Local Partnership has deferred the recognition of the proceeds of the
rental interruption insurance (principally received in 1993) (see discussion
above), while recognizing expenses currently. In addition, the B & V Local
Partnership is not recognizing full depreciation expense while the complex is in
the process of being reconstructed. Registrant's investment balance in the B & V
Local Partnership, after the allocation of cumulative equity losses, is zero as
of September 29, 1996.
As part of the overall plan and arrangement with the Local General Partner of
the B & V Local Partnership (see discussion above), during the year ended March
30, 1995, Registrant acquired a 98% limited partnership equity interest in B & V
Phase I, Ltd. (the "B & V Phase I Local Partnership"), which owns a 97-unit,
Section 8 assisted apartment complex located in Homestead, Florida, from
principals of the Local General Partner of the B & V Local Partnership. The
purpose of acquiring an interest in the B & V Phase I Local Partnership was to
mitigate potential adverse consequences of a loss of Low-income Tax Credits in
the event that the rebuilding of the apartment complex owned by the B & V Local
Partnership is not completed. Under the terms of the limited partnership
agreement between Registrant and the B & V Phase I Local Partnership, Registrant
made its full capital contribution of $140,000 (by utilizing reserves) in
October, 1994 with total Low-income Tax Credits expected to be allocated to
Registrant over the period 1994 through 1998 of approximately $499,000. In
August, 1992, the B & V Phase I Local Partnership was also damaged by Hurricane
Andrew. Since May 1, 1996, all 97 of the rental units were complete and
occupied. Under an agreement with the lender, the B & V Phase I Local
Partnership was to commence paying debt service in January, 1995 which was to
coincide with the completion of construction. However, due to construction
delays, the B & V Phase I Local Partnership has not commenced making such
payments. As a result, the lender has declared a default under the terms of the
mortgage and the Local General Partner of the B & V Phase I Local Partnership is
having discussions with the lender regarding a loan restructuring. Registrant's
investment balance in the B & V Phase I Local Partnership, after the allocation
of cumulative equity losses, is zero as of September 29, 1996. Of Registrant's
total annual Low-income Tax Credits, approximately 1.3% is allocated from the B
& V Phase I Local Partnership.
Results of Operations
Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting. Registrant accounts for its investments in Local Partnerships
in accordance with the equity method of accounting. Under the equity method of
accounting, the investment is carried at cost and is adjusted for Registrant's
share of the Local Partnership's results of operations and by any cash
distributions received. Equity in loss of each investment in Local Partnership
allocated to Registrant is recognized to the extent of Registrant's investment
balance in each Local Partnership. Any equity in loss in excess of Registrant's
investment balance in a Local Partnership is allocated to other partners'
capital in each such Local Partnership. As a result, the equity in loss of
investment in Local Partnerships is expected to decrease as Registrant's
investment balances in the respective Local Partnerships become zero.
Cumulative losses and cash distributions in excess of investment in Local
Partnerships may result from a variety of circumstances, including a Local
Partnership's accounting policies, subsidy structure, debt structure and
operating deficits, among other things. Accordingly, cumulative losses and cash
distributions in excess of the investment are not necessarily indicative of
adverse operating results of a Local Partnership. See discussion above under
Material Changes in Financial Condition regarding the Local Partnerships
currently operating below economic break even levels. In the case of the B & V
Local Partnership, losses have been exacerbated due to consequences resulting
from Hurricane Andrew. Such results may be reversed in a future period, pending
the outcome of the reconstruction of the complex and results of the litigation
discussed above.
Three Months Ended September 29, 1996
For the three months ended September 29, 1996, Registrant had a net loss of
approximately $606,000, which included an equity in loss of investment in Local
Partnerships of approximately $551,000 for the three months ended June 30, 1996.
Registrant's loss from operations for the three months ended September 29, 1996
of approximately $55,000 was attributable to interest revenue of approximately
$63,000, exceeded by operating expenses of approximately $118,000. Interest
income for future periods is expected to decline as investments in bonds mature
and are utilized for Registrant's operating expenses.
The Local Partnerships' net loss of approximately $1,203,000 for the three
months ended June 30, 1996 was attributable to rental and other revenue of
approximately $3,964,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $4,144,000 and approximately $1,023,000
of depreciation and amortization expenses.
Three Months Ended September 29, 1995
For the three months ended September 29, 1995, Registrant had a net loss of
approximately $487,000, which included an equity in loss of investment in Local
Partnerships of approximately $445,000 for the three months ended June 30, 1995.
Registrant's loss from operations for the three months ended September 29, 1995
of approximately $42,000 was attributable to interest revenue of approximately
$63,000 and other income from Local Partnerships of approximately $3,000,
exceeded by operating expenses of approximately $108,000.
The Local Partnerships' net loss of approximately $983,000 for the three months
ended June 30, 1995 was attributable to rental and other revenue of
approximately $3,907,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $3,892,000 and approximately $998,000
of depreciation and amortization expenses.
