<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, 1999
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-K 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).
Yes No X
----- -----
No documents are incorporated into the text by reference.
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 reference in Parts I through IV hereof. Capitalized terms
which are not defined herein have the same meaning as in the Prospectus.
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<C> <C>
PART I <S>
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 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>
<PAGE> 3
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 Operating Partnerships which owns the Properties. As a limited partner,
CPTCHF-II's liability for obligations of the Operating Partnerships is
limited to its investment. The Partnership made capital contributions to the
Operating Partnerships in amounts sufficient to pay the Operating
Partnerships' expenses and to reimburse the General Partners for their costs
incurred in forming the Operating Partnerships, if any, and acquiring the
Properties. For
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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, 1999, 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 receives 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
Percent -----------------------------
Property Date of Acquisition Paid
Name, Average Acquisition in Total at through
Location and Occupanty of Operating March 31, March 31,
Rental Units 1998 Interest Partnership 1999 1999
- --------------------- --------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Washington Courts 92% 5/1/89 90% $2,743,413 $2,743,413
Chicago, IL
103 Residential Units
Plumley Village 98% 8/1/89 60% 1,648,026 1,648,026
Boston, MA
430 Residential Units
$4,391,439 $4,391,439
========== ==========
<CAPTION>
December 31, 1998
-----------------------------------------------------------
Government
Mortgage Residual Purchase Other Assistance
Notes Note Note Note Program
----------- ---------- ---------- -------- -------------------
<S> <C> <C> <C> <C> <C>
Washington Courts $ 5,007,487 $--------- $--------- $------- HUD Insured
Chicago, IL Section 221(d)(4)
103 Residential Units IHDA HAP Contract
Plumley Village 7,572,225 5,895,924 5,393,880 405,895 HUD
Boston, MA Section 236
430 Residential Units Section B
$12,579,712 $5,895,924 $5,393,880 $405,895
=========== ========== ========== ========
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
-----------------
As of June 22, 1999, 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, 1999, 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 June 22, 1999 was
approximately 508, holding 5,754 units.
As of June 22, 1999, 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 1999 1998 1997 1996 1995
---------------------------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues 1,600 200 1,200 2,200 1,500
Operating Expenses (191,110) (182,183) (178,611) (175,115) (194,948)
Equity in Net Losses
of Operating Partnerships (318,696) (247,924) (146,872) (158,170) (226,083)
Net Loss (508,206) (429,907) (324,283) (331,085) (419,531)
Net Loss per Unit of
Limited Partnership Interest (88) (75) (56) (57) (72)
<CAPTION>
March 31,
--------------------------------------------------------------------------
FINANCIAL POSITION 1999 1998 1997 1996 1995
---------------------------- --------- ----------- ---------- ---------- ----------
Total Assets $ 684,322 $1,001,485 $1,249,411 $1,398,015 $1,555,203
========= ========== ========== ========== ==========
</TABLE>
6
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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 1998, 1997 and 1996
were $870,477, $860,539, and $861,187, respectively.
As of March 31, 1999, 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 1998, 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 1999 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 is to provide the funds
necessary for the Partnership to meet its administrative expenses and pay the
Partnerships 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, Ominbus Budget Reconciliation Act of 1987, Technical
- ----------------------------------------------------------------------------
and Miscellaneous Revenue Act of 1988, Ominbus Budget Reconciliation Act of
- ---------------------------------------------------------------------------
1989 and Ominbus Budget Reconciliation Act of 1990 and all subsequent tax
- -------------------------------------------------------------------------
acts.
- -----
The Partnership is organized as a limited partnership and is "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 Ominbus
Budget Reconciliation Act of 1989 and the Ominbus Budget Reconciliation Act
of 1990 and all subsequent tax acts (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, 1998.
1999 Compared to 1998
- ---------------------
For the fiscal year ended March 31, 1999, the Partnership recorded a net loss
of approximately $508,000, as compared to a net loss of approximately
$430,000 for the prior fiscal year. The increase in net loss is the result
of a increase in the Partnership's equity in net losses of the Operating
Partnerships of approximately $70,000 and a increase in the expenses of
approximately $8,000 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.
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 $319,000 from the Washington Courts Limited Partnership. In
the prior fiscal year, losses of approximately $248,000 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 only approximately $40,000 in the current calendar year.
The average occupancy level for Laurel-Clayton remained at 98% in both
calendar years, but Washington Court had a decrease to 92% occupancy level in
the current year. This decrease in occupancy level caused part of the small
increase in total rental revenue. The combined total expenses of the two
operating properties increased by approximately $110,000 in the current year
primarily due to an increase in repairs and maintenance and depreciation and
a decrease in other operating expenses.
1998 Compared To 1997
- ---------------------
For the fiscal year ended March 31, 1998, the Partnership recorded a net loss
of approximately $430,000, as compared to a net loss of approximately
$324,000 for the prior fiscal year. The increase in net loss in the result
of an increase in the Partnership's equity in net losses of the Operating
Partnerships of approximately $101,000 and an increase in the expenses of
approximately $3,500 for the current fiscal year. General and administrative
expenses, namely allocated administrative expenses and partnership
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management fees, continue each fiscal year to comprise an increasing portion of
the Partnership's net loss.
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
Partnership's losses in the current fiscal period consists of losses of
approximately $248,000 from the Washington Courts Limited Partnership. In
the prior fiscal year, losses of approximately $147,000 from the operations
of Washington Courts were 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 $144,000 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 of revenue, the combined total
expenses of the two operating properties decreased by approximately $147,000
in the current year primarily due to a decrease in repairs and maintenance.
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
Partnership's 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 were recorded. The carrying value of the Partnership's
investment in Laurel-Clayton was reduced to zero during fiscal 1993.
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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 of 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 that were completed in 1995 and no expenses were recorded for the
projects in 1996.
Inflation
- ---------
Inflation is not expected to have a material adverse impact on the
Partnership's operations during its period of ownership of the Properties.
Year 2000 Compliance
- --------------------
Background. Some computers, software, and other equipment include
programming code in which calendar year data is abbreviated to only two
digits. As a result of this design decision, some of these systems could
fail to operate or fail to produce correct results in "00" is interpreted to
mean 1900, rather than 2000. These problems are widely expected to increase
in frequency and severity as the year 2000 approaches, and are commonly
referred to as the "Millennium Bug" or "Year 2000 problem".
Assessment. The Year 2000 problem could affect computers, software and other
equipment used, operated, or maintained by the Company. Accordingly, the
Company is reviewing its internal computers, software, applications and
related equipment and its systems other than information technology systems
to ensure that they will be Year 2000 compliant. The Company believes that
its Year 2000 plan will be completed in all material respects prior to the
anticipated Year 2000 failure dates.
ITEM 8. FINANCIAL STATEMENTS
--------------------
The financial statements together with the report of the independent auditors
thereon are set forth on the pages indicated in ITEM 14.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
On April 15, 1999, the prior auditors, Novogradac & Company LLP, were
dismissed as auditors for the Partnership. The decision to change
accountants was approved by the Partnership's Board of Directors. Novogradac
& Company LLP's report on the Partnership's financial statements for the
years ended March 31, 1998, contained a modification as to uncertainty of the
Partnerships to continue as a going concern.
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Novogradac & Company LLP'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.
Effective April 15, 1999, 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, 1999.
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 58, 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 50, 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 53, 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, 1999, 1998, and 1997, CPII, a General
Partner of the Partnership, earned $144,440, $140,708, and $136,106,
respectively, of partnership management fees. During the fiscal years ended
March 31, 1999, 1998 and 1997, 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 1999, 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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<TABLE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) Exhibits - see the Exhibit Index at page 17 of this report.
<C> <S> <C>
(1) Financial Statements:
Independent Auditors' Report F-1
Balance Sheet as of March 31, 1999 and 1998 F-3
Statement of Partners' Equity for the Years Ended March 31,
1999, 1998, and 1997 F-4
Statement of Operations for the Years Ended March 31,
1999, 1998 and 1997 F-5
Statement of Cash Flows for the Years Ended March 31,
1999, 1998 and 1997 F-6
Notes to Financial Statements F-7
(2) Financial Statement Schedules:
Schedule III - Real Estate and Accumulated Depreciation of
Operating Partnerships in which CPTCHF-II has
Limited Partnership Interests F-14
Notes to Schedule III - Real Estate and Accumulated
Depreciation of Operating Partnerships in which
CPTCHF-II has Limited Partnership Interests F-15
Schedule IV - Mortgage Loans on Real Estate of Operating
Partnerships in which CPTCHF-II has Limited
Partnership Interests F-16
Notes to Schedule IV - Mortgage Loans on Real Estate of
Operating Partnerships in which CPTCHF-II has
Limited Partnership Interests F-17
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 did file with the Securities and Exchange Commission a
Current Report on Form 8-K during the year ending March 31, 1999.
</TABLE>
16
<PAGE> 17
EXHIBIT INDEX
These exhibits are numbered in accordance with the exhibit table of Item 601
of Regulation S-K.
<TABLE>
<CAPTION>
<S> <C>
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
Financial Statements of Washington Courts
(Equity Investment)
</TABLE>
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 amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
CENTURY PACIFIC TAX CREDIT HOUSING
FUND
Date: ------------------------------- ------------------------------------
By: Irwin Jay Deutch, as Managing
General Partner
and
Century Pacific Capital II
Corporation, as Corporate General
Partner and as attorney-in-fact for
all Investor Limited Partners
Date: ------------------------------- ------------------------------------
By: Irwin Jay Deutch, President
18
<PAGE> 19
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, 1999, and the related statements of
operations, 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 Century Pacific Tax Credit
Housing Fund - II as of March 31, 1999 and the results of its operations and
its 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 6 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 6. 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, 1998. In our
opinion the financial statement schedules present fairly, in all material
respects, the information required to be set forth therein.
