<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------------
FOR THE FISCAL YEAR ENDED MARCH 31, 1997
COMMISSION FILE NUMBER 33-24537
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. EMPLOYER IDENTIFICATION NO. 95-4178283
1925 CENTURY PARK EAST, SUITE 1760, LOS ANGELES, CA 90067
REGISTRANT'S TELEPHONE NUMBER: (310) 208-1888
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or 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
------------ ------------
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-X is not contained in this form and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference to Part III of this Form
10-K or any amendment to this Form 10-K (X)
No documents are incorporated into the text by reference.
Yes No X
------------ ------------
Exhibit Index is located on Page 17
Registrant's Prospectus dated January 4, 1989, as amended (the Prospectus)
and the Registrant's Supplement No. 2 dated November 21, 1989 to Prospectus
dated January 4, 1989 (Supplement No. 2) but only to the extent expressly
incorporated by references in Parts I through IV hereof. Capitalized terms
which are not defined herein have the same meaning as in the Prospectus.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PART 1
ITEM 1 BUSINESS 3
ITEM 2 PROPERTIES 4
ITEM 3 LEGAL PROCEEDINGS 5
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS 6
ITEM 6 SELECTED FINANCIAL DATA 6
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS 7
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 11
ITEM 9 CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 11
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 13
ITEM 11 EXECUTIVE COMPENSATION 14
ITEM 12 PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 15
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 15
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K 16
EXHIBIT INDEX 17
SIGNATURES 18
</TABLE>
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PART I
ITEM 1. BUSINESS
--------
Century Pacific Tax Credit Housing Fund-II (CPTCHF-II or the Partnership) was
formed on September 2, 1988 as a limited partnership under the laws of the
State of California to invest in multifamily housing developments (the
Properties). The Partnership's business is to invest primarily in other
limited partnerships (Operating Partnerships) that are organized for the
purposes of either constructing or acquiring and operating existing
affordable multifamily rental apartments (the Properties) that are eligible
for the Low Income Housing Tax Credit, or to a lesser extent, the
Rehabilitation Tax Credit, both enacted by the Tax Reform Act of 1986
(sometimes referred to as Credits or Tax Credits). The Partnership has
invested in two Properties, each of which qualifies for the Low Income
Housing Tax Credit. Both of these Properties receive one or more forms of
assistance from Federal, state or local governments. A summary of the
Partnership's objectives and a summary of the Tax Credits are provided in the
Prospectus under "Investment Objectives and Policies" and "Federal Income Tax
Aspects" on pages 45 and 79, respectively, and are incorporated herein by
reference.
The partnership does not employ any persons. Alternatively, the partnership
reimburses an affiliate for allocated overhead, consisting primarily of
payroll costs.
In order to stimulate private investment in low and moderate income housing
of the types in which CPTCHF-II has invested, the federal government, through
the Department of Housing and Urban Development (HUD), has provided investors
with significant ownership incentives, such as interest subsidies, rent
supplements, mortgage insurance and other measures, with the intent of
reducing the risks and providing the investors/owners with certain tax
benefits, limited cash distributions and the possibility of long-term capital
gains. However, there are significant risks inherent in this type of
housing. Long-term investments in real estate limit the ability of CPTCHF-II
to vary its portfolio in response to changing economic, financial and
investment conditions, rising operating costs and vacancies, rent controls
and collection difficulties, costs and availability of energy, as well as
other factors which normally affect real estate values. In addition, these
Properties usually are rent restricted and are subject to Government Agency
programs which may or may not require prior consent to transfer ownership.
The Partnership acquired the Properties by investing as the limited partner
in the Operating Partnership which owns the Properties. As a limited
partner, CPTCHF-II's liability for obligations of the Operating Partnership
is limited to its investment. The Partnership made capital contributions to
the Operating Partnership in amounts sufficient to pay the Operating
Partnership's expenses and to reimburse the General Partners for their costs
incurred in forming the Operating Partnership, if any, and
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acquiring the Properties. For each acquisition, this typically included a cash
down payment (in one or more installments), acceptance of the Property's
mortgage indebtedness, and execution of a Purchase Money Note in favor of the
seller of the Property.
The Partnership's primary objective is to provide Low-Income Housing Tax
Credits to its limited partners generally over a 10-year period. Each of the
Partnership's Operating Partnerships has been allocated, by the relevant
state tax credit agency, an annual amount of the Low-Income Housing Tax
Credits for 10 years from the date the Property was placed in service. The
required holding period of the Properties is 15 years (the Compliance
Period). The Properties must satisfy rent restriction, tenant income
limitations and other requirements (the Low-Income Housing Tax Credit
Requirements) in order to maintain eligibility for recognition of the
Low-Income Housing Tax Credits at all times during the Compliance Period.
Once an Operating Partnership has become eligible for the Low-Income Housing Tax
Credits, it may lose such eligibility and suffer an event of recapture if its
Property fails to remain in compliance with the Low-Income Housing Tax Credit
Requirements. To date, neither of the Operating Partnerships have suffered
an event of recapture of Low-Income Housing Tax Credit.
ITEM 2. PROPERTIES
----------
As of March 31, 1997, CPTCHF-II had acquired equity interests in the
Operating Partnerships set forth in the table below. Each of the Properties
acquired by the Operating Partnerships receive benefits under government
assistance programs provided by HUD and the Illinois Housing Development
Authority (IHDA). The table below summarizes the Operating Partnerships
acquired and the government assistance programs benefiting each Property.
Further information concerning these Properties may be found in Supplement
No. 2 to the Prospectus, pages 4 through 66, which information is
incorporated herein by reference and is summarized below.
<TABLE>
<CAPTION>
Capital
Contribution Obligation
----------------------------
Date of Percent Paid
Property Name, Average Acquisition Interest in Total at through
Location and Occupancy of Operating March 31, March 31,
Rental Units 1996 Interest Partnership 1997 1997
- -------------- --------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Washington 98% 5/1/89 90% $2,743,413 $2,743,413
Courts
Chicago, IL
103 Residential
Units
Plumley Village 96% 8/1/89 60% 1,648,026 1,648,026
Boston, MA
430 Residential
Units
$4,391,439 $4,391,439
========== ==========
<CAPTION>
December 31, 1996
-------------------------------------------------------------
Property Name, Government
Location and Residual Purchase Assistance
Rental Units Mortgage Notes Note Note Other Note Program
- -------------- -------------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Washington $ 5,054,562 $ -- $ -- $ -- HUD Insured
Courts IHDA HAP
Chicago, IL Contract
103 Residential
Units
Plumley Village 8,107,427 4,271,488 5,581,877 405,895 HUD
Boston, MA Section 236
430 Residential Section 8
Units
$13,161,989 $4,271,488 $5,581,877 $405,895
=========== ========== ========== ========
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
-----------------
As of March 31, 1997, there were no pending legal proceedings against
CPTCHF-II or any Operating Partnership in which it has invested.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
As of March 31, 1997, there were no submissions of matters to a vote of
security holders.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS
-------------------------------------------------
There is at present no public market for the units of limited partnership
interests (the Units), and it is unlikely that any public market for the
Units will develop. See the Prospectus under "Transferability of Interests"
on pages 24 and 52 of the Prospectus, which information is incorporated
herein by reference. The number of owners of Units as of May 30, 1997 was
approximately 508, holding 5,754 units.
