<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
----- ACT OF 1934
For the fiscal year ended March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
Commission File Number 0-24660
LIBERTY TAX CREDIT PLUS II L.P.
-------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3458180
--------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
-------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Beneficial Assignment Certificates (including underlying Limited
Partnership Interests)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
DOCUMENTS INCORPORATED BY REFERENCE
None
Index to exhibits may be found on page 113
Page 1 of 124
<PAGE>
PART I
Item 1. Business.
GENERAL
Liberty Tax Credit Plus II L.P. (the "Partnership") is a limited partnership
which was formed under the laws of the State of Delaware on March 25, 1988. The
general partners of the Partnership are Related Credit Properties II L.P., a
Delaware limited partnership (the "Related General Partner"), Liberty Associates
II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP
II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the
"Liberty General Partner" and together with the Related General Partner and
Liberty Associates, the "General Partners"). The general partner of the Related
General Partner is Related Credit Properties II Inc., a Delaware corporation.
The general partners of Liberty Associates are Related Credit Properties II
Inc., and the Liberty General Partner. On November 25, 1997, an affiliate of the
Related General Partner, purchased 100% of the stock of the Liberty General
Partner (the "Transfer"). In addition to the Transfer, by acquiring the stock of
the Liberty General Partner, an affiliate of the Related General Partner also
acquired the Liberty General Partner's general partner interest in Liberty
Associates, which is also the special limited partner of the Partnership.
Pursuant to the Partnership's Amended and Restated Partnership Agreement, the
consent of the limited partners was not required to approve the Transfer.
Liberty Associates is the Special Limited Partner in all 27 Local Partnerships,
as well as a general partner of the Partnership. Liberty Associates has certain
rights and obligations in its role as Special Limited Partner, which permit this
affiliate of the registrant to execute control over the management and policies
of the subsidiaries.
On July 20, 1988 the Partnership commenced a public offering (the "Offering") of
Beneficial Assignment Certificates ("BACs") representing assignments of limited
partnership interests in the Partnership ("Limited Partnership Interests").
As of January 9, 1989 (the date on which the Partnership held the final closing
of the sale of BACs and on which the Offering was terminated), the Partnership
had received $115,917,500 of gross proceeds of the Offering from 8,431
investors.
The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships") each of which owns one or more leveraged low-income multifamily
residential complexes ("Apartment Complexes") that are eligible for the
low-income housing tax credit ("Tax Credit") enacted in the Tax Reform Act of
1986, and to a lesser extent, in Local Partnerships owning properties that are
eligible for the historic rehabilitation tax credit ("Rehabilitation Projects";
and together with the Apartment Complexes, the "Properties"). Some of the
Apartment Complexes benefit from one or more other forms of federal and state
housing assistance. The Partnership's investment in each Local Partnership
represents from 20% to 98% of the partnership interests in the Local
Partnership. As of March 31, 2000, the Partnership had acquired interests in 27
Local Partnerships and does not anticipate making any additional investments.
See Item 2, Properties. In June 1997, the Partnership sold 24.98% of its limited
partnership interest in United-Glenarden I Limited Partnership and sold 32.32%
of its limited partnership interest in Property Development Associates, L.P.
(See Results of Operations of Certain Local Partnerships).
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INVESTMENT OBJECTIVES, TAX CREDITS
The investment objectives of the Partnership are to:
1. Entitle qualified BACs holders to Tax Credits (and to a lesser extent
historic rehabilitation tax credits) over the period of the Partnership's
entitlement to claim Tax Credits (for each Property, ten years from the date of
investment or, if later, the date the Property is placed in service.)
2. Preserve and protect the Partnership's capital.
3. Participate in any capital appreciation in the value of the Properties and
provide distributions of sale or refinancing proceeds upon the disposition of
the Properties.
4. Provide cash distributions when available from the operations of Apartment
Complexes and Rehabilitations Projects.
5. Allocate passive losses to individual BACs holders to offset passive income
that they may realize from rental real estate investments and other passive
activities, and allocate passive losses to corporate BACs holders to offset
active business income.
One of the Partnership's objectives is to entitle qualified BACs holders to Tax
Credits over the period of the Partnership's entitlement to claim Tax Credits
(for each Property, ten years from the date of investment or, if later, the date
the Property is placed in service; referred to herein as the "Credit Period").
Each of the Local Partnerships in which the Partnership has acquired an interest
has been allocated by the relevant state credit agency the authority to
recognize Tax Credits during the Credit Period provided that the Local
Partnership satisfies the rent restriction, minimum set-aside and other
requirements for recognition of the Tax Credits at all times during the 15-year
period commencing at the beginning of the Credit Period. Once a Local
Partnership has become eligible to recognize Tax Credits, it may lose such
eligibility and suffer an event of "recapture" if (i) the Local Partnership
ceases to meet qualification requirements, (ii) there is a decrease in the
qualified basis of the Projects, or (iii) there is a reduction in the taxpayer's
interest in the Project at any time during the 15-year Compliance Period that
began with the first tax year of the Credit Period. None of the Local
Partnerships in which the Partnership has acquired an interest has suffered an
event of recapture.
The Tax Credits are available for a ten-year period which commences when the
property is placed into service. However, the annual Tax Credits available in
the year in which the Apartment Complex is placed in service must be prorated
based upon the months remaining in the year. The amount of the annual Tax
Credits not available in the first year will be available in the eleventh year.
In certain cases, the Partnership acquired its interest in a Local Partnership
after the Local Partnership had placed its Apartment Complex in service. In
these cases, the Partnership may be allocated Tax Credits only beginning in the
month following the month in which it acquired its interest and Tax Credits
allocated in any prior period may not be claimed by the Partnership.
The General Partners generally required in connection with certain investments
in Local Partnerships that the general partner of the Local Partnership ("Local
General Partners") undertake to fund operating deficits (up to a stated maximum
amount) of the Local Partnership during a limited period of time following the
Partnership's investment ("Guarantee Period"). As of March 31, 2000, all
operating deficit guarantees have expired. Generally the amounts funded pursuant
to the Operating Deficit Guarantee have been treated as Operating Loans, do not
bear interest and will be repaid only out of 50% of available cash flow or out
of available net sale or refinancing proceeds. See Item 8, Note 8 - Related
Party Transactions.
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The Partnership continues to meet its primary objective of generating Tax
Credits to qualified BACs holders. To date, none of the Local Partnerships has
failed to remain in compliance with the Tax Credit requirements, and therefore
none has suffered an event of recapture of Tax Credits. The Partnership
generated $12,240,583, $16,707,661 and $17,061,894 in Tax Credits during the
1999, 1998 and 1997 Fiscal Years, respectively.
The Partnership also continues to meet its objective of allocating passive
losses to individual BACs holders to offset passive income that they may realize
from rental real estate investments and other passive activities, and allocating
passive losses to corporate BACs holders to offset business income.
As of March 31, 2000, cash distributions received from the Local Partnerships
have been relatively immaterial. Management expects that the distributions
received from the Local Partnerships will increase, although not to a level
sufficient to permit cash distributions to BACs holders. The Partnership does
not anticipate providing cash distributions to BACs holders in circumstances
other than refinancings or sales.
GOVERNMENT REGULATIONS
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 33%
of the properties are located in any single state. There are also substantial
risks associated with owning properties receiving government assistance, for
example the possibility that Congress may not appropriate funds to enable the
U.S. Department of Housing and Urban Development ("HUD") to make rental
assistance payments. HUD also restricts annual cash distributions to partners
based on operating results and a percentage of the owner's equity contribution.
The Partnership cannot sell or substantially liquidate its investments in Local
Partnerships during the period that the subsidy agreements are in existence,
without HUD's approval. Furthermore there may not be market demand for
apartments at full market rents when the rental assistance contracts expire.
COMPETITION
The real estate business is highly competitive and substantially all of the
Properties acquired by the Partnership are subject to competition from similar
properties in their respective vicinities. In addition, various other limited
partnerships may, in the future, be formed by the General Partners and/or their
affiliates to engage in business which may compete with the Partnership.
EMPLOYEES
The Partnership does not have any direct employees. All services are performed
for the Partnership by its General Partners and their affiliates. The General
Partners receive compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partners
and certain of their affiliates for expenses incurred in connection with the
performance by their employees of services for the Partnership in accordance
with the Partnerships Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement").
Item 2. Properties.
The Partnership has acquired an interest as a limited partner in 27 Local
Partnerships. Set forth below is a schedule of these Local Partnerships
including certain information concerning
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the Apartment Complexes (the "Local Partnership Schedule"). Further information
concerning these Local Partnerships and their properties, including any
encumbrances affecting the properties, may be found in Item 14, Schedule III.
Except for the seven limited partnerships listed below, the following is the
allocation of ownership percentage for each of the Local Partnerships:
<TABLE>
<S> <C>
Local General Partner 1%
Special Limited Partner 1%
Limited Partner - Liberty Tax Credit Plus II L.P. 98%
</TABLE>
<TABLE>
<CAPTION>
Local
General Special Liberty Tax Other
Partner(s) Limited Partner Credit Plus II L.P. Limited Partners*
---------- --------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Concourse Artists 1% 1% 19% 79%
Grand Concourse 1% 1% 19% 79%
Robin Housing 1% 1% 19% 79%
Willoughby-Wyckoff 1% 1% 19% 79%
Penn Alto 1% 1% 78.40% 19.60%
United Glen Arden I 1% 1% 73.52% 24.48%
Property Development
Associates 1% 1% 66.33% 31.67%
</TABLE>
*Each is an ffiliate of Liberty Tax Credit Plus II L.P. with same management
<TABLE>
<CAPTION>
Local Partnership Schedule
--------------------------
% of Units Occupied at May 1,
Name and Location ---------------------------------------
(Number of Units) Date Acquired 2000 1999 1998 1997 1996
----------------- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Polynesian Apartments Associates,
Ltd. (a Limited Partnership)
Homestead, FL (84) July 1988 96 99 96 100 94
Seagrape Village Associates, Ltd.
(a Limited Partnership)
Homestead, FL (112) July 1988 98 98 96 100 96
Metropolitan Towers Associates, L.P.
Rio Piedras, PR (150) December 1988 98 99 99 95 99
Westminster Place II - Olive Site, L.P.
St. Louis, MO (84) October 1988 93 95 93 90 88
Property Development Associates, L.P.
Kansas City, MO (232) December 1988 94 97 95 98 98
Whittier Plaza Associates
Limited Partnership
St. Louis, MO (27) December 1988 89 96 78 81 81
United-Glen Arden I
Limited Partnership
Glen Arden, MD (354) December 1988 97 96 96 91 90
United-Glen Arden II
Limited Partnership
Glen Arden, MD (238) December 1988 98 98 98 95 98
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<CAPTION>
Local Partnership Schedule
--------------------------
(continued)
-----------
% of Units Occupied at May 1,
Name and Location ---------------------------------------
(Number of Units) Date Acquired 2000 1999 1998 1997 1996
----------------- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Rolling Green Limited Partnership
Chicago, IL (224) December 1988 90 75 97 96 87
Santa Juanita II Limited Partnership
Bayamon, PR (46) December 1988 100 97 96 100 100
Spring Creek Associates, L.P.
(a Delaware Limited Partnership)
Brooklyn, NY (582) December 1988 98 98 99 97 97
East Two Thirty-Five Associates
(a Delaware Limited Partnership)
New York, NY (17) December 1988 100 100 100 100 94
Upper Fifth Avenue Residential
Associates, L.P.
New York, NY (151) January 1989 100 99 98 96 97
West 107th Street Associates, L.P.
(a Delaware Limited Partnership)
New York, NY (25) January 1989 100 100 96 100 100
General Atlantic Second Avenue
Associates, L.P.
(a Delaware Limited Partnership)
New York, NY (18) January 1989 100 100 100 95 94
Church Lane Associates
Germantown, PA (40) February 1989 95 100 98 98 95
Campeche Isle Apartments
Limited Partnership
Galveston, TX (208) May 1989 85 87 78 70 65
Robin Housing Associates
(a Limited Partnership)
Bronx, NY (100) November 1988 98 99 95 99 97
Concourse Artists Housing
Associates (a Limited Partnership)
Bronx, NY (23) November 1988 96 96 91 96 96
2051 Grand Concourse Housing
Associates (a Limited Partnership)
Bronx, NY (63) November 1988 95 97 94 97 97
Willoughby-Wyckoff Housing
Associates (a Limited Partnership)
Bronx, NY (68) November 1988 87 91 91 93 97
Goodfellow Place Limited Partnership
St. Louis, MO (71) May 1989 92 99 96 99 91
Penn Alto Associates
Limited Partnership
Altoona, PA (150) June 1989 82 89 87 81 87
Gramco Development
Limited Dividend
Partnership, L.P.
Bayamon, PR (300) July 1989 96 99 98 94 99
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<PAGE>
<CAPTION>
Local Partnership Schedule
--------------------------
(continued)
-----------
% of Units Occupied at May 1,
Name and Location ---------------------------------------
(Number of Units) Date Acquired 2000 1999 1998 1997 1996
----------------- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Alexis Park Apartments
A Louisiana Partnership
in Commendam
Bossier City, LA (280) July 1989 90 93 95 92 93
Williamsburg Residential, L.P.
Witchita, KS (76) August 1989 70 92 78 74 93
Victory Apartments
Chicago, IL (107) September 1989 93 93 93 97 96
</TABLE>
All leases are generally for periods not exceeding one to two years and no
tenant occupies more than 10% of the rentable square footage.
Rents from commercial tenants (to which average rental per square foot applies)
comprise less than 5% of the rental revenues of the Partnership. Maximum rents
for the residential units are determined annually by HUD and reflect
increases/decreases in consumer price indices in various geographic areas.
Management annually reviews the physical state of the properties and suggests to
the respective Local General Partners budget improvements, which are generally
funded from cash flow, from operations or release of replacement reserve
escrows.
Management annually reviews the insurance coverage of the properties and subject
to budget constraints recommends to the respective Local General Partners
additional coverage if warranted.
See Item 1, Business, above for the general competitive conditions to which the
Local Partnerships and properties described above are subject.
Real estate taxes are calculated using rates and assessed valuations determined
by the township or city in which the property is located. Such taxes have
approximated 1% of the aggregate cost of the properties as shown in Schedule III
to the financial statements included herein.
Item 3. Legal Proceedings.
This information is incorporated by reference to the discussions of Alexis,
Metropolitan, and Robin Housing in the Results of Operations of Certain Local
Partnerships contained in Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Security Holder
Matters.
The Partnership has issued and outstanding 115,917.5 Limited Partnership
Interests, each representing a $1,000 capital contribution to the Partnership,
or an aggregate capital contribution of $115,917,500. All of the issued and
outstanding Limited Partnership Interests have been
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<PAGE>
issued to Liberty Credit Assignor Inc. (the "Assignor Limited Partner"), which
has in turn issued 115,917.5 BACs to the purchasers thereof for an aggregate
purchase price of $115,917,500. Each BAC represents all of the economic and
virtually all of the ownership rights attributable to a Limited Partnership
Interest held by the Assignor Limited Partner. BACs may be converted into
Limited Partnership Interests at no cost to the holder (other than payment of
transfer costs not to exceed $100), but Limited Partnership Interests so
acquired are not thereafter convertible into BACs.
Neither the BACs nor the Limited Partnership Interests are traded on any
established public trading market. Because of the provisions of the Revenue Act
of 1987, unless there are further changes in such law, the Partnership does not
intend to include the BACs for quotation on NASDAQ or for listing on any
national or regional stock exchange or any other established securities market.
The Revenue Act of 1987 contained provisions which have an adverse impact on
investors in "publicly traded partnerships." Accordingly, the General Partners
have imposed limited restrictions on the transferability of the BACs and the
Limited Partnership Interests in secondary market transactions. Implementation
of the restrictions should prevent a public trading market from developing and
may adversely affect the ability of an investor to liquidate his or her
investment quickly. It is expected that such procedures will remain in effect
until such time, if ever, as further revision of the Revenue Act of 1987 may
permit the Partnership to lessen the scope of the restrictions.
As of June 1, 2000, the Partnership had 8,451 registered holders of an aggregate
of 115,917.5 BACs.
All of the Partnership's general partnership interests, representing an
aggregate capital contribution of $2,000, are held by the three General
Partners.
There are no material provisions in the Partnership Agreement that restrict the
ability of the Partnership to make distributions.
The Partnership has not made any distributions to the BACs holders as of
March 31, 2000. The Partnership does not anticipate providing cash distributions
to its BACs holders other than from net refinancings or sales proceeds.
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<PAGE>
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of the
Partnership. Additional financial information is set forth in the audited
financial statements in Item 8 hereof.
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------------------------------------------
OPERATIONS 2000 1999 1998 1997* 1996*
---------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 27,104,148 $ 26,705,795 $ 26,563,918 $ 25,919,807 $ 25,386,930
Operating expenses (35,347,234) (35,058,033) (35,799,640) (39,490,613) (32,104,631)
------------ ------------ ------------ ------------ ------------
Loss before minority (8,243,086) (8,352,238) (9,235,722) (13,570,806) (6,717,701)
interest and
extraordinary items
Minority interest in 254,205 414,579 404,890 163,680 185,143
loss of subsidiaries ------------ ------------ ------------ ------------ ------------
Net loss $ (7,988,881) $ (7,937,659) $ (8,830,832) $(13,407,126) $ (6,532,558)
============ ============ ============ ============ ============
Per unit amounts:
Net loss per BAC $ (68.23) $ (67.79) $ (75.42) $ (114.50) $ (55.79)
============ ============ ============ ============ ============
*Reclassified for comparative purposes.
<CAPTION>
Year Ended March 31,
------------------------------------------------------------------------
FINANCIAL POSITION 2000 1999 1998 1997 1996
------------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total assets $180,071,778 $185,526,512 $192,850,536 $200,269,263 $212,829,666
============ ============ ============ ============ ============
Total liabilities $149,572,808 $146,563,631 $145,266,475 $145,257,171 $143,880,937
============ ============ ============ ============ ============
Minority interest $ 3,542,196 $ 4,017,226 $ 4,700,747 $ 3,297,946 $ 3,827,457
============ ============ ============ ============ ============
Total partners' capital $ 26,956,774 $ 34,945,655 $ 42,883,314 $ 51,714,146 $ 65,121,272
============ ============ ============ ============ ============
</TABLE>
During the years ended March 31, 1996 through 2000, total assets decreased
primarily due to depreciation, partially offset by net additions to property and
equipment. For the year ended March 31, 1997, there was also a decrease in
assets due to a loss on impairment of assets.
