June 30, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Boston Financial Qualified Housing Tax Credits L.P. IV
Form 10-K Annual Report for Year Ended March 31, 1998
File Number 0-19765
Gentlemen:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, there is filed herewith one copy of the subject report.
Very truly yours,
\s\Dianne Groark
Dianne Groark
Assistant Controller
QH410K-K
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 Commission file number
March 31, 1998 0-19765
- ------------------------- ----------------------
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(Exact name of registrant as specified in its charter)
Massachusetts 04-3044617
- ---------------------- -------------------
(State of organization) (I.R.S. Employer
Identification No.)
101 Arch Street, 16th Floor
Boston, Massachusetts 02110-1106
- -------------------------------------- -------------
(Address of Principal executive office) (Zip Code)
Registrant's telephone number, including area code 617/439-3911
------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
-------------------------------------
(Title of Class)
100,000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
State the aggregate sales price of partnership units held by nonaffiliates of
the registrant.
$67,653,000 as of March 31, 1998
--------------------------------
<PAGE>
K-19
DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT
IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS: (2) ANY PROXY OR
INFORMATION STATEMENT: AND (3) ANY PROSPECTUS FILED PURSUANT TO RULE 424(b) OR
(c) UNDER THE SECURITIES ACT OF 1933.
Part of Report on
Form 10-K into
Which the Document
Documents incorporated by reference is Incorporated
- ----------------------------------- ---------------
Post-effective Amendments No. 1 through 3 to the
Registration Statement, File # 33-26394 Part I, Item 1
Acquisition Reports Part I, Item 1
Prospectus - Sections Entitled:
"Estimated Use of Proceeds" Part III, Item 13
"Management Compensation and Fees" Part III, Item 13
"Profits and Losses for Tax Purposes, Tax Credits
and Cash Distributions" Part III, Item 13
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED MARCH 31, 1998
TABLE OF CONTENTS
-----------------
PART I Page No.
Item 1 Business K-3
Item 2 Properties K-6
Item 3 Legal Proceedings K-13
Item 4 Submission of Matters to a
Vote of Security Holders K-13
PART II
Item 5 Market for the Registrant's Units
and Related Security Holder Matters K-13
Item 6 Selected Financial Data K-14
Item 7 Management's Discussion and Analysis of
Financial Condition and Results
of Operations K-15
Item 8 Financial Statements and Supplementary Data K-18
Item 9 Changes in and Disagreements on Accounting
and Financial Disclosure K-18
PART III
Item 10 Directors and Executive Officers
of the Registrant K-19
Item 11 Management Remuneration K-21
Item 12 Security Ownership of Certain Beneficial
Owners and Management K-21
Item 13 Certain Relationships and Related
Transactions K-21
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K K-24
SIGNATURES K-25
- ----------
<PAGE>
PART I
Item 1. Business
Boston Financial Qualified Housing Tax Credits L.P. IV (the "Partnership") is a
limited partnership formed on March 30, 1989 under the Revised Uniform Limited
Partnership Act of the Commonwealth of Massachusetts. The Partnership's
partnership agreement ("Partnership Agreement") authorized the sale of up to
100,000 units of Limited Partnership Interest ("Units") at $1,000 per Unit,
adjusted for certain discounts. The Partnership raised $67,653,000 ("Gross
Proceeds"), net of discounts of $390,000, through the sale of 68,043 Units. Such
amounts exclude five unregistered Units previously acquired for $5,000 by the
Initial Limited Partner, which is also one of the General Partners. The offering
of Units terminated on January 31, 1990.
The Partnership is engaged solely in the business of real estate investment.
Affiliates of the Managing General Partner, BF Leawood, Inc. and BF Texas
Limited Partnership,assumed the Local General Partner interests in Leawood Manor
Associates, L.P. ("Leawood") and twelve other Local Limited Partnerships in
which the Partnership invests (the "Texas Partnerships"), respectively. As a
result, the Partnership is deemed to have control over Leawood and the Texas
Partnerships, and the accompanying financial statements are presented in
combined form to conform with the required accounting treatment under generally
accepted accounting principles. However, this change only affects the
presentation of the Partnership's operating results, not the business of the
Partnership. Accordingly, a presentation of information about industry segments
is not applicable and would not be material to an understanding of the
Partnership's business taken as a whole. As described more fully under Item 7
- - Management's Discussion and Analysis of Financial Condition and Results of
Operations, the Managing General Partner has transferred all of the assets of
ten Texas Partnerships subject to their liabilities to unaffiliated entities.
Therefore, as of March 31, 1998, two of the Texas Partnerships are presented in
combined form.
The Partnership has invested as a limited partner in other limited partnerships
("Local Limited Partnerships") which own and operate residential apartment
complexes ("Properties"), most of which benefit from some form of federal, state
or local assistance programs and all of which qualify for the low-income housing
tax credits ("Tax Credits") added to the Internal Revenue Code (the "Code") by
the Tax Reform Act of 1986. The investment objectives of the Partnership include
the following: (i) to provide current tax benefits in the form of Tax Credits
which qualified limited partners may use to offset their federal income tax
liability; (ii) to preserve and protect the Partnership's capital; (iii) to
provide limited cash distributions from property operations which are not
expected to constitute taxable income during the expected duration of the
Partnership's operations; and (iv) to provide cash distributions from sale or
refinancing transactions. There cannot be any assurance that the Partnership
will attain any or all of these investment objectives.
Table A on the following page lists the properties owned by the Local Limited
Partnerships in which the Partnership has invested. Item 7 of this Report
contains other significant information with respect to such Local Limited
Partnerships. As required by applicable rules, the terms of the acquisition of
Local Limited Partnership interests have been described in supplements to the
Prospectus (and collected in three post-effective amendments to the Registration
Statement) listed in Part IV of this Report (collectively, the "Acquisition
Reports"); such descriptions are incorporated herein by this reference.
<PAGE>
<TABLE>
<CAPTION>
TABLE A
SELECTED LOCAL LIMITED
PARTNERSHIP DATA
(Unaudited)
<S> <C> <C>
Properties Owned by Local
Limited Partnerships* Date Interest
Location Acquired
--------------------------- --------------------- ---------------
Brookscrossing Atlanta, GA 06/30/89
Dorsett Philadelphia, PA 10/20/89
Willow Ridge Prescott, AZ 08/28/89
Town House Allentown, PA 12/26/89
Lancaster House North Lancaster, PA 03/13/89
Sencit Towne House Shillington, PA 12/26/89
Pinewood Terrace** Rusk, TX 12/27/89
Justin Place** Justin, TX 12/27/89
Grandview** Grandview, TX 12/27/89
Hampton Lane Buena Vista, GA 12/20/89
Audobon Boston, MA 12/22/89
Bent Tree** Jackson, TX 12/27/89
Royal Crest** Bowie, TX 12/27/89
Nocona Terrace** Nocona, TX 12/27/89
Pine Manor** Jacksboro, TX 12/27/89
Hilltop** Rhome, TX 12/27/89
Valley View** Valley View, TX 12/27/89
Bentley Court Columbia, SC 12/26/89
Orocovix IV Orocovix, PR 12/30/89
Leawood Manor Leawood, KS 12/29/89
Pecan Hill** Bryson, TX 12/28/89
Carolina Woods Greensboro, NC 01/31/90
Mayfair Mansions Washington, DC 03/21/90
Oakview Square Chesterfield, MI 03/22/89
Whitehills II Howell, MI 04/21/90
Orchard View Gobles, MI 04/29/90
Lakeside Square Chicago, IL 05/17/90
Lincoln Green Old Town, ME 03/21/90
Brown Kaplan Boston, MA 07/01/90
Green tree Village Greenville, GA 07/06/90
Canfield Crossing Milan, MI 08/20/90
Findlay Market Cincinnati, OH 08/15/90
Seagraves** Seagraves, TX 11/28/90
West Pine Findlay, PA 12/31/90
BK Apartments Jamestown, ND 12/01/90
46th & Vincennes Chicago, IL 03/29/91
Gateway Village Garden ** Azle, TX 06/24/91
</TABLE>
* The Partnership's interest in profits and losses of each Local Limited
Partnership arising from normal operations is 99%, with the exception of
Leawood Manor which is 89%. Profits and losses arising from sale or
refinancing transactions are allocated in accordance with the respective
Local Limited Partnership Agreements.
** As of March 31, 1998, the Managing General Partner has transferred all of
the assets of ten of the Texas Partnerships, subject to their liabilities,
to unaffiliated entities. Seagraves Housing, Grandview Housing, Bryson
Housing, Rhome Housing, Bent Tree Housing,Justin Housing, Valley View
Housing, Nocona Terrace Housing, Bowie Housing and Pine Manor Housing were
transferred prior to March 31, 1998. Negotiations between the Managing
General Partner, the Lender and prospective buyers have continued
through the past quarter to transfer title to the remaining two Texas
Partnerships to unaffiliated buyers. If negotiations continue as expected,
Pinewood Terrace will be transferred in July 1998, and Gateway Village will
be transferred in January of 1999. In the meantime, operating deficits
continue to be funded from Partnership Reserves.
Although the Partnership's investments in Local Limited Partnerships are not
subject to seasonal fluctuations, the Partnership's equity in losses of Local
Limited Partnerships and rental operations revenues and expenses to the extent
they reflect the operations of individual Properties, may vary from quarter to
quarter based upon changes in occupancy and operating expenses as a result of
seasonal factors.
With the exception of Leawood Manor and the Texas Partnerships, each Local
Limited Partnership has, as its general partners ("Local General Partners"), one
or more individuals or entities not affiliated with the Partnership or its
General Partners. In accordance with the partnership agreements under which such
entities are organized ("Local Limited Partnership Agreements"), the Partnership
depends on the Local General Partners for the management of each Local Limited
Partnership. As of March 31, 1998, the following Local Limited Partnerships have
a common Local General Partner or affiliated group of Local General Partners
accounting for the specified percentage of the capital contributions to Local
Limited Partnerships: Sencit Townhouse L.P., Allentown Townhouse L.P. and Prince
Street Ltd., representing 10.94%, have AIMCO Properties as Local General
Partner; Greentree Village L.P. and Buena Vista Properties L.P., representing
.59%, have Norsouth Corporation as Local General Partner; and Whitehills
Apartments Co., L.P., Milan Apartments Co., L.P. and Gobles LDHA, L.P.,
representing 1.10%, have First Centrum as Local General Partner. The Local
General Partners of the remaining Local Limited Partnerships are identified
in the Acquisition Reports, which are incorporated herein by reference.