As of May 30, 1997, there were no cash distributions.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The following summary of selected financial date should be read in
conjunction with ITEM 14, herein, which also includes a summary of
CPTCHF-II's significant accounting policies.
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------------------------------------------------
Operations 1997 1996 1995 1994 1993
- -------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues $ 1,200 $ 2,200 $ 1,500 $ 1,000 $ 1,500
Operating Expenses (178,611) (175,115) (194,948) (223,148) (241,544)
Equity in Net Losses of (146,872) (158,170) (226,083) (228,942) (408,668)
Operationg Partnerships --------- --------- --------- --------- ---------
Net Loss $(324,283) $(331,085) $(419,531) $(451,090) $(648,712)
========= ========= ========= ========= =========
Net Loss per Unit of $ (56) $ (57) $ (72) $ (78) $ (112)
Limited Partnership ========= ========= ========= ========= =========
Interest
<CAPTION>
March 31,
-----------------------------------------------------------------------------------
Financial position 1997 1996 1995 1994 1993
- -------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total Assets $1,249,411 $1,398,015 $1,555,203 $1,794,776 $2,074,737
========== ========== ========== ========== ==========
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
----------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership offered limited partnership interests to the public during
calendar year 1989, pursuant to a Registration Statement filed under the
Securities Act of 1933. The Partnership raised $5,754,000 in equity capital
and, thereafter, invested in Operating Partnerships, which own multifamily
Properties located in Illinois and Massachusetts representing approximately
$25,000,000 of Property value. These properties under Section 42 of the
Internal Revenue Code earn low-income housing tax credits which are passed
through to the individual partners of the Partnership. Low-Income housing
tax credits earned by the Partnership for calendar years 1996, 1995, and 1994
were $861,187, $859,233, and $859,232, respectively.
As of March 31, 1997 and 1996, the Partnership portfolio consists of two
Properties totalling 533 units. For a summary of the combined financial
status of the Operating Partnerships and the Properties, see the financial
information contained under ITEM 14.
The market for multifamily residential properties throughout the country
continued to show signs of improvement in 1996, as the ongoing absence of
significant new construction activity further improved the market's supply
and demand characteristics. Management believes that overall real estate
market conditions will improve further in 1997 along with the continued
improvement in general economic conditions. In addition, the recent
increases in market interest rate levels will make new construction more
expensive to finance, which should continue to limit the addition of new
multifamily units to the existing supply. However, the effects of the
gradually improving market conditions on the Partnership's operating property
investments, while positive, are limited by the government restrictions on
rental rate increases. A substantial amount of the revenue generated by
these properties comes from rental subsidy payments made by federal or state
housing agencies. These features, which are characteristic of all low-income
housing properties, limit the pool of potential buyers for these real estate
assets. As a limited partner of the Operating Partnerships, the Partnership
does not control property disposition decisions, and management is not aware
of any plans or intentions of the general partners of these partnerships to
sell any of the investment properties in the near future.
The Partnership is currently experiencing a liquidity problem. Under the
Partnership Agreement, the Partnership is entitled to receive distributions
of surplus cash from the Operating Partnerships which are to provide the
funds necessary for the Partnership to meet its administrative expenses and
pay the Partnership management fee. At the present time, the Operating
Partnerships have not generated sufficient cash distributions to fund the
Partnership's expenses. As a result of the foregoing, the Partnership has
been dependent upon its affiliates and the General Partners for continued
financial
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support to meet its expenses. Though there can be no assurance, management
believes that affiliates and/or the General Partners, though not required to do
so, will continue to fund operations of the Partnership and defer receipt of
payment of allocated overhead administrative expenses and partnership management
fees. Allocated administrative expenses paid or accrued to affiliates and the
General Partners represent reimbursement of the actual cost of goods and
materials used for or by the Partnership, salaries, related payroll costs and
other administrative items incurred or allocated, and direct expenses incurred
in rendering legal, accounting/bookkeeping, computer, printing and public
relations services. Items excluded from the overhead allocation include
overhead expenses of the General Partners, including rent and salaries of
employees not specifically performing the services described above. Unpaid
allocated administrative expenses and partnership management fees, an annual
amount up to .5% of invested assets, will accrue for payment in future operating
years.
The Partnership is not expected to have access to any significant sources of
financing. Accordingly, if unforeseen contingencies arise that cause an
Operating Partnership to require additional capital to sustain operations, in
addition to that previously contributed by the Partnership, the source of the
required capital needs may be from (i) limited reserves from the Partnership
(which may include distributions received from Operating Partnerships that
would otherwise be available for distribution to partners), (ii) debt
financing at the Operating Partnership level (which may not be available), or
(iii) additional equity contributions from the general partner of the
Operating Partnerships (which may not be available). There can be no
assurance that any of these sources would be readily available to provide for
possible additional capital requirements which may be necessary to sustain
the operations of the Operating Partnerships.
Tax Reform Act of 1986, Omnibus Budget Reconciliation Act of 1987, Technical
- ----------------------------------------------------------------------------
and Miscellaneous Revenue Act of 1988, Omnibus Budget Reconciliation Act of
- ---------------------------------------------------------------------------
1989 and Omnibus Budget Reconciliation Act of 1990
- --------------------------------------------------
The Partnership is organized as a limited partnership and is a "pass through"
tax entity which does not, itself, pay federal income tax. However, the
partners of the Partnership, who are subject to federal income tax, may be
affected by the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act
of 1987, the Technical and Miscellaneous Revenue Act of 1988, the Omnibus
Budget Reconciliation Act of 1989 and the Omnibus Budget Reconciliation Act
of 1990 (collectively the Tax Acts). The Partnership will consider the
effect of certain aspects of the Tax Acts on the partners when making
investment decisions. The Partnership does not anticipate that the Tax Acts
will have a material adverse impact on the Partnership's business operations,
capital resources, plans or liquidity.