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
LIQUIDITY AND CAPITAL RESOURCES
Through March 31, 2000, the Partnership has invested all of the net proceeds in
twenty-seven Local Partnerships. Approximately $350,000 of the purchase price
remains to be paid (none of which is held in escrow). During the year ended
March 31, 2000, $18,000 was paid.
During the year ended March 31, 2000, the primary sources of funds included: (i)
working capital reserves; (ii) interest earned on the working capital reserves;
and (iii) cash distributions from operations of the Local Partnerships. All
these sources of funds are available to meet obligations of the Partnership.
The Partnership is not expected to have access to additional sources of
financing, and in particular will not have the ability to access BACs holders
for additional capital contributions to provide capital if needed by the
Partnership. There can be no assurance that additional funds will be available
to the Partnership or any Local Partnership, nor that, if any property is sold,
the proceeds of the sale will be sufficient to pay outstanding balances due on
mortgage loans or other outstanding indebtedness to which the property is
subject.
During the years ended March 31, 2000, 1999 and 1998, respectively, cash
distributions received from operations of the Local Partnerships were
approximately $6,000, $334,000 and $272,000. The General Partners believe that
cash distributions received from the operations of the Local Partnerships are
sufficient to fund the Partnership's ongoing operations for the foreseeable
future (assuming the General Partners continue to defer payment of their
management fees).
During the year ended March 31, 2000, cash and cash equivalents of the
Partnership and its 27 consolidated Local Partnerships decreased approximately
$871,000. This decrease was the result of an increase in acquisitions of
property and equipment ($1,192,000), repayments of mortgage loans ($6,972,000),
an increase in cash held in escrow ($1,040,000), a decrease in due to selling
partners ($1,365,000), an increase in deferred costs($434,000), and a decrease
in capitalization of consolidated subsidiaries attributable to minority interest
($221,000) which exceeded cash flows provided by operating activities ($83,000),
a net increase in due to local general partners and affiliates ($281,000), and
proceeds from mortgage notes ($9,990,000). Included in the adjustments to
reconcile the net loss to cash provided by operating is depreciation and
amortization ($7,949,000).
Partnership management fees owed to the General Partners amounting to
approximately $6,816,000 and $5,370,000 were accrued and unpaid as of March 31,
2000 and 1999, respectively. Without the General Partner's continued accrual
without payment the Partnership will not be in a position to meet its
obligations. The General Partners have continued allowing the accrual without
payment of these amounts but are under no obligation to continue to do so.
For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships below. Since the maximum
loss the Partnership would be liable for is its net investment in the respective
Local Partnerships, the resolution of the existing contingencies is not
anticipated to impact future results of operations, liquidity or financial
condition in a material way. However, the Partnership's loss of its investment
in a Local Partnership will eliminate the ability to generate future Tax Credits
from such Local Partnership and may also result in recapture of Tax Credits if
the investment is lost before the expiration of the Credit Period.
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<PAGE>
Except as described above, management is not aware of any trends or events,
commitments or uncertainties which have not otherwise been disclosed, that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the properties around the United States so that
if one area of the country is experiencing downturns in the economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy. The Partnership has fully invested the
proceeds of its offerings in 27 Local Partnerships, all of which fully have
their Tax Credits in place. The Tax Credits are attached to the project for a
period of ten years and are transferable with the property during the remainder
of the ten-year period. If trends in the real estate market warranted the sale
of a property, the remaining tax credits would transfer to the new owner,
thereby adding significant value to the property on the market, which are not
included in the financial statement carrying amount.
RESULTS OF OPERATIONS
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time, property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows) when the property is considered to be impaired and the
depreciated cost exceeds estimated fair value. Through March 31, 2000, the
Partnership has recorded approximately $4,727,000 as a loss on impairment of
assets.
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. There are no assets classified as property and equipment-held for
sale through March 31, 2000.
The following is a summary of the results of operations of the Partnership for
the years ended March 31, 2000, 1999 and 1998 (the 1999, 1998 and 1997 Fiscal
Years, respectively).
The majority of the Local Partnerships' revenues continue to be in the form of
rental income with the corresponding expenses divided among operations,
depreciation and mortgage interest.
The net loss for the 1999, 1998 and 1997 Fiscal Years totaled $7,988,881,
$7,937,659 and $8,830,832, respectively.
The Partnership continues to meet its primary objective of generating Tax
Credits to qualified BACs holders. To date, none of the Local Partnerships have
failed to remain in compliance with the Tax Credit requirements, and, therefore,
none have suffered an event of recapture of Tax Credits. The Partnership
generated $12,240,583, $16,707,661 and $17,061,894 in Tax Credits during the
1999, 1998 and 1997 Fiscal Years, respectively.
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<PAGE>
1999 VS. 1998
Rental income increased less than 1% for the 1999 Fiscal Year as compared to the
1998 Fiscal Year primarily due to rental rate increases.
Other income increased approximately $335,000 for the 1999 Fiscal Year as
compared to the 1998 Fiscal Year primarily due to insurance proceeds received at
one Local Partnership, liabilities written off as other income at a second Local
Partnership, funds received from the managing agent at a third Local
Partnership, and increased interest income received on replacement reserves at a
fourth Local Partnership in 1999.
Total expenses excluding repairs and maintenance remained fairly consistent with
a decrease of less than 1% for the 1999 Fiscal Year as compared to the 1998
Fiscal Year.
Repairs and maintenance increased approximately $512,000 for the 1999 Fiscal
Year as compared to the 1998 Fiscal Year primarily due to roof repairs at one
Local Partnership and apartment refurbishing at a second Local Partnership in
1999.
1998 VS. 1997
Rental income increased approximately 2% for the 1998 Fiscal Year as compared to
the 1997 Fiscal Year primarily due to rental rate increases.
Other income decreased approximately $283,000 for the 1998 Fiscal Year as
compared to the 1997 Fiscal Year primarily due to a settlement of an estimated
liability of water and sewer expenses in 1996 which was written off and
recognized as other income in 1997 at one Local Partnership partially offset by
local grants received in the 1998 Fiscal Year at two other Local Partnerships.
Total expenses remained fairly consistent with a decrease of approximately 2%
for the 1998 Fiscal Year as compared to 1997 Fiscal Year.
RESULTS OF OPERATIONS OF CERTAIN LOCAL PARTNERSHIPS
(a) Subsidiary Partnerships - Going Concerns and Uncertainties
WHITTIER PLAZA ASSOCIATES
The financial statements for Whittier Plaza Associates Limited Partnership
("Whittier") have been prepared assuming that Whittier will continue as a going
concern. Whittier has sustained continuous losses since commencement of
operations in 1988, including losses of approximately $49,000, $38,000 and
$25,000 for the 1999, 1998 and 1997 Fiscal Years, respectively. Whittier has
experienced higher vacancies and lower rents than those originally projected,
resulting in increased difficulty in meeting both operating and debt service
obligations. The Local General Partner, pursuant to a development deficit
guarantee agreement, has advanced $22,636 and $42,262 in the 1999 and 1998
Fiscal Years, respectively, and $407,184 since 1988 to fund operating cash
shortfalls. In addition, Whittier's management company, an affiliate of the
Local General Partner, has deferred receipt of various fees since 1991 totaling
$64,307. These items raise substantial doubt about Whittier's ability to
continue as a going concern. The Partnership's investment in Whittier at March
31, 2000 and 1999 was reduced to zero as a result of prior years' losses and the
minority interest balance was $0 at each date. Whittier's net loss after
minority interest amounted to approximately $49,000, $38,000 and $25,000 for the
1999, 1998 and 1997 Fiscal Years.
ALEXIS PARK APARTMENTS
During 1990, vapor fumes were discovered in several apartments at Alexis Park
Apartments, a Louisiana Partnership in Commendam ("Alexis"). As a result, 47 of
the 280 units were vacated
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as ordered by the Louisiana Department of Environmental Quality ("LDEQ"). At
June 1, 2000, all but one of these units have been cleared for occupancy by the
Louisiana Department of Health and Hospital.
The United States Environmental Protection Agency (EPA) has placed the site on
the list of proposed Superfund sites. The EPA performed indoor air tests at the
site on 28 units and issued a draft report on January 2, 1997, which found that
none of the units had acute air pollution levels, but further states that two
units were found to have sufficient amounts of air pollutants to possibly cause
health concerns after years of continual exposure. The report recommended the
installation of mechanical systems to reduce air pollutant levels to acceptable
amounts and the sealing of penetrations or openings in the floor slab and walls.
During the year ended December 31, 1997, such remediation was performed. During
the year ended December 31, 1998, the EPA performed additional tests of the
project site and found that all removal actions for lead contaminated soils have
been fully performed in accordance with EPA standards. At June 1, 2000,
management is unaware of any additional or potential remediation or clean-up
costs that will be required and accordingly, is unable to estimate the possible
cost to Alexis of any remediation or clean-up that may be required in the
future.
Management believes the testing conducted by the LDEQ and the EPA has provided
sufficient evidence that there is no significant environmental hazard at the
Alexis Park Apartments site. Management, along with the mayor of Bossier City,
has been active in requesting that the EPA remove the site from the list of
proposed Superfund sites and that no further tests be conducted. Alexis has also
requested assistance with bringing this issue to closure from its Congressman
and U.S. Senators who have been responsive.
Although the environmental issue is in many respects beyond its control,
management intends to continue its efforts in bringing this issue to a close and
believes the favorable test results thus far reduce the chances of a disruptive
action by the EPA and provide an opportunity for Alexis to continue as a going
concern. Nonetheless, Alexis has sustained losses and its current liabilities
exceed its current assets by approximately $223,000. Management of Alexis
expects operating income to improve for 2000 from both increased occupancy and
slightly reduced expenses and also believes cash flows for 2000 will be
sufficient to meet liabilities and subject to the environmental uncertainty
enable Alexis to continue as a going concern. These items raise substantial
doubt about Alexis' ability to continue as a going concern. The maximum loss
which the Partnership would be liable for is its net investment in Alexis. The
Partnership's investment in Alexis at March 31, 2000 and 1999 was approximately
$114,000 and $357,000, respectively, and the minority interest balance was $0 at
each date. Alexis' net loss after minority interest amounted to approximately
$243,000, $263,000 and $259,000, for the 1999, 1998 and 1997 Fiscal Years,
respectively.
GOODFELLOW PLACE LIMITED PARTNERSHIP
The financial statements for Goodfellow Place Limited Partnership ("Goodfellow")
have been prepared assuming that Goodfellow will continue as a going concern.
Goodfellow has sustained substantial operating losses in recent years, has used
substantial amounts of working capital in its operations and has depleted the
operating deficit escrow in the amount of $163,000. Further, at December 31,
1999, current liabilities exceed current assets by $115,013.
A prepayment of $163,000 was due on the promissory note payable to St. Louis
Community Development Agency ("CDA") in August 1996, upon release of the
Operating Deficit Guarantee Escrow. The Local General Partners have defaulted on
this requirement and placed $163,000 in an interest-bearing money market account
in the name of the project. This account has been voluntarily restricted by the
Local General Partners and had a balance of $162,300 at December 31, 1999.
Goodfellow has defaulted on the first mortgage by not making the December 1999
and January and February 2000 mortgage payments, including required reserve
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deposits, when due. The mortgage payment which was due in December 1999 was paid
on March 2, 2000; however, the January through March 2000 mortgage payments have
not been made. On March 8, 2000, the General Partners met with representatives
of MHDC, HUD and the management company regarding the delinquent mortgage
payments.
During June 2000, the general partner of Goodfellow withdrew from the
partnership and Liberty Associates II, L.P. became the new general partner (the
"New General Partner"). It is anticipated that the New General Partner will
release approximately $65,000 from the restricted escrow account to bring the
first mortgage current and $25,000 will be released and paid to CDA to fully
defease and extinguish the promissory note payable. If the above transaction is
consummated, then Goodfellow will recognize approximately $1,600,000 as
forgiveness of indebtedness income. Goodfellow is considering contacting the
first mortgage lender to seek a reduction of the debt service to allow the
current anticipated cash flow to continue to maintain the property for the long
term.
In view of these matters, realization of a major portion of the assets in the
balance sheet of Goodfellow is dependent upon continued operations and the
success of its future operations. Management believes that actions presently
being taken to review Goodfellow's operating and financial requirements provide
the opportunity for Goodfellow to continue as a going concern.
The Partnership's investment in Goodfellow at March 31, 2000 and 1999 was
reduced to zero by prior years' losses, and the minority interest balance was
zero at each date. Goodfellow's net (loss) income after minority interest
amounted to approximately ($67,000), ($13,000) and $200 for the 1999, 1998 and
1997 Fiscal Years, respectively.
WILLOUGHBY-WYCKOFF HOUSING ASSOCIATES
The financial statements for Willoughby-Wyckoff Housing Associates
("Willoughby") have been prepared assuming that Willoughby will continue as a
going concern. There are certain conditions that raise substantial doubt about
Willoughby's ability to continue as a going concern. Willoughby has had
operating losses and equity deficiencies. Management plans to continue to
minimize costs within its control and seek additional funding sources to
supplement project operations. Continuance of Willoughby as a going concern is
dependent upon Willoughby's ability to obtain additional funding to supplement
project operations and enable Willoughby to meet its obligations as they become
due. The financial statements do not include any adjustments that might result
from the outcome of these uncertainties. The Partnership's investment in
Willoughby at March 31, 2000 and 1999 has been reduced to zero by prior years'
losses and the minority interest balance amounted to approximately $176,000 and
$178,000, respectively. Willoughby's net loss after minority interest amounted
to approximately $204,000, $220,000 and $141,000 for the 1999, 1998 and 1997
Fiscal Years, respectively.
CAMPECHE ISLE APARTMENTS, L.P.
The Campeche Isle Apartments Limited Partnership ("Campeche") financial
statements have been prepared in conformity with generally accepted accounting
principles which contemplate continuation of Campeche as a going concern.
On October 6, 1999, Campeche refinanced its mortgage with a mortgage maturing on
November 1, 2006. In addition, management has taken efforts to increase
occupancy by retaining several tenant locator services, refurbishing the
apartments and improving the overall condition of the property. As a
consequence, rental income has increased from $863,088 in 1998 to $986,189 in
1999.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of Campeche,
which in turn is dependent upon Campeche's ability to meet its financing
requirements, and the success of its future op-
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<PAGE>
erations. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty. As of December 31, 1999, total
advances to Campeche from the Partnership totaled approximately $2,218,000. The
Partnership's investment in Campeche at March 31, 2000 and 1999 was $0 and the
minority interest balance was $0 at each date. Campeche's net loss after
minority interest amounted to approximately $428,000, $518,000 and $845,000 for
the 1999, 1998 and 1997 Fiscal Years, respectively.
SANTA JUANITA II LIMITED DIVIDEND PARTNERSHIP
Santa Juanita II Limited Dividend Partnership ("Santa Juanita") had first
mortgage payments of $413,250 in arrears at December 31, 1999. In addition, the
last payment recorded to mortgage principal by the bank was July 1995. As of
February 28, 2000, uncertainties exist regarding the accuracy of the balance of
interest, penalties due and a confirmation of balances had not been received
from the bank. As of December 31, 1999, Santa Juanita was not in compliance with
its second mortgage loan and is in arrears on payment of principal and interest
of approximately $535,000.
The last audited financial information was for the year ended December 31, 1994.
The financial records available for the period January 1, 1995 through June 30,
1997 were not complete or reliable. Further adjustments that could have resulted
to the beginning balance of partners' equity and other accounts, if all
financial records had been available, cannot be determined at this time. During
July 1997, in an attempt to stabilize the operations and conditions of Santa
Juanita, a Substitute Management Agent was appointed as a replacement to the
Previous Management Agent by order of the United States Bankruptcy Court for the
District of Puerto Rico. Prior to July 1997, Santa Juanita engaged in
transactions with its general partners and affiliates which did not meet the
terms of its HAP contract. In addition, due to the lack of records prior to July
1997, the subsidiary's management has no evidence of its compliance with the
requirements of the low income tax credits. The effects of the above
uncertainties on the financial statements have not been determined.
Subsequent to December 31, 1999, Santa Juanita's first mortgage was modified
resulting in a reduction of the mortgage and related interest of approximately
$324,000 and the second mortgage note and related interest was reduced by
approximately $505,000.
The auditors for Santa Juanita qualified their report on the 1999 Fiscal Year
financial statements for the effects of the above uncertainties. The maximum
loss which the Partnership would be liable for is its net investment in Santa
Juanita. The Partnership's investment in Santa Juanita at March 31, 2000 and
1999 was approximately $178,000 and $285,000, respectively, and the minority
interest balance was zero at each date.
PROPERTY DEVELOPMENT ASSOCIATES LIMITED PARTNERSHIP
The financial statements for Property Development Associates Limited Partnership
("Bridgeport") have been prepared assuming that Bridgeport will continue as a
going concern. Bridgeport has a history of cash flow deficiencies and current
maturities due of $100,000 on the mortgage note payable in each of the next five
years and a final maturity date of August 1, 2005. The 1999 $100,000 mortgage
note payment was funded by selling the management contract. Additionally,
Bridgeport has amounts currently due to the management company disbursing
account of $75,384, accrued real estate taxes of $64,391 and accrued letter of
credit fees of $149,319. These items raise substantial doubt about Bridgeport's
ability to continue as a going concern.
The auditors for Bridgeport qualified their report on the 1999 Fiscal Year for
the effects of the above uncertainties. The maximum amount for which the
Partnership would be liable is its net investment in Bridgeport. During May
2000, a restructuring took place in which a new
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<PAGE>
general partner was admitted to Bridgeport and the terms of Bridgeport's debt
were restructured. As part of this restructuring, the new general partner agreed
to loan certain amounts to Bridgeport. The restructuring of Bridgeport's debt
delayed the maturity of principal amounts associated with the mortgage note
payable. The new general partner also received an option to purchase the
property. The time frame in which this option is exercisable and other terms
related to the option are defined in an amendment to the Local Partnership
Agreement. The Partnership's investment in Bridgeport at March 31, 2000 and 1999
was approximately $3,395,000 and $3,761,000 and the minority interest was
$2,245,000 and $2,361,000, respectively.
b) Subsidiary Partnerships - Other
GRAMCO DEVELOPMENT LIMITED DIVIDEND PARTNERSHIP, L.P.
Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net
funds of $4,867,000. In the event of a substantial violation to the provisions
of certain agreements between Gramco and the Municipality of Bayamon (the
"Municipality") and between the Municipality and HUD, the funds shall become
immediately due and payable at the election of HUD and the Municipality.