St. Louis, Missouri
June 22, 1999
F-1
<PAGE> 20
REPORT OF INDEPENDENT AUDITORS'
To the Partners of
Century Pacific Tax Credit Housing Fund-II
We have audited the accompanying balance sheet of Century Pacific Tax Credit
Housing Fund-II (the "Partnership"), as of March 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 did
not audit the financial statements of Washington Courts Apartments and
Plumley Village Apartments, which statements reflect total assets and
revenues constituting 100 percent of the Operating Partnerships. Those
statements were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts included for
Washington Courts Apartments and Plumley Village Apartments, is based solely
on the report of the other auditors. The financial statements of Century
Pacific Tax Credit Housing Fund-II for the years ended March 31, 1997 and
1996 were audited by other auditors, whose reports dated May 30, 1997 and
June 13, 1996, respectively, included an explanatory paragraph describing
conditions that raised substantial doubt about the partnership'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, based on our audit and the report of the other auditors, 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, 1998, and the results of its operations, changes in
partners' equity (deficit) and cash flows for the year then ended in
conformity with generally accepted accounting principles.
F-2
<PAGE> 21
To the Partners of
Century Pacific Tax Credit Housing Fund-II
- ------------------------------------------------------------------------------
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 6 to the
financial statements, the Partnership's Operating Partnerships have suffered
recurring operating losses, have not provided sufficient cash distributions
and the Partnership has a net capital deficiency, which 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 6.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
We have also audited, from information audited by us and other auditors, the
related financial statement schedules listed in Item 14(b)(2) as of December
31, 1997. In our opinion, the financial statement schedules present fairly,
in all material respects, the information required to be set forth therein.
Atlanta, Georgia
June 15, 1998
F-3
<PAGE> 22
<TABLE>
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ---------------------------------------------------------------------------------------------------------------
BALANCE SHEET
ASSETS
<CAPTION>
MARCH 31,
---------------------------------------
1999 1998
---------------------------------------
<S> <C> <C>
Cash $ 1,876 $ 343
Advance to a general partner (Note 3) 871 871
Investments in operating partnerships (Note 4) 681,575 1,000,271
- ---------------------------------------------------------------------------------------------------------------
$ 684,322 $1,001,485
===============================================================================================================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses $ 8,300 $ 3,300
Due to affiliates (Note 3) 1,470,267 1,284,224
Loan payable - affiliate (Note 3) 40,594 40,594
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,519,161 1,328,118
- ---------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY
General partners (57,402) (52,320)
Limited partners, $1,000 stated value per unit,
25,000 units authorized, 5,754 units issued
and outstanding (777,437) (274,313)
- ---------------------------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY (834,839) (326,633)
- ---------------------------------------------------------------------------------------------------------------
$ 684,322 $1,001,485
===============================================================================================================
F-4
- ---------------------------------------------------------------------------------------------------------------
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 23
<TABLE>
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ---------------------------------------------------------------------------------------------------------------
STATEMENT OF PARTNERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-----------------------------------------------
<S> <C> <C> <C>
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1996 $(44,778) $ 472,335 $ 427,555
NET LOSS (3,243) (321,040) (324,283)
- ---------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1997 (48,021) 151,295 103,272
NET LOSS (4,299) (425,608) (429,907)
- ---------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1998 (52,320) (274,313) (326,635)
NET LOSS (5,082) (503,124) (508,206)
- ---------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1999 $ (57,402) $ (777,437) $ (834,841)
===============================================================================================================
PERCENTAGE INTEREST - MARCH 31, 1999 1% 99% 100%
===============================================================================================================
F-5
- ---------------------------------------------------------------------------------------------------------------
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 24
<TABLE>
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ---------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
--------------------------------------------------
1999 1998 1997
--------------------------------------------------
<S> <C> <C> <C>
REVENUES
Transfer fees $ 1,600 $ 200 $ 1,200
EXPENSES
Partnership management fee - affiliate (Note 3) 144,440 140,708 136,106
Allocated overhead expenses - affiliate (Note 3) 37,600 37,600 37,600
Other general and administrative expenses 9,070 3,875 4,905
- ---------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 191,110 182,183 178,611
- ---------------------------------------------------------------------------------------------------------------
LOSS BEFORE EQUITY IN NET LOSSES OF
OPERATING PARTNERSHIPS (189,510) (181,983) (177,411)
EQUITY IN NET LOSSES OF OPERATING
PARTNERSHIPS (NOTE 4) (318,696) (247,924) (146,872)
- ---------------------------------------------------------------------------------------------------------------
NET LOSS $(508,206) $(429,907) $(324,283)
===============================================================================================================
ALLOCATION OF NET LOSS
General partners $ (5,082) $ (4,299) $ (3,243)
Limited partners (503,124) (425,608) (321,040)
- ---------------------------------------------------------------------------------------------------------------
$(508,206) $(429,907) $(324,283)
===============================================================================================================
NET LOSS PER UNIT OF LIMITED PARTNERSHIP
INTEREST $ (88) $ (75) $ (56)
===============================================================================================================
AVERAGE NUMBER OF OUTSTANDING UNITS 5,754 5,754 5,754
===============================================================================================================
F-6
- ---------------------------------------------------------------------------------------------------------------
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 25
<TABLE>
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ---------------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
<CAPTION>
FOR THE YEARS ENDED MARCH 31,
---------------------------------------------------
1999 1998 1997
---------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(508,206) $(429,907) $(324,283)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Equity in net losses of operating partnerships 318,696 247,924 146,872
Change in assets and liabilities:
Increase in advance to a general partner -- (1) (100)
Increase (decrease) in accounts payable
and accrued expenses 5,000 (4,024) (4,002)
Increase in due to affiliates 186,043 186,004 179,006
Increase in loan payable - affiliate -- 1 675
- ---------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 1,533 (3) (1,832)
- ---------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 1,533 (3) (1,832)
CASH - BEGINNING OF YEAR 343 346 2,178
- ---------------------------------------------------------------------------------------------------------------
CASH - END OF YEAR $ 1,876 $ 343 $ 346
===============================================================================================================
F-7
- ---------------------------------------------------------------------------------------------------------------
See the accompanying notes to the financial statements.
</TABLE>
<PAGE> 26
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999, 1998 AND 1997
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
investments in the Operating Partnerships (Note 4). Under the
equity method of accounting, the investments are 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-8
- ------------------------------------------------------------------------------
<PAGE> 27
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, 1999, 1998, and 1997.
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.
F-9
- ------------------------------------------------------------------------------
<PAGE> 28
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
As of March 31, 1999, 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.
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
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.
F-10
- ------------------------------------------------------------------------------
<PAGE> 29
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, 1999, 1998 and 1997 as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------
<S> <C> <C> <C>
Fees and reimbursement from the Partnership:
Partnership management fee (CPII) $144,440 $140,708 $136,106
Reimbursement for overhead allocated from
Century Pacific Investment Corporation
(CPIC) 37,600 37,600 37,600
-------- -------- --------
$182,040 $178,308 $173,706
======== ======== ========
</TABLE>
At March 31, 1999 and 1998, amounts due to affiliates consist of
fees and certain general and administrative costs payable by the
Partnership to the general partners and affiliates totalling
$1,467,065 and $1,284,224, respectively.
At March 31, 1999 and 1998, CPII owed the Partnership for an
unsecured, noninterest bearing advance of $871.
At March 31, 1999 and 1998, CPRC was owed $40,594 for a
noninterest bearing, demand, cash advance to the Partnership.
At March 31, 1999, CPII was owed $3,202 for a noninterest
bearing, demand cash advance made during the current fiscal year
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, 1999 and 1998, the
Partnership had no outstanding advances due to the general
partners.
F-11
- ------------------------------------------------------------------------------
<PAGE> 30
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
4. INVESTMENTS IN OPERATING PARTNERSHIPS
At March 31, 1999 and 1998, 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>
1999 1998
------------------------------------
<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 (3,854,445) (3,535,749)
-------------------------------------------------------------------------------------------
$ 681,575 $ 1,000,271
===========================================================================================
</TABLE>
The names and locations of the Properties in which the Operating
Partnerships hold beneficial interests are as follows:
<TABLE>
<CAPTION>
NAME OF NAME AND
OPERATING PARTNERSHIP LOCATION OF PROPERTY
<S> <C>
Washington Courts Limited Partnership Washington Courts
Chicago, Illinois
Laurel-Clayton Limited Partnership Plumley Village
Boston, Massachusetts
</TABLE>
A summary of the combined balance sheet as of December 31, 1998
and 1997 and statements of operations of the aforementioned
Operating Partnerships for the years then ended follows:
<TABLE>
<CAPTION>
COMBINED BALANCE SHEET
ASSETS
1998 1997
------------------------------------
<S> <C> <C>
Cash $ 142,430 $ 631,703
Reserve for replacements 1,065,487 733,866
Land and buildings 18,770,286 19,060,724
Other assets 1,223,372 1,139,093
--------------------------------------------------------------------------------------------
$21,201,575 $21,565,386
============================================================================================
</TABLE>
F-12
- ------------------------------------------------------------------------------
<PAGE> 31
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
1998 1997
------------------------------------
<S> <C> <C>
Notes payable $24,275,411 $23,853,491
Other liabilities 749,915 910,768
--------------------------------------------------------------------------------------------
25,025,326 24,764,259
Partners' equity (deficit) (3,823,751) (3,198,873)
--------------------------------------------------------------------------------------------
$21,201,575 $21,565,386
============================================================================================
COMBINED STATEMENT OF OPERATIONS
<CAPTION>
1998 1997
------------------------------------
<S> <C> <C>
REVENUES
Rental income 5,168,701 5,354,267
Other income 804,812 577,812
--------------------------------------------------------------------------------------------
TOTAL REVENUES $ 5,973,513 $ 5,932,079
--------------------------------------------------------------------------------------------
EXPENSES
Utilities 813,115 815,616
Repairs and maintenance 1,315,176 1,140,101
Management fees 305,088 303,688
Other operating expenses 1,205,719 1,327,698
Interest 1,847,720 1,831,665
Depreciation and amortization 1,032,170 990,504
--------------------------------------------------------------------------------------------
TOTAL EXPENSES 6,518,988 6,409,272
--------------------------------------------------------------------------------------------
NET LOSS $ (545,475) $ (477,193)
============================================================================================
ALLOCATION OF LOSS
General partners and other limited partners (135,549) (143,158)
CPTCHF-II (409,926) (334,035)
--------------------------------------------------------------------------------------------
$ (545,475) $ (477,193)
============================================================================================
</TABLE>
F-13
- ------------------------------------------------------------------------------
<PAGE> 32
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
5. COMMITMENTS AND CONTINGENCIES
The Federal Housing Administration (FHA) and the Department of
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
Properties 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 the 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.
6. GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplates continuation of the Partnership as a going concern.
However, the Partnership's Operating Partnerships have not
achieved the operating results required to provide the
Partnership with sufficient cash distributions to fund the
Partnership's administrative costs. Additionally, the
Partnership has incurred allocated losses from all but one of its
Operating Partnerships to the extent of the Partnership's cash
contributions. As a result of the foregoing, the Partnership is
dependent upon the general partners and affiliates for continued
financial support.
Management maintains that the general partners and affiliates,
though not required to do so, will continue to fund operations by
deferring payment to related parties of allocated overhead
expenses, and by funding any Partnership operating costs. Unpaid
allocated overhead expenses will accrue and become payable when
the Operating Partnerships generate sufficient cash distributions
to the Partnership to cover such expenses. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
F-14
- ------------------------------------------------------------------------------
<PAGE> 33
<TABLE>
Schedule III
Page 1 Of 1
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------------------------------------------------
REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING
PARTNERSHIPS IN WHICH CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 1998
<CAPTION>
COST CAPITALIZED
INITIAL COST TO SUBSEQUENT
OPERATING PARTNERSHIP TO ACQUISITION
--------------------------------- ---------------------------------
ENCUMBRANCES BUILDINGS AND BUILDINGS AND
DESCRIPTION <F2> LAND IMPROVEMENTS LAND IMPROVEMENTS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Washington Courts Apartments
Chicago, Illinois
103 Residential Units $ 5,007,487 $ 75,300 $ 1,720,666 $ -- $5,419,675
Plumley Village Apartments
Boston, Massachusetts
430 Residential Units 19,267,924 1,100,000 17,383,785 -- 3,188,473
- ------------------------------------------------------------------------------------------------------------------------
$24,275,411 $1,175,300 $19,104,451 $ -- $8,608,148
========================================================================================================================
<CAPTION>
LIFE UPON
WHICH
GROSS AMOUNT AT WHICH ACCUMULATED DEPRECIATION
CARRIED AT CLOSE OF YEAR DEPRECIATION IN LATEST
-------------------------------------- ------------ INCOME
BUILDINGS BUILDINGS DATE OF DATE STATEMENT
LAND IMPROVEMENT TOTAL IMPROVEMENT CONSTRUCTION ACQUIRED IS COMPUTED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Washington Courts Apartments
Chicago, Illinois
103 Residential Units $ 75,300 $ 7,140,341 $ 7,215,641 $ 2,359,398 1991 1/89 27.5 years
Plumley Village Apartments
Boston, Massachusetts
430 Residential Units 1,100,000 20,572,258 21,672,258 7,758,215 1972 9/89 27.5 years
- ----------------------------------------------------------------------------------------------
$1,175,300 $27,712,599 $28,887,899 $10,117,613
==============================================================================================
See notes to schedule
F-14
</TABLE>
- ------------------------------------------------------------------------------
<PAGE> 34
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, 1998
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 $ 5,007,487 $ -- $ -- $ -- $ 5,007,487
Laurel-Clayton L/P
Plumley Village 7,572,225 5,895,924 5,393,880 405,895 19,267,924
- -----------------------------------------------------------------------------------------------------------------
$12,579,712 $5,895,924 $5,393,880 $405,895 $24,275,411
=================================================================================================================
</TABLE>
NOTE 3 - RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
------------------------------------
<S> <C> <C>
Balance at December 31, 1995 $26,419,378 $ 7,066,787
Additions during year:
Depreciation -- 1,023,530
Improvements 801,892 --
------------------------------------
Balance at December 31, 1996 27,221,270 8,090,317
Additions during year:
Depreciation -- 990,504
Improvements 920,275 --
------------------------------------
Balance at December 31, 1997 28,141,545 9,080,821
Additions during year:
Depreciation -- 1,036,792
Improvements 746,354 --
------------------------------------
Balance at December 31, 1998 $28,887,899 $10,117,613
====================================
</TABLE>
F-15
- ------------------------------------------------------------------------------
<PAGE> 35
<TABLE>
Schedule IV
-----------
Page 1 of 1
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ----------------------------------------------------------------------------------------------------------------------
MORTGAGE LOANS ON REAL ESTATE OF OPERATING
PARTNERSHIPS IN WHICH CPTCHF-II HAS
LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 1998
<CAPTION>
MONTHLY
FINAL PAYMENTS TO ORIGINAL CARRYING
MATURITY MATURITY (NET OF FACE AMOUNT AMOUNT OF
DESCRIPTION <F1> INTEREST RATE DATE HUD SUBSIDY) OF 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 $ 5,007,487
Laurel-Clayton Limited
Partnership
Plumley Village 8.5% 2012 23,015 10,635,000 7,572,225
--------------------------------------------------
Total $63,856 $15,800,400 $12,579,712
==================================================
See notes to schedule
F-16
</TABLE>
- ------------------------------------------------------------------------------
<PAGE> 36
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, 1998
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, 1998
-------------------------------------------
MORTGAGE RESIDUAL
LOANS NOTES
-------------------------------------------
<S> <C> <C>
Balance at beginning of year $12,884,235 $4,451,913
Additions during year:
Accrued interest -- 1,444,011
Deductions during year:
Payments 304,523 --
-------------------------------------------
$12,579,712 $5,895,924
===========================================
</TABLE>
F-17
- ------------------------------------------------------------------------------
<PAGE> 37
==============================================================================
- ------------------------------------------------------------------------------
WASHINGTON COURTS
LIMITED PARTNERSHIP
071-35593
FINANCIAL STATEMENTS
DECEMBER 31, 1998
- ------------------------------------------------------------------------------
==============================================================================
<PAGE> 38
<TABLE>
CONTENTS
- ------------------------------------------------------------------------------
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report 1
Balance Sheet 2 - 3
Statement Of Profit And Loss 4 - 7
Statement Of Partners' Equity 8
Statement Of Cash Flows 9 - 10
Notes To Financial Statements 11 - 14
Supporting Data Required By HUD 15 - 17
Independent Auditors' Report On Internal
Controls 18 - 19
Independent Auditors' Report On Compliance With
Specific Requirements Applicable To Major HUD
Programs 20
Independent Auditors' Report On Compliance With
Specific Requirements Applicable To Fair Housing
And Non-Discrimination 21
Schedule Of Findings And Questioned Costs 22 - 23
Auditors' Comments On Audit Resolution Matters Relating
To The HUD Programs 24
Mortgagor's Certification 25
Management Agent's Certification 26
Auditor's Transmittal Letter 27
</TABLE>
<PAGE> 39
S2300-020 INDEPENDENT AUDITORS' REPORT
To The Partners
Washington Courts Limited Partnership
Los Angeles, California
We have audited the accompanying balance sheet of Washington Courts Limited
Partnership, Project No. 071-35593, a limited partnership, as of December 31,
1998 and 1997, 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 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 Washington Courts 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 17 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 28, 1999 on our consideration of Washington Courts
Limited Partnership's internal controls and a report dated January 28, 1999
on its compliance with laws and regulations.
January 28, 1999
<PAGE> 40
<TABLE>
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ----------------------------------------------------------------------------------------------------------------------
BALANCE SHEET
PAGE 1 OF 2
ASSETS
<CAPTION>
DECEMBER 31,
------------------------------------------
1998 1997
------------------------------------------
<S> <C> <C>
CURRENT ASSETS
1120 Cash - operations $ 22,615 $ 148,343
1130 Tenant accounts receivable 2,378 15,110
1135 Accounts receivable - HUD -- 6,870
1190 Miscellaneous current assets 100 100
1200 Miscellaneous prepaid expenses 30,382 31,174
- ----------------------------------------------------------------------------------------------------------------------
1100T TOTAL CURRENT ASSETS 55,475 201,597
- ----------------------------------------------------------------------------------------------------------------------
DEPOSITS HELD IN TRUST - FUNDED
1191 Tenant deposits held in trust 12,800 13,683
- ----------------------------------------------------------------------------------------------------------------------
RESTRICTED DEPOSITS AND FUNDED RESERVES
1310 Escrow deposits 29,627 22,804
1320 Replacement reserve 64,524 72,078
- ----------------------------------------------------------------------------------------------------------------------
1300T TOTAL DEPOSITS 94,151 94,882
- ----------------------------------------------------------------------------------------------------------------------
FIXED ASSETS
1410 Land 75,300 75,300
1420 Buildings 7,066,695 7,048,175
1440 Building equipment - portable 8,061 --
1465 Office furniture and equipment 65,585 65,585
- ----------------------------------------------------------------------------------------------------------------------
1400T Total Fixed Assets 7,215,641 7,189,060
1495 Less: Accumulated depreciation 2,359,398 2,093,234
- ----------------------------------------------------------------------------------------------------------------------
1400N NET FIXED ASSETS 4,856,243 5,095,826
- ----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
1520 Intangible assets 558,807 577,790
- ----------------------------------------------------------------------------------------------------------------------
1000T TOTAL ASSETS $5,577,476 $5,983,778
======================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements Page 2
<PAGE> 41
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ----------------------------------------------------------------------------------------------------------------------
BALANCE SHEET
PAGE 2 OF 2
LIABILITIES
<CAPTION>
DECEMBER 31,
------------------------------------------
1998 1997
------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
2110 Accounts payable - operations $ 19,504 $ 64,320
2113 Accounts payable - entity 68,269 69,876
2120 Accrued wages payable 3,357 4,205
2123 Accrued management fee payable 20,744 5,612
2131 Accrued interest payable - first mortgage 38,599 34,350
2150 Accrued property taxes 35,328 38,120
2170 Mortgage payable - first mortgage (short-term) 28,282 25,793
2190 Miscellaneous current liabilities 6,410 2,509
2210 Prepaid revenue 767 --
- ----------------------------------------------------------------------------------------------------------------------
2122T TOTAL CURRENT LIABILITIES 221,260 244,785
- ----------------------------------------------------------------------------------------------------------------------
DEPOSIT AND PREPAYMENT LIABILITIES
2191 Tenant deposits held in trust (contra) 12,800 12,618
- ----------------------------------------------------------------------------------------------------------------------
LONG-TERM LIABILITIES
2320 Mortgage payable - first mortgage 4,979,205 5,007,290
- ----------------------------------------------------------------------------------------------------------------------
2000T TOTAL LIABILITIES 5,213,265 5,264,693
PARTNERS' EQUITY
3130 Partners' equity 364,211 719,085
- ----------------------------------------------------------------------------------------------------------------------
2033T TOTAL LIABILITIES AND PARTNERS' EQUITY $5,577,476 $5,983,778
======================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements Page 3
</TABLE>
<PAGE> 42
<TABLE>
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- -----------------------------------------------------------------------------------------------------------------------
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED DECEMBER 31, 1998
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Rent Revenue - Gross Potential 5120 $ 217,046
--------------------------------------------------------------------------------------
Tenant Assistance Payments 5121 $ 815,521
--------------------------------------------------------------------------------------
Rent Revenue - Stores and Commercial 5140 $
--------------------------------------------------------------------------------------
Garage and Parking Spaces 5170 $
--------------------------------------------------------------------------------------