Results of Operations
- ---------------------
The fiscal year of the Partnership ends on March 31 of each year, however,
the fiscal year
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of each Operating Partnership ends on December 31. Therefore, the earnings and
losses of the Operating Partnerships reflected on the equity method in the
Partnership's financial statements for its current fiscal year are for the
calendar year ended December 31, 1996.
1997 Compared to 1996
- ---------------------
For the fiscal year ended March 31, 1997, the Partnership recorded a net loss
of approximately $324,000, as compared to a net loss of approximately
$331,000 for the prior fiscal year. The decrease in net loss is the result
of a decrease in the Partnership's equity in net losses of the Operating
Partnerships of approximately $11,000 and an increase in the expenses of
approximately $3,000 for the current fiscal year. General and administrative
expenses, namely allocated administrative expenses and partnership management
fees, continue each fiscal year to comprise an increasing portion of the
Partnership's net loss. This trend results primarily from a decrease in the
Partnership's recognition of equity losses from the Operating Partnerships in
each subsequent fiscal year.
In accordance with the equity method of accounting for limited partnership
interests, the Partnership does not recognize losses from investment
properties when losses exceed the Partnership's equity method basis in these
properties. One of the two investments has had an equity method basis of
zero since March 31, 1993. The Partnership's recorded share of the Operating
Partnerships' losses in the current fiscal period consists of losses of
approximately $147,000 from the Washington Courts Limited Partnership. In
the prior fiscal year, losses of approximately $158,000 from the operations
of Washington Courts was recorded. The carrying value of the Partnership's
investment in Laurel-Clayton was reduced to zero during fiscal 1993.
In the aggregate, combined rental revenue of the Operating Partnerships
increased during the current calendar year. The combined total rental
revenue increased by approximately $63,000 in the current calendar year, with
the largest increase occurring at Laurel-Clayton. The average occupancy
levels remained at or above 96% in both calendar years in both properties.
Such results reflect the generally improving market conditions referred to
above. In addition to the improvement in revenue, the combined total
expenses of the two operating properties decreased by approximately $410,000
in the current year primarily due to certain nonrecurring maintenance
projects were completed in 1995 and no expenses were recorded for the
projects in 1996.
1996 Compared to 1995
- ---------------------
For the fiscal year ended March 31, 1996, the Partnership recorded a net loss
of approximately $331,000, as compared to a net loss of approximately
$420,000 for the prior fiscal year. The decrease in net loss is the result
of a decrease in the Partnership's equity in net losses of the Operating
Partnerships of approximately $68,000 and a
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decrease in the expenses of approximately $20,000 for the current fiscal year.
General and administrative expenses, namely allocated administrative expenses
and partnership management fees, continue each fiscal year to comprise an
increasing portion of the Partnership's net loss. This trend results
primarily from a decrease in the Partnership's recognition of equity losses
from the Operating Partnerships in each subsequent fiscal year.
In accordance with the equity method of accounting for limited partnership
interests, the Partnership does not recognize losses from investment
properties when losses exceed the Partnership's equity method basis in these
properties. One of the two investments has had an equity method basis of
zero since March 31, 1993. The Partnership's recorded share of the Operating
Partnerships' losses in the current fiscal period consists of losses of
approximately $158,000 from the Washington Courts Limited Partnership. In
the prior fiscal year, losses of approximately $226,000 from the operations
of Washington Courts was recorded. The carrying value of the Partnership's
investment in Laurel-Clayton was reduced to zero during fiscal 1993.
In the aggregate, combined rental revenue of the Operating Partnerships
increased during the current calendar year. The combined total rental
revenue increased by approximately $442,000 in the current calendar year,
with the largest increase occurring at Laurel-Clayton. The average occupancy
levels remained at or above 97% in both calendar years in both properties.
Such results reflect the generally improving market conditions referred to
above. Contrary to the improvement in revenue, the combined total expenses
of the two operating properties increased by approximately $227,000 in the
current year primarily due to an increase in repairs and maintenance,
management fees, depreciation and other operating expenses.
1995 Compared to 1994
- ---------------------
For the fiscal year ended March 31, 1995, the Partnership recorded a net loss
of approximately $420,000, as compared to a net loss of approximately
$451,000 for the prior fiscal year. The decrease in net loss is a result of
a decrease in the Partnership's equity in net losses of the Operating
Partnerships of approximately $3,000 and a decrease in the expenses of
approximately $28,000 for the 1995 fiscal year. General and administrative
expenses, namely allocated administrative expenses and partnership management
fees, continue each fiscal year to comprise an increasing portion of the
Partnership's net loss. This trend results primarily from a decrease in the
Partnership's recognition of equity losses from the Operating Partnership in
each subsequent fiscal year.
In accordance with the equity method of accounting for limited partnership
interests, the Partnership does not recognize losses from investment
properties when losses exceed the Partnership's equity method basis in these
properties. One of the two investments has had an equity method basis of
zero since March 31, 1993. The Partnership's recorded
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share of the Operating Partnerships' losses in the 1995 fiscal period consists
of losses of approximately $226,000 from the Washington Courts Limited
Partnership. In the prior fiscal year, losses of approximately $229,000 from
the operation of Washington Courts was recorded. The carrying value of the
Partnership's investment in Laurel-Clayton was reduced to zero during fiscal
1993.
In the aggregate, combined rental revenue of the Operating Partnerships
increased during the 1994 calendar year. The combined total rental revenue
increased by approximately $253,000 in the 1994 calendar year, with the
largest increase occurring at Laurel-Clayton. The average occupancy levels
remained at or above 98% in both calendar years in both properties. The
increase in revenue is primarily attributable to an annual adjustment of
contract rents of approximately 7.5% at Laurel-Clayton and 3% at Washington
Courts. Such results reflect the generally improving market conditions
referred to above. Contrary to the improvement in revenue, the combined
total expenses of the two operating properties increased by approximately
$209,000 in the 1994 calendar year primarily due to an increase in repairs
and maintenance and security contract expenses at one of the properties. In
addition to several nonrecurring maintenance projects being completed at the
property, a security contract was entered into during the 1994 calendar year.
Inflation
- ---------
Inflation is not expected to have a material adverse impact on the
Partnership's operations during its period of ownership of the Properties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The financial statements at March 31, 1997 and 1996 together with the report
of the independent auditors thereon are incorporated by reference from the
Registrant's Financial Statement on the pages indicated in ITEM 14.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
On February 21, 1996, the prior auditors, Reznick, Fedder & Silverman, were
dismissed as auditors for the Partnership. The decision to change
accountants was approved by the Partnership's Board of Directors. Reznick,
Fedder & Silverman's report on the Partnership's financial statements for the
years ended March 31, 1995 and 1994, contained a modification as to
uncertainty of the Partnerships to continue as a going concern. Reznick,
Fedder & Silverman's report on the above mentioned financial statements
contained no adverse opinions or disclaimer of opinions, and was not
qualified as to uncertainty, audit scope or accounting principles, other than
those previously discussed.