Otherwise, the principal amount of the obligation together with any interest
will be forgiven. Proceeds from the loan have been deducted from fixed assets.
The Partnership's investment in Gramco at March 31, 2000 and 1999 was
approximately $488,000 and $690,000 and the minority interest balance was
approximately $418,000 and $420,000, respectively. Gramco's net loss after
minority interest amounted to approximately, $203,000, $284,000 and $257,000 for
the 1999, 1998 and 1997 Fiscal Years, respectively.
ROBIN HOUSING ASSOCIATES
Robin Housing Associates ("Robin Housing") is a defendant in several personal
injury lawsuits. The Partnership's insurance carrier intends to defend the
Partnership vigorously. Counsel believes that the insurance coverage is adequate
to cover any liability arising from this action. It is management's opinion that
no accrual for potential losses is currently warranted in the financial
statements. Because the Partnership is a limited partner in Robin Housing, the
maximum loss which the Partnership would suffer is its net investment in Robin
Housing. The Partnership's investment in Robin Housing at March 31, 2000 and
1999 was approximately $46,000 and $66,000 and the minority interest balance was
$283,000 and $360,000, respectively. Robin Housing's net loss after minority
interest amounted to approximately $20,000, $30,000 and $24,000 for the 1999,
1998 and 1997 Fiscal Years, respectively.
METROPOLITAN TOWERS ASSOCIATES, L.P.
The subsidiary partnership, Metropolitan Towers Associates, L.P.
("Metropolitan"), is a defendant in a legal proceeding brought about by the
family of an employee who died in a work related accident. It is management's
opinion that the claim should be covered by Metropolitan's insurance policy.
Because the Partnership is a limited partner in Metropolitan, the maximum loss
which the Partnership would suffer is its net investment in Metropolitan. The
Partnership's investment in Metropolitan at March 31, 2000 and 1999 was
approximately $1,069,000 and $1,108,000, respectively, and the minority interest
was zero at each date. Metropolitan's net loss after minority interest amounted
to approximately $39,000, $119,000 and $113,000 for the 1999, 1998 and 1997
Fiscal Years, respectively.
ROLLING GREEN LIMITED PARTNERSHIP
Rolling Green Limited Partnership ("Rolling Green") operates and is regulated by
HUD under Section 221(d)(3) of the National Housing Act. Rents received by
Rolling Green are subsidized by Section 8 Housing Assistance Payments. Rental
income from such Assistance Payments totaled $1,365,443 and $1,511,794 in the
1999 and 1998 Fiscal Years, respectively. In September 1999, the three Section 8
contracts were consolidated into one contract, and such contract is in force
through September 30, 2000. However, uncertainties regarding the future of HUD
Pro-
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<PAGE>
grams exist. It is not practical to estimate the impact upon Rolling Green's
operations if the rents were to revert to market value.
WILLIAMSBURG RESIDENTIAL, L.P.
In November 1996, the Local General Partner of Williamsburg Residential , L.P.
("Williamsburg ") stopped making the mortgage note payments which constituted an
event of default. On January 1, 1997 the Local General Partner was replaced.
A Reinstatement and Modification Agreement, dated July 24, 1997, and effective
March 1, 1997 was entered into between Williamsburg and Federal National
Mortgage Association ("FNMA"). Terms of the agreement include: 1. Interest only
on the loan for 36 months; 2. Replacement reserve escrow payments waived during
1997; 3. Net operating income is to be turned over to the loan servicer monthly;
and 4. Execution of a debt service reserve agreement.
The Debt Service Agreement, dated July 24, 1997, called for $275,000 to be
deposited into a debt service escrow account for the mutual benefit of
Williamsburg and Williamsburg Residential II, L.P. (an adjoining and affiliated
project). If the monthly net operating income turned over to the loan servicer
is less than the required mortgage and escrow payment, the debt service escrow
account is drawn upon. At December 31, 1999, balances in the two entities
accounts totaled $0. In 1997, the Partnership advanced Williamsburg funds to pay
legal costs, delinquent mortgage payments, and to set up a debt service escrow
account, all of which were required as part of the Reinstatement and
Modification Agreement dated July 24, 1997 with FNMA. The advances do not bear
interest and are short-term in nature. The Partnership has advanced Williamsburg
the necessary funds to keep the mortgage and escrows current during 1999 and is
expected to continue to do so during 2000. Williamsburg has experienced a
decrease in tenant occupancy from 92% at May 1, 1999, to 70% at May 1, 2000, due
to property damage suffered as a result of a tornado in May 1999.
The Partnership's investment in Williamsburg has been written down to $0 by
prior years' losses and the minority interest balance was approximately $731,000
and $733,000 at March 31, 2000 and 1999, respectively. Williamsburg net loss
after minority interest amounted to approximately $201,000, $285,000 and
$220,000 for the 1999, 1998, and 1997 Fiscal Years, respectively.
OTHER
The Partnership's investment, as a limited partner in the Local Partnerships, is
subject to the risks incident to the potential losses arising from management
and ownership of improved real estate. The Partnership's investments also could
be adversely affected by poor economic conditions generally, which could
increase vacancy levels, rental payment defaults, and increased operating
expenses, any or all of which could threaten the financial viability of one or
more of the Local Partnerships.
There also are substantial risks associated with the operation of Apartment
Complexes receiving government assistance. These include governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent apartments in the complexes; difficulties in obtaining government approval
for rent increases; limitations on the percentage of income which low and
moderate-income tenants may pay as rent; the possibility that Congress may not
appropriate funds to enable HUD to make the rental assistance payments it has
contracted to make; and that when the rental assistance contracts expire, there
may not be market demand for apartments at full market rents in a Local
Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Infla-
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<PAGE>
tion also affects the Local Partnerships adversely by increasing operating costs
as, for example, for such items as fuel, utilities and labor.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
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<PAGE>
Item 8. Financial Statements and Supplementary Data.
<TABLE>
<CAPTION>
Sequential
Page
----------
<S> <C>
(a) 1. Consolidated Financial Statements
Independent Auditors' Report 20
Consolidated Balance Sheets at March 31, 2000 and 1999 86
Consolidated Statements of Operations for the Years
Ended March 31, 2000, 1999 and 1998 87
Consolidated Statements of Changes in Partners' Capital
(Deficit) for the Years Ended March 31, 2000, 1999 and 1998 88
Consolidated Statements of Cash Flows for the Years Ended
March 31, 2000, 1999 and 1998 89
Notes to Consolidated Financial Statements 91
</TABLE>
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<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Liberty Tax Credit Plus II L.P. and Subsidiaries
(A Delaware Limited Partnership)
We have audited the consolidated balance sheets of Liberty Tax Credit Plus II
L.P. and Subsidiaries (a Delaware Limited Partnership) as of March 31, 2000 and
1999, and the related consolidated statements of operations, changes in
partners' capital (deficit), and cash flows for the years ended March 31, 2000,
1999 and 1998 (the 1999, 1998 and 1997 Fiscal Years). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We did not
audit the financial statements for 27 (1999, 1998 and 1997 Fiscal Years)
subsidiary partnerships whose losses aggregated $6,417,444, $6,407,403 and
$6,318,514 for the 1999, 1998 and 1997 Fiscal Years, respectively, and whose
assets constituted 98% of the Partnership's assets at March 31, 2000 and 1999,
presented in the accompanying consolidated financial statements. The financial
statements for 27 (1999 and 1998 Fiscal Years) and 26 (1997 Fiscal Year) of
these subsidiary partnerships were audited by other auditors whose reports
thereon have been furnished to us and our opinion expressed herein, insofar as
it relates to the amounts included for these subsidiary partnerships, is based
solely upon the reports of the other auditors. The financial statements of one
(Fiscal 1997) of these subsidiary partnerships were unaudited.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based upon our audits, and the reports of the other auditors
referred to above, the accompanying consolidated financial statements referred
to in the first paragraph present fairly, in all material respects, the
financial position of Liberty Tax Credit Plus II L.P. and Subsidiaries at March
31, 2000 and 1999, and the results of their operations and their cash flows for
the years ended March 31, 2000, 1999 and 1998, in conformity with generally
accepted accounting principles.
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<PAGE>
As discussed in Note 10(a), the consolidated financial statements include the
financial statements of seven limited partnerships with significant
contingencies and uncertainties. The financial statements of six of these
subsidiary partnerships were prepared assuming that each will continue as a
going concern. The auditors' opinion on the financial statements for the 1999
and 1998 Fiscal Years for one of these subsidiary partnerships was qualified due
to uncertainties relating to balances in replacement reserves, mortgage balances
and the related accrued interest. In addition, this subsidiary partnership was
not audited in prior years and there are uncertainties as to whether any
adjustments were necessary to be made to partners' equity at January 1, 1998.
The seven subsidiary partnerships' net losses aggregated $1,501,076 (Fiscal
1999), $1,617,090 (Fiscal 1998) and $1,697,525 (Fiscal 1997) and their assets
aggregated $30,458,479 and $30,717,830 at March 31, 2000 and 1999, respectively.
These matters raise substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. Management's plans in regard to these
matters are also described in Note 10(a). The accompanying consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
June 26, 2000
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<PAGE>
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Polynesian Apartments Associates, Ltd.
We have audited the accompanying balance sheet of Polynesian Apartments
Associates, Ltd. (a limited partnership), FHA Project No. FL29-K005-015-152, as
of December 31, 1999, and the related statements of operations, changes in
partners' capital and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Polynesian Apartments
Associates, Ltd. as of December 31, 1999 and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Friedman Alpren & Green LLP
New York, New York
January 24, 2000
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<PAGE>
[Letterhead of L. H. FRISHKOFF & COMPANY LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Polynesian Apartments Associates, Ltd.
(A Limited Partnership)
Miami, Florida
FHA PROJECT NO. FL29-K005-01552
We have audited the accompanying statements of financial condition of Polynesian
Apartments Associates, Ltd. (A Limited Partnership) as of December 31, 1998 and
1997, and the related statements of operations, changes in partners' capital,
and cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Polynesian Apartments
Associates, Ltd., (A Limited Partnership) as of December 31, 1998 and 1997, and
the results of its operations, changes in partners' capital, and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ L.H. Frishkoff & Company LLP
New York, New York
February 5, 1999
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<PAGE>
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Seagrape Village Associates, Ltd.
We have audited the accompanying balance sheet of Seagrape Village Associates,
Ltd. (a limited partnership), FHA Project No. FL29-K005-015-151, as of
December 31, 1999, and the related statements of operations, changes in
partners' capital and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Seagrape Village Associates,
Ltd. as of December 31, 1999 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ Friedman Alpren & Green LLP
New York, New York
January 24, 2000
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<PAGE>
[Letterhead of L. H. FRISHKOFF & COMPANY LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Seagrape Village Associates, Ltd.
(A Limited Partnership)
Miami, Florida
FHA PROJECT NO. FL29-K005-01551
We have audited the accompanying statements of financial condition of Seagrape
Village Associates, Ltd. (A Limited Partnership) as of December 31, 1998 and
1997, and the related statements of operations, changes in partners' capital,
and cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Seagrape Village Associates,
Ltd. (A Limited Partnership) as of December 31, 1998 and 1997, and the results
of its operations, changes in partners' capital, and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.
/s/ L.H. Frishkoff & Company LLP
New York, New York
February 5, 1999
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<PAGE>
[Letterhead of JOSE E. ROSARIO & CO.]
INDEPENDENT AUDITOR'S REPORT
To the PartnersPuerto Rico Housing Finance
Metropolitan Towers Associates, LPCorporation
Rio Piedras, PRSan Juan, Puerto Rico
I have audited the accompanying balance sheet of Metropolitan Towers Associates,
LP as of December 31, 1999, and the related statements of income, changes in
partner's capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Metropolitan Towers Associates, LP,
as of December 31, 1999, and the results of its operations and the changes in
partner's capital, and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated February 1, 2000, on my
consideration of Metropolitan Towers Associates, LP's internal control structure
and reports dated February 1, 2000, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to
Affirmative Fair Housing.
/s/ Jose E. Rosario & Co.
License No. 961
Expires December 1, 2001
Stamp No. 1624788 of the Puerto Rico College of CPA was affixed to the original.
February 1, 2000
-26-
<PAGE>
[Letterhead of JOSE E. ROSARIO & CO.]
INDEPENDENT AUDITOR'S REPORT
To the Partners Puerto Rico Housing Finance
Metropolitan Towers Associates, LPCorporation
Rio Piedras, PRSan Juan, Puerto Rico
I have audited the accompanying balance sheet of Metropolitan Towers Associates,
LP as of December 31, 1998, and the related statements of income, changes in
partner's capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Metropolitan Towers Associates, LP,
as of December 31, 1998, and the results of its operations and the changes in
partner's capital, and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, I have also issued a report dated January 21, 1999, on my
consideration of Metropolitan Towers Associates, LP's internal control structure
and reports dated January 21, 1999, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to
Affirmative Fair Housing.
/s/ Jose E. Rosario & Co.
License No. 961
Expires December 1, 2001
Stamp No. 1553300 of the Puerto Rico College of CPA was affixed to the original.
January 21, 1999
-27-
<PAGE>
[Letterhead of JOSE E. ROSARIO & CO. - SAN JUAN, PUERTO RICO]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Metropolitan Towers Associates, L.P.
Rio Piedras, Puerto Rico
I have audited the accompanying balance sheets of Metropolitan Towers
Associates, L.P. as of December 31, 1997 and 1996 and the related statements of
operations and changes in partners' capital and cash flows for the years ended
December 31, 1997 and 1996. These financial statements are the responsibility of
the partnership's management. My responsibility is to express an opinion on
these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining on a test basis, evidence supporting
the amount of 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Metropolitan Towers Associates,
L.P. as of December 31, 1997 and 1996, the results of its operations and changes
in partners' capital and cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Jose E. Rosario & Co.
License No. 961
Expires December 1, 1998
Stamp No. 1468192 of the Puerto Rico College of CPAs was affixed to the
original.
January 26, 1998
-28-
<PAGE>
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners
Westminster Place II - Olive Site, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., Project No. 085-35415-PM, a limited partnership, as of December 31,
1999 and 1998 and the related statements of profit and loss, partners' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Place II - Olive
Site, L.P. as of December 31, 1999 and 1998 and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audits was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 13 to 22) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 25, 2000 on our
consideration of Westminster Place II - Olive Site, L.P.'s internal controls and
reports dated January 25, 2000 on its compliance with specific requirements
applicable to major HUD programs, and specific requirements applicable to Fair
Housing and NonDiscrimination
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 25, 2000
-29-
<PAGE>
[Letterhead of RBG & Co.]
S2300-020
Independent Auditors' Report
To The Partners
Westminster Place II - Olive Site, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., Project No. 0855415-PM, a limited partnership, as of December 31,
1998 and 1997 and the related statements of income, partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Place II - Olive
Site, L.P. as of December 31, 1998 and 1997 and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audits was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 12 to 21) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 29, 1999 on our consideration of Westminster Place II - Olive
Site, L.P.'s internal controls and a report dated January 29, 1999 on its
compliance with laws and regulations.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 29, 1999
-30-
<PAGE>
[Letterhead of RBG & CO.]
Independent Auditors' Report
Partners
Property Development Associates, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheet of Property Development
Associates, L.P., a limited partnership, as of December 31, 1998 and 1997 and
the related statements of income, partners' equity and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Property Development
Associates, L.P., as of December 31, 1998 and 1997 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 22, 1999
-31-
<PAGE>
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners
Whittier Plaza Associates Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, Project No. 085-35412-PM-SR, a limited partnership, as of
December 31, 1999 and 1998 and the related statements of income, partners'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whittier Plaza Associates
Limited Partnership as of December 31, 1999 and 1998 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 15 to 24) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 27, 2000 on our
consideration of Whittier Plaza Associates Limited Partnership's internal
control and a reports dated January 27, 2000, on its compliance with specific
requirements applicable to major HUD programs, specific requirements applicable
to Fair Housing and Non-Discrimination, and specific requirements applicable to
nonmajor HUD program transactions.
-32-
<PAGE>
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership has sustained recurring losses from
operations, excessive vacancies, and has continually required a general partner
to fund deficits. These items raise substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 27, 2000
-33-
<PAGE>
[Letterhead of RBG & Co.]
S2300-020
Independent Auditors' Report
To The Partners
Whittier Plaza Associates Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, Project No. 0855412-PM-SR, a limited partnership, as of
December 31, 1998 and 1997 and the related statements of income, partners'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whittier Plaza Associates
Limited Partnership as of December 31, 1998 and 1997 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 15 to 24) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated February 4, 1999 on our consideration of Whittier Plaza Associates Limited
Partnership's internal controls and a report dated February 4, 1999 on its
compliance with laws and regulations.
-34-
<PAGE>
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership has sustained recurring losses from
operations, excessive vacancies, and has continually required a general partner
to fund deficits. These items raise substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
February 4, 1999
-35-
<PAGE>
[Letterhead of Habif, Arogeti & Wynne, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1999, and the related statements of operations,
changes in partners' equity [deficit], and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1999, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 2, 2000
-36-
<PAGE>
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1998, and the related statements of operations,
changes in partners' equity [deficit], and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1998, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 1, 1999
-37-
<PAGE>
[Letterhead of HABIF, AROGETI & WYNNE, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1997, and the related statements of operations,
changes in partners' equity [deficit], and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN I LIMITED
PARTNERSHIP as of December 31, 1997, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
As discussed in Note O of the financial statements, the Partnership is in
default of the terms of its loan agreement. In addition, the Partnership
incurred a net operating loss of $732,764 for 1997. These conditions raise
substantial doubt about the Partnership's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 16, 1998
-38-
<PAGE>
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners
United - Glenarden II Limited Partnership
We have audited the accompanying balance sheet of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1999, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1999, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 2, 2000
-39-
<PAGE>
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners
United - Glenarden II Limited Partnership
We have audited the accompanying balance sheet of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1998, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1998, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 1, 1999
-40-
<PAGE>
[Letterhead of HABIF, AROGETI & WYNNE, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners
United - Glenarden II Limited Partnership
We have audited the accompanying balance sheet of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1997, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 1997, and results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
As discussed in Note N of the financial statements, the Partnership is in
default of the term of its loan agreement. In addition, the Partnership incurred
a net operating loss of $488,048 for 1997 and the Partnership's deficit totaled
$2,076,236 as of December 31, 1997. These conditions raise substantial doubt
about the Partnership's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 16, 1998
-41-
<PAGE>
[Letterhead of SOLOMON, BAERSON, WITONSKI, PATEL & KASKEL, LTD.]