The Properties owned by Local Limited Partnerships in which the Partnership has
invested are and will continue to be subject to competition from existing and
future apartment complexes in the same areas. The continued success of the
Partnership will depend on many outside factors, most of which are beyond the
control of the Partnership and which cannot be predicted at this time. Such
factors include general economic and real estate market conditions, both on a
national basis and in those areas where the Properties are located, the
availability and cost of borrowed funds, real estate tax rates, operating
expenses, energy costs and government regulations. In addition, other risks
inherent in real estate investment may influence the ultimate success of the
Partnership, including: (i) possible reduction in rental income due to an
inability to maintain high occupancy levels or adequate rental levels; (ii)
possible adverse changes in general economic conditions and adverse local
conditions, such as competitive overbuilding, a decrease in employment or
adverse changes in real estate laws, including building codes; and (iii) the
possible future adoption of rent control legislation which would not permit
increased costs to be passed on to the tenants in the form of rent increases or
which would suppress the ability of the Local Limited Partnerships to generate
operating cash flow. Since most of the Properties benefit from some form of
government assistance, the Partnership is subject to the risks inherent in that
area including decreased subsidies, difficulties in finding suitable tenants and
obtaining permission for rent increases. In addition, any Tax Credits allocated
to investors with respect to a Property are subject to recapture to the extent
that the Property or any portion thereof ceases to qualify for the Tax Credits.
Other future changes in federal and state income tax laws affecting real estate
ownership or limited partnerships could have a material and adverse affect on
the business of the Partnership.
The Partnership is managed by Arch Street IV, Inc., the Managing General Partner
of the Partnership. The other General Partner of the Partnership is Arch Street
IV Limited Partnership. To economize on direct and indirect payroll costs, the
Partnership, which does not have any employees, reimburses The Boston Financial
Group Limited Partnership ("Boston Financial"), an affiliate of the General
Partner, for certain expenses and overhead costs. A complete discussion of the
management of the Partnership is set forth in Item 10 of this Report.
<PAGE>
Item 2. Properties
The Partnership owns limited partnership interests in twenty-seven Local Limited
Partnerships which own and operate Properties, some of which benefit from some
form of federal, state or local assistance programs and all of which qualify for
the Tax Credits added to the Code by the Tax Reform Act of 1986. The
Partnership's ownership interest in each Local Limited Partnership is 99% with
the exception of Leawood Manor and BK Associates, which are 89% and 49.5%,
respectively.
Each of the Local Limited Partnerships has received an allocation of Tax Credits
by its relevant state tax credit agency. In general, the Tax Credit runs for ten
years from the date the Property is placed in service. The required holding
period (the "Compliance Period") of the Properties is fifteen years. During
these fifteen years, the Properties must satisfy rent restrictions, tenant
income limitations and other requirements, as promulgated by the Internal
Revenue Service, in order to maintain eligibility for the Tax Credit at all
times during the Compliance Period. Once a Local Limited Partnership has become
eligible for the Tax Credits, it may lose such eligibility and suffer an event
of recapture if its Property fails to remain in compliance with the
requirements.
In addition, some of the Local Limited Partnerships have obtained one or a
combination of different types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the property is located at favorable terms; and iii) repayment terms that
are based on a percentage of cash flow.
The schedules on the following pages provide certain key information on the
Local Limited Partnership interests acquired by the Partnership.
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions
Total Total Paid Mtge. Loans
Local Limited Partnership Number of committed at through March payable at Occupancy at
Property Name Apt. Units March 31, 1998 31, 1998 December 31, Type of March 31,
Property Location 1997 Subsidy* 1998
- ------------------------------- ---------- -------------- --------------- ----------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Brookscrossing Apartments, L.P.
A Limited Partnership
Brookscrossing
Atlanta, GA 224 $3,363,776 $3,363,776 $5,508,316 None 99%
Willow Ridge Development Co.
Limited Partnership
Willow Ridge
Prescott, AZ 134 2,125,000 2,125,000 3,080,713 None 97%
Leawood Associates, L.P.**
A Limited Partnership
Leawood Manor
Leawood, KS 254 7,497,810 7,497,810 7,471,460 None 96%
Dorsett Limited Partnership
Dorsett Apartments
Philadelphia, PA 58 2,482,107 2,482,107 2,236,792 Section 8 94%
Allentown Towne House, L.P.
Towne House Apartments
Allentown, PA 160 1,589,403 1,589,403 6,574,639 Section 8 100%
Prince Street Towers L.P.
A Limited Partnership
Lancaster House North
Lancaster, PA 201 1,996,687 1,996,687 7,980,992 Section 8 100%
Sencit Towne House L.P.
Sencit Towne House
Shillington, PA 201 1,996,687 1,996,687 6,966,525 Section 8 100%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions
Total Total Paid Mtge. Loans
Local Limited Partnership Number of committed at through March payable at Occupancy at
Property Name Apt. Units March 31, 1998 31, 1998 December 31, Type of March 31,
Property Location 1997 Subsidy* 1998
- -------------------------------------- ------------ ---------------- --------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
East Rusk Housing Associates, LTD (A)**
Pinewood Terrace Apartments
Rusk, TX 84 269,515 269,515 1,087,288 FmHA 10%
Gateway Housing Associates, LTD (A)**
Gateway Village Garden Apts.
Azle, TX 50 251,326 251,326 1,162,111 FmHA 98%
Justin Housing Associates, LTD(A)
Justin Place
Justin, TX
Grandview Housing Associates, LTD (A)
Grandview
Grandview, TX
Buena Vista Limited Partnership
Hampton Lane (Buena Vista)
Buena Vista, GA 24 153,474 153,474 717,351 FmHA 95%
Audobon Group, L.P.
A Massachusetts Limited Partnership
Audobon
Boston, MA 37 2,640,419 2,640,419 3,127,020 Section 8 92%
Bent Tree Housing Associates (A)
Bent Tree
Jacksboro, TX
Bowie Housing Associates, LTD (A)
Royal Crest (Bowie)
Bowie, TX
</TABLE>
<TABLE>
<CAPTION>
Capital Contributions
Total Total Paid Mtge. Loans
Local Limited Partnership Number of committed at through March payable at Occupancy at
Property Name Apt. Units March 31, 1998 31, 1998 December 31, Type of March 31,
Property Location 1997 Subsidy* 1998
- -------------------------------------- ------------ ---------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Nocona Terrace Housing
Associates, LTD (A)
Nocona Terrace
Nocona, TX
Pine Manor Housing Associates (A)
Pine Manor
Jacksboro, TX
Rhome Housing Associates, LTD (A)
Hilltop Apartments
Rhome, TX
Valley View Housing Associates, LTD (A)
Valley View
Valley View, TX
Bentley Court II Limited Partnership
Bentley Court
Columbia, SC 273 5,000,000 5,000,000 6,925,240 None 94%
Bryson Housing Associates, LTD (A)
Pecan Hill Apartments
Bryson, TX
Orocovix Limited Dividend
Partnership, S.E.
Orocovix IV
Orocovix, PR 40 361,444 361,444 1,645,417 FmHA 100%
Carolina Woods Associates, L.P.
Carolina Woods
Greensboro, NC 48 1,000,000 1,000,000 1,132,541 None 80%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions
Total Total Paid Mtge. Loans
Local Limited Partnership Number of committed at through March payable at Occupancy at
Property Name Apt. Units March 31, 1998 31, 1998 December 31, Type of March 31,
Property Location 1997 Subsidy* 1998
- ----------------------------------- ------------ -------------- ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenilworth Associates LTD
A Limited Partnership
Mayfair Mansions
Washington, DC 569 4,250,000 4,250,000 21,403,483 Section 8 95%
Oakview Square Limited Partnership
A Michigan Limited Partnership
Oakview Square
Chesterfield, MI 192 5,299,652 5,299,652 6,040,777 None 96%
Whitehills II Apartments Company
Limited Partnership
Whitehills II
Howell, MI 24 169,276 169,276 754,485 None 96%
Gobles Limited Dividend
Housing Associates
Orchard View
Gobles, MI 24 162,022 162,022 738,752 FmHA 100%
Lakeside Square Limited Partnership
An Illinois Limited Partnership
Lakeside Square
Chicago, IL 308 3,978,813 3,978,813 6,178,202 Section 8 97%
Lincoln Green Associates, A Limited
Partnership
Lincoln Green
Old Towne, ME 30 352,575 352,575 1,209,526 Section 8 97%
Brown Kaplan Limited Partnership
Brown Kaplan
Boston, MA 60 3,024,663 3,024,663 7,851,941 Loans 98%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions
Total Total Paid Mtge. Loans
Local Limited Partnership Number of committed at through March payable at Occupancy at
Property Name Apt. Units March 31, 1998 31, 1998 December 31, Type of March 31,
Property Location 1997 Subsidy* 1998
- -------------------------------------- ---------- -------------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Green Tree Village Limited Partnership
A Limited Partnership
Green Tree Village
Greenville, GA 24 145,437 145,437 658,485 FmHA 96%
Milan Apartments Company
Limited Partnership
Canfield Crossing
Milan, MI 32 230,500 230,500 1,017,410 FmHA 97%
Findlay Market Limited Partnership
Findlay Market
Cincinnati, OH 49 1,313,595 1,313,595 1,332,929 Section 8 65%
Seagraves Housing Associates, LTD. (A)
Seagraves
Seagraves, TX
West Pine Associates
West Pine
Findlay, PA 38 313,445 313,445 1,677,531 FmHA 89%
B-K Apartments Limited Partnership
BK Apartments
Jamestowne, ND 48 290,000 290,000 875,000 Section 8 75%
46th and Vincennes Limited
Partnership
46th and Vincennes
Chicago, IL 28 751,120 751,120 1,311,435 Section 8 97%
------ ------------ ----------- ------------
3,214 51,008,746 51,008,746 106,666,361
======
Less: **Combined Entities 8,018,651 8,018,651 9,720,859
------------ ----------- ------------
$ 42,990,095 $42,990,095 $ 96,945,502
============ =========== ============
</TABLE>
* FmHA This subsidy, which is authorized under Section 515 of
the Housing Act of 1949, can be one or a combination of many
different types. For instance, FmHA may provide: 1) direct
below-market-rate mortgage loans for rural rental housing; 2)
mortgage interest subsidies which effectively lower the
interest rate of the loan to 1%; 3) rental assistance
subsidies to tenants which allow them to pay no more than 30%
of their monthly income as rent with the balance paid by the
federal government; or 4) a combination of any of the above.
Section 8 This subsidy, which is authorized under Section 8 of Title
II of the Housing and Community Development Act of 1974,
allows qualified low-income tenants to pay 30% of their
monthly income as rent with the balance paid by the federal
government.