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Effective February 21, 1996, the Partnership engaged Rubin, Brown, Gornstein
& Co., LLP to perform the audit of the Partnership's financial statements as
of and for the year ending March 31, 1996 and 1997.
There are no known disagreements on any matter of accounting principles or
practices or financial statement disclosure with current or predecessor
auditors.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The Partnership has no officers or directors. Management of the Partnership
is vested in Irwin Jay Deutch and Century Pacific Capital II Corporation
(CPII) (the General Partners). The General Partners will involve themselves
in the day-to-day affairs of the Partnership as required to protect the
Limited Partners' investment and advance the Partnership's investment
objectives. Mr. Deutch, the Managing General Partner, has the overall
responsibility for the preparation and transmittal of periodic reports to the
Limited Partners, preparation and filing of the Partnership's tax returns
with the IRS and the appropriate state tax authorities, and the preparation
and filing of reports to HUD and other Government Agencies.
Following is biographical information on Mr. Deutch and the Executive
Officers of CPII:
IRWIN JAY DEUTCH
Irwin Jay Deutch, age 56, is Chairman of the Board, President, and Chief
Executive Officer of Century Pacific Realty Corporation (CPRC), a General
Partner of the Operating Partnerships that own the Properties in which
CPTCHF-II has invested, and its Affiliates. Mr. Deutch has been involved
with low-income housing investments since 1968. He is the individual general
partner in 62 private limited partnerships and two public limited
partnerships investing in 209 properties, including 196 multifamily
properties with 33,700 apartment units, 10 commercial projects, and 3 hotel
properties. Fifty-eight of the 62 private limited partnerships have invested
in affordable housing. In his capacity as general partner and officer of
CPRC, he oversees the management of these partnerships and assumes overall
responsibility for the development, direction, and operation of all
affiliated CPRC companies. Mr. Deutch is recognized as an expert in the
field of affordable housing and frequently addresses professional groups on
topics of real estate investment, syndication, tax law, and the Low-Income
Housing Tax Credit program.
Mr. Deutch received a B.B.A. with distinction from the University of Michigan
School of Business Administration in 1962 and a Juris Doctor degree with
honors from the University of Michigan Law School in 1965. He is a member of
the Order of the Coif. Mr. Deutch served in the Honors Program in the Office
of the Chief Counsel of the Internal Revenue Service from 1965 to 1967, where
he was assigned to the Interpretative Division in Washington, D.C. He
attended Georgetown Law Center and received his Master of Laws degree in
taxation in 1967. Mr. Deutch is a member of the State Bars of Michigan and
California, as well as the American, Federal, Los Angeles, and Beverly Hills
Bar Associations.
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KEY OFFICERS OF CPII AND AFFILIATES
ESSIE SAFAIE, age 48, is Chief Financial Officer and Chief Operating
Officer of CPRC. Prior to joining CPRC in 1988, from 1985-88, he was Vice
President and Chief Financial Officer of Sunrise Investments, Inc., a real
estate syndication firm with $450 million of real estate under management.
During this period, Mr. Safaie was also President of an affiliated property
management firm, S&L Property Management, Inc., with over 12,000 residential
units and 800,000 square feet of commercial office space under direct
management. From 1982 to 1985, Mr. Safaie was assistant controller of
Standard Management Company, builders and managers of luxury hotels,
commercial offices and residential units. From 1980-1982, he served as
financial officer of Diamond "M" Drilling Company. Mr. Safaie received a BA
degree in Business Administration from California State University with a
major in accounting.
CHARLES L. SCHWENNESEN, age 51, is Vice President of Acquisition Finance
for CPRC and is responsible for financial analysis and "due diligence"
reviews of all properties acquired by CPRC. Prior to joining CPRC in 1987,
he was a consultant to companies which provided investment opportunities
through private placements. From 1984 to 1985, Mr. Schwennesen was Vice
President of Cranston Securities Company and was responsible for the
structuring of more than $30 million of mortgage revenue bond financing for
affordable housing projects. From 1977 to 1984, Mr. Schwennesen was a
manager with the accounting firm of Price Waterhouse where he specialized in
providing auditing and consulting services to publicly held California real
estate development companies involved in the affordable housing industry.
Mr. Schwennesen is a Certified Public Accountant and holds a Masters degree
in Business Administration from the UCLA Graduate School of Management and a
B.A. degree in Mathematics from UCLA.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The Partnership has no officers or directors. However, in connection with
the operations of the partnership and the Operating Partnerships, the General
Partners and their Affiliates will or may receive certain fees, compensation,
income and other payments which are described in the Prospectus under
"Compensation, Fees and Reimbursements" on page 17, the terms of which are
incorporated herein by reference.
During the fiscal years ended March 31, 1997, 1996, and 1995, CPII, a General
Partner of the Partnership, earned $136,106, $132,097, and $132,814,
respectively, of partnership management fees. During the fiscal years ended
March 31, 1997, 1996 and 1995, the Partnership accrued $37,600, $37,600 and
$37,600, respectively, for the reimbursement of overhead allocation from
Century Pacific Investment Corporation (CPIC). During fiscal year 1997, the
General Partners received no payments from the Operating Partnerships.
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ITEM 12. PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------------------
MANAGEMENT
----------
No partner in CPTCHF-II owns more than 5% of the total number of partnership
interests outstanding. Irwin J. Deutch, the Managing General Partner, holds
a one-half percent General Partnership Interest.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Irwin J. Deutch is the Managing General Partner of CPTCHF-II, and CPII is
also a General Partner. Irwin J. Deutch is the sole Director and President
of CPII, and the stock of CPII is solely owned by the Deutch Family Trust.
Mr. Deutch is also the President, sole Director and the Deutch Family Trust
is the sole stockholder of Century Pacific Realty Corporation (CPRC), a
General Partner of the Operating Partnerships that own the Properties in
which CPTCHF-II has invested. CPII received a partnership management fee for
its services in managing and advising the Partnership and its business.
CPIC, an affiliate, provides all the services and materials necessary for the
operation of the Partnership and is reimbursed for actual costs. These
transactions are more particularly set forth in the financial statements
found under ITEM 14.
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<PAGE> 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) Exhibits - See the Exhibit Index on Page 17 of this report.
The exhibits listed in the accompanying index to exhibits
are filed or incorporated by reference as part of this
annual report.