INDEPENDENT AUDITOR'S REPORT
To the Partners
ROLLING GREEN LIMITED PARTNERSHIP
D/B/A Prairie View Apartments
Libertyville, IL
We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP at December 31, 1999 and 1998, and the related statements of income,
changes in partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 1999 and 1998, and the results of its operations,
changes in partners' equity (deficit) and cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Solomon, Baerson, Witonski, Patel & Kaskel, Ltd.
Chicago, IL
January 26, 2000
-42-
<PAGE>
[Letterhead of SOLOMON, BAERSON, WITONSKI, PATEL & KASKEL, LTD.]
INDEPENDENT AUDITOR'S REPORT
To the Partners
ROLLING GREEN LIMITED PARTNERSHIP
D/B/A Prairie View Apartments
Libertyville, IL
We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP at December 31, 1998 and 1997, and the related statements of income,
partners' capital, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ROLLING GREEN LIMITED
PARTNERSHIP at December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Solomon, Baerson, Witonski, Patel & Kaskel, Ltd.
Chicago, IL
January 23, 1999
-43-
<PAGE>
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners
Santa Juanita II Limited
Dividend Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited
Dividend Partnership, as of December 31, 1999, and the related statements of
profit and loss, partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Santa Juanita II Limited
Dividend Partnership as of December 31, 1999, and the results of its operations,
changes in partners' equity, and cash flows for the year then ended in
conformity with generally accepted accounting principles.
As discussed in Note 13 to the financial statements, on April 2000, Santa
Juanita II Limited Dividend Partnership entered into a reinstatement and
amendment agreement related to the balances of the first mortgage and second
mortgage and their related accrued interests. The effect of such reinstatement
and amendment will be recognized during the year ending December 31, 2000.
As described in Note 9 to the financial statements, the Substitute Management
Agent was designated on July 1, 1997. The last audited information prior to such
designation, corresponds to the year ended December 31, 1994. For the period of
January 1, 1995 thru June 30, 1997, the financial records that have been made
available to the Substitute Management Agent were not complete or reliable. The
adjustments that could have been made to the beginning balance of partners'
equity and other accounts, if all financial records had been available, when the
Substitute Management Agent assumed the project, may not be determined at this
time. Accordingly, these financial statements are not designed for those who are
not informed about such matters.
-44-
<PAGE>
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 16, 2000, except
for the first paragraph of such report, as to which the date is May 23, 2000, on
our consideration of Santa Juanita II Limited Dividend Partnership's internal
control, a report dated February 16, 2000, except for the first and sixth
paragraphs, as to which the date is May 23, 2000, on its compliance with
specific requirements applicable to major HUD programs , and a report dated
February 16, 2000, except for the first paragraph of such report, as to which
the date is May 23, 2000, on its compliance with and specific requirements
applicable to Affirmative Fair Housing and Non-Discrimination.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 26
through 35 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
Stamp No. 1631923 of the Puerto Rico Society of
Certified Public Accountants was affixed to original.
Federal Employer Identification Number: 66-0365844
February 16, 2000, except for the fourth and sixth
paragraphs of this report and Note 13, as to which
the date is May 23, 2000.
-45-
<PAGE>
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners
Santa Juanita II Limited
Dividend Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited
Dividend Partnership, as of December 31, 1998, and the related statements of
profit and loss, partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As described in Notes 4 and 6, the amounts reported in the balance sheet for
Replacement Reserves, First Mortgage Payable, Accrued Interest -First Mortgage,
Accrued Interest - Second Mortgage, and Second Mortgage Payable (stated at
$28,750, $1,243,581 (current and long-term portion), $98,009, $47,466, and
$474,656 (current and long-term portion), respectively) may not be accurate,
since the debts are in the process of renegotiations and for other factors. The
effect of such uncertainty can not be reasonably estimated as of the date of the
financial statements.
In our opinion, except for the effects of the matters discussed in the preceding
paragraph, the financial statements referred to above present fairly, in all
material respects, the financial position of Santa Juanita II Limited Dividend
Partnership as of December 31, 1998, and the results of its operations, changes
in partners' equity, and cash flows for the year then ended in conformity with
generally accepted accounting principles.
As described in Note 9 to the financial statements, the Substitute Management
Agent was designated on July 1, 1997. The last audited information prior to such
designation, corresponds to the year ended December 31, 1994. For the period of
January 1, 1995 thru June 30, 1997, the financial records that have been made
available to the Substitute Management Agent were not complete or reliable. The
adjustments that could have been made to the beginning balance of partners'
equity and other accounts, if all financial records had been available, when the
Substitute Management Agent assumed the project, may not be determined at this
time. Accordingly, these financial statements are not designed for those who are
not informed about such matters.
-46-
<PAGE>
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 28, 1999, on our
consideration of Santa Juanita II Limited Dividend Partnership's internal
control and reports dated February 28, 1999, on its compliance with specific
requirements applicable to major HUD programs and specific requirements
applicable to Affirmative Fair Housing and Non-Discrimination.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 26
through 35 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
Stamp No. 1549736 of the Puerto Rico Society of
Certified Public Accountants was affixed to original.
Federal Employer Identification Number: 66-0365844
February 28, 1999
-47-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Spring Creek
Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of Spring Creek Associates, L.P.
(a Delaware limited partnership) as of December 31, 1999 and 1998, and the
related statements of income (loss), changes in partners' capital (deficit), and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spring Creek Associates, L.P.
as of December 31, 1999 and 1998 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 18, 2000
-48-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Spring Creek
Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of Spring Creek Associates, L.P.
(a Delaware limited partnership) as of December 31, 1998 and 1997, and the
related statements of income (loss), changes in partners' capital (deficit), and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spring Creek Associates, L.P.
as of December 31, 1998 and 1997 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 22, 1999
-49-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
East Two Thirty-Five
Associates, L.P.
New York, New York
We have audited the accompanying consolidated balance sheets of East Two
Thirty-Five Associates, L.P. (a Delaware limited partnership) and subsidiary as
of December 31, 1999 and 1998, and the related consolidated statements of income
(loss), changes in partners' capital, and cash flows for the years then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated 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 East Two Thirty-Five
Associates, L.P. and subsidiary as of December 31, 1999 and 1998 and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 7, 2000
-50-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
East Two Thirty-Five
Associates, L.P.
New York, New York
We have audited the accompanying consolidated balance sheets of East Two
Thirty-Five Associates, L.P. (a Delaware limited partnership) and subsidiary as
of December 31, 1998 and 1997, and the related consolidated statements of income
(loss), changes in partners' capital, and cash flows for the years then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated 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 East Two Thirty-Five
Associates, L.P. and subsidiary as of December 31, 1998 and 1997 and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 10, 1999
-51-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Upper Fifth Avenue Residential
Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of Upper Fifth Avenue
Residential Associates, L.P. (a Delaware limited partnership) as of December 31,
1999 and 1998, and the related statements of income (loss), changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Upper Fifth Avenue Residential
Associates, L.P. as of December 31, 1999 and 1998 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
January 31, 2000
-52-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Upper Fifth Avenue Residential
Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of Upper Fifth Avenue
Residential Associates, L.P. (a Delaware limited partnership) as of December 31,
1998 and 1997, and the related statements of income (loss), changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Upper Fifth Avenue Residential
Associates, L.P. as of December 31, 1998 and 1997 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 4, 1999
-53-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
West 107th Street
Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of West 107th Street Associates,
L.P. (a Delaware limited partnership) as of December 31, 1999 and 1998, and the
related statements of income (loss), changes in partners' capital, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West 107th Street Associates,
L.P. as of December 31, 1999 and 1998 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 2, 2000
-54-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
West 107th Street
Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of West 107th Street Associates,
L.P. (a Delaware limited partnership) as of December 31, 1998 and 1997, and the
related statements of income (loss), changes in partners' capital, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West 107th Street Associates,
L.P. as of December 31, 1998 and 1997 and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 9, 1999
-55-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
General Atlantic Second Avenue
Associates, L.P.
New York, New York
We have audited the accompanying consolidated balance sheets of General Atlantic
Second Avenue Associates, L.P. (a Delaware limited partnership) and subsidiary
as of December 31, 1999 and 1998, and the related consolidated statements of
income (loss), changes in partners' capital (deficit), and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated 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 General Atlantic
Second Avenue Associates, L.P. and subsidiary as of December 31, 1999 and 1998
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 8, 2000
-56-
<PAGE>
[Letterhead of GROSSMAN, TUCHMAN & SHAH, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
General Atlantic Second Avenue
Associates, L.P.
New York, New York
We have audited the accompanying consolidated balance sheets of General Atlantic
Second Avenue Associates, L.P. (a Delaware limited partnership) and subsidiary
as of December 31, 1998 and 1997, and the related consolidated statements of
income (loss), changes in partners' capital (deficit), and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated 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 General Atlantic
Second Avenue Associates, L.P. and subsidiary as of December 31, 1998 and 1997
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
Respectfully submitted,
/s/ Grossman, Tuchman & Shah, LLP
New York, N.Y.
February 10, 1999
-57-
<PAGE>
[Letterhead of ZINER, KENNEDY & LEHAN LLP
INDEPENDENT AUDITORS' REPORT
To the Partners of
Church Lane Associates
We have audited the accompanying balance sheets of Church Lane Associates (a
Pennsylvania limited partnership) as of December 31, 1999 and 1998 and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's general partners and contracted management agent. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's general partners and contracted management agent, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Church Lane Associates as of
December 31, 1999 and 1998, and the results of its operations, changes in
partners' equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP
Quincy, Massachusetts
January 18, 2000
-58-
<PAGE>
[Letterhead of ZINER & COMPANY, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Church Lane Associates
We have audited the accompanying balance sheets of Church Lane Associates (a
Pennsylvania limited partnership) as of December 31, 1998 and 1997 and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's general partners and contracted management agent. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's general partners and contracted management agent, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Church Lane Associates as of
December 31, 1998 and 1997, and the results of its operations, changes in
partners' equity and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Ziner & Company, P.C.
Boston, Massachusetts
January 18, 1999
-59-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Campeche Isle Apartments
Limited Partnership
We have audited the accompanying balance sheet of Campeche Isle Apartments
Limited Partnership as of December 31, 1999, and the related statements of
operations, partners' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance that the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Campeche Isle Apartments
Limited Partnership as of December 31, 1999, and the results of its operations,
the changes in partners' deficit and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
partnership will continue as a going concern. As discussed in note B to the
financial statements, the partnership has suffered recurring losses from
operations. This raises substantial doubt about the partnership's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in note B. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 1, 2000
-60-
<PAGE>
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Campeche Isle Apartments
Limited Partnership
We have audited the accompanying balance sheet of Campeche Isle Apartments
Limited Partnership as of December 31, 1998, and the related statements of
operations, partners' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance that the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Campeche Isle Apartments
Limited Partnership as of December 31, 1998, and the results of its operations,
the changes in partners' deficit and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
partnership will continue as a going concern. As discussed in note B to the
financial statements, the partnership has suffered recurring losses from
operations and its mortgage is due on March 31, 1999. This raises substantial
doubt about the partnership's ability to continue as a going concern.
Management's plans in regard to these matters are also described in note B. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 22, 1999
-61-
<PAGE>
[Letterhead of REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Campeche Isle Apartments
Limited Partnership
We have audited the accompanying balance sheet of Campeche Isle Apartments
Limited Partnership as of December 31, 1997, and the related statements of
operations, partners' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance that the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Campeche Isle Apartments
Limited Partnership as of December 31, 1997, and the results of its operations,
the changes in partners' deficit and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
March 12, 1998
-62-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robin Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 1999 and 1998, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robin Housing Associates as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 28, 2000
-63-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robin Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 1998 and 1997, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robin Housing Associates as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
Port Chester, New York
January 29, 1999
-64-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Concourse Artists Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 1999 and 1998, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concourse Artists Housing
Associates as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 28, 2000
-65-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Concourse Artists Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 1998 and 1997, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concourse Artists Housing
Associates as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
Port Chester, New York
January 29, 1999
-66-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
2051 Grand Concourse Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 1999 and 1998, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 2051 Grand Concourse Housing
Associates as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
Port Chester, New York
January 28, 2000
-67-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
2051 Grand Concourse Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 1998 and 1997, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 2051 Grand Concourse Housing
Associates as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
Port Chester, New York
January 29, 1999
-68-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Willoughby-Wyckoff Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 1999 and 1998, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Willoughby-Wyckoff Housing
Associates as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 1B to the
financial statements, the Partnership has had operating losses, and equity
deficiencies. These conditions raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 28, 2000
-69-
<PAGE>
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Willoughby-Wyckoff Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 1998 and 1997, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Willoughby-Wyckoff Housing
Associates as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in Note 1B to the
financial statements, the Partnership has had operating losses, operating cash
flow deficiencies, and equity deficiencies. These conditions raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
Port Chester, New York
January 29, 1999
-70-
<PAGE>
[Letterhead of WOLFE NILGES NAHORSKI]
INDEPENDENT AUDITORS' REPORT
To the Partners
Goodfellow Place Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, 1999 and 1998, and the related statements of
income, partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Goodfellow Place Limited
Partnership as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in Note 11 to the
financial statements, the Project has suffered recurring cash flow deficiencies
from operations and has defaulted on the mortgage loan. This raises substantial
doubt about the Project's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 11.
/s/ Wolfe Nilges Nahorski
A Professional Corporation
February 25, 2000, except for
Note 11, which is dated
March 8, 2000
St. Louis, Missouri
-71-
<PAGE>
[Letterhead of WOLFE NILGES NAHORSKI]
INDEPENDENT AUDITORS' REPORT
To the Partners
Goodfellow Place Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, 1998 and 1997, and the related statements of
income, partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Goodfellow Place Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Project will continue as a going concern. As discussed in Note 10 to the
financial statements, the Project has suffered recurring cash flow deficiencies
from operations. This raises substantial doubt about the Project's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 10.
/s/ Wolfe Nilges Nahorski
A Professional Corporation
St. Louis, Missouri
February 3, 1999
-72-
<PAGE>
[Letterhead of HAMILTON & MUSSER, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Penn Alto Associates, Limited Partnership
Altoona, Pennsylvania 16601
We have audited the accompanying balance sheets of Penn Alto Associates, Limited
Partnership as of December 31, 1999 and 1998 and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Penn Alto Associates, Limited
Partnership, as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information on pages
9 and 10 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Hamilton & Musser
Certified Public Accountants
Mechanicsburg, Pennsylvania
February 22, 2000
-73-
<PAGE>
[Letterhead of HAMILTON & MUSSER, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Penn Alto Associates, Limited Partnership
Altoona, Pennsylvania 16601
We have audited the accompanying balance sheets of Penn Alto Associates, Limited
Partnership as of December 31, 1998 and 1997 and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Penn Alto Associates, Limited
Partnership, as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information on pages
9 and 10 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Hamilton & Musser
Certified Public Accountants
Mechanicsburg, Pennsylvania
February 22, 1999
-74-
<PAGE>
[Letterhead of Torres Llompart, Sanchez Ruiz & Co.]
Partners
Gramco Development Limited Dividend Partnership, L.P.
San Juan, Puerto Rico
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying balance sheets of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 1999 and 1998, and the related statements of profit and loss, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statements
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 1999 and 1998, and the results of its operations, changes in partners'
capital and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for audits of HUD Programs, issued by the US Department of Housing and
Urban Development, we have also issued a report dated January 27, 2000, on our
consideration of the Partnership's internal control structure and reports dated
January 27, 2000, on its compliance with specific requirements applicable to
major HUD programs; compliance with laws, regulations, contracts, loan covenants
and agreements; and compliance with specific requirements applicable to Fair
Housing and Non-Discrimination.
-75-
<PAGE>
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements, taken as a whole. The accompanying supplementary
information included in the report on pages 23 to 26 is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project
No. 056-35140-LD (HODAG). Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements for the year
ended December 31, 1999, and in our opinion, is fairly stated in all material
respects in relation to the basic financial statements for the year ended
December 31, 1999, taken as a whole.
/s/ Torres Llompart, Sanchez Ruiz & Co.
San Juan, Puerto Rico
License No. 169
Stamp number 1592887 was affixed to the original of this report.
January 27, 2000
-76-
<PAGE>
[Letterhead of Torres Llompart, Sanchez Ruiz & Co.]
Partners
Gramco Development Limited Dividend Partnership, L.P.
San Juan, Puerto Rico
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying balance sheets of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 0565140-LD (HODAG), as of December
31, 1998 and 1997, and the related statements of profit and loss, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statements
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 0565140-LD (HODAG), as of December
31, 1998 and 1997, and the results of its operations, changes in partners'
capital and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for audits of HUD Programs, issued by the US Department of Housing and
Urban Development, we have also issued a report dated March 2, 1999, on our
consideration of the Partnership's internal control structure and reports dated
March 2, 1999, on its compliance with specific requirements applicable to major
HUD programs; compliance with laws, regulations, contracts, loan covenants and
agreements; and compliance with specific requirements applicable to Fair Housing
and Non-Discrimination.
-77-
<PAGE>
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements, taken as a whole. The accompanying supplementary
information included in the report on pages 24 to 27 is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project
No. 0565140-LD (HODAG). Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements for the year
ended December 31, 1998, and in our opinion, is fairly stated in all material
respects in relation to the basic financial statements for the year ended
December 31, 1998, taken as a whole.
/s/ Torres Llompart, Sanchez Ruiz & Co.
San Juan, Puerto Rico
License No. 169
Stamp number 1562306 was affixed to the original of this report.
March 2, 1999
-78-
<PAGE>
[Letterhead of COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT
To the Partners
Alexis Park Apartments, A Louisiana
Partnership In Commendam
Bossier City, Louisiana
We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at December 31, 1999 and December 31, 1998
and the related statements of income, partners' capital and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at December 31, 1999 and
December 31, 1998, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed at Note 10 to the
financial statements, there are uncertainties that affect the Partnership
concerning the existence of hazardous waste and negative performance indicators
that raise substantial doubt about the Partnership's ability to continue as a
going concern. Management's position in regard to these matters is also
discussed at Note 10. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the years ended December 31, 1999 and December 31, 1998
taken as a whole. The supplementary Schedule 1 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the audit procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
February 25, 2000
-79-
<PAGE>
[Letterhead of COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT
To the Partners
Alexis Park Apartments, A Louisiana
Partnership In Commendam
Bossier City, Louisiana
We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at December 31, 1998 and December 31, 1997
and the related statements of income, partners' capital and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at December 31, 1998 and
December 31, 1997, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed at Note 10 to the
financial statements, there are uncertainties that affect the Partnership
concerning the existence of hazardous waste and negative performance indicators
that raise substantial doubt about the Partnership's ability to continue as a
going concern. Management's position in regard to these matters is also
discussed at Note 10. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
-80-
<PAGE>
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the years ended December 31, 1998 and December 31, 1997
taken as a whole. The supplementary Schedule 1 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the audit procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
February 25, 1999
-81-
<PAGE>
[Letterhead of CHESSER & COMPANY]
INDEPENDENT AUDITOR'S REPORT
Partners
Williamsburg Residential, L.P.