Flexible Subsidy Revenue 5180 $
RENT --------------------------------------------------------------------------------------
REVENUE Miscellaneous Rent Revenue 5190 $
5100 --------------------------------------------------------------------------------------
Excess Rent 5191 $
--------------------------------------------------------------------------------------
Rent Revenue/Insurance 5192 $
--------------------------------------------------------------------------------------
Special Claims Revenue 5193 $
--------------------------------------------------------------------------------------
Retained Excess Income 5194 $
----------------------------------------------------------------------------------------------------
TOTAL RENT REVENUE 5100T $ 1,032,567
- ------------------------------------------------------------------------------------------------------------------------
Apartments 5220 $ 107,608
--------------------------------------------------------------------------------------
Stores and Commercial 5240 $
--------------------------------------------------------------------------------------
Rental Concessions 5250 $
VACANCIES --------------------------------------------------------------------------------------
5200 Garage and Parking Space 5270 $
--------------------------------------------------------------------------------------
Miscellaneous 5290 $
----------------------------------------------------------------------------------------------------
TOTAL VACANCIES 5200T $ 107,608
----------------------------------------------------------------------------------------------------
NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 924,959
- ------------------------------------------------------------------------------------------------------------------------
Nursing Homes/Assisted Living/Board and
5300 Care/Other Elderly Care/
----------------------------------------------------------------------------------------------------
Coop/ and Other Revenues 5300 $
- ------------------------------------------------------------------------------------------------------------------------
Financial Revenue - Project Operations 5410 $ 919
--------------------------------------------------------------------------------------
Revenue from Investments - Residual Receipts 5430 $
FINANCIAL --------------------------------------------------------------------------------------
REVENUE Revenue from Investments - Replacement Reserve 5440 $ 1,630
5400 --------------------------------------------------------------------------------------
Revenue from Investments - Miscellaneous 5490 $ 190
----------------------------------------------------------------------------------------------------
TOTAL FINANCIAL REVENUE 5400T $ 2,739
- ------------------------------------------------------------------------------------------------------------------------
Laundry and Vending Revenue 5910 $
--------------------------------------------------------------------------------------
Tenant Charges 5920 $ 590
--------------------------------------------------------------------------------------
OTHER Interest Reduction Payments Revenue 5945 $ 1,595
REVENUE --------------------------------------------------------------------------------------
5900 Miscellaneous Revenue 5990 $
----------------------------------------------------------------------------------------------------
TOTAL OTHER REVENUE 5900T $ 2,185
----------------------------------------------------------------------------------------------------
TOTAL REVENUE 5000T $ 929,883
- ------------------------------------------------------------------------------------------------------------------------
Conventions and Meetings 6203 $
--------------------------------------------------------------------------------------
Management Consultants 6204 $
--------------------------------------------------------------------------------------
Advertising and Marketing 6210 $ 509
--------------------------------------------------------------------------------------
Other Renting Expenses 6250 $ 588
--------------------------------------------------------------------------------------
Office Salaries 6310 $ 11,617
--------------------------------------------------------------------------------------
Office Expenses 6311 $ 5,788
--------------------------------------------------------------------------------------
Office or Model Apartment Rent 6312 $
--------------------------------------------------------------------------------------
Management Fee 6320 $ 47,068
ADMINISTRATIVE --------------------------------------------------------------------------------------
EXPENSES Manager or Superintendent Salaries 6330 $ 11,868
6200/6300 --------------------------------------------------------------------------------------
Administrative Rent Free Unit 6331 $
--------------------------------------------------------------------------------------
Legal Expense - Project 6340 $ 5,945
--------------------------------------------------------------------------------------
Audit Expense 6350 $ 7,761
--------------------------------------------------------------------------------------
Bookkeeping Fees/Accounting Services 6351 $ 3,011
--------------------------------------------------------------------------------------
Bad Debts 6370 $ 15,110
--------------------------------------------------------------------------------------
Miscellaneous Administrative Expenses 6390 $ 7,838
----------------------------------------------------------------------------------------------------
TOTAL ADMINISTRATIVE EXPENSES 6263T $ 117,103
- ------------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
--------------------------------------------------------------------------------------
Electricity 6450 $ 3,110
UTILITIES --------------------------------------------------------------------------------------
EXPENSE Water 6451 $ 14,226
6400 --------------------------------------------------------------------------------------
Gas 6452 $ 65,998
--------------------------------------------------------------------------------------
Sewer 6453 $ 7,894
----------------------------------------------------------------------------------------------------
TOTAL UTILITIES EXPENSE 6400T $ 91,228
----------------------------------------------------------------------------------------------------
TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 208,331
- ------------------------------------------------------------------------------------------------------------------------
Page 1 of 2
- ------------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 4
<PAGE> 43
Project Name: Washington Courts Limited Partnership
- ------------------------------------------------------------------------------------------------------------------------
BALANCE CARRIED FORWARD $ 208,331
- ------------------------------------------------------------------------------------------------------------------------
Payroll 6510 $ 30,288
--------------------------------------------------------------------------------------
Supplies 6515 $ 86,406
--------------------------------------------------------------------------------------
Contracts 6520 $ 50,830
--------------------------------------------------------------------------------------
Operating and Maintenance Rent Free Unit 6521 $
--------------------------------------------------------------------------------------
Garbage and Trash Removal 6525 $ 14,332
OPERATING --------------------------------------------------------------------------------------
MAINTENANCE Security Payroll/Contract 6530 $ 11,489
EXPENSES --------------------------------------------------------------------------------------
6500 Security Rent Free Unit 6531 $
--------------------------------------------------------------------------------------
Heating/Cooling Repairs and Maintenance 6546 $ 2,987
--------------------------------------------------------------------------------------
Snow Removal 6548 $
--------------------------------------------------------------------------------------
Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 819
--------------------------------------------------------------------------------------
Miscellaneous Operating and Maintenance Expenses 6590 $ 21,325
----------------------------------------------------------------------------------------------------
TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 218,476
- ------------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 32,506
--------------------------------------------------------------------------------------
Payroll Taxes (Project's Share) 6711 $ 5,640
--------------------------------------------------------------------------------------
Property and Liability Insurance (Hazard) 6720 $ 14,569
TAXES --------------------------------------------------------------------------------------
AND Fidelity Bond Insurance 6721 $
INSURANCE --------------------------------------------------------------------------------------
6700 Workmen's Compensation 6722 $ 886
--------------------------------------------------------------------------------------
Health Insurance and Other Employee Benefits 6723 $ 6,287
--------------------------------------------------------------------------------------
Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,587
----------------------------------------------------------------------------------------------------
TOTAL TAXES AND INSURANCE 6700T $ 61,475
- ------------------------------------------------------------------------------------------------------------------------
Interest on Mortgage Payable 6820 $ 464,361
--------------------------------------------------------------------------------------
Interest on Notes Payable (Long-Term) 6830 $
FINANCIAL --------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable (Short-Term) 6840 $
6800 --------------------------------------------------------------------------------------
Mortgage Insurance Premium/Service Charge 6850 $ 27,194
--------------------------------------------------------------------------------------
Miscellaneous Financial Expenses 6890 $
----------------------------------------------------------------------------------------------------
TOTAL FINANCIAL EXPENSES 6800T $ 491,555
- ------------------------------------------------------------------------------------------------------------------------
Nursing Homes/ Assisted Living/ Board and Care/ Other
6900 ----------------------------------------------------------------------------------------------------
Elderly Care Expenses 6900 $
----------------------------------------------------------------------------------------------------
TOTAL COST OF OPERATIONS BEFORE DEPRECIATION
AND AMORTIZATION 6000T $ 979,837
- ------------------------------------------------------------------------------------------------------------------------
PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ (49,954)
----------------------------------------------------------------------------------------------------
Depreciation Expense 6600 $ 266,164
--------------------------------------------------------------------------------------
Amortization Expense 6610 $ 18,984
----------------------------------------------------------------------------------------------------
TOTAL DEPRECIATION AND AMORTIZATION $ 285,148
----------------------------------------------------------------------------------------------------
OPERATING PROFIT OR (LOSS) 5060N $ (335,102)
- ------------------------------------------------------------------------------------------------------------------------
Officer's Salaries 7110 $
--------------------------------------------------------------------------------------
Legal Expenses 7120 $
--------------------------------------------------------------------------------------
Federal, State, and Other Income Taxes 7130 $
CORPORATE OR --------------------------------------------------------------------------------------
MORTGAGOR Interest Income 7140 $
ENTITY --------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable 7141 $
7100 --------------------------------------------------------------------------------------
Interest on Mortgage Payable 7142 $
--------------------------------------------------------------------------------------
Other Expenses (Asset supervisory fees) 7190 $ 19,772
----------------------------------------------------------------------------------------------------
NET ENTITY EXPENSES 7100T $ 19,772
----------------------------------------------------------------------------------------------------
PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (354,874)
- ------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense
sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or more,
attach a separate schedule describing or explaining the miscellaneous income or expense.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
PART II
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1. Total mortgage principal payments required during the audit year (12 monthly payments).