(b) (1) Financial Statements:
The financial statements listed in the following index as set
forth in ITEM 8 of this report on Form 10-K are filed or
incorporated by reference as part of this annual report.
Independent Auditors' Report F-1
Balance Sheet as of March 31, 1997 and 1996 F-2
Statement of Partners' Equity for the Years Ended March 31,
1997, 1996, and 1995 F-3
Statement of Operations for the Years Ended March 31,
1997, 1996 and 1995 F-4
Statement of Cash Flows for the Years Ended March 31,
1997, 1996 and 1995 F-5
Notes to Financial Statements F-6
(2) Financial Statement Schedules:
Schedule III - Real Estate and Accumulated Depreciation of
Operating Partnerships in which CPTCHF-II has
Limited Partnership Interests F-13
Notes to Schedule III - Real Estate and Accumulated
Depreciation of Operating Partnerships in which
CPTCHF-II has Limited Partnership Interests F-14
Schedule IV - Mortgage Loans on Real Estate of Operating
Partnerships in which CPTCHF-II has Limited
Partnership Interests F-15
Notes to Schedule IV - Mortgage Loans on Real Estate of
Operating Partnerships in which CPTCHF-II has
Limited Partnership Interests F-16
All other schedules are omitted because they are not
applicable, or the required information is shown
in the financial statements or notes thereto.
(b) Reports on Form 8-K
Registrant has not filed with the Securities and Exchange Commission a
Current Report on Form 8-K during the year ended March 31, 1997, as there
were no transactions that required the filing.
16
<PAGE> 17
EXHIBIT INDEX
These exhibits are numbered in accordance with the exhibit table of Item 601
of Regulation S-K.
Exhibit Number Description
- -------------- ----------------------
11 Omitted - inapplicable
12 Omitted - inapplicable
13 Omitted - inapplicable
16 Omitted - inapplicable
18 Omitted - inapplicable
21 Omitted - inapplicable
23 Omitted - inapplicable
27 Financial Data Schedule
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTURY PACIFIC TAX CREDIT HOUSING
FUND - II
By: Irwin Jay Deutch, as Managing General Partner
Date: June 27, 1997 /s/ Irwin Jay Deutch
---------------------------------------
and
Century Pacific Capital II Corporation, as Corporate
General Partner and as attorney-in-fact for all
Investor Limited Partners
Date: June 27, 1997 /s/ Irwin Jay Deutch
-------------------------------
By: Irwin Jay Deutch, President
18
<PAGE> 19
Rubin, Brown, Gornstein & Co. LLP 230 South Bemiston Avenue
Certified Public Accountants St. Louis, Missouri 63105
314/727-8150
RBG&CO. 314/727-9195 FAX
Internet htp://www.rbgco.com
INDEPENDENT AUDITORS' REPORT
Partners
Century Pacific Tax Credit Housing Fund - II
We have audited the accompanying balance sheet of Century Pacific Tax Credit
Housing Fund - II as of March 31, 1997 and 1996 and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audit. The financial statements of Century Pacific Tax Credit
Housing Fund-II for the year ended March 31, 1995 were audited by other
auditors, whose report dated June 16, 1995, included an explanatory paragraph
describing conditions that raised substantial doubt about the Company's
ability to continue as a going concern.
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 Century Pacific Tax Credit
Housing Fund - II as of March 31, 1997 and 1996 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Notes 2, 3 and
4 to the financial statements, the Partnership has suffered recurring losses
from operations and has a net capital deficiency that raises substantial
doubt about its ability to continue as a going concern. Management's plans
regarding these matters also are described in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
We have also prepared, from information audited by us, the related financial
statement schedules listed in Item 14(b)(2) as of December 31, 1996. In our
opinion the financial statement schedules present fairly, in all material
respects, the information required to be set forth therein.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
May 30, 1997
F-1
Member: Summit International Associates, Inc., with offices in principal U.S.
and International Cities
American Institute of Certified Public Accountants
<PAGE> 20
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- -------------------------------------------------------------------------------
<TABLE>
BALANCE SHEET
<CAPTION>
ASSETS
MARCH 31,
----------------------------
1997 1996
----------------------------
<S> <C> <C>
Cash $ 346 $ 2,178
Advance to a general partner (Note 3) 870 770
Investments in operating partnerships (Note 4) 1,248,195 1,395,067
- ------------------------------------------------------------------------------------
$1,249,411 $1,398,015
====================================================================================
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY
<S>
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 7,324 $ 11,326
Due to affiliates (Note 3) 1,098,220 919,214
Loan payable - affiliate (Note 3) 40,593 39,918
- ------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,146,137 970,458
- ------------------------------------------------------------------------------------
PARTNERS' EQUITY
General partners (48,021) (44,778)
Limited partners, $1,000 stated value per unit,
25,000 units authorized, 5,754 units issued
and outstanding 151,295 472,335
- ------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY 103,274 427,557
- ------------------------------------------------------------------------------------
$1,249,411 $1,398,015
====================================================================================
</TABLE>
F-2
- --------------------------------------------------------------------------------
See the accompanying report letter and notes to financial statements.
<PAGE> 21
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
--------------------------------------------
<S> <C> <C> <C>
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1994 $(37,272) $1,215,445 $1,178,173
NET LOSS (4,195) (415,336) (419,531)
- ---------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1995 (41,467) 800,109 758,642
NET LOSS (3,311) (327,774) (331,085)
- ---------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1996 (44,778) 472,335 427,557
NET LOSS (3,243) (321,040) (324,283)
- ---------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1997 $(48,021) $ 151,295 $ 103,274
===================================================================================================
PERCENTAGE INTEREST - MARCH 31, 1997 1% 99% 100%
===================================================================================================
</TABLE>
F-3
- --------------------------------------------------------------------------------
See the accompanying report letter and notes to financial statements.