New York, New York
We have audited the accompanying balance sheet of Williamsburg Residential, L.P.
as of December 31, 1999 and 1998, and the related statements of operations,
changes in Partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Williamsburg Residential, L.P.
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ Chesser & Company, P.A.
Wichita, Kansas
February 17, 2000
-82-
<PAGE>
[Letterhead of CHESSER & COMPANY]
INDEPENDENT AUDITOR'S REPORT
Partners
Williamsburg Residential, L.P.
New York, New York
We have audited the accompanying balance sheet of Williamsburg Residential, L.P.
as of December 31, 1998 and 1997, and the related statements of operations,
changes in Partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Williamsburg Residential, L.P.
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ Chesser & Company, P.A.
Wichita, Kansas
February 23, 1999
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<PAGE>
[Letterhead of PHILIP ROOTBERG & COMPANY, LLP]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Victory Apartments
We have audited the accompanying balance sheet of Victory Apartments (a limited
partnership) - F.H.A. Project No. 071-35588 as of December 31, 1999 and 1998,
and the related statements of profit and loss, partners' capital, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Victory Apartments, F.H.A.
Project No. 071-35588 as of December 31, 1999 and 1998, and the results of its
operations, changes in partners' capital and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 31, 2000, on our consideration of the Partnership's internal
control and a report dated January 31, 2000, on its compliance with laws and
regulations.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
listed on the preceding contents page are presented for purposes of additional
analysis to comply with HUD reporting requirements and are not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ Philip Rootberg & Company, LLP
Chicago, Illinois
January 31, 2000
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<PAGE>
[Letterhead of PHILIP ROOTBERG & COMPANY, LLP]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Victory Apartments
We have audited the accompanying balance sheet of Victory Apartments (a limited
partnership) - F.H.A. Project No. 0715588 as of December 31, 1998 and 1997, and
the related statements of profit and loss, partners' capital, and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Victory Apartments, F.H.A.
Project No. 0715588 as of December 31, 1998 and 1997, and the results of its
operations, changes in partners' capital and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 1999, on our consideration of the Partnership's internal
control and a report dated January 26, 1999, on its compliance with laws and
regulations.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
listed on the preceding contents page are presented for purposes of additional
analysis to comply with HUD reporting requirements and are not a required part
of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ Philip Rootberg & Company, LLP
Chicago, Illinois
January 26, 1999
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
------------------------------
2000 1999
------------- -------------
ASSETS
<S> <C> <C>
Property and equipment, at cost, less accumulated
depreciation (Notes 2, 4 and 7) $ 160,643,092 $ 167,205,538
Cash and cash equivalents (Notes 2, 3 and 10) 2,463,141 3,334,363
Cash held in escrow (Notes 2, 3 and 5) 7,798,477 6,902,143
Deferred costs - less accumulated amortization (Notes 2 and 6) 3,937,473 3,751,361
Other assets 5,229,595 4,333,107
------------ ------------
Total assets $ 180,071,778 $ 185,526,512
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Mortgage notes payable (Note 7) $ 119,104,452 $ 116,033,679
Accounts payable and other liabilities (Note 10) 9,094,539 9,521,924
Due to local general partners and affiliates (Note 8) 10,326,684 10,045,549
Due to general partners and affiliates (Note 8) 8,887,441 7,383,024
Due to selling partners 2,159,692 3,579,455
------------ ------------
Total liabilities 149,572,808 146,563,631
------------ ------------
Minority interests (Note 2) 3,542,196 4,017,226
------------ ------------
Commitments and contingencies (Notes 8 and 10)
Partners' capital (deficit)
Limited partners ( 115,917.5 BACs
issued and outstanding) (Note 1) 27,717,890 35,626,882
General partners (761,116) (681,227)
------------ ------------
Total partners' capital (deficit) 26,956,774 34,945,655
------------ ------------
Total liabilities and partners' capital (deficit) $ 180,071,778 $ 185,526,512
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-86-
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended March 31,
---------------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Rental income $25,799,708 $25,736,121 $25,156,685
Other (Note 10) 1,304,440 969,674 1,252,656
Gain on sale of interests 0 0 154,577
---------- ---------- ----------
27,104,148 26,705,795 26,563,918
---------- ---------- ----------
Expenses
General and administrative 6,292,028 6,280,636 6,199,421
General and administrative-related parties
(Note 8) 2,608,395 2,648,941 2,592,241
Repairs and maintenance 5,441,649 4,929,821 5,365,245
Operating and other 2,711,898 2,752,456 2,664,912
Real estate taxes 1,082,512 1,066,433 1,037,475
Insurance 1,085,663 1,144,811 1,126,788
Financial, primarily interest 8,176,289 8,241,779 8,109,996
Depreciation and amortization 7,948,800 7,993,156 8,703,562
---------- ---------- ----------
Total expenses 35,347,234 35,058,033 35,799,640
---------- ---------- ----------
Loss before minority interest (8,243,086) (8,352,238) (9,235,722)
Minority interest in loss of subsidiaries 254,205 414,579 404,890
---------- ---------- ----------
Net loss $(7,988,881) $(7,937,659) $(8,830,832)
========== ========== ==========
Net loss - limited partners $(7,908,992) $(7,858,282) $(8,742,524)
========== ========== ==========
Number of BACs outstanding 115,917.5 115,917.5 115,917.5
========== ========== ==========
Net loss per BAC $ (68.23) $ (67.79) $ (75.42)
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-87-
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
<TABLE>
<CAPTION>
Limited General
Total Partners Partners
----------- -------- --------
<S> <C> <C> <C>
Partners' capital (deficit) - April 1, 1997 $51,714,146 $52,227,688 $(513,542)
Net loss (8,830,832) (8,742,524) (88,308)
---------- ---------- --------
Partners' capital (deficit) - March 31, 1998 42,883,314 43,485,164 (601,850)
Net loss (7,937,659) (7,858,282) (79,377)
---------- ---------- --------
Partners' capital (deficit) - March 31, 1999 34,945,655 35,626,882 (681,227)
Net loss (7,988,881) (7,908,992) (79,889)
---------- ---------- --------
Partners' capital (deficit) - March 31, 2000 $26,956,774 $27,717,890 $(761,116)
========== ========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
-88-
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(7,988,881) $(7,937,659) $(8,830,832)
Adjustments to reconcile net loss to net cash ---------- ---------- ----------
provided by operating activities:
Gain on sale of interests 0 0 (154,577)
Loss on sale of property and equipment 0 0 7,251
Depreciation and amortization 7,948,800 7,993,156 8,703,562
Minority interest in loss of subsidiaries (254,205) (414,579) (404,890)
Accrued interest added to principal of
mortgage note payable 52,873 52,873 52,879
(Increase) decrease in assets
Cash held in escrow 144,147 (336,227) (155,978)
Other assets (896,488) (246,324) 37,478
Increase (decrease) in liabilities
Accounts payable and other liabilities (427,385) 182,103 7,882
Due to general partners and affiliates 1,504,417 2,425,035 2,172,448
---------- ---------- ----------
Total adjustments 8,072,159 9,656,037 10,266,055
---------- ---------- ----------
Net cash provided by operating activities 83,278 1,718,378 1,435,223
---------- ---------- ----------
Cash flows from investing activities:
Acquisitions of property and equipment (1,192,241) (1,258,853) (792,036)
Construction in progress 0 0 (604,411)
(Increase) decrease in cash held in escrow (1,040,481) 258,027 (363,451)
---------- ---------- ----------
Net cash used in investing activities (2,232,722) (1,000,826) (1,759,898)
---------- ---------- ----------
</TABLE>
-89-
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(continued)
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities:
(Increase) decrease in deferred costs (434,230) 71,025 (192,733)
Proceeds from mortgage notes 9,990,000 0 4,000,000
Repayments of mortgage notes (6,972,100) (1,350,512) (5,504,992)
Increase in due to local general partners
and affiliates 491,747 890,189 397,477
Decrease in due to local general partners
and affiliates (210,612) (980,298) (1,188,216)
(Decrease) increase in due to selling partners (1,365,758) 77,766 71,826
(Decrease) increase in capitalization of
consolidated subsidiaries attributable to
minority interest (220,825) (268,942) 562,268
Proceeds from sale of interests 0 0 1,400,000
---------- ---------- ----------
Net cash provided by (used in) financing activities 1,278,222 (1,560,772) (454,370)
---------- ---------- ----------
Net (decrease) increase in cash and
cash equivalents (871,222) (843,220) (779,045)
Cash and cash equivalents at
beginning of year 3,334,363 4,177,583 4,956,628
---------- ---------- ----------
Cash and cash equivalents
at end of year $ 2,463,141 $ 3,334,363 $ 4,177,583
========== ========== ==========
Supplemental disclosure of cash flows
information:
Cash paid during the year for interest $ 7,123,406 $ 8,088,271 $ 6,663,972
Supplemental disclosures of noncash
investing and financing activities:
Construction in progress
reclassified to property and equipment 0 604,411 0
Decrease in property and equipment due to a
decrease in due to selling partners 54,005 0 0
</TABLE>
See accompanying notes to consolidated financial statements.
-90-
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - General
Liberty Tax Credit Plus II L.P., a Delaware limited partnership (the
"Partnership"), was organized on March 25, 1988, but had no activity until
July 1, 1988 (which date is considered to be inception for financial accounting
purposes). The Partnership had no operations until commencement of the public
offering on July 20, 1988.
The Partnership's business is to invest in other limited partnerships ("Local
Partnerships", "subsidiaries" or "subsidiary partnerships") owning leveraged
Apartment Complexes that are eligible for the low-income housing tax credit
("Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent in
Local Partnerships owning properties that are eligible for the historic
rehabilitation tax credit. The Partnership's investment in each Local
Partnership represents a 20% to 98% interest in that Local Partnership.
The Partnership had acquired interests in 27 Local Partnerships as of March 31,
2000, and does not anticipate making any additional investments.
The Partnership was authorized to issue a total of 200,000 Beneficial Assignment
Certificates ("BACs"), of which 120,000 have been registered with the Securities
and Exchange Commission for sale to the public. The public offering was
completed on January 9, 1989 with a total of 115,917.5 BACs sold and
$115,917,500 of proceeds received by the Partnership.
The terms of the Partnership's Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") provide, among other things, that net
profits or losses and distributions of cash flow are, in general, allocated 99%
to the limited partners and BACs holders and 1% to the general partners.
NOTE 2 - Summary of Significant Accounting Policies
a) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership
and 27 subsidiary partnerships in which the Partnership is a limited partner.
Through the rights of the Partnership and/or a General Partner, which General
Partner has a contractual obligation to act on behalf of the Partnership, to
remove the general partner of the subsidiary local partnerships and to approve
certain major operating and financial decisions, the Partnership has a
controlling financial interest in the subsidiary local partnerships.
For financial reporting purposes, the Partnership's fiscal year ends on March
31. The Partnership's fiscal year ends on March 31 in order to allow adequate
time for the subsidiaries' financial statements to be prepared and consolidated.
The books and records of the Partnership are maintained on the accrual basis of
accounting, in accordance with generally accepted accounting principles
("GAAP"). All subsidiaries have fiscal years ending December 31. Accounts of the
subsidiaries have been adjusted for intercompany transactions from January 1
through March 31. All intercompany accounts and transactions with the subsidiary
partnerships have been eliminated in consolidation.
-91-
<PAGE>
Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from cash contributions and cash
distributions to the minority interest partners.
The Partnership's investment in each subsidiary partnership is equal to the
respective subsidiary partners' equity less minority interest capital, if any.
Losses attributable to minority interests which exceed the minority interest's
investment in a subsidiary partnership have been charged to the Partnership.
Such losses aggregated approximately $510,000, $431,000 and $391,000 for the
years ended March 31, 2000, 1999 and 1998 (the 1999, 1998 and 1997 Fiscal
Years), respectively. In consolidation, all subsidiary partnership losses are
included in the Partnership's capital account except for losses allocated to
minority interest capital.
b) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term highly liquid instruments purchased with original maturities of
three months or less.
c) Property and Equipment
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. A loss on impairment of assets is recorded when management estimates
amounts recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time, property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows) when the property is considered to be impaired and the
depreciated cost exceeds estimated fair value. Through March 31, 2000, the
Partnership has recorded approximately $4,727,000 on impairment of assets.
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. These
assets are classified as property and equipment-held for sale and are not
depreciated. There are no assets classified as property and equipment-held for
sale through March 31, 2000.
d) Offering Costs
Costs incurred to sell BACs, including brokerage and the nonaccountable expense
allowance, are considered selling and offering expenses. These costs are charged
directly to limited partners' capital.
e) Income Taxes
The Partnership is not required to provide for, or pay, any federal income
taxes. Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The Partnership may be subject
to state and local taxes in jurisdictions in
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<PAGE>
which it operates. For income tax purposes, the Partnership has a fiscal year
ending December 31 (Note 9).
f) Loss Contingencies
The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated. In
addition, the Partnership evaluates a potential environmental liability
independently from any potential claim for recovery.
g) Use of 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. Accordingly, actual results
could differ from those estimates.
h) New Pronouncements
In April of 1998, the Financial Accounting Standards Board issued Statement of
Position 98-5 ("SOP 98-5") "Reporting on the Costs of Start-Up Activities." SOP
98-5 provides guidance on the financial reporting of start-up costs and
organization costs. SOP 98-5 is effective for all fiscal quarters of fiscal
years beginning after December 15, 1998. Such change in accounting principle
amounted to $211,549 for the year ended March 31, 2000.
NOTE 3 - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (all of which are held for non-trading
purposes) for which it is practicable to estimate that value:
CASH AND CASH EQUIVALENTS, AND CASH HELD IN ESCROW
The carrying amount approximates fair value.
MORTGAGE NOTES PAYABLE
The fair value of mortgage notes payable is estimated, where practicable, based
on the borrowing rate currently available for similar loans.
The estimated fair values of the Partnership's mortgage notes payable are as
follows:
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
------------------------- --------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Mortgage Notes Payable for
which it is:
Practicable to estimate fair value $35,615,929 $33,615,730 $31,802,893 $31,278,134
Not Practicable $83,488,523 * $84,230,786 *
</TABLE>
-93-
<PAGE>
*Management believes it is not practical to estimate the fair value of the
mortgage notes payable because mortgage programs with similar characteristics
are not currently available to the partnerships.
The carrying amount of other financial instruments that require such disclosure
approximates fair value.
NOTE 4 - Property and Equipment
The components of property and equipment are as follows:
<TABLE>
<CAPTION>
March 31, Estimated
----------------------------- Useful Lives
2000 1999 (Years)
------------ ------------ ------------
<S> <C> <C> <C>
Land $ 14,444,085 $ 14,444,085 -
Building and improvements 220,100,710 219,417,040 15 to 40
Other 5,886,055 5,555,224 5 to 15
----------- -----------
240,430,850 239,416,349
Less: Accumulated depreciation (79,787,758) (72,210,811)
----------- -----------
$160,643,092 $167,205,538
=========== ===========
</TABLE>
Included in property and equipment is $6,955,050 of acquisition fees paid or
accrued to the general partners and $1,606,014 of acquisition expenses as of
March 31, 2000 and 1999. In addition, as of March 31, 2000 and 1999, buildings
and improvements include $7,015,991 of capitalized interest.
Depreciation expense for the years ended March 31, 2000, 1999 and 1998 amounted
to $7,700,682, $7,694,504 and $8,358,728, respectively.
In connection with the rehabilitation of the properties, the subsidiary
partnerships have incurred developer's fees of $20,563,695 to the Local General
Partners and affiliates. Such fees have been included in the cost of property
and equipment.
During the 1999 and 1998 Fiscal Years, there was a decrease in accumulated
depreciation in the amounts of $123,735 and $28,715, respectively, due to
write-offs on dispositions.
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<PAGE>
NOTE 5 - Cash Held in Escrow
Cash held in escrow is restricted and consists of the following:
<TABLE>
<CAPTION>
March 31,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Real estate taxes, insurance, reconstruction and other $3,462,163 $3,798,078
Reserve for replacements 3,260,068 2,219,587
Tenant security deposits 1,076,246 884,478
--------- ---------
$7,798,477 $6,902,143
========= =========
</TABLE>
NOTE 6 - Deferred Costs
The components of other deferred costs and their periods of amortization are as
follows:
<TABLE>
<CAPTION>
March 31,
-------------------------------------------
2000 1999* Period
----------- ----------- ---------
<S> <C> <C> <C>
Financing expenses $ 5,519,861 $ 5,075,633 **
Organization expenses - 1,419,792 60 months
Other 741,253 741,253 Various
---------- ----------
6,261,114 7,236,678
Less: Accumulated amortization (2,323,641) (3,485,317)
---------- ----------
$ 3,937,473 $ 3,751,361
========== ==========
</TABLE>
*Reclassified.
**Over the life of the respective related mortgages.
Amortization expense for the years ended March 31, 2000, 1999 and 1998 amounted
to $248,118, $298,652 and $344,834, respectively. During the year ended March
31, 2000 and 1999, $1,419,792 and $80,443 of fully amortized deferred costs were
written off. During the year ended March 31, 1999, $79,892 of unamortized
deferred costs were written off.
NOTE 7 - Mortgage Notes Payable
The mortgage notes are payable in aggregate monthly installments of
approximately $716,000, including principal and interest at rates varying from
1% to 15% per annum, through 2034. Each subsidiary partnership's mortgage note
payable is collateralized by the land and buildings of the respective subsidiary
partnership and the assignment of certain subsidiary partnership's rents and
leases and is without further recourse.
-95-
<PAGE>
Annual principal payment requirements for each of the next five fiscal years and
thereafter are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ending Amount
------------------ ------------
<S> <C>
2000 $ 2,665,575
2001 1,931,818
2002 2,032,704
2003 2,153,184
2004 9,046,180
Thereafter 101,274,991
-----------
$119,104,452
===========
</TABLE>
One subsidiary partnership, United Glen Arden II Limited Partnership, holds a
mortgage note which is eligible for an interest reduction subsidy under Section
236 of the National Housing Act. At December 31, 1999, said note, which bears
interest at 7.5% per annum through April 1, 2011, had a balance of $2,377,845.