(A) As of March 31, 1998, the Managing General Partner has
transferred all of the assets of ten of the Texas Partnerships
subject to their liabilities. The two remaining Texas
Partnerships will be transferred after March 31, 1998. The ten
transferred Texas Partnerships had total capital contributions
and mortgage payable amounts of $1,049,282 and $4,498,623,
respectively, as of the transfer dates.
<PAGE>
Two Local Limited Partnerships invested in by the Partnership each represent
more than 10% of the total capital contributions made to Local Limited
Partnerships by the Partnership. The first is Leawood Associates, L.P. ("Leawood
Manor"). Leawood Manor, representing 14.7% of the total capital contributions to
Local Limited Partnerships, is a 254-unit apartment complex located in Leawood,
Kansas. Leawood Manor is financed by a first mortgage at 8%, with an accrual
rate of 11.75% and monthly payments of $77,850 plus 95% of the net cash flows as
defined by the mortgage agreement. On July 10, 1999, the reduced payment rate is
scheduled to increase to 10%. The mortgage note matures in July 2006 and is
collateralized by the property.
The other Local Limited Partnership which represents more than 10% of the total
capital contributions to Local Limited Partnerships is Oakview Square Limited
Partnership ("Oakview Square"). Oakview Square, representing 10.4% of the total
capital contributions to Local Limited Partnerships, is a 192-unit apartment
complex located in Chesterfield, Michigan. Oakview Square is financed by a first
mortgage loan at 9.75% interest and a 35 year term. The loan matures in April
2010.
The duration of the leases for occupancy in the Properties described above is
six to twelve months. The Managing General Partner believes the Properties
described herein are adequately covered by insurance.
Item 3. Legal Proceedings
Bently Court is involved in an audit by the IRS in which the IRS is questioning
the treatment of certain items and included findings for non-compliance in 1993.
On behalf of the Partnership, the Managing General Partner hired attorneys to
respond to the IRS. The Managing General Partner was just advised that the
local general partner for this property has been indicted on various criminal
charges. The Managing General Partner has not yet obtained a copy of this
indictment. However, the counsel mentioned above does not believe this
indictment is likely to have a material impact on the tax issues facing this
partnership.
The Partnership is not a party to any other pending legal or administrative
proceeding, and to the best of its knowledge, no legal or administrative
proceeding is threatened or contemplated against it.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Units and Related Security Holder Matters
There is no public market for the Units, and it is not expected that a public
market will develop. If a Limited Partner desires to sell Units, the buyer of
those Units will be required to comply with the minimum purchase and retention
requirements and investor suitability standards imposed by applicable federal or
state securities laws and the minimum purchase and retention requirements
imposed by the Partnership. The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers, will be subject
to negotiation by the Limited Partner seeking to sell his Units. Units will not
be redeemed or repurchased by the Partnership.
The Partnership Agreement does not impose on the Partnership or its General
Partners any obligation to obtain periodic appraisals of assets or to provide
Limited Partners with any estimates of the current value of Units.
As of June 15, 1998, there were 3,882 record holders of Units of the
Partnership.
Cash distributions, when made, are paid annually. No cash distributions were
paid for the years ended March 31, 1998, 1997 and 1996.
<PAGE>
Item 6. Selected Financial Data
The following table sets forth selected financial information regarding the
Partnership's financial position and operating results. This information should
be read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Combined Financial Statements and
Notes thereto, which are included in Items 7 and 8 of this Report.
<TABLE>
<CAPTION>
March 31, March 31, March 31, March 31, March 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Revenue (C) $ 2,061,588 $ 2,099,229 $ 2,633,694 $ 2,506,970 $ 1,765,316
Equity in losses of Local Limited
Partnerships (C) (1,405,591) (2,747,270) (2,957,339) (3,688,171) (4,055,382)
Net loss (3,950,858) (5,503,780) (5,046,594) (6,661,959) (5,954,828)
Per Limited Partnership Unit (57.48) (80.08) (73.43) (96.93) (86.64)
Cash and cash equivalents (C) 386,059 288,153 414,451 532,287 466,607
Marketable securities 985,849 1,056,590 1,428,765 1,962,559 3,439,855
Investments in Local Limited
Partnerships 15,959,055 19,593,420 22,748,929 26,117,975 30,902,613
Total assets (A) 31,608,124 36,632,053 41,744,078 50,243,398 57,149,940
Long-term debt (C) 9,720,859 11,111,888 11,228,864 14,636,443 14,671,667
Total liabilities (C) 13,857,576 14,948,056 14,550,850 17,903,195 18,115,404
Cash Distribution - - - - -
Per Limited Partnership Unit - - - - -
Other Data:
Passive loss (B) (5,850,622) (6,118,380) (6,562,619) (6,695,703) (7,069,544)
Per Limited Partnership Unit (B) (85.12) (89.02) (95.48) (97.42) (102.86)
Portfolio income (B) 399,057 511,058 627,741 401,044 703,566
Per Limited Partnership Unit (B) 5.81 7.44 9.13 5.84 10.24
Low-Income Housing Tax Credit (B) 9,278,685 9,364,677 9,536,996 9,432,363 9,467,376
Per Limited Partnership Unit (B) 134.57 135.81 138.31 136.78 137.30
Recapture of Low-Income Housing
Tax Credits (B) 338,222 179,372 - - -
Per Limited Partnership Unit (B) 4.92 2.61 - - -
Local Limited Partnership interests
owned at end of period (D) 27 32 34 37 37
</TABLE>
(A) Total assets include the net investment in Local Limited Partnerships.
(B) Income tax information is as of December 31, the year end of the
Partnership for income tax purposes. The Low-Income Housing Tax Credits
per Limited Partnership Unit for 1998, 1997, 1996, 1995 and 1994
represents the amount allocated to individual investors. Corporate
investors were allocated $137.27, $138.59, $141.11, $139.60 and $140.08
per Unit in 1998, 1997, 1996, 1995 and 1994, respectively.
(C) Revenue for the years ended March 31, 1998, 1997, 1996, 1995 and 1994
includes $1,911,961, $1,941,455, $2,522,643, $2,354,347 and $1,621,789,
respectively, of total revenue from Leawood Manor and the Texas
Partnerships. Equity in losses of Local Limited Partnerships for the
years ended March 31, 1998, 1997, 1996, 1995 and 1994 does not include
($26,848),$1,808,207, $1,165,223, $1,199,409 and $1,063,808, respectively,
of losses from Leawood Manor and the Texas Partnerships that have been
combined with the Partnership's loss. Cash and cash equivalents at March
31, 1998, 1997, 1996, 1995 and 1994 includes $113,251, $71,426, $107,545,
$250,751 and $145,627, respectively, of cash and cash equivalents from
Leawood Manor and the Texas Partnerships. The total amount of long-term
debt is related to Leawood Manor and the Texas Partnerships. Total
liabilities for the years ended March 31, 1998, 1997, 1996, 1995 and 1994
includes $13,200,479, $14,529,452, $14,368,374, $17,756,853 and
$18,051,535, respectively, of liabilities from Leawood Manor and the Texas
Partnerships (other than the Texas Partnerships described in (D) below).
(D) As of March 31, 1998, the Managing General Partner has transferred all of
the assets of ten of the Texas Partnerships, subject to their liabilities,
to unaffiliated entities. The two remaining Texas Partnerships will be
transferred after March 31, 1998.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Partnership (including the Combined Entities) had an increase in cash and
cash equivalents of $97,906 from $288,153 at March 31, 1997 to $386,059 at March
31, 1998. The increase is mainly attributable to proceeds from sales and
maturities of marketable securities in excess of purchases of marketable
securities and cash distributions received from Local Limited Partnerships.
These increases are offset by cash used for operations, repayment of mortgage
principal and purchase of rental property by the Combined Entities.
The Managing General Partner initially designated 4% of the Gross Proceeds as
Reserves. The Reserves were established to be used for working capital of the
Partnership and contingencies related to the ownership of Local Limited
Partnership interests. Funds totaling approximately $1,162,000 have been
withdrawn from the Reserve account to pay legal fees relating to various
property issues. This amount includes approximately $1,096,000 for the Texas
Partnerships. To date, Reserve funds in the amount of $304,000 have been used to
make additional capital contributions to a Local Limited Partnership. To date,
the Partnership has used approximately $1,055,000 of operating funds to
replenish Reserves. At March 31, 1998, approximately $1,200,000 of cash, cash
equivalents and marketable securities has been designated as Reserves.
Management believes that the investment income earned on the Reserves, along
with cash distributions received from Local Limited Partnerships, to the extent
available, will be sufficient to fund the Partnership's ongoing operations.
Reserves may be used to fund Partnership operating deficits, if the Managing
General Partner deems funding appropriate. If Reserves are not adequate to cover
the Partnership's operations, the Partnership will seek other financing sources
including, but not limited to, the deferral of Asset Management Fees to an
affiliate of the Managing General Partner or working with Local Limited
Partnerships to increase cash distributions. In the event a Local Limited
Partnership encounters operating difficulties requiring additional funds, the
Partnership's management might deem it in its best interests to voluntarily
provide such funds in order to protect its investment. To date, in addition to
the $1,162,000 noted above, the Partnership has also advanced approximately
$744,000 to the Texas Partnerships to fund operating deficits. Approximately
$366,000 has also been advanced to two other Local Limited Partnerships.
Since the Partnership invests as a limited partner, the Partnership has no
contractual obligation to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, at March 31, 1998, the Partnership had no
contractual or other obligation to any Local Limited Partnership which had not
been paid or provided for.
Cash Distributions
No cash distributions were made during the year ended March 31, 1998.
Results of Operations
1998 versus 1997
The Partnership's results of operations for the fiscal year ended March 31, 1998
resulted in a net loss of $3,950,858 compared to a net loss of $5,503,780 for
the same period in 1997. The decrease in net loss is primarily attributable to
the recognition of extraordinary gain on cancellation of indebtedness for three
of the Texas Partnerships, a decrease in equity in losses of Local Limited
Partnerships and a decrease in the provision for valuation of rental property.
The decrease in equity in losses of Local Limited Partnerships is due to an
increase in losses not recognized by the Partnership for Local Limited
Partnerships whose cumulative equity in losses and cumulative distributions
exceeded its total investment in those partnerships. The decrease in equity in
losses of Local Limited Partnerships is expected to continue. The expected
transfers of Pinewood Terrace Apartments and Gateway Village Apartments in July
1998 and January 1999, respectively, will result in additional extraordinary
gain on cancellation of indebtedness. The gain on debt cancellation and
decrease in equity in losses of Local Limited Partnerships were partially offset
by a provision for valuation of two investments in Local Limited Partnerships
recorded in 1998.