<PAGE> 22
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
---------------------------------------------
1997 1996 1995
---------------------------------------------
<S> <C> <C> <C>
REVENUES
Transfer fees $ 1,200 $ 2,200 $ 1,500
- ------------------------------------------------------------------------------------------------------------
EXPENSES
Partnership management fee - affiliate (Note 3) 136,106 132,097 132,814
Allocated overhead expenses - affiliate (Note 3) 37,600 37,600 37,600
Other general and administrative 4,905 5,418 10,379
Amortization -- -- 14,155
- ------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 178,611 175,115 194,948
- ------------------------------------------------------------------------------------------------------------
LOSS BEFORE EQUITY IN NET LOSSES OF
OPERATING PARTNERSHIPS (177,411) (172,915) (193,448)
EQUITY IN NET LOSSES OF OPERATING
PARTNERSHIPS (NOTE 4) (146,872) (158,170) (226,083)
- ------------------------------------------------------------------------------------------------------------
NET LOSS $(324,283) $(331,085) $(419,531)
============================================================================================================
ALLOCATION OF NET LOSS
General partners $ (3,243) $ (3,311) $ (4,195)
Limited partners (321,040) (327,774) (415,336)
- ------------------------------------------------------------------------------------------------------------
$(324,283) $(331,085) $(419,531)
============================================================================================================
NET LOSS PER UNIT OF LIMITED PARTNERSHIP
INTEREST $ (56) $ (57) $ (72)
============================================================================================================
AVERAGE NUMBER OF OUTSTANDING UNITS 5,754 5,754 5,754
============================================================================================================
</TABLE>
F-4
- --------------------------------------------------------------------------------
See the accompanying report letter and notes to financial statements.
<PAGE> 23
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- --------------------------------------------------------------------------------
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
--------------------------------------------
1997 1996 1995
--------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(324,283) $(331,085) $(419,531)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization of organization costs -- -- 14,155
Equity in net losses of Operating Partnerships 146,872 158,170 226,083
Change in assets and liabilities:
Increase in advance to a general partner (100) -- --
Increase (decrease) in accounts payable
and accrued expenses (4,002) (5,718) 5,744
Increase in due to affiliates 179,006 169,697 174,214
Increase in loan payable - affiliate 675 9,918 --
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (1,832) 982 665
- -------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (1,832) 982 665
CASH - BEGINNING OF YEAR 2,178 1,196 531
- -------------------------------------------------------------------------------------------------------
CASH - END OF YEAR $ 346 $ 2,178 $ 1,196
=======================================================================================================
</TABLE>
F-5
- --------------------------------------------------------------------------------
See the accompanying report letter and notes to financial statements.
<PAGE> 24
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Partnership maintains its financial records on the tax
basis. Memorandum entries, while not recorded in the records of the
Partnership, have been made in order to prepare the financial
statements in accordance with generally accepted accounting
principles.
On August 7, 1991, management of the Partnership changed from a
calendar year end to a fiscal year end of March 31 for financial
reporting purposes. Accordingly, the Partnership's quarterly
periods end June 30, September 30 and December 31. The Operating
Partnerships, for financial reporting purposes, have a calendar
year. The Partnership, as well as the Operating Partnerships, have
a calendar year for income tax purposes.
ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results
could differ from those estimates.
INVESTMENTS IN OPERATING PARTNERSHIPS
The Partnership uses the equity method to account for its investment
in the Operating Partnerships in which it has invested (Note 4).
Under the equity method of accounting, the investment is carried at
cost and adjusted for the Partnership's share of the Operating
Partnerships' results of operations and by cash distributions
received. Equity in the loss of each Operating Partnership
allocated to the Partnership is not recognized to the extent that
the investment balance would become negative.
SYNDICATION COSTS
Public offering costs have been recorded as a direct reduction to
the capital accounts of the Limited Partners.
F-6
- -------------------------------------------------------------------------------
See the accompanying report letter.
<PAGE> 25
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
Notes To Financial Statements (Continued)
- -------------------------------------------------------------------------------
INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes and/or the recapture of the
Low-Income Housing Tax Credit benefits received, if any, are the
liability of the individual partners. The Partnership uses the
accrual method of accounting for tax purposes.
NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net loss per unit of limited partnership interest is calculated
based upon the weighted average number of units of limited
partnership interest (units) outstanding, which is 5,754 for the
years ending March 31, 1997, 1996, and 1995.
2. OPERATIONS
Century Pacific Tax Credit Housing Fund-II, a California limited
partnership, (the Partnership or CPTCHF-II), was formed on September
2, 1988 for the purpose of raising capital by offering and selling
limited partnership interests and then acquiring limited partnership
interests in partnerships (the Operating Partnerships) owning and
operating existing residential apartment rental properties (the
Properties).
The general partners of the Partnership are Century Pacific Capital
II Corporation, a California corporation (CPII), and Irwin Jay
Deutch, an individual (collectively, the general partners). The
general partners and affiliates of the general partners (the general
partners and affiliates) have interests in the Partnership and
receive compensation from the Partnership and the Operating
Partnerships (Note 3).
The Properties qualify for the Low-Income Housing Tax Credit
established by Section 42 of the Tax Reform Act of 1986 (the
Low-Income Housing Tax Credit). These properties are leveraged
low-income multifamily residential complexes and receive one or more
forms of assistance from federal, state or local governments, or
agencies (the Government Agencies).
In September 1988, the Partnership began raising capital from sales
of limited partnership interests, at $1,000 per unit, to limited
partners. The Partnership authorized the issuance of a maximum of
25,000 Partnership Units of which 5,754 were subscribed and issued.
The limited partnership interest offering closed as of December 31,
1989.
As of March 31, 1997, the Partnership has acquired limited
partnership interests of 90% in Washington Courts Limited
Partnership and 60% in Laurel-Clayton Limited Partnership, two
existing Operating Partnerships which own apartment rental
properties.
- -------------------------------------------------------------------------------
See the accompanying report letter.
<PAGE> 26
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
Notes To Financial Statements (Continued)
- -------------------------------------------------------------------------------
The Partnership is currently experiencing a liquidity problem as the
Partnership's Operating Partnerships have not achieved operating
results required to provide the Partnership with sufficient cash
distributions to fund the Partnership's administrative costs. As a
result of the foregoing, the Partnership has been dependent upon its
affiliates and the general partners for continued financial support
to meet its expenses. Though there can be no assurance, management
believes that affiliates and or the general partners, though not
required to do so, will continue to fund operations of the
Partnership and defer receipt of payment on management fees and
allocated overhead expenses. Unpaid management fees and allocated
overhead expenses will accrue for payment in future operating years.
Management believes that these factors do not permanently impair the
net carrying value of the Partnership's investment in the Operating
Partnerships.
3. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
OF THE GENERAL PARTNERS
The General Partners of the Partnership are CPII and Irwin Jay
Deutch. Century Pacific Placement Corporation (CPPC), an affiliate
of the general partners, served as the broker-dealer-manager for
sales of the limited partnership interests in the Partnership.
Century Pacific Realty Corporation (CPRC), an affiliate of CPII, is
a general partner in each of the Operating Partnerships.
The general partners have an aggregate one percent interest in the
Partnership. CPRC has a one-half percent interest in each of the
Operating Partnerships.