Six Months Ended September 29, 1996
For the six months ended September 29, 1996, Registrant had a net loss of
approximately $1,119,000, which included an equity in loss of investment in
Local Partnerships of approximately $1,018,000 for the six months ended June 30,
1996. Registrant's loss from operations for the six months ended September 29,
1996 of approximately $101,000 was attributable to interest revenue of
approximately $130,000, exceeded by operating expenses of approximately
$231,000. Interest income for future periods is expected to decline as
investments in bonds mature and are utilized for Registrant's operating
expenses.
The Local Partnerships' net loss of approximately $2,402,000 for the six months
ended June 30, 1996 was attributable to rental and other revenue of
approximately $7,964,000, exceeded by operating and interest expenses (including
Non-Mandatory Interest) of approximately $8,327,000 and approximately $2,039,000
of depreciation and amortization expenses.
Six Months Ended September 29, 1995
For the six months ended September 29, 1995, Registrant had a net loss of
approximately $1,140,000, which included an equity in loss of investment in
Local Partnerships of approximately $1,062,000 for the six months ended June 30,
1995. Registrant's loss from operations for the six months ended September 29,
1995 of approximately $78,000 was attributable to interest revenue of
approximately $138,000 and other income from Local Partnerships of $5,000,
exceeded by operating expenses of approximately $221,000.
The Local Partnerships' net loss of approximately $2,188,000 for the six months
ended June 30, 1995 was attributable to rental and other revenue of
approximately $7,704,000, exceeded by operating and interest expenses of
approximately $7,897,000 and approximately $1,995,000 of depreciation and
amortization expenses.
Three and Six Month Periods Ended September 29, 1996 versus
Three and Six Month Periods Ended September 29, 1995
Registrant's operations for the three months ended September 29, 1996 resulted
in a net loss of approximately $606,000 as compared to a net loss of
approximately $487,000 for the same period in 1995. The increase in net loss is
primarily attributable to an increase in the equity in loss of investment in
Local Partnerships of approximately $106,000, which is primarily the result of
an increase in the operating expenses of the Local Partnerships, partially
offset by an increase in the nonrecognition of losses in excess of Registrant's
investment in certain Local Partnerships of approximately $95,000 in accordance
with the equity method of accounting. Although the Local Partnerships' total
operating expenses have increased for the three months ended June 30, 1996 as
compared to the 1995 period, they are comparable to the total operating expenses
incurred during the year ended December 31, 1995.
Registrant's operations for the six months ended September 29, 1996 resulted in
a net loss of approximately $1,119,000 as compared to a net loss of
approximately $1,140,000 for the same period in 1995. Although the net loss is
comparable, the nonrecognition of losses in excess of Registrant's investment in
certain Local Partnerships increased by approximately $238,000. Although the
Local Partnerships' total operating expenses have increased for the six months
ended June 30, 1996 as compared to the 1995 period, they are comparable to the
total operating expenses incurred during the year ended December 31, 1995.
Equity in loss of investment in Local Partnerships is expected to decrease as
Registrant's investment balances in the respective Local Partnerships become
zero.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
As discussed in Part I, Item 1 - Financial Statements and Part I, Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations included herein, B & V, Ltd. (the "B & V Local
Partnership") sustained considerable damage in August, 1992 due to
Hurricane Andrew. Although the B & V Local Partnership was insured for
property damage and rental interruption, the insurance company has not
fully performed under its coverage obligation. Because of this
circumstance and due to its limited resources, the B & V Local
Partnership filed a voluntary petition of bankruptcy under Chapter 11
of the Bankruptcy Code on November 21, 1994 in order to have a court
address matters concerning the insurance company, the contractor and
the contractor's bonding company. The petition was filed in the United
States Bankruptcy Court, Southern District of Florida, Miami. The B & V
Local Partnership was authorized to continue in the management and
control of its business and property as debtor-in-possession under the
Bankruptcy Code. Because the construction contract provides for
disputes to be remedied through binding arbitration, the bankruptcy
court decided to have the action against the contractor and its bonding
company settled in binding arbitration rather than through a bankruptcy
proceeding. Accordingly, the B & V Local Partnership has commenced an
action directly against the contractor and the contractor's bonding
company.
In connection with the foregoing, the B & V Local Partnership is a
defendant in a lawsuit brought by the contractor alleging non-payment
for repairs of approximately $120,000. The local general partner of the
B & V Local Partnership denies that any amounts are due and has
counterclaimed that the contractor breached its contract by rendering
inadequate services and causing the B & V Local Partnership to incur
substantial expense to remedy the defects. In connection with the
reconstruction of the complex, the B & V Local Partnership has
countersued the contractor and the contractor's bonding company for
damages to the B & V Local Partnership's property. In addition, the B &
V Local Partnership has brought an action against its insurance carrier
for delays in settling its property damage claim. It is not possible at
this time to determine the final economic impact resulting from
Hurricane Andrew and the above stated legal proceedings on the B & V
Local Partnership and Registrant.