<PAGE>
1997 versus 1996
The Partnership's results of operations for the fiscal year ended March 31, 1997
resulted in a net loss of $5,503,780 as compared to a net loss of $5,046,594 for
the same period in 1996. The increase in net loss is primarily attributable to
the recognition of a provision for valuation of rental property by certain Texas
Partnerships, a decrease in rental revenue and an increase in bad debt expense.
These increases to net loss are partially offset by a decrease in equity in
losses of Local Limited Partnerships, decreases in general and administrative,
rental operations, depreciation and interest expense items. The decrease in
equity in losses of Local Limited Partnerships is due to an increase in losses
not recognized by the Partnership for Local Limited Partnerships whose
cumulative equity in losses and cumulative distributions exceeded its total
investment in those partnerships. This decrease is partially offset by an
increase in equity in losses from one Local Limited Partnership due to a
cancellation of indebtedness income recognized during its year ended December
31, 1995 by this Local Limited Partnership which is included in equity in losses
of Local Limited Partnerships. The decrease in general and administrative
expenses is due to a decrease in expenses paid on behalf of the Texas
Partnerships. The decreases in rental revenue and rental operations,
depreciation and interest expenses were due to the exclusion of seven of the
Texas Partnership's operations which were previously combined. Please refer to
the section entitled "Property Discussions" included in this Item. The increase
in bad debt expense is the result of a reserve for advances made to one Local
Limited Partnership.
Effect of Recently Issued Accounting Standard
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income. The standard
requires that changes in comprehensive income be shown in a financial statement
that is displayed with the same prominence as other financial statements. The
standard is effective for fiscal years beginning after December 15, 1997. The
Partnership will adopt the new standard beginning in the first quarter of the
fiscal year ending March 31, 1999, but it is not expected to have a significant
effect on the Partnership's financial position or results of operations.
Low-Income Housing Tax Credits
The 1997, 1996 and 1995 Tax Credits per Unit were $134.57, $135.81 and $138.31,
respectively, for individual investors. The 1997, 1996 and 1995 Tax Credits per
Unit were $137.27, $138.59 and $141.11, respectively, for corporate investors.
Tax Credits are not available for a Property until the Property is placed in
service and its apartment units are occupied by qualified tenants. In the first
year the Tax Credits are claimed, the allowable credit amount is determined
using an averaging convention to reflect the number of months that apartment
units comprising the qualified basis were occupied by qualified tenants during
the year. To the extent that the full amount of the annual credit is not
allocated in the first year, an additional credit equal to the difference is
available in the 11th taxable year.
As of March 31, 1998, each of the twenty-seven properties have been placed in
service and their apartment units are qualified. The credits, which have
stabilized, are expected to remain the same for the next two years, and then
they are expected to decrease as properties reach the end of the ten year credit
period. The Partnership has transferred ten of the Texas Partnerships and is in
the process of transferring the remaining two Texas Partnerships. There will be
a nominal recapture of tax credits since the Texas Partnerships represent only
3% of the Partnerships' tax credits.
The Tax Credits per Unit for corporate investors will be slightly higher for the
remaining years of the credit period than that for individual investors because
certain of the properties took advantage of 1990 federal legislation that
allowed the acceleration of future tax credits to individuals in the tax year
ended December 31, 1990. For those properties that elected to accelerate the
individual credit, the accelerated portion is being amortized over the remainder
of the credit period, thereby causing a reduction of this and future year's tax
credits passed through by those properties. In total, both individual and
corporate investors will be allocated equal amounts of Tax Credits.
On November 10, 1997, the Partnership transferred 50% of its interest in capital
and profits of BK Apartments to the local general partner in order to protect
the Partnership in the event of recapture of these tax credits. The first stage
of this transfer will cause approximately one-half of the recapture liability to
flow to the local general partner.
Property Discussions
Prior to the transfer of ten of the Texas Partnerships, Limited Partnership
interests had been acquired in thirty-seven Local Limited Partnerships which are
located in thirteen states, Washington, D.C. and Puerto Rico. Fifteen of the
properties with 1,440 apartments were newly constructed, and twenty-two of the
properties with 2,061 apartments were rehabilitated. Most of the Local Limited
Partnerships have stable operations, operating at break-even or generating
operating cash flow.
A few properties are experiencing operating difficulties and cash flow deficits
due to a variety of reasons. The Local General Partners of those properties have
funded operating deficits through project expense loans, subordinated loans or
payments from operating escrows. In instances where the Local General Partners
have stopped funding deficits because their obligation to do so has expired or
otherwise, the Managing General Partner is working with the Local General
Partners to increase operating income, reduce expenses or refinance the debt at
lower interest rates in order to improve cash flow.
Audobon Apartments, located in Massachusetts, is operating below break-even
primarily due to decreased rental subsidy assistance, increased operating
expenses and adverse market conditions. The SHARP mortgage subsidy has been an
important part of the property's annual income. However, effective October 1,
1997, the Massachusetts Housing Finance Agency (MHFA), which provided the SHARP
subsidies, withdrew future SHARP mortgage subsidies from its portfolio of 77
SHARP subsidized properties. The Managing General Partner joined a group of
interested parties and is working with MHFA to find a solution to the problems
that will arise as a result of withdrawn subsidies. Given the dependence on the
mortgage subsidy, it is possible that the property will default on its mortgage
obligation in the near future. It is possible that Partnership Reserves will be
used to support the property until these issues can be resolved. The Local
General Partner has also obtained preliminary approval for releases from lender
escrows to fund certain cash deficits. In addition to the SHARP issues, the
Managing General Partner continues to work with the lender to develop a
satisfactory workout. It is likely that a workout would require an advance from
Partnership Reserves. For financial reporting purposes the carrying value of
this investment is zero.
Bentley Court, located in Columbia, South Carolina, continues to generate
significant deficits despite the July 1996 debt refinancing. As previously
reported, an agreement was set up with the lender which enabled an affiliate of
the Managing General Partner to become an additional General Partner and
substitute management agent, subject to lender approval, with the right to take
control of the property if it becomes necessary. In addition, the agreement
stipulates that if the Local Limited Partnership defaults on the agreement, the
lender has the right to remove the management company. In addition, the IRS
finalized its report from an audit of the 1993 tax return for the project. The
IRS report includes the questioning of treatment of certain items and findings
for non-compliance in 1993. Management now understands that the audit now also
focuses on 1994 and 1995 tax credits. On behalf of the Partnership, the
Managing General Partner hired attorneys to appeal the findings in the IRS
report in order to minimize the loss of credits. The Managing General Partner
was just advised that the Local General Partner for this property has been
indicted on various criminal charges. The Managing General Partner has not yet
obtained a copy of this indictment. In the opinion of management, there is a
risk that Bentley Court will suffer some tax credit recapture or credit
disallowance. However, management cannot quantify the risk at this time. The
Managing General Partner will continue to monitor property operations and the
Local General Partner closely. Operating deficits are currently being funded by
the Local General Partner. As a result of the continuing tax issues
at this property, management has decided to fully reserve the Partnership's
investment in Bentley Court.
As previously reported, BK Apartments, located in Jamestown, North Dakota, has
been generating operating deficits despite improved occupancy. The lender issued
a default notice and threatened to foreclose. A workout agreement was negotiated
and completed on November 10, 1997. The Managing General Partner is closely
monitoring the workout plan with the local general partner. Furthermore, in
November 1997, the Managing General Partner consummated a transfer of 50% of its
interest in capital and profits of BK Apartments Limited Partnership to the
local general partner. Included in this transfer is a put option. The put option
grants the Managing General Partner the right to put the Partnership's remaining
interest to the local general partner any time after one year has elapsed. The
Partnership will retain its full share of tax credits until such time as the
remaining interest is put to the local general partner.
At Findlay Market (Cincinnati, Ohio), reconstruction of the property units
damaged by fire was completed in December 1996, and lease-up continues. As
previously reported, in order to reconstruct the units, the Partnership agreed
to advance up to $345,000 to help cover the funding shortfall between the
insurance proceeds, lender funding and a City grant. To date, the Partnership
has advanced approximately $297,000 of this amount. However, the property
continues to generate operating deficits which caused the default of the first
mortgage. At this juncture, the lender is not amenable to a cure of the mortgage
and is expected to exercise its right to foreclose on the mortgage. Despite
these indications, the Managing and Local General Partners continue to negotiate
with the lender in hopes of averting a foreclosure. A foreclosure of this
property will result in recapture of tax credits and the allocation of taxable
income to the Partnership. For financial reporting purposes, the carrying value
of this investment has been written down to zero.
As previously reported, the Managing General Partner transferred all of the
assets of five of the Texas Partnerships, subject to their liabilities, to
unaffiliated entities in 1996. In 1997, the Managing General Partner transferred
all of the assets of five of the remaining seven Texas Partnerships, subject to
their liabilities, to unaffiliated entities. Additional transfers of the two
remaining Texas Partnerships, Pinewood Terrace and Gateway Village, are expected
to take place in July 1998 and January 1999, respectively.
For tax purposes, this transfer event of Pinewood Terrace and Gateway Village
will result in both Section 1231 Gain and cancellation of indebtedness income.
In addition, the transfer of ownership will result in a nominal amount of
recapture of tax credits, since the Texas Partnerships represent only 3% of the
Partnership's tax credits.
In accordance with Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
which is effective for fiscal years beginning after December 15, 1995, the
Partnership has implemented policies and practices for assessing impairment of
its real estate assets and investments in Local Limited Partnerships. Each asset
is analyzed by real estate experts to determine if an impairment indicator
exists. If so, the current value is compared to the fair value and if there is a
significant impairment in value, a provision to write down the asset to fair
value will be charged against income.
Inflation and Other Economic Factors
Inflation had no material impact on the operations or financial condition of the
Partnership for the years ended March 31, 1998, 1997, and 1996.
Since some of the Properties benefit from some sort of government assistance,
the Partnership is subject to the risks inherent in that area including
decreased subsidies, difficulties in finding suitable tenants and obtaining
permission for rent increases. In addition, any Tax Credits allocated to
investors with respect to a Property are subject to recapture to the extent that
the Property or any portion thereof ceases to qualify for the Tax Credits.
Certain of the Properties listed in this Report are located in areas suffering
from poor economic conditions. Such conditions could have an adverse effect on
the rent or occupancy levels at such Properties. Nevertheless, management
believes that the generally high demand for below-market rate housing will tend
to negate such factors. However, no assurance can be given in this regard.