The general partners and affiliates receive compensation and
reimbursement of expenses from the Partnership, as set forth in the
limited partnership agreement, for their services in managing the
Partnership and its business. Pursuant to the partnership
agreement, the Partnership is required to pay CPII an annual
management fee for its services in connection with the management of
the affairs of the Partnership. The annual management fee is equal
to .5% of invested assets (as defined by the partnership agreement).
The general partners and affiliates also receive compensation and
reimbursement of expenses from the Operating Partnerships. This
compensation and reimbursement includes services provided to the
Partnership during its offering stage, acquisition stage and
operational stage.
- -------------------------------------------------------------------------------
See the accompanying report letter.
<PAGE> 27
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
Notes To Financial Statements (Continued)
- -------------------------------------------------------------------------------
The general partners and affiliates earned the following fees for
services provided to the Partnership and were entitled to
reimbursement for costs incurred by the general partners and
affiliates on behalf of the Partnership and the Operating
Partnerships for the years ended March 31, 1997, 1996 and 1995 as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------------
<S> <C> <C> <C>
Fees and reimbursement from the Partnership:
Reimbursement for overhead allocated from
Century Pacific Investment Corporation
(CPIC) $ 37,600 $ 37,600 $ 37,600
Partnership management fee (CPII) 136,106 132,097 132,814
------------------------------------------------------------------------------------
$173,706 $169,697 $170,414
====================================================================================
</TABLE>
At March 31, 1997 and 1996, amounts due to affiliates consist of
fees and certain general and administrative costs payable by the
Partnership to the general partners and affiliates totalling
$1,098,220 and $919,214, respectively.
At March 31, 1997 and 1996, CPII owed the Partnership for an
unsecured, noninterest bearing advance of $870 and $770,
respectively.
At March 31, 1997 and 1996, CPRC was owed $40,593 and $39,918,
respectively, for a noninterest bearing, demand, cash advance to
the Partnership.
The general partners may advance funds to the Partnership to fund
operating deficits, but are not obligated to do so. Such advances
shall be evidenced by a promissory note of a term no more than 12
months in length and at a rate of interest no lower than the prime
rate. All such loans shall be repaid prior to any distributions of
net cash. At March 31, 1997 and 1996, the Partnership had no
outstanding advances due to the general partners.
- -------------------------------------------------------------------------------
See the accompanying report letter.
<PAGE> 28
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
Notes To Financial Statements (Continued)
- -------------------------------------------------------------------------------
4. INVESTMENTS IN OPERATING PARTNERSHIPS
At March 31, 1997 and 1996, the Partnership owned limited
partnership interests in two Operating Partnerships, each of which
has invested in a Property.
Investments in Operating Partnerships consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------------------------------
<S> <C> <C>
Cash contributions to Operating Partnerships
to fund purchase of properties and
acquisition and organization costs $ 4,536,020 $ 4,536,020
Equity in net losses of Operating Partnerships (3,287,825) (3,140,953)
----------------------------------------------------------------------------------
$ 1,248,195 $ 1,395,067
==================================================================================
</TABLE>
The names and locations of the Properties in which the Operating
Partnerships hold beneficial interests are as follows:
NAME OF NAME AND
OPERATING PARTNERSHIP LOCATION OF PROPERTY
Washington Courts Limited Partnership Washington Courts
Chicago, Illinois
Laurel-Clayton Limited Partnership Plumley Village
Boston, Massachusetts
- -------------------------------------------------------------------------------
See the accompanying report letter.
<PAGE> 29
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
Notes To Financial Statements (Continued)
- -------------------------------------------------------------------------------
A summary of the combined balance sheet as of December 31, 1996 and
1995 and statements of operations of the aforementioned Operating
Partnerships for the years then ended follows:
<TABLE>
COMBINED BALANCE SHEET
<CAPTION>
ASSETS
1996 1995
--------------------------------
<S> <C> <C>
Cash $ 520,489 $ 304,030
Reserve for replacements 699,742 652,506
Land and buildings 19,130,953 19,352,591
Other assets 1,187,396 1,214,799
----------------------------------------------------------------------------------------------
$21,538,580 $21,523,926
==============================================================================================
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
1996 1995
--------------------------------
<S> <C> <C>
Notes payable $23,443,651 $23,026,415
Other liabilities 796,837 646,699
----------------------------------------------------------------------------------------------
24,240,488 23,673,114
Partners' equity (deficit) (2,701,908) (2,149,188)
----------------------------------------------------------------------------------------------
$21,538,580 $21,523,926
==============================================================================================
<CAPTION>
COMBINED STATEMENT OF OPERATIONS
1996 1995
--------------------------------
<S> <C> <C>
REVENUES
Rental income $5,209,890 $ 5,146,633
Other income 772,398 755,470
----------------------------------------------------------------------------------------------
TOTAL REVENUES 5,982,288 5,902,103
----------------------------------------------------------------------------------------------
EXPENSES
Utilities 846,866 792,073
Repairs and maintenance 1,257,706 1,601,491
Management fees 310,821 308,007
Other operating expenses 1,297,157 1,356,755
Interest 1,819,923 1,803,167
Depreciation and amortization 1,023,530 1,074,633
----------------------------------------------------------------------------------------------
TOTAL EXPENSES 6,556,003 6,936,126
----------------------------------------------------------------------------------------------
NET LOSS $ (573,715) $(1,034,023)
==============================================================================================
ALLOCATION OF LOSS
General partners and other limited partners $ (180,530) $ (342,014)
CPTCHF-II (393,185) (692,009)
----------------------------------------------------------------------------------------------
$ (573,715) $(1,034,023)
==============================================================================================
</TABLE>
- -------------------------------------------------------------------------------
See the accompanying report letter.
<PAGE> 30
CENTURY PACIFIC TAX CREDIT HOUSING FUND II
Notes To Financial Statements (Continued)
- -------------------------------------------------------------------------------
RESTRICTIVE COVENANTS AND AGREEMENTS INVOLVING THE OPERATING PARTNERSHIPS
The Federal Housing Administration (FHA) and the Housing and Urban
Development (HUD) exercise control over the projects through provisions of
Regulatory Agreements (the Agreements). The Agreements restrict the
Projects, without prior written approval from HUD, from encumbering,
acquiring, altering or disposing of land, buildings and equipment; using
the Property for any purpose other than the use originally intended;
engaging in any other business or activity; and paying distributions to
partners, compensation to officers or directors, or for any purpose other
than reasonable operating expenses. The Agreements also stipulate that
FHA and HUD shall control the rental rates, rate of return on investment
and method of operation.
In addition, the Agreements require Properties to make cash
deposits on a monthly basis into a reserve fund for replacements. The
respective mortgagees are the designated custodians of the reserve funds
and withdrawals can only be made with HUD approval.