This applies to all direct loans and HUD-held and fully insured mortgages. Any HUD
approved second mortgages should be included in the figures. (Account S1000-010) $ 25,793
- ------------------------------------------------------------------------------------------------------------------------
2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account,
as required by the Regulatory Agreement even if payments may be temporarily suspended
or reduced. (Account S1000-020) $ 20,093
- ------------------------------------------------------------------------------------------------------------------------
3. Replacement Reserve or Residual Receipts releases which are included as expense items
on this Profit and Loss Statement. (Account S1000-030) $ 21,217
- ------------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are
included as expense items on this Profit and Loss Statement. (Account S1000-040) $
- ------------------------------------------------------------------------------------------------------------------------
Page 2 of 2
</TABLE>
- ------------------------------------------------------------------------------
See the accompanying notes to financial statements Page 5
<PAGE> 44
<TABLE>
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ------------------------------------------------------------------------------------------------------------------------
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Rent Revenue - Gross Potential 5120 $ 244,975
--------------------------------------------------------------------------------------
Tenant Assistance Payments 5121 $ 817,588
--------------------------------------------------------------------------------------
Rent Revenue - Stores and Commercial 5140 $
--------------------------------------------------------------------------------------
Garage and Parking Spaces 5170 $
--------------------------------------------------------------------------------------
Flexible Subsidy Revenue 5180 $
RENT --------------------------------------------------------------------------------------
REVENUE Miscellaneous Rent Revenue 5190 $
5100 --------------------------------------------------------------------------------------
Excess Rent 5191 $
--------------------------------------------------------------------------------------
Rent Revenue/Insurance 5192 $
--------------------------------------------------------------------------------------
Special Claims Revenue 5193 $
--------------------------------------------------------------------------------------
Retained Excess Income 5194 $
----------------------------------------------------------------------------------------------------
TOTAL RENT REVENUE 5100T $ 1,062,563
- ------------------------------------------------------------------------------------------------------------------------
Apartments 5220 $ 84,065
--------------------------------------------------------------------------------------
Stores and Commercial 5240 $
--------------------------------------------------------------------------------------
Rental Concessions 5250 $
VACANCIES --------------------------------------------------------------------------------------
5200 Garage and Parking Space 5270 $
--------------------------------------------------------------------------------------
Miscellaneous 5290 $
----------------------------------------------------------------------------------------------------
TOTAL VACANCIES 5200T $ 84,065
----------------------------------------------------------------------------------------------------
NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 978,498
- ------------------------------------------------------------------------------------------------------------------------
Nursing Homes/Assisted Living/Board and Care/Other
5300 Elderly Care/
----------------------------------------------------------------------------------------------------
Coop/ and Other Revenues 5300 $
- ------------------------------------------------------------------------------------------------------------------------
Financial Revenue - Project Operations 5410 $ 4,754
--------------------------------------------------------------------------------------
Revenue from Investments - Residual Receipts 5430 $
FINANCIAL --------------------------------------------------------------------------------------
REVENUE Revenue from Investments - Replacement Reserve 5440 $ 1,475
5400 --------------------------------------------------------------------------------------
Revenue from Investments - Miscellaneous 5490 $
----------------------------------------------------------------------------------------------------
TOTAL FINANCIAL REVENUE 5400T $ 6,229
- ------------------------------------------------------------------------------------------------------------------------
Laundry and Vending Revenue 5910 $ 1,204
--------------------------------------------------------------------------------------
Tenant Charges 5920 $ 3,330
--------------------------------------------------------------------------------------
Interest Reduction Payments Revenue 5945 $
OTHER --------------------------------------------------------------------------------------
REVENUE Miscellaneous Revenue (Schedule) 5990 $ 48,864
5900 ----------------------------------------------------------------------------------------------------
TOTAL OTHER REVENUE 5900T $ 53,398
----------------------------------------------------------------------------------------------------
TOTAL REVENUE 5000T $ 1,038,125
- ------------------------------------------------------------------------------------------------------------------------
Conventions and Meetings 6203 $
--------------------------------------------------------------------------------------
Management Consultants 6204 $
--------------------------------------------------------------------------------------
Advertising and Marketing 6210 $ 285
--------------------------------------------------------------------------------------
Other Renting Expenses 6250 $
--------------------------------------------------------------------------------------
Office Salaries 6310 $ 17,046
--------------------------------------------------------------------------------------
Office Expenses 6311 $ 1,326
--------------------------------------------------------------------------------------
Office or Model Apartment Rent 6312 $
--------------------------------------------------------------------------------------
Management Fee 6320 $ 53,731
ADMINISTRATIVE --------------------------------------------------------------------------------------
EXPENSES Manager or Superintendent Salaries 6330 $
6200/6300 --------------------------------------------------------------------------------------
Administrative Rent Free Unit 6331 $
--------------------------------------------------------------------------------------
Legal Expense - Project 6340 $ 22,656
--------------------------------------------------------------------------------------
Audit Expense - Project 6350 $ 7,700
--------------------------------------------------------------------------------------
Bookkeeping Fees/Accounting Services 6351 $ 1,843
--------------------------------------------------------------------------------------
Bad Debts 6370 $ 20,977
--------------------------------------------------------------------------------------
Miscellaneous Administrative Expenses (Schedule) 6390 $ 33,301
----------------------------------------------------------------------------------------------------
TOTAL ADMINISTRATIVE EXPENSES 6263T $ 158,865
- ------------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
--------------------------------------------------------------------------------------
Electricity (Light and Misc. Power) 6450 $ 7,584
UTILITIES --------------------------------------------------------------------------------------
EXPENSE Water 6451 $ 28,080
6400 --------------------------------------------------------------------------------------
Gas 6452 $ 100,684
--------------------------------------------------------------------------------------
Sewer 6453 $
----------------------------------------------------------------------------------------------------
TOTAL UTILITIES EXPENSE 6400T $ 136,348
----------------------------------------------------------------------------------------------------
TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 295,213
- ------------------------------------------------------------------------------------------------------------------------
Page 1 of 2
- ------------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 6
<PAGE> 45
Project Name: Washington Courts Limited Partnership
- ------------------------------------------------------------------------------------------------------------------------
BALANCE CARRIED FORWARD $ 295,213
- ------------------------------------------------------------------------------------------------------------------------
Payroll 6510 $ 41,311
--------------------------------------------------------------------------------------
Supplies 6515 $ 32,086
--------------------------------------------------------------------------------------
Contracts 6520 $ 40,457
--------------------------------------------------------------------------------------
Operating and Maintenance Rent Free Unit 6521 $
--------------------------------------------------------------------------------------
Garbage and Trash Removal 6525 $ 16,636
OPERATING --------------------------------------------------------------------------------------
MAINTENANCE Security Payroll/Contract 6530 $ 3,220
EXPENSES --------------------------------------------------------------------------------------
6500 Security Rent Free Unit 6531 $
--------------------------------------------------------------------------------------
Heating/Cooling Repairs and Maintenance 6546 $ 19,583
--------------------------------------------------------------------------------------
Snow Removal 6548 $ 294
--------------------------------------------------------------------------------------
Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 488
--------------------------------------------------------------------------------------
Miscellaneous Operating and Maintenance Expenses 6590 $ 2,563
----------------------------------------------------------------------------------------------------
TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 156,638
- ------------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 37,220
--------------------------------------------------------------------------------------
Payroll Taxes (Project's Share) 6711 $ 6,386
--------------------------------------------------------------------------------------
Property and Liability Insurance (Hazard) 6720 $ 15,008
TAXES --------------------------------------------------------------------------------------
AND Fidelity Bond Insurance 6721 $
INSURANCE --------------------------------------------------------------------------------------
6700 Workmen's Compensation 6722 $ 2,168
--------------------------------------------------------------------------------------
Health Insurance and Other Employee Benefits 6723 $ 7,432
--------------------------------------------------------------------------------------
Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,274
----------------------------------------------------------------------------------------------------
TOTAL TAXES AND INSURANCE 6700T $ 69,488
- ------------------------------------------------------------------------------------------------------------------------
Interest on Mortgage Payable 6820 $
--------------------------------------------------------------------------------------
Interest on Notes Payable (Long-Term) 6830 $ 466,566
FINANCIAL --------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable (Short-Term) 6840 $
6800 --------------------------------------------------------------------------------------
Mortgage Insurance Premium/Service Charge 6850 $ 25,267
--------------------------------------------------------------------------------------
Miscellaneous Financial Expenses 6890 $ 18,085
----------------------------------------------------------------------------------------------------
TOTAL FINANCIAL EXPENSES 6800T $ 509,918
- ------------------------------------------------------------------------------------------------------------------------
Nursing Homes/ Assisted Living/ Board and Care/ Other
6900 ----------------------------------------------------------------------------------------------------
Elderly Care Expenses 6900 $
- ------------------------------------------------------------------------------------------------------------------------
TOTAL COST OF OPERATIONS BEFORE DEPRECIATION
AND AMORTIZATION 6000T $ 1,031,257
----------------------------------------------------------------------------------------------------
PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ 6,868
----------------------------------------------------------------------------------------------------
Depreciation Expense 6600 $ 261,542
--------------------------------------------------------------------------------------
Amortization Expense 6610 $
----------------------------------------------------------------------------------------------------
TOTAL DEPRECIATION AND AMORTIZATION $ 261,542
----------------------------------------------------------------------------------------------------
OPERATING PROFIT OR (LOSS) 5060N $ (254,674)
- ------------------------------------------------------------------------------------------------------------------------
Officer's Salaries 7110 $
--------------------------------------------------------------------------------------
Legal Expenses 7120 $
--------------------------------------------------------------------------------------
Federal, State, and Other Income Taxes 7130 $
CORPORATE OR --------------------------------------------------------------------------------------
MORTGAGOR Interest Income 7140 $
ENTITY --------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable 7141 $
7100 --------------------------------------------------------------------------------------
Interest on Mortgage Payable 7142 $
--------------------------------------------------------------------------------------
Other Expenses 7190 $ 20,797
----------------------------------------------------------------------------------------------------
NET ENTITY EXPENSES 7100T $ 20,797
----------------------------------------------------------------------------------------------------
PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (275,471)
- ------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense
sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or more,
attach a separate schedule describing or explaining the miscellaneous income or expense.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
PART II
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1. Total mortgage principal payments required during the audit year (12 monthly payments).