Item 8. Financial Statements and Supplementary Data
Information required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The Managing General Partner of the Partnership is Arch Street IV, Inc., a
Massachusetts corporation (the "Managing General Partner"), an affiliate of The
Boston Financial Group Limited Partnership ("Boston Financial"), a Massachusetts
limited partnership. George Fantini, Jr. and Donna C. Gibson, Vice Presidents of
the Managing General Partner, resigned their positions effective June 30, 1995
and September 13, 1996, respectively. Georgia Murray resigned as Managing
Director, Treasurer and Chief Financial Officer of the General Partner on May
25, 1997. Fred N. Pratt, Jr. resigned as Managing Director of the General
Partner on May 28, 1997. William E. Haynsworth resigned as Managing Director
and Chief Operating Officer of the General Partner on March 23, 1998.
The Managing General Partner was incorporated in December 1988. Randolph G.
Hawthorne is the Chief Operating Officer of the Managing General Partner and had
the primary responsibility for evaluating, selecting and negotiating investments
for the Partnership. The Investment Committee of the Managing General Partner
approved all investments. The names and positions of the principal officers and
the directors of the Managing General Partner are set forth below.
Name Position
Jenny Netzer Managing Director and President
Michael H. Gladstone Managing Director, Vice President and Clerk
Randolph G. Hawthorne Managing Director, Vice President and
Chief Operating Officer
James D. Hart Chief Financial Officer and Treasurer
Paul F. Coughlan Vice President
Peter G. Fallon, Jr. Vice President
William E. Haynsworth Vice President
The other General Partner of the Partnership is Arch Street IV Limited
Partnership, a Massachusetts Limited Partnership ("Arch Street IV L.P.") that
was organized in December 1988. Arch Street IV, Inc. is the managing general
partner of Arch Street IV L.P.
The Managing General Partner provides day-to-day management of the Partnership.
Compensation is discussed in Item 11 of this Report. Such day-to-day management
does not include the management of the Properties.
The business experience of each of the persons listed above is described below.
There is no family relationship between any of the persons listed in this
section.
Jenny Netzer, age 42, graduated from Harvard University (B.A., 1976) and
received a Master's in Public Policy from Harvard's Kennedy School of Government
in 1982. She joined Boston Financial in 1987 and is a Senior Vice President
leading the Institutional Tax Credit Team. She is also a member of the Senior
Leadership Team. Previously, Ms. Netzer led Boston Financial's new business
initiatives and managed the firm's Asset Management division, which is
responsible for the performance of 750 properties and providing service to
35,000 investors. Before joining Boston Financial, she was Deputy Budget
Director for the Commonwealth of Massachusetts where she was responsible for
the Commonwealth's health care and public pension programs' budgets. Ms. Netzer
was also Assistant Controller at Yale University and has been a member of the
Watertown Zoning Board of Appeals.
Michael H. Gladstone, age 41, graduated from Emory University (B.A. 1978) and
Cornell University (J.D., MBA, 1982). He joined Boston Financial in 1985 and
currently serves as Vice President and as the company's General Counsel. Prior
to joining Boston Financial, Mr. Gladstone was associated with the law firm of
Herrick & Smith. Mr. Gladstone is a member of the National Realty Committee and
has served on the advisory board to the Housing and Development Reporter, a
national publication on housing issues.
Randolph G. Hawthorne, age 48, is a graduate of Massachusetts Institute of
Technology (B.S., 1971) and Harvard Graduate School of Business (M.B.A., 1973).
He has been associated with Boston Financial since 1973 and has served as the
Treasurer of Boston Financial. Currently a Senior Vice President of the firm,
Mr. Hawthorne's primary responsibility is structuring and acquiring real estate
investments. Mr. Hawthorne is Past Chairman of the Board of the National Multi
Housing Council, having served on the board since 1989. He is a past president
of the National Housing and Rehabilitation Association, is a member of the
Residential Development Council of the Urban Land Institute, as well as a member
of the Advisory Board of the Berkeley Real Estate Center at the University of
California. In addition to speaking at industry conferences, he is on the
Editorial Advisory Boards of the Tax Credit Advisor and Multi-Housing News.
James D. Hart, age 40, earned his Bachelor of Arts degree from Trinity College
and his Masters of Business Administration from the Amos Tuck School at
Dartmouth College. Mr. Hart serves as Chief Financial Officer and is a member of
the Senior Leadership Team. Prior to joining Boston Financial, Mr. Hart was
engaged in venture capital management on behalf of institutional investors,
including the negotiation and structuring of private equity and mezzanine
transactions as a Vice President of Interfid Ltd., and later in the operational
management of a venture-backed software company, as Managing Director and Chief
Financial Officer of Bitstream Inc. Mr. Hart has also served on the Board of
Directors of several investee companies, including those that went on to
complete initial public offerings.
Paul F. Coughlan, age 54, is a graduate of Brown University (B.A., 1965) and
served in the United States Navy before entering the securities business in
1969. He was employed as an Account Executive by Bache & Company until 1972 and
then by Reynolds Securities Inc. He joined Boston Financial in 1975 and is
currently a Senior Vice President on the Institutional Tax Credit Team.
Peter G. Fallon, Jr., age 59, graduated from the College of the Holy Cross
(B.S., 1960) and Babson College (M.B.A., 1965). He joined Boston Financial in
1970, shortly after its formation, to raise capital for the firm's investments.
He is currently a Senior Vice President and a member of the Institutional Tax
Credits Team with responsibility for marketing institutional investments.
Previously, he has served as president of BFG Securities, as a director of
Boston Financial and as marketing director for public and corporate funds. Mr.
Fallon has also served as Chairman of the Board of Directors for Boston College
High School, as well as a director of a local bank.
William E. Haynsworth, age 58, is a graduate of Dartmouth College (B.A., 1961)
and Harvard Law School (L.L.B., 1964; L.L.M., 1969). Prior to joining Boston
Financial in 1977, Mr. Haynsworth was Acting Executive Director and General
Counsel of the Massachusetts Housing Finance Agency. He was also the Director of
Non-Residential Development of the Boston Redevelopment Authority and an
associate of the law firm of Goodwin, Procter & Hoar. Appointed Senior Vice
President in 1986, Mr. Haynsworth brings over 25 years of experience structuring
real estate investments. Mr. Haynsworth is a member of the Executive Committee
and the Board of Directors of the Affordable Housing Tax Credit Coalition. He is
a member of the Senior Leadership Team, the firm's Executive Committee and the
Board of Directors of Boston Financial.
<PAGE>
Item 11. Management Remuneration
Neither the directors or officers of Arch Street IV, Inc., nor the partners of
Arch Street IV L.P., nor any other individual with significant involvement in
the business of the Partnership receives any current or proposed remuneration
from the Partnership.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 31, 1998, the following is the only entity known to the Partnership
to be the beneficial owner of more than 5% of the Units outstanding:
Amount
Title of Class Name and Address of Beneficially
Beneficial Owner Owned Percent of Class
- --------------- ------------------------ ----------------- -----------------
Limited AMP, Incorporated 10,000 Units 14.69%
Partner P.O. Box 3608
Harrisburg, PA
The equity securities registered by the Partnership under Section 12(g) of the
Act consist of 100,000 Units, of which 68,043 were sold to the public. The
remaining Units were deregistered in Post-Effective Amendment No. 3, dated
February 21, 1990. Holders of Units are permitted to vote on matters affecting
the Partnership only in certain unusual circumstances and do not generally have
the right to vote on the operation or management of the Partnership.
Arch Street IV L.P. owns five (unregistered) Units not included in the 68,043
Units sold to the public.
Except as described in the preceding paragraph, neither Arch Street IV, Inc.,
Arch Street IV L.P., Boston Financial nor any of their executive officers,
directors, partners or affiliates is the beneficial owner of any Units. None of
the foregoing persons possess a right to acquire beneficial ownership of Units.
There is no arrangement in existence, to the Partnership's knowledge, that would
result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions
The Partnership paid certain fees to and reimbursed certain expenses of the
Managing General Partner or its affiliates (including Boston Financial) in
connection with the organization of the Partnership and the offering of Units.
The Partnership was also required to pay certain fees to and reimburse certain
expenses of the Managing General Partner or its affiliates (including Boston
Financial) in connection with the administration of the Partnership and its
acquisition and disposition of investments in Local Limited Partnerships. In
addition, the General Partners are entitled to certain Partnership distributions
under the terms of the Partnership Agreement. Also, an affiliate of the General
Partners will receive up to $10,000 from the sale or refinancing proceeds of
each Local Limited Partnership, if it is still a limited partner at the time of
such transaction. All such fees and distributions are more fully described in
the sections entitled "Estimated Use of Proceeds", "Management Compensation and
Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash
Distributions" of the Prospectus. Such sections are incorporated herein by
reference. In addition, Boston Financial Property Management ("BFPM"), an
affiliate of the Managing General Partner, serves as property management agent
for the properties owned by Leawood Associates, L.P., Oakview Square, L.P.,
Whitehills II Apartments Company, L.P., Gobles Limited Dividend Housing
Association and Milan Apartments Company, L.P. BFPM is also the Management agent
for the Texas Partnerships.
The Partnership is permitted to enter into transactions involving affiliates of
the Managing General Partner, subject to certain limitations established in the
Partnership Agreement.
Information regarding the fees paid and expense reimbursements made in the three
years ending March 31, 1998 is presented as follows:
Organizational fees and expenses
In accordance with the Partnership Agreement, Boston Financial is to be
reimbursed by the Partnership for organizational, offering and selling expenses
advanced on behalf of the Partnership by Boston Financial or its affiliates and
for salaries and direct expenses of certain employees of the Managing General
Partner and its affiliates in connection with the registration and organization
of the Partnership. Such expenses include printing expenses and legal,
accounting, escrow agent and depository fees and expenses. Such expenses also
include a non-accountable expense allowance for marketing expenses equal to 1%
of gross offering proceeds. From inception through March 31, 1998, $8,351,601 of
organization fees and expenses incurred on behalf of the Partnership were paid
and reimbursed to an affiliate of the Managing General Partner. Total
organization and offering expenses did not exceed 5.5% of the gross offering
proceeds.
Acquisition fees and expenses
In accordance with the Partnership Agreement, the Partnership is required to pay
acquisition fees to and reimburse acquisition expenses of the Managing General
Partner or its affiliates for selecting, evaluating, structuring, negotiating
and closing the Partnership's investments in Local Limited Partnerships.