- -------------------------------------------------------------------------------
See the accompanying report letter.
<PAGE> 31
Schedule III
------------
Page 1 of 1
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- -------------------------------------------------------------------------------
<TABLE>
REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING
PARTNERSHIPS IN WHICH CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 1996
<CAPTION>
INITIAL COST TO COST CAPITALIZED
OPERATING PARTNERSHIP SUBSEQUENT TO ACQUISITION
------------------------------ -------------------------
BUILDINGS AND BUILDING AND
DESCRIPTION<F1> ENCUMBRANCES<F2> LAND IMPROVEMENTS LAND IMPROVEMENTS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Washington Courts Apartments
Chicago, Illinois
103 Residential Units $ 5,054,562 $ 75,300 $ 1,720,666 $ -- $5,387,783
Plumley Village Apartment
Boston, Massachusetts
430 Residential Units 18,366,687 1,100,000 17,383,785 -- 1,553,736
--------------------------------------------------------------------------------
$23,421,249 $1,175,300 $19,104,451 $ -- $6,941,519
================================================================================
<CAPTION>
LIFE UPON
WHICH
GROSS AMOUNT AT WHICH ACCUMULATED DEPRECIATION
CARRIED AT CLOSE OF YEAR DEPRECIATION IN LATEST
--------------------------------- ------------- INCOME
BUILDINGS AND BUILDINGS AND DATE OF DATE STATEMENT IS
LAND IMPROVEMENTS TOTAL IMPROVEMENTS CONSTRUCTION ACQUIRED COMPUTED
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Washington Courts Apartments
Chicago, Illinois
103 Residential Units $ 75,300 $ 7,108,449 $ 7,183,749 $1,831,691 1991 1/89 27.5 years
Plumley Village Apartment
Boston, Massachusetts
430 Residential Units 1,100,000 18,937,521 20,037,521 6,258,626 1973 9/89 27.5 years
-------------------------------------------------------
$1,175,300 $26,045,970 $27,221,270 $8,090,317
=======================================================
See notes to schedule
</TABLE>
F-13
<PAGE> 32
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- -------------------------------------------------------------------------------
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH
CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 1996
NOTE 1 - DESCRIPTION OF PROPERTIES
- ----------------------------------
The Properties held by the Operating Partnerships in which CPTCHF-II has
invested are housing projects, primarily for families and elderly or
handicapped individuals of low and moderate income.
NOTE 2 - SCHEDULE OF ENCUMBRANCES
- ---------------------------------
<TABLE>
<CAPTION>
OPERATING PARTNERSHIP MORTGAGE RESIDUAL PURCHASE OTHER
NAME AND PROPERTY NAME NOTES NOTE NOTE NOTES TOTAL
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Washington Courts L/P
Washington Courts $ 5,054,562 $ -- $ -- $ -- $ 5,054,562
Laurel-Clayton L/P
Plumley Village 8,107,427 4,271,488 5,581,877 405,895 18,366,687
- ------------------------------------------------------------------------------------------------------------------------
$13,161,989 $4,271,488 $5,581,877 $405,895 $23,421,249
========================================================================================================================
</TABLE>
NOTE 3 - RECONCILIATION OF REAL ESTATE AND ACCUMULATED
- ------------------------------------------------------
DEPRECIATION
- ------------
<TABLE>
<CAPTION>
ACCUMULATED
COST DEPRECIATION
-----------------------------
<S> <C> <C>
Balance at December 31, 1993 $26,068,588 $5,012,918
Additions during year:
Depreciation -- 979,236
Improvements 189,446 --
----------- ----------
Balance at December 31, 1994 26,258,034 5,992,154
Additions during year:
Depreciation -- 1,074,633
Improvements 161,344 --
----------- ----------
Balance at December 31, 1995 26,419,378 7,066,787
Additions during year:
Depreciation -- 1,023,530
Improvements 801,892 --
----------- ----------
$27,221,270 $8,090,317
=========== ==========
</TABLE>
F-14
<PAGE> 33
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- -------------------------------------------------------------------------------
<TABLE>
MORTGAGE LOANS ON REAL ESTATE OF OPERATING
PARTNERSHIPS IN WHICH CPTCHF-II HAS
LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 1996
<CAPTION>
Schedule IV
-----------
Page 1 of 1
Monthly
Payments
to Maturity Original
Final Maturity (Net of Face Carrying
Description<F1> Interest Rate Date HUD Amount of Amount of
Subsidy) Mortgage Mortgage<F2>
- --------------- ------------- -------------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
First mortgages
assumed
by Operating
Partnerships:
Washington Courts
Limited Partnership
Washington Courts 9.25% 2031 $ 40,841 $ 5,165,400 $ 5,054,562
Laurel-Clayton Limited
Partnership
Plumley Village 8.5% 2012 77,965 10,635,000 8,107,427
-------- ----------- -----------
Total $118,806 $15,800,400 $13,161,989
======== =========== ===========
See notes to schedule
</TABLE>
F-15
<PAGE> 34
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- -------------------------------------------------------------------------------
NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL
ESTATE OF OPERATING PARTNERSHIPS IN WHICH
CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 1996
NOTE 1 - DESCRIPTION
-----------
Each Operating Partnership has invested in a Property.
Laurel-Clayton Limited Partnership assumed a mortgage loan
obligation from the seller of the Property. The mortgage loan
obligation is insured by the United States Department of Housing and
Urban Development and is secured by the land and buildings of the
Property.
Washington Courts Limited Partnership has obtained permanent
financing in the principal amount of $5,165,400 which is insured by
the Federal Housing Administration. The loan bears interest at
9.25% per annum. The note will be amortized over a period of 40
years. Prepayment is prohibited during the construction period and
for ten years from the date of completion of construction.
NOTE 2 - RECONCILIATION OF MORTGAGES
---------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1996
-----------------------------
MORTGAGE RESIDUAL
LOANS NOTES
-----------------------------
<S> <C> <C>
Balance at beginning of year $13,418,903 $4,047,488
Additions during year:
-- 224,000
Deductions during year:
Payments 256,914 --
----------- ----------
Balance at end of year $13,161,989 $4,271,488
=========== ==========
</TABLE>
F-16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 346
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,249,411
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,249,211
<CURRENT-LIABILITIES> 1,146,137
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 103,274
<TOTAL-LIABILITY-AND-EQUITY> 1,249,211
<SALES> 0
<TOTAL-REVENUES> 1,200
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 178,611
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (177,411)
<INCOME-TAX> 0
<INCOME-CONTINUING> (324,283)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (324,283)
<EPS-PRIMARY> (56)
<EPS-DILUTED> 0
</TABLE>