This applies to all direct loans and HUD-held and fully insured mortgages. Any HUD approved
second mortgages should be included in the figures. (Account S1000-010) $ 21,479
- ------------------------------------------------------------------------------------------------------------------------
2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account,
as required by the Regulatory Agreement even if payments may be temporarily suspended
or reduced. (Account S1000-020) $ 18,414
- ------------------------------------------------------------------------------------------------------------------------
3. Replacement Reserve or Residual Receipts releases which are included as expense items
on this Profit and Loss Statement. (Account S1000-030) $ --
- ------------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are
included as expense items on this Profit and Loss Statement. (Account S1000-040) $ --
- ------------------------------------------------------------------------------------------------------------------------
Page 2 of 2
</TABLE>
- ------------------------------------------------------------------------------
See the accompanying notes to financial statements Page 7
<PAGE> 46
<TABLE>
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ---------------------------------------------------------------------------------------------------------
STATEMENT OF PARTNERS' EQUITY
<CAPTION>
FOR THE YEARS
ENDED DECEMBER 31,
-----------------------------
1998 1997
-----------------------------
<S> <C> <C>
S1100-010 BEGINNING OF YEAR $ 719,085 $1,014,328
3250 NET LOSS (354,874) (275,471)
Distributions -- (19,772)
- ---------------------------------------------------------------------------------------------------------
3130 END OF YEAR $ 364,211 $ 719,085
=========================================================================================================
</TABLE>
- ------------------------------------------------------------------------------
See the accompanying notes to financial statements Page 8
<PAGE> 47
<TABLE>
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- --------------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
PAGE 1 OF 2
<CAPTION>
FOR THE YEARS
ENDED DECEMBER 31,
--------------------------
ACCOUNT 1998 1997
--------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
S1200-010 Rental receipts $ 945,328 $ 958,685
S1200-020 Interest receipts 2,739 6,229
S1200-030 Other operating receipts 2,185 53,398
- --------------------------------------------------------------------------------------------------------------
S1200-040 Total Receipts 950,252 1,018,312
- --------------------------------------------------------------------------------------------------------------
Disbursements:
S1200-050 Administrative 98,694 88,043
S1200-070 Management fee 31,936 53,327
S1200-090 Utilities 86,102 136,348
S1200-100 Salaries and wages 54,621 --
S1200-110 Operating and maintenance 182,086 126,918
S1200-120 Real estate taxes 35,298 36,305
S1200-140 Property insurance 22,537 24,118
S1200-150 Miscellaneous taxes and insurance 5,640 7,660
S1200-160 Tenant security deposits (1,065) (194)
S1200-180 Interest on mortgages 460,112 466,746
S1200-210 Mortgage insurance premium (MIP) 27,194 25,267
S1200-220 Miscellaneous financial -- 125
- --------------------------------------------------------------------------------------------------------------
S1200-230 Total Disbursements 1,003,155 964,663
- --------------------------------------------------------------------------------------------------------------
S1200-240 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (52,903) 53,649
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
S1200-245 Net (deposits to) withdrawals from the
mortgage escrow account (6,823) 5,712
S1200-250 Net (deposits to) withdrawals from the
reserve for replacement account 7,554 (19,889)
S1200-330 Net purchases of fixed assets (26,581) (5,311)
- --------------------------------------------------------------------------------------------------------------
S1200-350 NET CASH USED IN INVESTING ACTIVITIES (25,850) (19,488)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
S1200-360 Mortgage principal payments (25,596) (21,479)
S1200-450 Other financing activities -- 298
S1200-455 Entity/Construction financing activities:
S1200-456 Administrative fee paid to general
partner S1200-457 (21,379) (39,544)
- --------------------------------------------------------------------------------------------------------------
S1200-460 NET CASH USED IN FINANCING ACTIVITIES (46,975) (60,725)
- --------------------------------------------------------------------------------------------------------------
S1200-470 NET DECREASE IN CASH AND CASH EQUIVALENTS (125,728) (26,564)
S1200-480 BEGINNING OF PERIOD CASH 148,343 174,907
- --------------------------------------------------------------------------------------------------------------
S1200T END OF PERIOD CASH $ 22,615 $ 148,343
==============================================================================================================
- --------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements Page 9
<PAGE> 48
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- --------------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
PAGE 2 OF 2
<CAPTION>
FOR THE YEARS
ENDED DECEMBER 31,
--------------------------
ACCOUNT 1998 1997
--------------------------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES
3250 Net loss $ (354,874) $ (275,471)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
6600 Depreciation 266,164 261,543
6610 Amortization 18,984 18,984
Change in assets and liabilities:
S1200-490 Decrease in tenant accounts
receivable 12,732 1,773
S1200-500 (Increase) decrease in accounts
receivable - other 6,870 (786)
S1200-510 Decrease in accrued receivable -- 177
S1200-520 Decrease in prepaid expenses 792 490
S1200-530 (Increase) decrease in cash restricted
for tenant security deposits 883 (157)
S1200-540 Increase (decrease) in accounts payable (44,816) 26,973
S1200-560 Increase in accrued liabilities 15,392 --
S1200-570 Increase in accrued interest payable 4,249 --
S1200-580 Increase in tenant security deposits
held in trust 182 351
S1200-590 Increase in prepaid revenue 767 --
S1200-605 Increase in entity/construction
liability accounts
S1200-606 Administrative fees paid to general
partner S1200-457 19,772 19,772
- --------------------------------------------------------------------------------------------------------------
S1200-610 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (52,903) $ 53,649
==============================================================================================================
</TABLE>
- ------------------------------------------------------------------------------
See the accompanying notes to financial statements Page 10
<PAGE> 49
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(S3100-010)
ORGANIZATION (S3100-010)
The Partnership is organized as a limited partnership formed April 6,
1988 to acquire an interest in real property located in Chicago,
Illinois and to construct and operate thereon an apartment complex of
103 units under Section 221(d)(4) of the National Housing Act. Such
projects are regulated by the U.S. Department of Housing and Urban
Development (HUD) and the Illinois Housing Development Authority
(IDHA) as to rent charges and operating methods. The regulatory
agreements limit annual distributions of net operating receipts to
"surplus cash" available at the end of each year. There was no
available "surplus cash" at December 31, 1998.
The following significant accounting policies have been followed in
the preparation of the financial statements:
Management uses estimates and assumptions in preparing
financial statements. Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities, and the reported revenues
and expenses.
The Partnership provides an allowance for doubtful accounts
equal to the estimated collection losses that will be incurred
in collection of all receivables. The estimated losses are
based on a review of the current status of the existing
receivables. No allowance for doubtful accounts was provided
for at December 31, 1998 or 1997 as none was deemed necessary
by management.
Depreciation is provided using primarily the straight-line
method over the estimated useful lives of the assets ranging
from seven to twenty-seven and a half years.
The replacement reserve can only be used for improvements to
buildings upon prior approval of HUD.
- ------------------------------------------------------------------------------
Page 11
<PAGE> 50
WASHINGTON COURTS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
Deferred loan costs consist of fees for obtaining the HUD
insured mortgage loan and are being amortized using the
straight-line method over the life of the mortgage loan.
Low income housing credit fees are amortized over ten years.
Income or loss of the Partnership is allocated 1.005% to the general
partners and 98.995% to the limited partners. No income tax
provision has been included in the financial statements since income
or loss of the Partnership is required to be reported by the partners
on their respective income tax returns. No adjustment of financial
statement loss to tax loss is required.
2. OTHER ASSETS (S3100-X3X) (S3100-240)
Other assets consist of:
<TABLE>
<CAPTION>
1998 1997
--------------------------
<S> <C> <C>
Loan costs, less amortization $556,754 $ --
Low income housing credit fees,
less amortization 2,053 --
--------------------------
$558,807 $ --
==========================
</TABLE>
3. MORTGAGE PAYABLE (S3100-050)
The 9.25% mortgage note payable is insured by HUD and is payable in
monthly installments of $40,841 (including principal and interest)
through February 2031. The note is secured by a first deed of trust
on real estate.
The scheduled maturities of the mortgage payable at December 31, 1998
are as follows: (S3100-x1x)
<TABLE>
<CAPTION>
YEAR ACCOUNT AMOUNT
----------------------------------------------------------------------
<S> <C> <C>
1999 S3100-060 $ 28,282
2000 S3100-070 31,013
2001 S3100-080 34,007
2002 S3100-090 37,289
2003 S3100-100 40,575
Thereafter S3100-110 4,836,321
----------------------------------------------------------------------
$5,007,487
======================================================================
</TABLE>
- ------------------------------------------------------------------------------
Page 12
<PAGE> 51
WASHINGTON COURTS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
4. COMMITMENTS (S3100-X3X) (S3100-240)
The partnership has entered into regulatory agreements with HUD and
IHDA which regulate, among other things, the rents which may be
charged for apartment units in the Project, prohibit the sale of the
Project without HUD and IHDA consent, limit the annual distribution
of cash flow to the partners and otherwise regulate the relationship
between the Partnership, HUD and IHDA
Pursuant to an agreement with HUD, under Section 8 of the Housing
Assistance Payment Program, the Partnership is entitled to receive
housing assistance payments on behalf of qualified tenants. The term
of the agreement is for a maximum of 15 years. The Partnership
cannot sell of otherwise substantially liquidate its assets during
each period that the agreement for housing assistance program with
HUD is in existence without their approval.
5. RELATED PARTY TRANSACTIONS (S3100-200)
INCENTIVE MANAGEMENT FEE
Commencing in 1990, the Managing General Partner will receive from
Permissible Sources a non-cumulative incentive management fee equal
to the lesser of (i) 10% of the gross income of the Partnership for
such fiscal year less the management fee paid or payable in respect
of such fiscal year or (ii) seventy percent (70%) of the amount of
the Partnership's Available Cash remaining after payment of the
Preferred Distribution, the Administration Fee, and repayment of any
Operating Deficit Advances made to the Partnership.