CAMPECHE ISLE APARTMENTS, L.P.
On October 6, 1999, Campeche refinanced its existing indebtedness by borrowing
$4,125,000 from Lehman Brothers Bank, FSB. The loan bears interest at the rate
of 8.02% per annum, and matures on November 1, 2006. Campeche's prior mortgages
indebtedness in the principal amount of approximately $4,000,000 together with
$25,000 in accrued interest was repaid.
ROLLING GREEN LIMITED PARTNERSHIP
On February 1, 1999, Rolling Green refinanced its existing indebtedness by
borrowing $5,865,000 from the United States Department of Housing and Urban
Development ("HUD"). The loan bears interest at the rate of 6.85% per annum, and
matures on March 1, 2034. Rolling Green's prior mortgage indebtedness in the
principal amount of approximately $1,671,000 and a purchase money note of
$1,450,000 along with $1,695,000 in accrued interest were repaid.
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<PAGE>
NOTE 8 - Related Party Transactions
RELATED PARTY FEES
One of the General Partners has a 1% interest as a special limited partner in
each of the Local Partnerships. An affiliate of the General Partners also has a
minority interest in certain Local Limited Partnerships.
The General Partners and their affiliates perform services for the Partnership.
The costs incurred for the years ended March 31, 2000, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Partnership management fees (a) $1,496,000 $1,496,000 $1,496,000
Expense reimbursement (b) 193,721 156,680 135,010
Property management fees incurred to affiliates
of the General Partners (c) 341,738 335,031 350,474
Local administrative fee (d) 51,500 49,000 51,500
--------- --------- ---------
Total general and administrative-General Partners 2,082,959 2,036,711 2,032,984
--------- --------- ---------
Property management fees incurred to affiliates
of the subsidiary partnerships general partners (c) 525,436 612,230 559,257
--------- --------- ---------
Total general and administrative-related parties $2,608,395 $2,648,941 $2,592,241
========= ========= =========
</TABLE>
(a) The General Partners are entitled to receive a partnership management fee,
after payment of all Partnership expenses, which together with the local annual
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership Agreement), for administer ing the affairs
of the Partnership. The partnership management fee, subject to the foregoing
limitation, will be determined by the General Partners in their sole discretion
based upon their review of the Partnership's investments. Partnership management
fees owed to the General Partners amounting to ap proximately $6,816,000 and
$5,370,000 were accrued and unpaid as of March 31, 2000 and March 31, 1999.
Without the General Partner's continued accrual without payment, the Partnership
will not be in a position to meet its obligations. The General Partners have
continued allowing the accrual without payment of these amounts but are under no
obligation to do so.
(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.
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<PAGE>
(c) Property management fees incurred by subsidiary partnerships amounted to
$1,568,548, $1,537,420 and $1,521,339 for the 1999, 1998 and 1997 Fiscal Years,
respectively. Of these fees $867,174, $947,261 and $909,731 were incurred to
affiliates of the subsidiary partnerships' general partners. Included in amounts
incurred to affiliates of the subsidiary partnerships' general partners are
$341,738, $335,031 and $350,474, respectively, which were also incurred to
affiliates of the Partnership.
(d) Liberty Associates II L.P., a special limited partner of the subsidiary
partnerships, is entitled to receive a local administrative fee of up to $2,500
per year from each subsidiary partnership.
Liberty Associates II L.P. has a 1% interest as the special limited partner in
each of the subsidiary partnerships. Liberty Associates II L.P. received cash
distributions of approximately $2,600, $4,900 and $5,700 during the 1999, 1998
and 1997 Fiscal Years, respectively.
Pursuant to the Partnership Agreement and the Local Partnership Agreements, the
General Partners and Liberty Associates II L.P. received their allocable share
of profits, losses and tax credits allocated by the Partnership and the Local
Partnerships, respectively.
(e) Due to Local General Partners and affiliates at March 31, 2000 and 1999
consists of the following:
<TABLE>
<CAPTION>
March 31,
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
Operating advances $ 1,002,159 $ 968,957
Development fee payable 2,499,090 2,526,087
Operating deficit advances 4,666,883 4,570,747
Management and other fees 603,007 530,423
Long-term notes payable (f) 965,541 965,541
Interest long-term notes payable 590,004 483,794
---------- ----------
$10,326,684 $10,045,549
========== ==========
(f) Long-term notes payable consist of the following:
POLYNESIAN $ 316,370 $ 316,370
This promissory note bears interest at 11% with a maturity
date of June 1, 2003. Interest expense of $34,800 was
incurred for the years ended March 31, 2000 and 1999.
SEAGRAPE 649,171 649,171
This promissory note bears interest at 11% with a maturity ---------- ----------
date of July 1, 2002. Interest expense of $71,409 and $71,606
was incurred for the years ended March 31, 2000 and 1999.
$ 965,541 $ 965,541
========== ==========
</TABLE>
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NOTE 9 - Income Taxes
A reconciliation of the financial statement net loss to the income tax loss for
the Partnership and its consolidated subsidiaries is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
Financial statement
Net loss $(7,988,881) $(7,937,659) $ (8,830,832)
Difference resulting from parent company having
a different fiscal year for income tax and financial
reporting purposes (8,740) 17,468 (1,128,089)
Difference between depreciation and amortization
expense recorded for financial reporting purposes
and the accelerated cost recovery system utilized
for income tax purposes (2,306,951) (1,894,545) (1,613,036)
Difference between gain on sale of interests for
financial reporting purposes and income tax purposes 0 0 (200,101)
Excess losses allocated to minority interest for
income tax purposes 681,252 896,524 1,202,905
Other 441,380 (163,393) 190,143
---------- ---------- -----------
Net loss as shown on the income tax return for the
calendar year ended $(9,181,940) $(9,081,605) $(10,379,010)
========== ========== ===========
</TABLE>
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NOTE 10 - Commitments and Contingencies
a) Subsidiary Partnerships - Going Concerns and Uncertainties
The auditors for six subsidiary partnerships, Whittier Plaza Associates Limited
Partnership, Alexis Park Apartments, Goodfellow Place Limited Partnership,
Willoughby-Wyckoff Housing Associates, Campeche Isle Apartments Limited
Partnership, and Property Development Associates Limited Partnership modified
their reports on the 1999 Fiscal Year financial statements due to the
uncertainty of each subsidiary partnership's ability to continue as a going
concern. The financial statements do not include any adjustments that would be
necessary in the event the subsidiary partnerships are unable to continue as
going concerns. The auditors for one subsidiary partnership, Santa Juanita II
Limited Dividend Partnership modified their report on the 1999 Fiscal Year
financial statements due to the uncertainty of certain amounts reported in the
balance sheet.
WHITTIER PLAZA ASSOCIATES
The financial statements for Whittier Plaza Associates Limited Partnership
("Whittier") have been prepared assuming that Whittier will continue as a going
concern. Whittier has sustained continuous losses since commencement of
operations in 1988, including losses of approximately $49,000, $38,000 and
$25,000 for the 1999, 1998 and 1997 Fiscal Years, respectively. Whittier has
experienced higher vacancies and lower rents than those originally projected,
resulting in increased difficulty in meeting both operating and debt service
obligations. The Local General Partner, pursuant to a development deficit
guarantee agreement, has advanced $22,636 and $42,262 in the 1999 and 1998
Fiscal Years, respectively, and $407,184 since 1988 to fund operating cash
shortfalls. In addition, Whittier's management company, an affiliate of the
Local General Partner, has deferred receipt of various fees since 1991 totaling
$64,307. These items raise substantial doubt about Whittier's ability to
continue as a going concern. The Partnership's investment in Whittier at March
31, 2000 and 1999 was reduced to zero as a result of prior years' losses and the
minority interest balance was $0 at each date. Whittier's net loss after
minority interest amounted to approximately $49,000, $38,000 and $25,000 for the
1999, 1998 and 1997 Fiscal Years.
ALEXIS PARK APARTMENTS
During 1990, vapor fumes were discovered in several apartments at Alexis Park
Apartments, a Louisiana Partnership in Commendam ("Alexis"). As a result, 47 of
the 280 units were vacated as ordered by the Louisiana Department of
Environmental Quality ("LDEQ"). At June 1, 2000, all but one of these units have
been cleared for occupancy by the Louisiana Department of Health and Hospital.
The United States Environmental Protection Agency (EPA) has placed the site on
the list of proposed Superfund sites. The EPA performed indoor air tests at the
site on 28 units and issued a draft report on January 2, 1997, which found that
none of the units had acute air pollution levels, but further states that two
units were found to have sufficient amounts of air pollutants to possibly cause
health concerns after years of continual exposure. The report recommended the
installation of mechanical systems to reduce air pollutant levels to acceptable
amounts and the sealing of penetrations or openings in the floor slab and walls.
During the year ended December 31, 1997, such remediation was performed. During
the year ended December 31, 1998, the EPA performed additional tests of the
project site and found that all removal actions for lead contaminated soils have
been fully performed in accordance with EPA standards. At June 1, 2000,
management is unaware of any additional or potential remediation
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or clean-up costs that will be required and accordingly, is unable to estimate
the possible cost to Alexis of any remediation or clean-up that may be required
in the future.
Management believes the testing conducted by the LDEQ and the EPA has provided
sufficient evidence that there is no significant environmental hazard at the
Alexis Park Apartments site. Management, along with the mayor of Bossier City,
has been active in requesting that the EPA remove the site from the list of
proposed Superfund sites and that no further tests be conducted. Alexis has also
requested assistance with bringing this issue to closure from its Congressman
and U.S. Senators who have been responsive.
Although the environmental issue is in many respects beyond its control,
management intends to continue its efforts in bringing this issue to a close and
believes the favorable test results thus far reduce the chances of a disruptive
action by the EPA and provide an opportunity for Alexis to continue as a going
concern. Nonetheless, Alexis has sustained losses and its current liabilities
exceed its current assets by approximately $223,000. Management of Alexis
expects operating income to improve for 2000 from both increased occupancy and
slightly reduced expenses and also believes cash flows for 2000 will be
sufficient to meet liabilities and subject to the environmental uncertainty
enable Alexis to continue as a going concern. These items raise substantial
doubt about Alexis' ability to continue as a going concern. The maximum loss
which the Partnership would be liable for is its net investment in Alexis. The
Partnership's investment in Alexis at March 31, 2000 and 1999 was approximately
$114,000 and $357,000, respectively, and the minority interest balance was $0 at
each date. Alexis' net loss after minority interest amounted to approximately
$243,000, $263,000 and $259,000, for the 1999, 1998 and 1997 Fiscal Years,
respectively.
GOODFELLOW PLACE LIMITED PARTNERSHIP
The financial statements for Goodfellow Place Limited Partnership ("Goodfellow")
have been prepared assuming that Goodfellow will continue as a going concern.
Goodfellow has sustained substantial operating losses in recent years, has used
substantial amounts of working capital in its operations and has depleted the
operating deficit escrow in the amount of $163,000. Further, at December 31,
1999, current liabilities exceed current assets by $115,013.
A prepayment of $163,000 was due on the promissory note payable to St. Louis
Community Development Agency ("CDA") in August 1996, upon release of the
Operating Deficit Guarantee Escrow. The Local General Partners have defaulted on
this requirement and placed $163,000 in an interest-bearing money market account
in the name of the project. This account has been voluntarily restricted by the
Local General Partners and had a balance of $162,300 at December 31, 1999.
Goodfellow has defaulted on the first mortgage by not making the December 1999
and January and February 2000 mortgage payments, including required reserve
deposits, when due. The mortgage payment which was due in December 1999 was paid
on March 2, 2000; however, the January through March 2000 mortgage payments have
not been made. On March 8, 2000, the General Partners met with representatives
of MHDC, HUD and the management company regarding the delinquent mortgage
payments.
During June 2000, the general partner of Goodfellow withdrew from the
partnership and Liberty Associates II, L.P. became the new general partner (the
"New General Partner"). It is anticipated that the New General Partner will
release approximately $65,000 from the restricted escrow account to bring the
first mortgage current and $25,000 will be released and paid to CDA to fully
defease and extinguish the promissory note payable. If the above transaction is
consummated, then Goodfellow will recognize approximately $1,600,000 as
forgiveness of
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indebtedness income. Goodfellow is considering contacting the first mortgage
lender to seek a reduction of the debt service to allow the current anticipated
cash flow to continue to maintain the property for the long term.
In view of these matters, realization of a major portion of the assets in the
balance sheet of Goodfellow is dependent upon continued operations and the
success of its future operations. Management believes that actions presently
being taken to review Goodfellow's operating and financial requirements provide
the opportunity for Goodfellow to continue as a going concern.
The Partnership's investment in Goodfellow at March 31, 2000 and 1999 was
reduced to zero by prior years' losses, and the minority interest balance was
zero at each date. Goodfellow's net (loss) income after minority interest
amounted to approximately ($67,000), ($13,000) and $200 for the 1999, 1998 and
1997 Fiscal Years, respectively.
WILLOUGHBY-WYCKOFF HOUSING ASSOCIATES
The financial statements for Willoughby-Wyckoff Housing Associates
("Willoughby") have been prepared assuming that Willoughby will continue as a
going concern. There are certain conditions that raise substantial doubt about
Willoughby's ability to continue as a going concern. Willoughby has had
operating losses and equity deficiencies. Management plans to continue to
minimize costs within its control and seek additional funding sources to
supplement project operations. Continuance of Willoughby as a going concern is
dependent upon Willoughby's ability to obtain additional funding to supplement
project operations and enable Willoughby to meet its obligations as they become
due. The financial statements do not include any adjustments that might result
from the outcome of these uncertainties. The Partnership's investment in
Willoughby at March 31, 2000 and 1999 has been reduced to zero by prior years'
losses and the minority interest balance amounted to approximately $176,000 and
$178,000, respectively. Willoughby's net loss after minority interest amounted
to approximately $204,000, $220,000 and $141,000 for the 1999, 1998 and 1997
Fiscal Years, respectively.
CAMPECHE ISLE APARTMENTS, L.P.
The Campeche Isle Apartments Limited Partnership ("Campeche") financial
statements have been prepared in conformity with generally accepted accounting
principles which contemplate continuation of Campeche as a going concern.
On October 6, 1999, Campeche refinanced its mortgage with a mortgage maturing on
November 1, 2006. In addition, management has taken efforts to increase
occupancy by retaining several tenant locator services, refurbishing the
apartments and improving the overall condition of the property. As a
consequence, rental income has increased from $863,088 in 1998 to $986,189 in
1999.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of Campeche,
which in turn is dependent upon Campeche's ability to meet its financing
requirements, and the success of its future operations. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty. As of December 31, 1999, total advances to Campeche from the
Partnership totaled approximately $2,218,000. The Partnership's investment in
Campeche at March 31, 2000 and 1999 was $0 and the minority interest balance was
$0 at each date. Campeche's net loss after minority interest amounted to
approximately $428,000, $518,000 and $845,000 for the 1999, 1998 and 1997 Fiscal
Years, respectively.
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<PAGE>
SANTA JUANITA II LIMITED DIVIDEND PARTNERSHIP
Santa Juanita II Limited Dividend Partnership ("Santa Juanita") had first
mortgage payments of $413,250 in arrears at December 31, 1999. In addition, the
last payment recorded to mortgage principal by the bank was July 1995. As of
February 28, 2000, uncertainties exist regarding the accuracy of the balance of
interest, penalties due and a confirmation of balances had not been received
from the bank. As of December 31, 1999, Santa Juanita was not in compliance with
its second mortgage loan and is in arrears on payment of principal and interest
of approximately $535,000.
The last audited financial information was for the year ended December 31, 1994.
The financial records available for the period January 1, 1995 through June 30,
1997 were not complete or reliable. Further adjustments that could have resulted
to the beginning balance of partners' equity and other accounts, if all
financial records had been available, cannot be determined at this time. During
July 1997, in an attempt to stabilize the operations and conditions of Santa
Juanita, a Substitute Management Agent was appointed as a replacement to the
Previous Management Agent by order of the United States Bankruptcy Court for the
District of Puerto Rico. Prior to July 1997, Santa Juanita engaged in
transactions with its general partners and affiliates which did not meet the
terms of its HAP contract. In addition, due to the lack of records prior to July
1997, the subsidiary's management has no evidence of its compliance with the
requirements of the low income tax credits. The effects of the above
uncertainties on the financial statements have not been determined.
Subsequent to December 31, 1999, Santa Juanita's first mortgage was modified
resulting in a reduction of the mortgage and related interest of approximately
$324,000 and the second mortgage note and related interest was reduced by
approximately $505,000.
The auditors for Santa Juanita qualified their report on the 1999 Fiscal Year
financial statements for the effects of the above uncertainties. The maximum
loss which the Partnership would be liable for is its net investment in Santa
Juanita. The Partnership's investment in Santa Juanita at March 31, 2000 and
1999 was approximately $178,000 and $285,000, respectively, and the minority
interest balance was zero at each date.
PROPERTY DEVELOPMENT ASSOCIATES LIMITED PARTNERSHIP
The financial statements for Property Development Associates Limited Partnership
("Bridgeport") have been prepared assuming that Bridgeport will continue as a
going concern. Bridgeport has a history of cash flow deficiencies and current
maturities due of $100,000 on the mortgage note payable in each of the next five
years and a final maturity date of August 1, 2005. The 1999 $100,000 mortgage
note payment was funded by selling the management contract. Additionally,
Bridgeport has amounts currently due to the management company disbursing
account of $75,384, accrued real estate taxes of $64,391 and accrued letter of
credit fees of $149,319. These items raise substantial doubt about Bridgeport's
ability to continue as a going concern.
The auditors for Bridgeport qualified their report on the 1999 Fiscal Year for
the effects of the above uncertainties. The maximum amount for which the
Partnership would be liable is its net investment in Bridgeport. During May
2000, a restructuring took place in which a new general partner was admitted to
Bridgeport and the terms of Bridgeport's debt were restructured. As part of this
restructuring, the new general partner agreed to loan certain amounts to
Bridgeport. The restructuring of Bridgeport's debt delayed the maturity of
principal amounts associated with the mortgage note payable. The new general
partner also received an option
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to purchase the property. The time frame in which this option is exercisable and
other terms related to the option are defined in an amendment to the Local
Partnership Agreement. The Partnership's investment in Bridgeport at March 31,
2000 and 1999 was approximately $3,395,000 and $3,761,000 and the minority
interest was $2,245,000 and $2,361,000, respectively.
b) Subsidiary Partnerships - Other
GRAMCO DEVELOPMENT LIMITED DIVIDEND PARTNERSHIP, L.P.
Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net
funds of $4,867,000. In the event of a substantial violation to the provisions
of certain agreements between Gramco and the Municipality of Bayamon (the
"Municipality") and between the Municipality and HUD, the funds shall become
immediately due and payable at the election of HUD and the Municipality.
Otherwise, the principal amount of the obligation together with any interest
will be forgiven. Proceeds from the loan have been deducted from fixed assets.
The Partnership's investment in Gramco at March 31, 2000 and 1999 was
approximately $488,000 and $690,000 and the minority interest balance was
approximately $418,000 and $420,000, respectively. Gramco's net loss after
minority interest amounted to approximately, $203,000, $284,000 and $257,000 for
the 1999, 1998 and 1997 Fiscal Years, respectively.
ROBIN HOUSING ASSOCIATES
Robin Housing Associates ("Robin Housing") is a defendant in several personal
injury lawsuits. The Partnership's insurance carrier intends to defend the
Partnership vigorously. Counsel believes that the insurance coverage is adequate
to cover any liability arising from this action. It is management's opinion that
no accrual for potential losses is currently warranted in the financial
statements. Because the Partnership is a limited partner in Robin Housing, the
maximum loss which the Partnership would suffer is its net investment in Robin
Housing. The Partnership's investment in Robin Housing at March 31, 2000 and
1999 was approximately $46,000 and $66,000 and the minority interest balance was
$283,000 and $360,000, respectively. Robin Housing's net loss after minority
interest amounted to approximately $20,000, $30,000 and $24,000 for the 1999,
1998 and 1997 Fiscal Years, respectively.
METROPOLITAN TOWERS ASSOCIATES, L.P.
The subsidiary partnership, Metropolitan Towers Associates, L.P.
("Metropolitan"), is a defendant in a legal proceeding brought about by the
family of an employee who died in a work related accident. It is management's
opinion that the claim should be covered by Metropolitan's insurance policy.
Because the Partnership is a limited partner in Metropolitan, the maximum loss
which the Partnership would suffer is its net investment in Metropolitan. The
Partnership's investment in Metropolitan at March 31, 2000 and 1999 was
approximately $1,069,000 and $1,108,000, respectively, and the minority interest
was zero at each date. Metropolitan's net loss after minority interest amounted
to approximately $39,000, $119,000 and $113,000 for the 1999, 1998 and 1997
Fiscal Years, respectively.
ROLLING GREEN LIMITED PARTNERSHIP
Rolling Green Limited Partnership ("Rolling Green") operates and is regulated by
HUD under Section 221(d)(3) of the National Housing Act. Rents received by
Rolling Green are subsidized by Section 8 Housing Assistance Payments. Rental
income from such Assistance Payments totaled $1,365,443 and $1,511,794 in the
1999 and 1998 Fiscal Years, respectively. In September 1999, the three Section 8
contracts were consolidated into one contract, and such contract is in force
through September 30, 2000. However, uncertainties regarding the future of HUD
Pro-
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<PAGE>
grams exist. It is not practical to estimate the impact upon Rolling Green's
operations if the rents were to revert to market value.
WILLIAMSBURG RESIDENTIAL , L.P.
In November 1996, the Local General Partner of Williamsburg Residential , L.P.
("Williamsburg ") stopped making the mortgage note payments which constituted an
event of default. On January 1, 1997 the Local General Partner was replaced.
A Reinstatement and Modification Agreement, dated July 24, 1997, and effective
March 1, 1997 was entered into between Williamsburg and Federal National
Mortgage Association ("FNMA"). Terms of the agreement include: 1. Interest only
on the loan for 36 months; 2. Replacement reserve escrow payments waived during
1997; 3. Net operating income is to be turned over to the loan servicer monthly;
and 4. Execution of a debt service reserve agreement.
The Debt Service Agreement, dated July 24, 1997, called for $275,000 to be
deposited into a debt service escrow account for the mutual benefit of
Williamsburg and Williamsburg Residential II, L.P. (an adjoining and affiliated
project). If the monthly net operating income turned over to the loan servicer
is less than the required mortgage and escrow payment, the debt service escrow
account is drawn upon. At December 31, 1999, balances in the two entities
accounts totaled $0. In 1997, the Partnership advanced Williamsburg funds to pay
legal costs, delinquent mortgage payments, and to set up a debt service escrow
account, all of which were required as part of the Reinstatement and
Modification Agreement dated July 24, 1997 with FNMA. The advances do not bear
interest and are short-term in nature. The Partnership has advanced Williamsburg
the necessary funds to keep the mortgage and escrows current during 1999 and is
expected to continue to do so during 2000. Williamsburg has experienced a
decrease in tenant occupancy from 92% at May 1, 1999, to 70% at May 1, 2000, due
to property damage suffered as a result of a tornado in May 1999.
The Partnership's investment in Williamsburg has been written down to $0 by
prior years' losses and the minority interest balance was approximately $731,000
and $733,000 at March 31, 2000 and 1999, respectively. Williamsburg net loss
after minority interest amounted to approximately $201,000, $285,000 and
$220,000 for the 1999, 1998, and 1997 Fiscal Years, respectively.
c) Uninsured Cash and Cash Equivalents
The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. As of March 31, 2000, uninsured cash and cash
equivalents approximated $2,058,000.
d) Other
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally, however no more than 33%
of the properties are located in any single state. There are also substantial
risks associated with owning properties receiving government assistance, for
example the possibility that Congress may not appropriate funds to enable HUD to
make rental assistance payments. HUD also restricts annual cash distributions to
partners based on operating results and a percentage of the owner's equity
contribution. The Partnership cannot sell or substantially liquidate its
investments in subsidiary partnerships
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during the period that the subsidy agreements are in existence, without HUD's
approval. Furthermore, there may not be market demand for apartments at full
market rents when the rental assistance contracts expire.
e) Tax Credits
The Partnership and BACs holders began recognizing Housing Tax Credits with
respect to a Property when the Credit Period for such Property began. Because of
the time required for the acquisition, completion and rent-up of Properties, the
amount of Tax Credits per BAC gradually increased over the first three years of
the Partnership. Housing Tax Credits not recognized in the first three years
will be recognized in the 11th through 13th years. For the 1999, 1998 and 1997
tax years, Housing Tax Credits of $12,240,583, $16,707,661 and $17,061,894, were
generated.
A portion of the low-income housing tax credits are subject to recapture in
future years if (i) the Partnership ceases to meet qualification requirements,
(ii) there is a decrease in the qualified basis of the projects, or (iii) there
is a reduction in the taxpayer's interest in the project at any time during the
15-year Compliance Period that began with the first tax year of the credit
period.
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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.
On November 25, 1997, an affiliate of the Related General Partner, purchased
100% of the stock of the Liberty General Partner (the "Transfer"). In addition
to the Transfer, by acquiring the stock of the Liberty General Partner, an
affiliate of the Related General Partner also acquired the Liberty General
Partner general partner interest in Liberty Associates, which is also the
special limited partner of the Partnership. Pursuant to the Partnership's
Amended and Restated Partnership Agreement, the consent of the limited partners
was not required to approve the Transfer.
The Partnership has no directors or executive officers. The Partnership's
affairs are managed and controlled by the General Partners. Certain information
concerning the directors and executive officers of the Liberty General Partner
and of Related Credit Properties II Inc., the general partner of the Related
General Partner, is set forth below.
RELATED CREDIT PROPERTIES II, INC.
Name Position
---- --------
Stephen M. Ross Director
Alan P. Hirmes President
Stuart J. Boesky Senior Vice President
Marc D. Schnitzer Vice President
Denise L. Kiley Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
STEPHEN M. ROSS, 60, is President, Director and shareholder of The Related
Realty Group, Inc., the General Partner of The Related Companies, L.P. He
graduated from the University of Michigan School of Business Administration with
a Bachelor of Science degree and from Wayne State University School of Law with
a Juris Doctor degree. Mr. Ross then received a Master of Laws degree in
taxation from New York University School of Law. He joined the accounting firm
of Coopers & Lybrand in Detroit as a tax specialist and later moved to New York,
where he worked for two large Wall Street investment banking firms in their real
estate and corporate finance departments. Mr. Ross formed the predecessor of The
Related Companies, L.P. in 1972 to develop, manage, finance and acquire
subsidized and conventional apartment developments. Mr. Ross also serves on the
Board of Trustees of Charter Municipal Mortgage Acceptance Company.
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ALAN P. HIRMES, 45, has been a Certified Public Accountant in New York since
1978. Prior to joining Capital in October 1983, Mr. Hirmes was employed by
Weiner & Co., certified public accountants. Mr. Hirmes is also a Vice President
of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts
degree.
STUART J. BOESKY, 44, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984 Mr. Boesky practiced law with the Boston law firm of
Kaye, Fialkow, Richard & Rothstein (which subsequently merged with Strook &
Strook & Lavan), and from 1978 to 1980 was a consultant specializing in real
estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from
Michigan State University with a Bachelor of Arts degree and from Wayne State
School of Law with a Juris Doctor degree. He then received a Master of Laws
degree in Taxation from Boston University School of Law.
MARC D. SCHNITZER, 39, joined Related in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, in Business Administration, from the School of Management at
Boston University in May 1983.
DENISE L. KILEY, 40, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in RCC sponsored
corporate, public and private equity and debt funds. Prior to joining Related in
1990, Ms. Kiley had experience acquiring, financing and asset managing
multifamily residential properties. From 1981 through 1985 she was an auditor
with Price Waterhouse. Ms. Kiley holds a Bachelor of Science in Accounting from
Boston College.
GLENN F. HOPPS, 37, prior to joining Related in December 1990, was employed by
Marks Shron & Company and Weissbarth, Altman and Michaelson, certified public
accountants. Mr. Hopps graduated from New York State University at Albany with a
Bachelor of Science Degree in Accounting.
TERESA WICELINSKI, 34, joined Related in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski graduated from Pace University with a Bachelor of Arts Degree in
Accounting.
LIBERTY GP II INC.
Name Position
---- --------
Alan P. Hirmes President
Stuart J. Boesky Executive Vice President
Marc D. Schnitzer Vice President
Denise L. Kiley Vice President
Frank P. Cerbini Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
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FRANK P. CERBINI, 43, rejoined Related in 1992 where his primary responsibility
has been disposition of real estate. From 1990 to 1992 he was Marketing Director
at Carlton Property Auctions; during 1992 he was Vice President of USAuction,
Inc. From 1987 to 1990 he was Vice President at Marigold Real Estate, a real
estate development company located in Greenwich, CT. From 1980 to 1986 he was in
the acquisition office at Related Capital Company. He received a Bachelor of
Science in Economics from Manhattan College in 1979.
Biographical information with respect to Messrs. Hirmes, Boesky, Schnitzer, Ms.
Kiley, Hopps and Ms. Wicelinski is set forth above.
Item 11. Executive Compensation.
The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the Liberty General Partner or the general partner of the Related
General Partner for their services. Certain directors and executive officers of
the Liberty General Partner and the general partner of the Related General
Partner receive compensation from the General Partners and their affiliates for
services performed for various affiliated entities which may include services
performed for the Partnership.
Under the terms of the Partnership Agreement, the General Partners and their
affiliates are entitled to receive compensation from the Partnership in
consideration of certain services rendered to the Partnership by such parties.
Such arrangements include, but are not limited to, the payment of an accountable
operating expense reimbursement, an annual partnership management fee not to
exceed 0.5% of invested assets and subordinated disposition fees. In addition,
the General Partners are entitled to 1% of all cash distributions and Tax Credit
allocations and a subordinated 15% interest in Net Sales or Refinancing
Proceeds. See also Note 8 to the Financial Statements in Item 8 for a
presentation of the types and amounts of compensation paid to the General
Partners and their affiliates, which is incorporated by reference thereto.
Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The levels of
compensation payable to the General Partners and/or their affiliates is limited
by the terms of the Partnership Agreement and may not be increased therefrom on
a discretionary basis.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The general partnership interest and BACs in the Partnership are owned in the
manner indicated on the chart below.
Liberty Associates II L.P. holds a 1% limited partnership interest in each Local
Partnership.
No person is known by the Partnership to be the beneficial owner of more than 5%
percent of the Limited Partnership Interests and/or the BACs; and none of the
General Partners nor any director or executive officer of the Liberty General
Partner or of the general partner of the Related General Partner owns any
Limited Partnership Interests or BACs, except as noted in the chart below.
-109-
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage
Title of Class Beneficial Ownership Beneficial Ownership of Class
-------------- -------------------- -------------------- ----------
<S> <C> <C> <C>
General Partnership Related Credit $500 capital contribution 49%
Interest in the Properties II L.P. - directly owned
Partnership 625 Madison Avenue
New York, NY 10022
General Partnership Liberty GP II, Inc. $500 capital contribution 49%
Interest in the 625 Madison Avenue - directly owned
Partnership New York, NY 10022
General Partnership Liberty Associates II L.P. $1,000 capital contribution 2%
Interest in the 625 Madison Avenue - directly owned
Partnership New York, NY 10022
</TABLE>
-110-
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage
Title of Class Beneficial Ownership Beneficial Ownership of Class
-------------- -------------------- -------------------- ----------
<S> <C> <C> <C>
BACs Lehigh Tax Credit 2,239 (1) 1.9%
Partners, Inc.
625 Madison Avenue
New York, NY 10022
BACs J. Michael Fried 2,239 (1)(2) 1.9%
625 Madison Avenue
New York, NY 10022
BACs Alan P. Hirmes 2,239 (1)(2) 1.9%
625 Madison Avenue
New York, NY 10022
BACs Stuart J. Boesky 2,239 (1)(2) 1.9%
625 Madison Avenue
New York, NY 10022
BACs Marc D. Schnitzer 0 0%
625 Madison Avenue
New York, NY 10022
BACs Denise L. Kiley 0 0%
625 Madison Avenue
New York, NY 10022
BACs Glenn F. Hopps 0 0%
625 Madison Avenue
New York, NY 10022
BACs Teresa Wicelinski 0 0%
625 Madison Avenue
New York, NY 10022
BACs All directors and 2,239 (1)(2) 1.9%
executive officers of
the general partner
of the Related General
Partner as a group
(seven persons)
625 Madison Avenue
New York, NY 10022
</TABLE>
(1) All such BACs represent BACs owned directly by Lehigh Tax Credit Partners
L.L.C. ("Lehigh I") and Lehigh Tax Credit Partners II L.L.C. ("Lehigh II") for
which Lehigh Tax Credit Partners, Inc. (the "Managing Member") serves as
managing member. As of June 1, 2000, Lehigh I held 1,080.5 BACs and Lehigh II
held 1,158.5 BACs.
(2) Each such party serves as a director and executive officer of the Managing
Member, and owns an equity interest therein except J. Michael Fried who owns
only an economic interest.
-111-
<PAGE>
Item 13. Certain Relationships and Related Transactions.
The Partnership has and will continue to have certain relationships with the
General Partners and their affiliates, as discussed in Item 11 and also Note 8
to the Financial Statements in Item 8 above, which is incorporated herein by
reference thereto. However, there have been no direct financial transactions
between the Partnership and the directors and executive officers of the Liberty
General Partner and the general partner of the Related General Partner.
-112-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
<TABLE>
<CAPTION>
Sequential
Page
----------
<S> <C>
(a) 1. Financial Statements
Independent Auditors' Report 20
Consolidated Balance Sheets at March 31, 2000 and 1999 86
Consolidated Statements of Operations for the Years
Ended March 31, 2000, 1999 and 1998 87
Consolidated Statements of Changes in Partners' Capital
(Deficit) for the Years Ended March 31, 2000, 1999 and 1998 88
Consolidated Statements of Cash Flows for the Years Ended
March 31, 2000, 1999 and 1998 89
Notes to Consolidated Financial Statements 91
(a) 2. FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report 117
Schedule I - Condensed Financial Information of Registrant 118
Schedule III - Real Estate and Accumulated Depreciation
and Mortgage Loans on Real Estate 121
All other schedules have been omitted because they are
not required or because the required information is
contained in the financial statements and notes thereto.
(a) 3. EXHIBITS
(3B) Form of Amended and Restated Agreement of Limited
Partnership of Liberty Tax Credit Plus II L.P.
(incorporated by reference to exhibits filed with
Amendment No. 1 to Liberty Tax Credit Plus II L.P.'s
Registration Statement on Form S-11 Registration
No. 33-21429) 114
(21) Subsidiaries of the Registrant 124
(27) Financial date schedule (filed herewith)
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter.
</TABLE>
-113-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(continued)
<TABLE>
<CAPTION>
JURISDICTION
(C) SUBSIDIARIES OF THE REGISTRANT (EXHIBIT 21) OF ORGANIZATION
<S> <C>
Polynesian Apartments Associates, Ltd. (a Limited Partnership) FL
Seagrape Village Associates, Ltd. (a Limited Partnership) FL
Metropolitan Towers Associates, L.P. PR
Westminster Place II - Olive Site, L.P. MO
Property Development Associates, L.P. (Bridgeport) MO
Whittier Plaza Associates Limited Partnership MO
United-Glen Arden I Limited Partnership MD
United-Glen Arden II Limited Partnership MD
Rolling Green Limited Partnership IL
Santa Juanita II Limited Partnership NY
Spring Creek Associates, L.P. (a Delaware Limited Partnership) DE
East Two Thirty-Five Associates L.P. (a Delaware Limited Partnership)
(14th Street) DE
Upper Fifth Avenue Residential Associates, L.P. DE
West 107th Street Associates, L.P. (a Delaware Limited Partnership) DE
General Atlantic Second Avenue Associates, L.P.
(a Delaware Limited Partnership) (96th Street) NY
Church Lane Associates PA
Campeche Isle Apartments Limited Partnership TX
Robin Housing Associates (a Limited Partnership) NY
Concourse Artists Housing Associates (a Limited Partnership) NY
2051 Grand Concourse Housing Associates (a Limited Partnership) NY
Willoughby-Wyckoff Housing Associates (a Limited Partnership) NY
Goodfellow Place Limited Partnership MO
Penn Alto Associates Limited Partnership PA
Gramco Development Limited Dividend Partnership, L.P. (Bayamon) PR
Alexis Park Apartments, a Louisiana Partnership in Commendam LA
Williamsburg Residential, L.P. KS
Victory Apartments IL
</TABLE>
-114-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LIBERTY TAX CREDIT PLUS II L.P.