Acquisition fees totaled 7.5% of the gross offering proceeds. Acquisition
expenses, which include such expenses as legal fees and expenses, travel and
communications expenses, costs of appraisals, accounting fees and expenses, did
not exceed 1.75% of the gross offering proceeds. Acquisition fees totaling
$5,080,756 for the closing of the Partnership's Local Limited Partnership
Investments have been paid to an affiliate of the Managing General Partner.
Acquisition expenses totaling $974,240 were incurred and have been reimbursed to
an affiliate of the Managing General Partner. No payments were made or expenses
reimbursed in each of the three years ended March 31, 1998.
Asset Management Fees
In accordance with the Partnership Agreement, an affiliate of the Managing
General Partner is paid an annual fee for services in connection with the
administration of the affairs of the Partnership. The affiliate currently
receives $7,352 (as adjusted by the CPI factor) per Local Limited Partnership
annually as the Asset Management Fee. Fees earned in each of the three years
ended March 31, 1998 are as follows:
1998 1997 1996
---------- ---------- ----------
Asset management fees $ 222,066 $ 250,509 $ 252,599
<PAGE>
Salaries and benefits expense reimbursements
An affiliate of the Managing General Partner is reimbursed for the cost of the
Partnership's salaries and benefits expenses. The reimbursements are based upon
the size and complexity of the Partnership's operations. Reimbursements paid or
payable in each of the three years ended March 31, 1998 are as follows:
1998 1997 1996
---------- ---------- ----------
Salaries and benefits expense
reimbursements $ 147,039 $ 136,075 $ 155,984
Property Management Fees
BFPM is the management agent of the Texas Partnerships and Leawood Manor,
properties in which the Partnership has invested. The property management fee
earned is 5% of the properties' gross revenues. Fees earned by BFPM, which have
been included in the Combined Statements of Operations for each of the three
years ended March 31, 1998, are as follows:
1998 1997 1996
---------- ---------- ---------
Property management fees $ 122,823 $ 129,241 $ 101,364
BFPM is the management agent for Oakview Square, Whitehills II Apartments,
Orchard View and Canfield Crossing, properties in which the Partnership
invested. The property management fee charged is 5% of the properties'
gross revenues. Fees earned by BFPM, which have been included in operating
expenses in the summarized income statements in Note 4 to the Combined Financial
Statements in Part II, Item 8 for each of the three years ended March 31,
1998, are as follows:
1998 1997 1996
---------- ---------- ---------
Property management fees $ 77,411 $ 65,926 $ 62,634
Cash distributions paid to the General Partners
In accordance with the Partnership Agreement, the General Partners of the
Partnership, Arch Street IV, Inc. and Arch Street IV Limited Partnership,
receive 1% of cash distributions made to partners. No cash distributions were
made to the General Partners in any of the three years ended March 31, 1998.
Additional information concerning cash distributions and other fees paid or
payable to the Managing General Partner and its affiliates and the reimbursement
of expenses paid or payable to Boston Financial and its affiliates during each
of the three years ended March 31, 1998 is presented in Note 5 to the Combined
Financial Statements in Part II Item 8.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) and (a)(2) Documents filed as a part of this Report.
In response to this portion of Item 14, the financial statements, financial
statement schedules and the auditors' report relating thereto are submitted as
a separate section of this Report. See Index on page F-1 hereof.
The reports of auditors of the Local Limited Partnership relating to the audits
of the financial statements of such Local Limited Partnerships appear in Exhibit
(28)(1) of this Report.
Other schedules have been omitted as they are either not required or the
information required to be presented therein is available elsewhere in the
financial statements and the accompanying notes and schedules.
(a)(3)(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the year ended March 31,
1998.
(a)(3)(c) Exhibits
Number and Description in Accordance with
Item 601 of Regulation S-K
4. Instruments defining the rights of security
holders, including indentures
4.1 Amended and Restated Agreement Exhibit A to Prospectus contained in
and Certificate of Limited Form S-11 Registration Statement,
Partnership dated as of File # 33-26394
April 20, 1989
27. Financial Data Schedule
28. Additional Exhibits
28.1 (a) Reports of Other Independent Auditors
(b) Audited financial statements of
Local Limited Partnerships
Leawood Manor
(a)(3)(d) None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
By: Arch Street IV, Inc.
its Managing General Partner
By: /s/Randolph G. Hawthorne Date: 6/30/98
Randolph G. Hawthorne
Managing Director, Vice President and
Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Managing General
Partner of the Partnership and in the capacities and on the dates indicated:
By: /s/Randolph G. Hawthorne Date: 6/30/98
Randolph G. Hawthorne
Managing Director, Vice President and
Chief Operating Officer
By: /s/Michael H. Gladstone Date: 6/30/98
Michael H. Gladstone
A Managing Director
F-1
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Annual Report on Form 10-K
For the Year Ended March 31, 1998
Index
Page No.
Report of Independent Accountants F-2
Combined Financial Statements
Combined Balance Sheets - March 31, 1998 and 1997 F-3
Combined Statements of Operations - Years Ended
March 31, 1998, 1997 and 1996 F-4
Statements of Changes in Partners' Equity
- Years Ended March 31, 1998, 1997 and 1996 F-6
Combined Statements of Cash Flows - Years Ended
March 31, 1998, 1997 and 1996 F-7
Notes to the Combined Financial Statements F-9
Financial Statement Schedule
Schedule III - Real Estate and Accumulated
Depreciation F-27
Other schedules have been omitted as they are either not required or the
information required to be presented therein is available elsewhere in the
financial statements and the accompanying notes and schedules.
See also Index to Exhibits on Page K-24 for the financial statements of the
Investor Local Limited Partnership included as a separate exhibit in this Annual
Report of Form 10-K.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Boston Financial Qualified Housing Tax Credits L.P. IV
(A Limited Partnership)
We have audited the combined balance sheets of Boston Financial Qualified
Housing Tax Credits L.P. IV (A Limited Partnership) ("BFQH IV") as of March 31,
1998 and 1997 and the related combined statements of operations, changes in
partners' equity, and cash flows and the financial statement schedule listed in
Item 14(a) of this Report on Form 10-K for each of the three years in the period
ended March 31, 1998. These financial statements and financial statement
schedule are the responsibility of BFQH IV's management. Our responsibility is
to express an opinion on these financial statements and financial statement
schedules based on our audits. BFQH IV accounts for its investments in Local
Limited Partnerships as discussed in Note 2 of the notes to the financial
statements, using the equity method of accounting. In 1998 and 1997, 86% and 77%
of total assets, respectively, and in 1998, 1997 and 1996, 36%, 73% and 73% of
net loss, respectively, reflected in the combined financial statements of BFQH
IV, relate to investments in Local Limited Partnerships for which we did not
audit the financial statements. The financial statements of those Local Limited
Partnerships were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to those investments in Local Limited
Partnerships, is based solely upon the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined 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 and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
combined financial statements referred to above present fairly, in all material
respects, the financial position of BFQH IV at March 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended March 31, 1998, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic combined financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
June 22, 1998
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
F-8
COMBINED BALANCE SHEETS - MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
------------- ------------
Assets
Cash and cash equivalents $ 386,059 $ 288,153
Marketable securities, at fair value (Note 3) 985,849 1,056,590
Accounts receivable, net of allowance for bad debt of $314,316
and $337,793 in 1998 and 1997, respectively 12,759 23,778
Tenant security deposits 85,340 98,963
Investments in Local Limited Partnerships,
net of reserve for valuation of $2,724,482
and $945,277 in 1998 and 1997, respectively (Note 4) 15,959,055 19,593,420
Rental property at cost, net of
accumulated depreciation (Note 6) 13,846,553 15,217,196
Mortgagee escrow deposits 114,300 106,501
Deferred charges, net of $176,768 and $156,662 of
accumulated amortization in 1998 and 1997,
respectively 189,076 209,182
Other assets 29,133 38,270
------------- ------------
Total Assets $ 31,608,124 $ 36,632,053
============= ============
Liabilities and Partners' Equity
Mortgage notes payable (Note 7) $ 9,720,859 $ 11,111,888
Accounts payable to affiliates (Note 5) 602,600 390,926
Accounts payable and accrued expenses 340,574 366,076
Interest payable (Note 7) 627,412 507,457
Tenant security deposits payable 84,131 89,709
Payable to affiliated Developer (Note 8) 2,482,000 2,482,000
------------- ------------
Total Liabilities 13,857,576 14,948,056
------------- ------------
Minority interest in Local Limited Partnerships 432,469 421,489
------------- ------------
General, Initial and Investor Limited Partners' Equity 17,316,902 21,267,760
Net unrealized gains (losses) on marketable securities 1,177 (5,252)
------------- ------------
Total Partners' Equity 17,318,079 21,262,508
------------- ------------
Total Liabilities and Partners' Equity $ 31,608,124 $ 36,632,053
============= ============
The accompanying notes are an integral part of the combined financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1998, 1997, AND 1996
<S> <C> <C> <C>
1998 1997 1996
------------ ------------ ------------
Revenue:
Rental $ 1,831,495 $ 1,846,570 $ 2,422,830
Investment 108,299 130,027 148,235
Other 121,794 122,632 62,629
------------ ------------ ------------
Total Revenue 2,061,588 2,099,229 2,633,694
------------ ------------ ------------
Expenses:
Asset management fees, related party (Note 5) 222,066 250,509 252,599
General and administrative (includes
reimbursement to affiliate in the amounts
of $147,039, $136,075 and $155,984,
respectively) (Note 5) 348,400 462,680 561,221
Bad debt expense 176,648 300,835 41,046
Rental operations, exclusive of depreciation 1,025,546 1,170,804 1,598,259
Property management fees, related party (Note 5) 122,823 129,241 101,364
Interest (Note 7) 1,012,385 987,379 1,130,490
Provision for valuation of rental property 181,098 791,830 -
Provision for valuation of
investments in Local Limited
Partnerships (Note 4) 1,880,482 - 69,047
Depreciation (Note 6) 658,377 746,829 917,812
Amortization 110,330 107,784 135,652
------------ ------------ ------------
Total Expenses 5,738,155 4,947,891 4,807,490
------------ ------------ ------------
Loss before equity in losses of Local Limited
Partnerships, minority interest, loss on
liquidation of interests in Local Limited Partnerships
and extraordinary item (3,676,567) (2,848,662) (2,173,796)
Equity in losses of Local Limited
Partnerships (Note 4) (1,405,591) (2,747,270) (2,957,339)
Minority interest in losses of
Local Limited Partnerships 81,241 92,152 84,541
Loss on liquidation of interests
in Local Limited Partnerships (Note 9) (3,922) - -
------------ ------------ ------------
Net loss before extraordinary item (5,004,839) (5,503,780) (5,046,594)
Extraordinary gain on cancellation of indebtedness 1,053,981 - -
------------ ------------ ------------
Net Loss $ (3,950,858) $ (5,503,780) $ (5,046,594)
============ ============ ============
Net Loss allocated:
General Partners $ (39,509) $ (55,038) $ (50,466)
Limited Partners (3,911,349) (5,448,742) (4,996,128)
------------ ------------ ------------
$ (3,950,858) $ (5,503,780) $ (5,046,594)
============ ============ ============
The accompanying notes are an integral part of the combined financial statements.