For its services in administering the Local Affairs of the
Partnership within the state, including, without limitation,
coordinating the activities of the Partnership relating to HUD, the
lender and the agency, and overseeing local compliance with
applicable regulations, the Partnership shall be required to pay the
local general partners from Permissible Sources an annual
Administrative Fee of $19,772 beginning in 1990. A portion of the
Administrative Fee equal to one percent (1%) of the gross income of
the Partnership shall be payable each year from the Partnership's
Available Cash (to the extent that such Available Cash constitutes
Permissible Sources remaining after payment of the Preferred
Distribution). The balance of the Administration Fee shall be
payable from available cash (to the extent that such Available Cash
constitutes a Permissible Source) remaining after full payment of the
Preferred Distribution and repayment of any operating deficit
advances, such payment to be made dollar-for-dollar with payments of
the Preferred Distribution (plus unpaid amounts thereof accruing from
prior taxable years) until one of such fees is paid in full, with any
remainder of such Available Cash applied to any balance of the other
such fee. The Partnership owes the Managing General Partner $68,269
and $69,876 at December 31, 1998 and 1997, respectively.
- ------------------------------------------------------------------------------
Page 13
<PAGE> 52
WASHINGTON COURTS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
The Investor Limited Partner will, beginning in 1989, receive from
Permissible Sources an annual cumulative cash distribution (the
"Annual Preferred Distribution") of $39,545. Beginning in 1990, a
portion of the Annual Preferred Distribution equal to one percent
(1%) of the annual gross income of the Partnership (the "Guaranteed
Portion") shall be distributed to the Investor Limited Partner from
Permissible Sources without regard to Partnership income. An amount
of the Annual Preferred Distribution equal to $19,772 (the "Priority
Portion"), reduced by the Guaranteed Portion payable for such year,
shall be payable from the Partnership's Available Cash (to the
Permissible Source) after payment of the Primary Portion of the
Administration Fee and repayment of any outstanding Operating Deficit
Advances, such payment to be made dollar-for-dollar with repayments
of the Administration Fee (other than the Primary Portion thereof)
until one of such items is paid in full, with any remainder of such
Available Cash applied to any balance of the other such item. Any
unpaid amount of the Priority Portion with respect to any year after
1989 shall accrue, without interest, and be distributable to the
Investor Limited Partner from Available Cash (to the extent that such
Available Cash constitutes a Permissible Source) after payment of the
Primary Portion of the Administration Fee and repayment of any
outstanding Operating Deficit Advances, such payment to be made
dollar-for-dollar with payments of the Administration Fee (other than
the Primary Portion thereof) until one of such items is paid in full,
with any remainder of such Available Cash (to the extent that such
Available Cash constitutes a Permissible Source) applied to any
balance of the other such item. Any remaining amounts of the Annual
Preferred Distribution after 1989, including any unpaid amount of the
Priority Portion, shall be distributable to the Investor Limited
Partner, without interest, from cash available for distribution from
Capital Transactions. The remaining unpaid balance at December 31,
1998 amounted to $228,785.
MANAGEMENT FEE (S3100-230)
The apartment project was managed by a corporation which is a general
partner for the first four months of the year and received a fee of
5.55% of rents collected. Century Pacific Management Corporation, an
affiliate of the general partner, took over management on May 1, 1998
and receives a fee of 5.55% of rents collected. The management fee
was $47,068 in 1998 and $53,731 in 1997. Management fees payable at
December 31, 1998 and 1997 are $20,744 and $5,612, respectively.
S3100-210 COMPANY NAME Century Pacific Realty Corporation
--------------------------------------
S3100-220 AMOUNT RECEIVED $21,379
--------------------------------------
S3100-210 COMPANY NAME Century Pacific Management Corporation
--------------------------------------
S3100-220 AMOUNT RECEIVED $15,000
--------------------------------------
S3100-210 COMPANY NAME Shorebank Development Corporation
--------------------------------------
S3100-220 AMOUNT RECEIVED $16,936
--------------------------------------
- ------------------------------------------------------------------------------
Page 14
<PAGE> 53
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ------------------------------------------------------------------------------
SUPPORTING DATA REQUIRED BY HUD
DECEMBER 31, 1998
REPLACEMENT RESERVE
In accordance with the provisions of the regulatory agreement, restricted
cash is held by WMF/Huntoon, Paige & Assoc. to be used for replacement of
property with the approval of HUD as follows:
<TABLE>
<C> <S> <C>
1320P Balance at beginning of year $ 72,078
1320DT Total monthly deposits 20,093
1320ODT Other deposits 1,630
1320OD-010 Interest
1320OD-020 $1,630
1320WT Approved withdrawals (29,277)
-------------
1320 Balance at end of year, confirmed
by mortgagee $ 64,524
=============
</TABLE>
- ------------------------------------------------------------------------------
Page 15
<PAGE> 54
COMPUTATION OF SURPLUS CASH,
DISTRIBUTIONS AND RESIDUAL
RECEIPTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
Washington Courts Limited Partnership 12/31/98 071-35593
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PART A - COMPUTE SURPLUS CASH
- -------------------------------------------------------------------------------------------------------------------------
CASH
- -------------------------------------------------------------------------------------------------------------------------
1. Cash (Accounts 1120, 1170, 1191 minus Account 2105) (S1300-010) $ 35,415
- ----------------------------------------------------------------------------------------------------------
2. Tenant subsidy due for period covered by financial statement (1135) $
- ----------------------------------------------------------------------------------------------------------
3. Other (describe) (S1300-030) $
- -------------------------------------------------------------------------------------------------------------------------
(a) TOTAL CASH (Add Lines 1, 2, and 3) (S1300-040) $ 35,415
- -------------------------------------------------------------------------------------------------------------------------
CURRENT OBLIGATIONS
- -------------------------------------------------------------------------------------------------------------------------
4. Accrued mortgage interest payable (S1300-050) $ 38,599
- ----------------------------------------------------------------------------------------------------------
5. Delinquent mortgage principal payments (S1300-060) $
- ----------------------------------------------------------------------------------------------------------
6. Delinquent deposits to reserve for replacements (S1300-070) $
- ----------------------------------------------------------------------------------------------------------
7. Accounts payable - 30 days (S1300-075) $ 25,914
- ----------------------------------------------------------------------------------------------------------
8. Loans and notes payable (due within 30 days) (S1300-080) $
- ----------------------------------------------------------------------------------------------------------
9. Deficient tax insurance or MIP escrow deposits (S1300-090) $
- ----------------------------------------------------------------------------------------------------------
10. Accrued expenses (not escrowed) (S1300-100) $ 24,101
- ----------------------------------------------------------------------------------------------------------
11. Prepaid revenue (2210) $ 767
- ----------------------------------------------------------------------------------------------------------
12. Tenant security deposits liability (2191) $ 12,800
- ----------------------------------------------------------------------------------------------------------
13. Other current obligations (Describe) (S1300-110) $
- -------------------------------------------------------------------------------------------------------------------------
(b) TOTAL CURRENT OBLIGATIONS (Add Lines 4 through 13) (S1300-140) $ 102,181
- -------------------------------------------------------------------------------------------------------------------------
(c) SURPLUS CASH (DEFICIENCY) [Line (a) minus Line (b)] (S1300-150) $ (66,766)
- -------------------------------------------------------------------------------------------------------------------------
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS
- -------------------------------------------------------------------------------------------------------------------------
1. Surplus Cash $
- -------------------------------------------------------------------------------------------------------------------------
LIMITED DIVIDEND PROJECTS
- -------------------------------------------------------------------------------------------------------------------------
2a. Annual distribution earned during fiscal period covered
by the statement (S1300-160) $
- ----------------------------------------------------------------------------------------------------------
2b. Distribution accrued and unpaid as of the end of the prior
fiscal period (S1300-170) $
- ----------------------------------------------------------------------------------------------------------
2c. Distributions and entity expenses paid during fiscal period
covered by statement (S1300-180) $
- ----------------------------------------------------------------------------------------------------------
3. Distribution earned but unpaid (Line 2a plus 2b minus 2c) (S1300-190) $
- -------------------------------------------------------------------------------------------------------------------------
4. Amount available for distribution during next fiscal period (S1300-200) $
- -------------------------------------------------------------------------------------------------------------------------
5. Deposit due residual receipts (S1300-210) $
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------------------------------
Page 16
<PAGE> 55
<TABLE>
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- --------------------------------------------------------------------------------------------------------------------------
SUPPORTING DATA REQUIRED BY HUD (CONTINUED)
DECEMBER 31, 1998
<CAPTION>
ASSETS
----------------------------------------------------------------------
BALANCE BALANCE
JANUARY 1, DECEMBER 31,
1998 ADDITIONS DEDUCTIONS 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1410 Land $ 75,300 $ -- $ -- $ 75,300
1420 Buildings 7,048,175 18,520 -- 7,066,695
1440 Building equipment
portable -- 8,061 -- 8,061
1465 Office furniture
and equipment 65,585 -- -- 65,585
- --------------------------------------------------------------------------------------------------------------------------
TOTAL $7,189,060 $26,581 $ -- $7,215,641
==========================================================================================================================
<CAPTION>
ACCUMULATED DEPRECIATION
----------------------------------------------------------------- NET
BALANCE BALANCE BOOK VALUE
JANUARY 1, CURRENT DECEMBER 31, DECEMBER 31,
1998 PROVISIONS DEDUCTIONS 1998 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1410 Land $ -- $ -- $ -- $ -- $ 75,300
1420 Buildings 2,049,185 258,942 -- 2,308,127 4,758,568
1440 Building equipment
portable -- 1,152 -- 1,152 6,909
1465 Office furniture
and equipment 44,049 6,070 -- 50,119 15,466
- --------------------------------------------------------------------------------------------------------------------------
TOTAL $2,093,234 $266,164 $ -- $2,359,398 $4,856,243
==========================================================================================================================
- --------------------------------------------------------------------------------------------------------------------------
Page 17
</TABLE>
<PAGE> 56
S2200-020 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS
To The Partners
Washington Courts Limited Partnership
Los Angeles, California
We have audited the financial statements of Washington Courts Limited
Partnership as of and for the year ended December 31, 1998, and have issued
our report thereon dated January 28, 1999. We have also audited Washington
Courts Limited Partnership's compliance with requirements applicable to
HUD-assisted programs and have issued our reports thereon dated January 28,
1999.