-------------------------------
(Registrant)
By: RELATED CREDIT PROPERTIES II L.P.,
a General Partner
By: Related Credit Properties II Inc.,
its general partner
Date: June 26, 2000
By: /s/ Alan P. Hirmes
--------------------
Alan P. Hirmes
President and Chief Executive
Officer (Principal Executive
Officer)
and
By: LIBERTY G.P. II INC.,
a General Partner
Date: June 26, 2000
By: /s/ Alan P. Hirmes
--------------------
Alan P. Hirmes
President
and
By: LIBERTY ASSOCIATES II, L.P.,
a General Partner
By: Related Credit Properties II, Inc.,
its General Partner
Date: June 26, 2000
By: /s/ Alan P. Hirmes
--------------------
Alan P. Hirmes
President
By: Liberty G.P. II Inc.,
its General Partner
By: /s/ Alan P. Hirmes
--------------------
Alan P. Hirmes
President
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
Signature Title Date
------------------ ------------------------------------- -------------
President and Chief Executive Officer
(Principal Executive and Financial
Officer) of Related Credit Properties
II Inc., (general partner of Related
Credit Properties II L.P. and Liberty
Associates II, L.P., General Partners
of Registrant) and Liberty GP II,
/s/ Alan P. Hirmes Inc. (general partner of Liberty
------------------ Associates II, L.P) (a General
Alan P. Hirmes Partner of Registrant) June 26, 2000
Treasurer (Principal Accounting
Officer) of Related Credit Properties
II Inc., (general partner
of Related Credit Properties II L.P.
and Liberty Associates II, L.P.,
General Partners of Registrant)
and Liberty GP II, Inc.
/s/ Glenn F. Hopps (general partner of Liberty
------------------ Associates II, L.P.)
Glenn F. Hopps (a General Partner of Registrant) June 26, 2000
Director of Related Credit Properties
II Inc., (general partner of Related
/s/ Stephen M. Ross Credit Properties II L.P.
------------------- and Liberty Associates II, L.P.,
Stephen M. Ross (General Partners of Registrant) June 26, 2000
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Liberty Tax Credit Plus II L.P. and Subsidiaries
(A Delaware Limited Partnership)
In connection with our audits of the consolidated financial statements of
Liberty Tax Credit Plus II L.P. and Subsidiaries (a Delaware Limited
Partnership) included in this Form 10-K as presented in our opinion dated June
26, 2000 on pages 20 and 21, and based on the reports of other auditors, we have
also audited supporting Schedule I for the 1999, 1998 and 1997 Fiscal Years and
Schedule III at March 31, 2000. In our opinion, and based on the reports of the
other auditors, these consolidated schedules present fairly, when read in
conjunction with the related consolidated financial statements, the financial
data required to be set forth therein.
As discussed in Note 10(a), the consolidated financial statements include the
financial statements of seven limited partnerships with significant
contingencies and uncertainties. The financial statements of six of these
subsidiary partnerships were prepared assuming that each will continue as a
going concern. The auditors' opinion on the financial statements for the 1999
and 1998 Fiscal Years for one of these subsidiary partnerships was qualified due
to uncertainties relating to balances in replacement reserves, mortgage balances
and the related accrued interest. In addition, this subsidiary partnership was
not audited in prior years and there are uncertainties as to whether any
adjustments were necessary to be made to partners' equity at January 1, 1998.
The seven subsidiary partnerships' net losses aggregated $1,501,076 (Fiscal
1999), $1,617,090 (Fiscal 1998) and $1,697,525 (Fiscal 1997) and their assets
aggregated $30,458,479 and $30,717,830 at March 31, 2000 and 1999, respectively.
These matters raise substantial doubt about these subsidiary partnerships'
abilities to continue as going concerns. Management's plans in regard to these
matters are also described in Note 10(a). The accompanying consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
June 26, 2000
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Summarized condensed financial information of registrant (not including
consolidated subsidiary partnerships)
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash and cash equivalents $ 620,498 $ 282,009
Cash held in escrow 0 501,219
Investment and advances in subsidiary partnerships 46,137,524 50,387,769
Other assets 153,197 153,197
---------- ----------
Total assets $46,911,219 $51,324,194
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Due to general partner and affiliates $ 8,582,422 $ 6,643,203
Other liabilities 79,795 103,347
---------- ----------
Total liabilities 8,662,217 6,746,550
Partners' equity 38,249,002 44,577,644
---------- ----------
Total liabilities and partners' equity $46,911,219 $51,324,194
========== ==========
</TABLE>
Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly, partners' equity on the consolidated balance sheet will differ from
partners' equity shown above.
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended March 31,
------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
Other $ 20,952 $ 16,869 $ 14,021
Gain on sale of investments in subsidiary
partnerships 0 0 154,577
---------- ---------- ----------
20,952 16,869 168,598
---------- ---------- ----------
Expenses
Administrative and management 106,721 169,819 595,300
Administrative and management-related parties 1,689,721 1,652,680 1,631,010
---------- ---------- ----------
Total expenses 1,796,442 1,822,499 2,226,310
---------- ---------- ----------
Loss from operations (1,775,490) (1,805,630) (2,057,712)
Equity in loss of subsidiary partnerships (*) (4,553,152) (4,547,392) (5,066,504)
---------- ---------- ----------
Net loss $(6,328,642) $(6,353,022) $(7,124,216)
========== ========== ==========
</TABLE>
(*) Includes suspended prior year losses in excess of investment in accordance
with the equity method of accounting amounting to $(130,920), $(207,946) and
$(176,296) for 2000, 1999, and 1998, respectively.
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(6,328,642) $(6,353,022) $(7,124,216)
---------- ---------- ----------
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in loss of subsidiary partnerships 4,553,152 4,547,392 5,066,504
Gain on sale of investments in subsidiary
partnerships 0 0 (154,577)
Increase (decrease) in liabilities
Due to general partners and affiliates 1,939,219 2,490,983 1,731,718
Other liabilities (23,552) (7,895) (25,271)
---------- ---------- ----------
Total adjustment 6,468,819 7,030,480 6,618,374
---------- ---------- ----------
Net cash provided by (used in) operating activities 140,177 677,458 (505,842)
---------- ---------- ----------
Cash flows from investing activities:
Distributions from subsidiaries 6,343 334,217 272,052
Decrease (increase) in cash held in escrow 501,219 (343,638) (157,581)
Advances and investments in
subsidiary partnerships (309,250) (647,620) (1,706,173)
Proceeds from sale of investments in subsidiary
partnerships 0 0 1,400,000
---------- ---------- ----------
Net cash provided by (used in) investing
activities 198,312 (657,041) (191,702)
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents 338,489 20,417 (697,544)
Cash and cash equivalents, beginning of year 282,009 261,592 959,136
---------- ---------- ----------
Cash and cash equivalents, end of year $ 620,498 $ 282,009 $ 261,592
========== ========== ==========
</TABLE>
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2000
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost to Partnership Subsequent to
--------------------------- Acquisition:
Buildings and Improvements
Description Encumbrances Land Improvements (Disposals)
----------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
Apartment Complexes
Polynesian Apartments Associates, Ltd.
Homestead, FL $ 2,519,928 $ 386,180 $ 4,195,068 $ (10,325)
Seagrape Village Associates, LTD.
Homestead, FL 4,543,848 1,270,000 6,123,373 709,189
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 4,801,145 322,000 2,434,303 5,695,970
Westminster Place II- Olive Site, L.P.
St. Louis, MO 4,416,803 928,979 5,382,740 179,670
Property Development Associates, L.P.
Kansas City, MO 5,500,000 624,858 7,228,721 5,216,068
Whittier Plaza Associates, L.P.
St. Louis, MO 1,697,003 26,920 2,015,030 (391,316)
United-Glen Arden I L.P.
Glen Arden, MO 12,144,730 1,770,000 6,577,720 12,753,608
United-Glen Arden II L.P.
Glen Arden, MO 9,266,543 1,190,000 4,837,436 9,064,699
Rolling Green L.P.
Chicago, IL 5,833,926 466,683 4,533,670 3,658,122
Santa Juanita II L.P.
Bayamon, PR 1,718,237 115,000 2,085,485 1,775,847
Spring Creek Associates, L.P.
Brooklyn, NY 0 3,343,549 16,216,700 19,336,168
<CAPTION>
Gross Amount at which Carried At Close of Period
------------------------------------------------ Year of
Buildings and Accumulated Construction/
Description Land Improvements Total Depreciation Renovation
----------- ---------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Apartment Complexes
Polynesian Apartments Associates, Ltd.
Homestead, FL $ 388,192 $ 4,182,731 $ 4,570,923 $ 1,079,903 1988
Seagrape Village Associates, LTD.
Homestead, FL 1,275,292 6,827,270 8,102,562 1,884,849 1988
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 327,292 8,124,981 8,452,273 1,982,319 1987
Westminster Place II- Olive Site, L.P.
St. Louis, MO 916,669 5,574,720 6,491,389 1,670,650 1988
Property Development Associates, L.P.
Kansas City, MO 606,704 12,462,943 13,069,647 3,837,008 1988
Whittier Plaza Associates, L.P.
St. Louis, MO 32,261 1,618,373 1,650,634 605,770 1987
United-Glen Arden I L.P.
Glen Arden, MO 1,775,293 19,326,035 21,101,328 8,483,162 1988
United-Glen Arden II L.P.
Glen Arden, MO 1,195,293 13,896,842 15,092,135 6,046,772 1988
Rolling Green L.P.
Chicago, IL 471,975 8,186,500 8,658,475 2,650,586 1988
Santa Juanita II L.P.
Bayamon, PR 120,293 3,856,039 3,976,332 1,391,599 1988
Spring Creek Associates, L.P.
Brooklyn, NY 2,595,782 36,300,635 38,896,417 13,144,472 1987
<CAPTION>
Life on which
Depreciation in
Latest Income
Date Statements is
Description Acquired Computed (a)(b)
----------- -------- ---------------
<S> <C> <C>
Apartment Complexes
Polynesian Apartments Associates, Ltd.
Homestead, FL July 1988 27.5 years
Seagrape Village Associates, LTD.
Homestead, FL July 1988 27.5 years
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR Dec. 1988 40 years
Westminster Place II- Olive Site, L.P.
St. Louis, MO Oct. 1988 20-40 years
Property Development Associates, L.P.
Kansas City, MO Dec. 1988 40 years
Whittier Plaza Associates, L.P.
St. Louis, MO Dec. 1988 20-40 years
United-Glen Arden I L.P.
Glen Arden, MO Dec. 1988 8-25 years
United-Glen Arden II L.P.
Glen Arden, MO Dec. 1988 15-25 years
Rolling Green L.P.
Chicago, IL Dec. 1988 7-39 years
Santa Juanita II L.P.
Bayamon, PR Dec. 1988 27.5 years
Spring Creek Associates, L.P.
Brooklyn, NY Dec. 1988 15-27.5 years
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2000
(continued)
<CAPTION>
Cost Capitalized
Initial Cost to Partnership Subsequent to
--------------------------- Acquisition:
Buildings and Improvements
Description Encumbrances Land Improvements (Disposals)
----------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
East Two Thirty-Five Associates L.P.
(14th Street)
New York, NY 0 950,000 2,542,604 (527,787)
Concourse Artists Housing Associates, L.P.
Bronx, NY 1,546,817 5,750 2,246,560 52,924
2051 Grand Concourse Housing Associates
Bronx, NY 3,885,487 31,500 5,221,117 52,924
Robin Housing Associates
Bronx, NY 5,332,550 26,750 8,186,055 52,925
Willoughby-Wyckoff Housing Associates
Bronx, NY 4,188,965 17,000 6,126,088 52,925
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY 19,245,100 159,861 21,096,862 1,234,404
West 107th Street Associates, L.P.
Bronx, NY 0 305,813 3,850,928 132,299
General Atlantic Second Avenue Associates, L.P.
(96th Street)
Bronx, NY 0 246,495 2,689,395 167,710
Church Lane Associates
Germantown, PA 1,828,884 20,000 4,009,983 3,696
Campeche Isle Apartments L.P.
Galveston, TX 4,122,243 450,000 6,792,005 1,074,231
Goodfellow Place L.P.
St. Louis, MO 3,900,748 160,000 4,581,787 (3,532,767)
Penn Alto Associates L.P.
Altoona, PA 4,855,900 60,000 2,731,082 9,008,177
Gramco Development Limited Dividend
Partnership, L.P. (Bayamon)
Bayamon, PR 4,507,608 1,322,887 7,609,024 (232,432)
Alexis Park Apartments
Bossier City, LA 4,972,213 640,000 7,297,925 453,067
Williamsburg Residential
Witchita, KS 1,998,926 136,974 831,584 1,878,957
<CAPTION>
Gross Amount at which Carried At Close of Period
------------------------------------------------ Year of
Buildings and Accumulated Construction/
Description Land Improvements Total Depreciation Renovation
----------- ---------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
East Two Thirty-Five Associates L.P.
(14th Street)
New York, NY 462,662 2,502,155 2,964,817 1,034,730 1988
Concourse Artists Housing Associates, L.P.
Bronx, NY 11,042 2,294,192 2,305,234 941,519 1988
2051 Grand Concourse Housing Associates
Bronx, NY 36,792 5,268,749 5,305,541 2,149,268 1988
Robin Housing Associates
Bronx, NY 32,042 8,233,688 8,265,730 3,345,856 1988
Willoughby-Wyckoff Housing Associates
Bronx, NY 22,292 6,173,721 6,196,013 2,514,142 1988
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY 166,763 22,324,364 22,491,127 6,042,267 1987
West 107th Street Associates, L.P.
Bronx, NY 312,715 3,976,325 4,289,040 1,618,871 1987
General Atlantic Second Avenue Associates, L.P.
(96th Street)
Bronx, NY 253,397 2,850,203 3,103,600 1,162,861 1988
Church Lane Associates
Germantown, PA 26,902 4,006,777 4,033,679 1,651,337 1988
Campeche Isle Apartments L.P.
Galveston, TX 456,902 7,859,334 8,316,236 2,893,651 1988
Goodfellow Place L.P.
St. Louis, MO 41,102 1,167,918 1,209,020 186,540 1988
Penn Alto Associates L.P.
Altoona, PA 97,907 11,701,352 11,799,259 3,803,543 1989
Gramco Development Limited Dividend
Partnership, L.P. (Bayamon)
Bayamon, PR 1,329,788 7,369,691 8,699,479 3,301,277 1989
Alexis Park Apartments
Bossier City, LA 646,902 7,744,090 8,390,992 3,033,554 1986
Williamsburg Residential
Witchita, KS 673,429 2,174,086 2,847,515 811,419 1989
<CAPTION>
Life on which
Depreciation in
Latest Income
Date Statements is
Description Acquired Computed (a)(b)
----------- -------- ---------------
<S> <C> <C>
East Two Thirty-Five Associates L.P.
(14th Street)
New York, NY Dec. 1988 27.5-31.5 years
Concourse Artists Housing Associates, L.P.
Bronx, NY Nov. 1988 27.5 years
2051 Grand Concourse Housing Associates
Bronx, NY Nov. 1988 27.5 years
Robin Housing Associates
Bronx, NY Nov. 1988 27.5 years
Willoughby-Wyckoff Housing Associates
Bronx, NY Nov. 1988 27.5 years
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY Jan. 1989 40 years
West 107th Street Associates, L.P.
Bronx, NY Jan. 1989 27.5-31.5 years
General Atlantic Second Avenue Associates, L.P.
(96th Street)
Bronx, NY Jan. 1989 27.5-31.5 years
Church Lane Associates
Germantown, PA Feb. 1989 15 - 27.5 years
Campeche Isle Apartments L.P.
Galveston, TX May 1989 27.5 years
Goodfellow Place L.P.
St. Louis, MO May 1989 10 - 40 years
Penn Alto Associates L.P.
Altoona, PA June 1989 27.5 - 40 years
Gramco Development Limited Dividend
Partnership, L.P. (Bayamon)
Bayamon, PR July 1989 25 years
Alexis Park Apartments
Bossier City, LA July 1989 27.5 years
Williamsburg Residential
Witchita, KS Aug. 1989 40 years
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2000
(continued)
<CAPTION>
Cost Capitalized
Initial Cost to Partnership Subsequent to
--------------------------- Acquisition:
Buildings and Improvements
Description Encumbrances Land Improvements (Disposals)
----------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
Victory Apartments
Chicago, IL 6,276,848 161,500 4,929,133 5,060,820
----------- ---------- ----------- ----------
$119,104,452 $15,138,699 $152,372,378 $72,919,773
=========== ========== =========== ==========
<CAPTION>
Life on which
Gross Amount at which Carried At Close of Period Depreciation in
------------------------------------------------ Year of Latest Income
Buildings and Accumulated Construction/ Date Statements is
Description Land Improvements Total Depreciation Renovation Acquired Computed (a)(b)
----------- ---------- ------------- ----------- ------------ ------------ -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Victory Apartments
Chicago, IL 168,402 9,983,051 10,151,453 2,519,833 1988 Sept. 1989 40 years
---------- ----------- ----------- ----------
$14,444,085 $225,986,765 $240,430,850 $79,787,758
========== =========== =========== ==========
</TABLE>
(a) Since all properties were acquired as operating properties, depreciation is
computed using primarily the straight line method over the estimated useful
lives determined by the partnership date of acquisition.
(b) Furniture and fixtures, included in building improvements, are depreciated
primarily by the straight line method over the estimated useful lives
ranging from 5 to 15 years.
<TABLE>
<CAPTION>
Cost of Property and Equipment Accumulated Depreciation
---------------------------------------------- -------------------------------------------
Year Ended March 31,
-----------------------------------------------------------------------------------------------
2000 1999 1998 2000 1999 1998
------------ ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $239,416,349 $237,581,800 $236,910,301 $72,210,811 $64,545,022 $56,299,580
Additions during period:
Improvements 1,197,054 1,866,699 792,036
Depreciation expense 7,700,682 7,694,504 8,358,728
Deductions during period:
Dispositions (182,553) (32,150) (120,537) (123,735) (28,715) (113,286)
----------- ----------- ----------- ---------- ---------- ----------
Balance at close of period $240,430,850 $239,416,349 $237,581,800 $79,787,758 $72,210,811 $64,545,022
=========== =========== =========== ========== ========== ==========
</TABLE>
At the time the local partnerships were acquired by Liberty Tax Credit Plus II
Limited Partnership, the entire purchase price paid by Liberty Tax Credit Plus
II Limited Partnership was pushed down to the local partnerships as property and
equipment with an offsetting credit to capital. Since the projects were in the
construction phase at the time of acquisition, the capital accounts were
insignificant at the time of purchase. Therefore, there are no material
differences between the original cost basis for tax and GAAP.