On March 5, 1990, Stonebridge Associates ("Stonebridge") filed a
lawsuit against Federal Apartments Limited Partnership (the "Federal
Local Partnership") for repayment of an unsecured, non-interest bearing
note in the amount of $96,000. The suit was filed in the First Judicial
District Court in Caddo Parish, Louisiana. The suit alleges that the
defendant was required to pay down such note upon the receipt of the
second installment of the capital contribution obligation from
Registrant. Such capital contribution payment was made by Registrant to
the Federal Local Partnership on December 27, 1989. The Federal Local
Partnership contends that Stonebridge is not entitled to such payment.
On December 16, 1993, the Federal Local Partnership filed a lawsuit
against Henry Cisneros (in his capacity as Secretary of the United
States Department of Housing and Urban Development ("HUD") and the
Housing Authority of the City of Fort Lauderdale, Florida ("FLHA") for
violating the Administrative Procedure Act. The suit was filed in the
United States District Court, Southern District of Florida (the
"Court"). The suit alleges that the defendants used an incorrect figure
for debt service in determining the base rent component of the Federal
Local Partnership's Housing Assistance Payments Contract rents,
resulting in rents at a level insufficient to service the Federal Local
Partnership's co-insured first mortgage and, as a further result, the
amount of the maximum insurable first mortgage was reduced and the
local general partner of the Federal Local Partnership had to provide
approximately $1,299,000 to the Federal Local Partnership. The Federal
Local Partnership seeks payment of the difference in rents dating from
1988 to the present and recovery of all legal fees. The local general
partner of the Federal Local Partnership estimates that the annual
difference in rents resulting from the defendants' methods is
approximately $180,000. The Court had previously ruled that HUD acted
within its authority in denying certain change orders incurred in
connection with the development of the property owned by the Federal
Local Partnership, but remanded HUD to review the rent computations
used in determining the base rent component. The Court has since ruled
in favor of HUD and the local general partner of the Federal Local
Partnership has filed an appeal in both rulings. The Federal Local
Partnership is unable to determine at this time the final amounts that
may be recoverable from HUD and/or FLHA.
The principal shareholder of the local general partner of Grove Park
Housing, A California Limited Partnership (the "Grove Park Local
Partnership") recently pled guilty to criminal charges of mail fraud,
submitting a false statement to HUD and obstructing a HUD audit in
connection with alleged misappropriation of funds. Registrant is not
aware of any charges of alleged misappropriation related to the local
general partner's management of the Grove Park Local Partnership.
Registrant is not aware of any other material legal proceedings.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
As discussed in Part I, Item 1 - Financial Statements and Part I, Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations, the mortgagee of the first mortgage underlying
the B & V Local Partnership has declared a default due to circumstances
arising from the damage to the property resulting from Hurricane Andrew
in August, 1992.
As discussed in Part I, Item 1 - Financial Statements and Part I, Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations, pursuant to an agreement with the lender, B & V
Phase I, Ltd. (the "B & V Phase I Local Partnership") was to commence
paying debt service in January, 1995 which was to coincide with the
completion of construction. However, due to construction delays, the B
& V Phase I Local Partnership has not commenced making such payments.
As a result, the lender has declared a default under the terms of the
mortgage loan and the local general partner of the B & V Phase I Local
Partnership is conducting discussions with the lender regarding a loan
restructuring.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
As discussed in Part I, Item 1 - Financial Statements and Part I, Item
2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations, the B & V Local Partnership sustained
considerable damage in August, 1992 due to Hurricane Andrew. The
General Partner has taken the position that temporary vacancies do not
result in either a loss or delay of Low-income Tax Credits while
attempts to conduct repairs are being made and, based on circumstances
to date, Registrant may continue to utilize the Low-income Tax Credits
without interruption. However, Registrant's tax professionals have
informed Registrant that, based upon a 1995 revenue procedure, the
Internal Revenue Service could challenge the position taken by
Registrant concerning the uninterrupted utilization of the Low-income
Tax Credits, with respect to units not completed, after December 31,
1994. Of Registrant's total Low-income Tax Credits, approximately 6.4%
is allocated from the B & V Local Partnership. A disaster of this scale
is an unusual event. Because the magnitude of destruction caused by
Hurricane Andrew in Southern Florida has limited precedent it is not
possible to determine at this time the final economic impact resulting
from Hurricane Andrew on the B & V Local Partnership, even if
reconstructed.
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AMERICAN TAX CREDIT PROPERTIES L.P.
(a Delaware limited partnership)
By: Richman Tax Credit Properties L.P.,
General Partner
by: Richman Tax Credit Properties Inc.,
general partner
Date: November 13, 1996 s/ Richard Paul Richman
----------------- ------------------------
Richard Paul Richman
President, Chief Executive Officer and
Director of the general partner of the
General Partner
Date: November 13, 1996 /s/ Neal Ludeke
----------------- ---------------
Neal Ludeke
Vice President and Treasurer of the
general partner of the General Partner
(Principal Financial and Accounting
Officer of Registrant)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the quarter ended September 29, 1996 Form 10Q Balance Sheets and
Statements of Operations and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
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<NAME> ATCP1
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