</TABLE>
<PAGE>
COMBINED STATEMENTS OF OPERATIONS (continued)
YEARS ENDED MARCH 31, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
------------ ------------ -----------
Net loss before extraordinary item per Limited
Partnership Unit (68,043 Units) $ (72.82) $ (80.08) $ (73.43)
============ ============ ===========
Extraordinary item per Limited Partnership Unit
(68,043 Units) $ 15.34 $ - $ -
============ ============ ===========
Net Loss per Limited Partnership
Unit (68,043 Units) $ (57.48) $ (80.08) $ (73.43)
============ ============ ===========
The accompanying notes are an integral part of the combined financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
YEARS ENDED MARCH 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partners Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1995 $ (272,904) $ 5,000 $ 32,086,038 $(37,598) $ 31,780,536
Net change in net unrealized losses
on marketable securities
available for sale - - - 37,866 37,866
Net Loss (50,466) - (4,996,128) - (5,046,594)
----------- ------- ------------ -------- ------------
Balance at March 31, 1996 (323,370) 5,000 27,089,910 268 26,771,808
Net change in net unrealized gains
on marketable securities
available for sale - - - (5,520) (5,520)
Net Loss (55,038) - (5,448,742) - (5,503,780)
----------- ------- ------------ -------- ------------
Balance at March 31, 1997 (378,408) 5,000 21,641,168 (5,252) 21,262,508
Net change in net unrealized losses
on marketable securities
available for sale - - - 6,429 6,429
Net Loss (39,509) - (3,911,349) - (3,950,858)
----------- ------- ------------ -------- ------------
Balance at March 31, 1998 $ (417,917) $ 5,000 $ 17,729,819 $ 1,177 $ 17,318,079
=========== ======= ============ ======== ============
The accompanying notes are an integral part of the combined financial statements.
</TABLE>
<PAGE>
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
------------ ------------ ------------
Cash flows from operating activities
Net Loss $ (3,950,858) $ (5,503,780) $ (5,046,594)
Adjustments to reconcile net loss to net cash
used for operating activities:
Equity in losses of Local Limited Partnerships 1,405,591 2,747,270 2,957,339
Extraordinary gain on cancellation of indebtedness (1,053,981) - -
Loss on liquidation of interests in
Local Limited Partnerships 3,922 - -
Cash distribution income included in
cash distributions from Local Limited
Partnerships (64,034) (19,584) -
Provision for valuation of
investments in Local Limited Partnerships 1,880,482 - 69,047
Other (5,456) - (3,642)
Bad debt expense 176,648 300,835 41,046
Provision for valuation of rental property 181,098 791,830 -
Depreciation and amortization 768,707 854,613 1,053,464
Loss on sale of marketable securities 1,902 1,310 3,775
Minority interest in losses of Local
Limited Partnerships (81,241) (92,152) (84,541)
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Accounts receivable, net 10,918 15,868 23,462
Tenant security deposits 11,385 11,006 (34,621)
Mortgagee escrow deposits (7,945) 6,867 (17,497)
Other assets 3,983 (2,805) 4,671
Accounts payable to affiliates 205,805 250,503 10,301
Accounts payable and accrued expenses 81,313 (43,617) 197,135
Interest payable 180,471 289,020 128,518
Tenant security deposits payable (3,340) 4,004 (5,609)
------------ ------------ ------------
Net cash used for operating activities (254,630) (388,812) (703,746)
------------ ------------ ------------
Cash flows from investing activities:
Return of investment in Local Limited Partnership - 3,331 -
Purchases of marketable securities (623,364) (487,098) (1,466,927)
Proceeds from sales and maturities
of marketable securities 698,632 852,443 2,034,812
Cash distributions received from Local
Limited Partnerships 318,180 332,439 278,721
(Advances to) reimbursements from
Local Limited Partnerships 42,133 (336,775) (49,269)
Purchase of rental property and equipment (81,449) (127,283) (116,811)
----------- ------------ ------------
Net cash provided by investing activities 354,132 237,057 680,526
----------- ------------ ------------
Cash flows from financing activities:
Capital contributions received 92,221 92,221 29,431
Advances from affiliate 20,851 50,212 90,287
Payment of mortgage principal (114,668) (116,976) (214,334)
----------- ------------ ------------
Net cash provided by (used for) financing activities (1,596) 25,457 (94,616)
----------- ------------ ------------
The accompanying notes are an integral part of the combined financial statements.
</TABLE>
<PAGE>
COMBINED STATEMENTS OF CASH FLOWS (Continued)
YEARS ENDED MARCH 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 97,906 (126,298) (117,836)
Cash and cash equivalents, beginning 288,153 414,451 532,287
------------ ------------ ------------
Cash and cash equivalents, ending $ 386,059 $ 288,153 $ 414,451
============ ============ ============
Supplemental disclosure:
Cash paid for interest $ 831,914 $ 698,359 $ 1,001,972
============ ============ ============
Non-cash disclosure:
See Note 9 for discussion on the transfers of certain Texas Partnerships.
The accompanying notes are an integral part of the combined financial statements.
</TABLE>
<PAGE>
F-17
Notes to the Combined Financial Statements
1. Organization
Boston Financial Qualified Housing Tax Credits L.P. IV (the "Partnership") was
formed on March 30, 1989 under the laws of the Commonwealth of Massachusetts for
the primary purpose of investing, as a limited partner, in other limited
partnerships ("Local Limited Partnerships"), each of which own and operate
apartment complexes, most of which benefit from some form of federal, state or
local assistance program and each of which qualify for low-income housing tax
credits. The Partnership's objectives are to:(i) provide current tax benefits in
the form of tax credits which qualified investors may use to offset their
federal income tax liability; (ii) preserve and protect the Partnership's
capital; (iii) provide limited cash distributions which are not expected to
constitute taxable income during Partnership operations; and (iv) provide cash
distributions from sale or refinancing transactions. The General Partners of the
Partnership are Arch Street IV, Inc., which serves as the Managing General
Partner, and Arch Street IV L.P. which also serves as the Initial Limited
Partner. Both of the General Partners are affiliates of The Boston Financial
Group Limited Partnership ("Boston Financial"). The fiscal year of the
Partnership ends on March 31.
The Partnership's partnership agreement ("Partnership Agreement") authorized the
sale of up to 100,000 units of Limited Partnership Interest ("Units") at $1,000
per Unit, adjusted for certain discounts. The Partnership raised $67,653,000
("Gross Proceeds"), net of discounts of $390,000, through the sale of 68,043
Units. Such amounts exclude five unregistered Units previously acquired for
$5,000 by the Initial Limited Partner, which is also one of the General
Partners. The offering of Units terminated on January 31, 1990.
Generally, profits, losses, tax credits and cash flows from operations are
allocated 99% to the Limited Partners and 1% to the General Partners. Net
proceeds from a sale or refinancing will be allocated 95% to the Limited
Partners and 5% to the General Partners, after certain priority payments.
Under the terms of the Partnership Agreement, the Partnership initially
designated 4% of the gross proceeds from the sale of Units as a Reserve for
working capital of the Partnership and contingencies related to ownership of
Local Limited Partnership interests. The Managing General Partner may increase
or decrease such amounts from time to time, as it deems appropriate. At March
31, 1998, the Managing General Partner has designated approximately $1,200,000
of cash, cash equivalents and marketable securities as such Reserve.
2. Significant Accounting Policies
Basis of Presentation and Combination
The Partnership accounts for its investments in Local Limited Partnerships, with
the exception of the Combined Entities, using the equity method of accounting,
because the Partnership does not have a majority control of the major operating
and financial policies of the Local Limited Partnerships in which it invests.
Under the equity method, the investment is carried at cost, adjusted for the
Partnership's share of net income or loss of the Local Limited Partnership,
additional investments and cash distributions from the Local Limited
Partnership. Equity in income or loss of the Local Limited Partnership's is
included currently in the Partnership's operations. The Partnership has no
obligation to fund liabilities of the Local Limited Partnerships beyond its
investment, therefore, the Local Limited Partnerships investment will not be
carried below zero. To the extent that equity losses are incurred or
distributions received when the Partnership's respective carrying value of the
Local Limited Partnership has been reduced to a zero balance, the losses will be
suspended and offset against future income, and distributions received will be
recorded as income.
<PAGE>
Notes to the Combined Financial Statements (continued)
2. Significant Accounting Policies (continued)
Basis of Presentation and Combination (continued)
Excess investment costs over the underlying net assets acquired have arisen from
acquisition fees paid and expenses reimbursed to an affiliate of the
Partnership. These fees and expenses are included in the Partnership's
Investments in Local Limited Partnerships and are being amortized on a
straight-line basis over 35 years.
The Managing General Partner has elected to report results of the Local Limited
Partnerships on a 90 day lag basis, because the Local Limited Partnerships
report their results on a calendar year basis. Accordingly, the financial
information about the Local Limited Partnerships that is included in the
accompanying combined financial statements is as of December 31, 1997, 1996 and
1995.
On September 13, 1991, an affiliate of the Partnership's Managing General
Partner, BF Leawood, Inc., became the General Partner of Leawood Associates,
L.P. ("Leawood Manor"), a Local Limited Partnership in which the Partnership has
invested. BF Leawood, Inc. replaced the previous management agent with Boston
Financial Property Management, an affiliate of the Managing General Partner.
Since the Local General Partner of Leawood Manor is now an affiliate of the
Partnership and has a controlling financial interest as set forth in paragraph
22 of ARB 51, these combined financial statements include all financial activity
of Leawood Associates, L.P. for the years ended December 31, 1997, 1996 and
1995. All significant intercompany balances and transactions have been
eliminated.