We conducted our audits in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller
General of the United States and the Consolidated Audit Guide for Audits of
HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban
Development, Office of the Inspector General. Those standards and the Guide
require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement and
about whether Washington Courts Limited Partnership complied with laws and
regulations, noncompliance with which would be material to a major
HUD-assisted program.
In planning and performing our audits, we obtained an understanding of the
design of relevant internal controls and determined whether they had been
placed in operation, and we assessed control risk in order to determine our
auditing procedures for the purpose of expressing our opinions on the
financial statements of Washington Courts Limited Partnership and on its
compliance with specific requirements applicable to its major HUD-assisted
programs and to report on the internal control structure in accordance with
the provisions of the Guide and not to provide any assurance on the internal
control structure.
Page 18
<PAGE> 57
To The Partners
Washington Courts Limited Partnership
- ------------------------------------------------------------------------------
The management of Washington Courts Limited Partnership is responsible for
establishing and maintaining internal controls. In fulfilling this
responsibility, estimates and judgments by management are required to assess
the expected benefits and related costs of internal controls. The objectives
of internal controls are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from
unauthorized use or disposition and that transactions are executed in
accordance with management authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted
accounting principles and that HUD-assisted programs are managed in
compliance with applicable laws and regulations. Because of inherent
limitations in any internal controls, errors, irregularities or instances of
noncompliance may nevertheless occur and not be detected. Also, projection
of any evaluation of the structure to future periods is subject to the risk
that procedures may become inadequate because of changes in conditions or
that the effectiveness of the design and operation of policies and procedures
may deteriorate.
We performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of internal controls that we
considered relevant to preventing or detecting material noncompliance with
specific requirements applicable to Washington Courts Limited Partnership's
major HUD-assisted programs. Our procedures were less in scope than would be
necessary to render an opinion on internal control. Accordingly, we do not
express such an opinion.
Our consideration of internal controls would not necessarily disclose all
matters in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that errors or irregularities in amounts that would be
material in relation to the financial statements being audited or that
noncompliance with laws and regulations that would be material to a
HUD-assisted program may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We
noted no matters involving the internal control structure and its operations
that we consider to be material weaknesses as defined above.
This report is intended solely for the information and use of management and
the Department of Housing and Urban Development and is not intended to be and
should not be used by anyone other than these specified parties.
January 28, 1999
- ------------------------------------------------------------------------------
Page 19
<PAGE> 58
S2300-020 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS
To The Partners
Washington Courts Limited Partnership
Los Angeles, California
We have audited the financial statements of Washington Courts Limited
Partnership as of and for the year ended December 31, 1998 and have issued
our report thereon dated January 28, 1999. In addition, we have audited
Washington Courts Limited Partnership's compliance with the specific program
requirements governing federal financial reports, mortgage status,
replacement reserve, security deposits, cash receipts and disbursements,
tenant application eligibility and recertification and management functions
that are applicable to each of its major HUD-assisted programs for the year
ended December 31, 1998. The management of Washington Courts Limited
Partnership is responsible for compliance with those requirements. Our
responsibility is to express an opinion on compliance with those requirements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General
of the United States, and the Consolidated Audit Guide for Audits of HUD
Programs (the "Guide") issued by the U.S. Department of Housing and Urban
Development, Office of Inspector General. Those standards and the Guide
require that we plan and perform the audit to obtain reasonable assurance
about whether material noncompliance with the requirements referred to above
occurred. An audit includes examining, on a test basis, evidence about
Washington Courts Limited Partnership's compliance with those requirements.
We believe that our audit provides a reasonable basis for our opinion.
The results of our audit procedures disclosed immaterial instances of
noncompliance with the requirements referred to above, which are described in
the accompanying Schedule of Findings and Questioned Costs. We considered
those instances of noncompliance in forming our opinion on compliance, which
is expressed in the following paragraph.
In our opinion, Washington Courts Limited Partnership complied, in all
material respects, with the requirements described above that are applicable
to each of its HUD-assisted programs for the year ended December 31, 1998.
This report is intended solely for the information and use of management and
the Department of Housing and Urban Development and is not intended to be and
should not be used by anyone other than these specified parties.
January 28, 1999
Page 20
<PAGE> 59
S2500-020
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION
To The Partners
Washington Courts Limited Partnership
Los Angeles, California
We have audited the financial statements of Washington Courts Limited
Partnership as of and for the year ended December 31, 1998, and have issued
our report thereon dated January 28, 1999.
We have applied procedures to test Washington Courts Limited Partnership's
compliance with Fair Housing and Non-Discrimination requirements applicable
to its HUD-assisted programs, for the year ended December 31, 1998.
Our procedures were limited to the applicable compliance requirements
described in the Consolidated Audit Guide for Audits of HUD Programs issued
by the U.S. Department of Housing and Urban Development, Office of Inspector
General. Our procedures were substantially less in scope than an audit, the
objective of which would be the expression of an opinion on Washington Courts
Limited Partnership's compliance with Fair Housing and Non-Discrimination
requirements. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended solely for the information and use of management and
the Department of Housing and Urban Development and is not intended to be and
should not be used by anyone other than these specified parties.
January 28, 1999
Page 21
<PAGE> 60
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ------------------------------------------------------------------------------
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (S2700-X1X)
SECURITY DEPOSIT ACCOUNT
S2700-010 * STATEMENT OF CONDITION - Security Deposit account is not
labeled "Security Deposits".
S2700-020 * CRITERIA - Security Deposit account should be labeled
"Security Deposits."
S2700-030 * EFFECT - Potential for inappropriate placement or
withdrawal of funds from the account.
S2700-040 * CAUSE - When current management took over and set up a new
account the account was not labeled "Security Deposits."
S2700-050 * RECOMMENDATION - Management should have the account labeled
"Security Deposits."
S2700-065 * AMOUNT OF QUESTIONED COSTS - N/A
ABC REPORTS
S2700-010 * STATEMENT OF CONDITION - ABC monthly reports are not being
filed as required by HUD.
S2700-020 * CRITERIA - Monthly ABC reports are required to be filed
with HUD.
S2700-030 * EFFECT - Project is not in compliance with HUD and could
suffer penalties as a result.
S2700-040 * CAUSE - Current management is not filing reports due to
information not being readily available.
S2700-050 * RECOMMENDATION - Management should take necessary steps to
obtain the information on a timely basis and begin filing
the reports immediately.
S2700-065 * AMOUNT OF QUESTIONED COSTS - N/A
- ------------------------------------------------------------------------------
Page 22
<PAGE> 61
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ------------------------------------------------------------------------------
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
TENANT FILES
S2700-010 * STATEMENT OF CONDITIONS - Upon examination of tenant files,
it was noted in one file that.
a) A move-in inspection form was not located.
b) Application included in file was not
signed.
c) Security deposit is greater that tenant
deposit.
S2700-020 * CRITERIA - Tenant files should include all proper
information at all times.
S2700-030 * EFFECTS - a) Tenant file is not complete and not in
compliance with HUD requirements.
b) Tenant file is not complete and not in
compliance with HUD requirements.
c) Security deposit account is potentially
underfunded.
S2700-040 * CAUSES - a) Move-in inspection form was not completed
at move in.
b) Tenant did not sign application.
c) Full payment was not received from tenant
upon tenant moving in.
S2700-050 RECOMMENDATIONS -
a) Management should implement procedures to
ensure move-in inspection forms are filled
out for each new tenant.
b) Property manager should have tenant sign
application immediately.
c) The proper security deposit amount should
be determined and collected from the
tenant.
S2700-065 * AMOUNT OF QUESTIONED COSTS N/A
- ------------------------------------------------------------------------------
Page 23
<PAGE> 62
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ------------------------------------------------------------------------------
AUDITORS' COMMENTS ON AUDIT RESOLUTION
MATTERS RELATING TO THE HUD PROGRAMS (S2800-X1X)
S2800-010 NARRATIVE
The chart of accounts used by the project is not in
accordance with the requirements of HUD.
S2800-020 STATUS
CLEARED
S2800-030 REPORTING PERIOD
December 31, 1997
S2800-010 NARRATIVE
A physical inspection of the property was performed by the
mortgagee in September 1997. The inspection noted certain
repairs needing immediate attention. As of the date of
this report, Project management has not responded to the
mortgagee addressing the deficiencies.
S2800-020 STATUS
CLEARED
S2800-030 REPORTING PERIOD
December 31, 1997
- ------------------------------------------------------------------------------
Page 24
<PAGE> 63
S2900-010 MORTGAGOR'S CERTIFICATION
We hereby certify that we have examined the accompanying financial statements
and supplemental data of Washington Courts Limited Partnership and, to the
best of our knowledge and belief, the same is complete and accurate.
S2900-020 Name of Signatory #1 Century Pacific Realty Corporation
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*S2900-030 Name of Signatory #2 (if required)
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* For all owning entities other than a sole proprietor or a limited
partnership, this field is required.
S2900-040 Auditee Telephone Number
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S2900-050 Date of Certification
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Signature Date
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Signature Date
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<PAGE> 64
(S3000-010) MANAGEMENT AGENT'S CERTIFICATION
We hereby certify that we have examined the accompanying financial statements
and supplemental data of Washington Courts Limited Partnership and, to the
best of our knowledge and belief, the same is complete and accurate.
Century Pacific Management Corporation
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Name of Managing Agent (S3000-020) Date
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Name of Signatory (S3000-030)
95-4625437
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Management Agent TIN (S3000-040)
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Name of Individual (i.e., Property Manager)
(S3000-050)
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<PAGE> 65
AUDITOR'S TRANSMITTAL LETTER
S3200-010 Audit Firm Rubin, Brown, Gornstein & Co. LLP
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S3200-020 Lead Auditor First Name Lawrence
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S3200-030 Lead Auditor Middle Name Edward
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S3200-040 Lead Auditor Last Name Rubin
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S3200-050 Auditor Street Address Line 1 230 South Bemiston Avenue
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S3200-060 Auditor Street Address Line 2
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S3200-070 Auditor City St. Louis
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S3200-080 Auditor State Missouri
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S3200-090 Auditor Zip Code 63105
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S3200-100 Auditor Zip Code Extension
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S3200-110 Auditor Telephone Number (314) 727-8150
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S3200-120 Auditor Firm TIN 43-0765316
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S3200-130 Date of Submission
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