On October 6, 1993, an affiliate of the Partnership's Managing General Partners,
BF Texas Limited Partnership, became an additional Local General Partner with
responsibility for all management decisions in twelve Local Limited Partnerships
(the "Texas Partnerships") in which the Partnership has invested. Since the
Local General Partner of the Texas Partnerships was an affiliate of the
Partnership, and had a controlling financial interest in these Local Limited
Partnerships as set forth in paragraph 22 of ARB 51, these combined financial
statements included the financial activity of the twelve Texas Partnerships
beginning in the year ended December 31, 1994. Prior to March 31, 1996, control
of seven of these Texas Partnerships was transferred to unrelated parties, and
as such, as of that date, these partnerships were accounted for on the equity
method (see Note 9). During the years ended March 31, 1998 and 1997, the
Partnership relinquished its interest in these seven Texas Partnerships. During
the year ended March 31, 1998, the Partnership also relinquished its interest in
three of the five remaining Texas Partnerships. As of March 31, 1998, the
financial statements of the remaining two Texas Partnerships are combined with
the Partnership's financial statements. All significant intercompany balances
and transactions have been eliminated.
The Partnership has elected to report the results of Leawood Manor and the Texas
Partnerships on a 90 day lag basis, consistent with the presentation of the
financial information of all Local Limited Partnerships. As used herein the
"Combined Entities" refers to Leawood Manor and the Texas Partnerships, prior to
the transfer of control referenced above.
Loans and operating advances to Local Limited Partnerships ($19,947 and $336,775
during the years ended March 31, 1998 and 1997, respectively) are reflected as
receivables. A bad debt allowance is provided for such loans and advances deemed
uncollectible ($314,316 and $309,835 at March 31, 1998 and 1997, respectively).
The Partnership recognizes a decline in the carrying value of its investment in
Local Limited Partnerships when there is evidence of a non-temporary decline in
the recoverable amount of the investment. There is a possibility that the
estimates relating to reserves for non-temporary declines in carrying value of
investments in Local Limited Partnerships may be subject to material near term
adjustments.
<PAGE>
Notes to the Combined Financial Statements (continued)
2. Significant Accounting Policies (continued)
Basis of Presentation and Combination (continued)
The Partnership, as a limited partner in the Local Limited Partnerships, is
subject to risks inherent in the ownership of property which are beyond its
control, such as fluctuations in occupancy rates and operating expenses,
variations in rental schedules, proper maintenance and continued eligibility for
tax credits. If the cost of operating a property exceeds the rental income
earned thereon, the Partnership may deem it in its best interest to voluntarily
provide funds in order to protect its investment.
Cash Equivalents
Cash equivalents consist of short-term money market instruments with maturities
of ninety days or less at acquisition and approximate fair value.
Marketable Securities
Marketable securities consist primarily of U.S. Treasury instruments and various
asset-backed investment vehicles. The Partnership's marketable securities are
classified as "Available for Sale" securities and reported at fair value as
reported by the brokerage firm at which the securities are held. All marketable
securities have fixed maturities. Realized gains and losses from the sales of
securities are based on the specific identification method. Unrealized gains and
losses are excluded from earnings and reported as a separate component of
partners' equity.
Effect of Recently Issued Accounting Standard
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income. The standard
requires that changes in comprehensive income be shown in a financial statement
that is displayed with the same prominence as other financial statements. The
standard is effective for fiscal years beginning after December 15, 1997. The
Partnership will adopt the new standard beginning in the first quarter of the
fiscal year ending March 31, 1999, but it is not expected to have a significant
effect on the Partnership's financial position or results of operations
Deferred Fees
Costs incurred in connection with the organization of the Partnership amounting
to $50,000 have been deferred and amortized on a straight-line basis over 60
months.
Leawood Manor's deferred charges consist of financing fees, which are being
amortized using the straight-line method over the term of the related debt.
Rental Property
Real estate and personal property of the Combined Entities are recorded in
accordance with SFAS 121. The Combined Entities provide for depreciation using
various methods over their estimated useful lives.
<PAGE>
Notes to the Combined Financial Statements (continued)
2. Significant Accounting Policies (continued)
Rental Income
Rental income, principally from short-term leases on the Combined Entities'
apartment units, is recognized as income under the accrual method as the rentals
become due.
Use of Estimates
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 disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"),
Disclosures About Fair Value of Financial Instruments, requires disclosure for
the fair value of most on- and off-balance sheet financial instruments for which
it is practicable to estimate that value. The scope of SFAS No. 107 excludes
certain financial instruments, such as trade receivables and payables when the
carrying value approximates the fair value and investments accounted for under
the equity method, and all nonfinancial assets, such as real property. Except as
discussed in Note 7, the fair values of the Partnership's assets and liabilities
which qualify as financial instruments under SFAS No. 107 approximate their
carrying amounts in the accompanying balance sheets.
Income Taxes
No provision for income taxes has been made as the liability for such taxes is
the obligation of the partners of the Partnership.
Reclassifications
Certain amounts in prior years' financial statements have been reclassified
herein to conform to the current year presentation.
<PAGE>
Notes to the Combined Financial Statements (continued)
3. Marketable Securities
A summary of marketable securities is as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Debt securities issued by the
US Treasury and other US
Government agencies $ 836,320 $ 1,298 $ (2,249) $ 835,369
Mortgage backed securities 148,352 2,128 - 150,480
----------- -------- -------- -----------
Marketable securities
at March 31, 1998 $ 984,672 $ 3,426 $ (2,249) $ 985,849
=========== ======== ======== ===========
Debt securities issued by the
US Treasury and other US
Government agencies $ 754,966 $ 3,764 $ (7,169) $ 751,561
Mortgage backed securities 302,807 1,480 (3,328) 300,959
Other debt securities 4,069 1 - 4,070
----------- -------- -------- -----------
Marketable securities
at March 31, 1997 $ 1,061,842 $ 5,245 $(10,497) $ 1,056,590
=========== ======== ======== ===========
</TABLE>
The contractual maturities at March 31, 1998 are as follows:
Fair
Cost Value
Due in one year or less $ 464,590 $ 464,737
Due in one to five years 371,730 370,632
Mortgage backed securities 148,352 150,480
----------- -----------
$ 984,672 $ 985,849
=========== ===========
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from sales and maturities
were approximately $699,000, $852,000 and $2,035,000 during the fiscal years
ended March 31, 1998, 1997 and 1996, respectively. Included in investment income
are gross gains of $1,041 and gross losses of $2,943 which were realized on
these sales in fiscal year 1998, gross gains of $4,471 and gross losses of
$5,781 which were realized on these sales in fiscal year 1997 and gross gains
of $12,646 and gross losses of $16,421 which were realized on these sales in
fiscal year 1996.
<PAGE>
Notes to the Combined Financial Statements (continued)
4. Investments in Local Limited Partnerships
The Partnership uses the equity method to account for its limited partnership
interests in twenty-six Local Limited Partnerships (excluding the Combined
Entities) which own and operate multi-family housing complexes, most of which
are government-assisted. The Partnership, as Investor Limited Partner pursuant
to the various Local Limited Partnership Agreements which contain certain
operating and distribution restrictions, has generally acquired a 99% interest
in the profits, losses, tax credits and cash flows from operations of each of
the Local Limited Partnerships. Upon dissolution, proceeds will be distributed
according to each respective partnership agreement.
<TABLE>
<CAPTION>
The following is a summary of investments in Local Limited Partnerships,
excluding the Combined Entities, at March 31:
1998 1997 1996
<S> <C> <C> <C>
Capital contributions paid to Local Limited
Partnerships and purchase price paid
to withdrawing partners of Local
Limited Partnerships $ 43,001,951 $ 43,318,237 $ 43,775,232
Cumulative equity in losses of Local Limited
Partnerships (excluding cumulative unrecognized
losses of $2,445,394, $895,873 and $16,868 for
the years ended 1998, 1997 and 1996, respectively) (25,573,556) (24,452,001) (22,227,131)
Cash distributions received from Local
Limited Partnerships (1,808,459) (1,490,279) (1,157,840)
------------ ------------ ------------
Investments in Local Limited Partnerships
before adjustment 15,619,936 17,375,957 20,390,261
Excess of investment cost over the underlying
net assets acquired:
Acquisition fees and expenses 3,899,388 3,910,599 3,930,470
Accumulated amortization of acquisition
fees and expenses (835,787) (747,859) (658,755)
------------ ------------ ------------
Investments in Local Limited Partnerships 18,683,537 20,538,697 23,661,976
Reserve for valuation of investments
in Local Limited Partnerships (2,724,482) (945,277) (913,047)
------------ ------------ ------------
$ 15,959,055 $ 19,593,420 $ 22,748,929
============ ============ ============
</TABLE>
The Partnership has provided for a reserve for valuation for its investment in
two Local Limited Partnerships, Findlay Market and Bentley Court, because
there is evidence of non-temporary declines in the recoverable amounts of these
investments.
<PAGE>
Notes to the Combined Financial Statements (continued)
4. Investments in Local Limited Partnerships (continued)
Summarized financial information for each of the three years ended December 31,
1997, 1996 and 1995 (due to the Partnership's policy of reporting the financial
information of its Local Limited Partnership interests on a 90 day lag basis) of
all Local Limited Partnerships in which the Partnership has invested as of that
date (excluding the combined entities)is as follows:
Summarized Balance Sheets - as of December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
------------- ------------ ------------
Assets:
Rental property, net $ 114,216,561 $119,968,771 $121,655,134
Current assets 4,386,715 4,512,930 5,285,738
Other assets, net 11,196,370 11,160,325 10,916,051
------------- ------------ ------------
Total Assets $ 129,799,646 $135,642,026 $137,856,923
============= ============ ============
Liabilities and Partners' Equity:
Mortgages payable, net of current portion $ 95,338,576 $ 98,043,569 $ 98,589,771
Other liabilities 8,068,167 9,238,211 9,230,947
Current liabilities (includes current
portion of mortgage payable) 8,647,970 7,371,825 4,912,957
------------- ------------ ------------
Total Liabilities 112,054,713 114,653,605 112,733,675
------------- ------------ ------------
Partners' Equity:
Partnership's equity 13,407,318 16,613,767 20,462,970
Other Partners' equity 4,337,615 4,374,654 4,660,278
------------- ------------ ------------
Total Partners' Equity 17,744,933 20,988,421 25,123,248
------------- ------------ ------------
Total Liabilities and Partners' Equity $ 129,799,646 $135,642,026 $137,856,923
============= ============ ============
Summarized Income Statements -
for the years ended December 31,
Rental and other revenue $ 20,094,050 $ 19,632,293 $ 20,136,140
------------- ------------ ------------
Expenses:
Operating expenses 10,525,127 10,458,548 10,493,595
Interest expense 7,356,242 7,621,226 7,412,019
Depreciation and amortization 4,807,406 4,847,371 4,933,894
------------- ------------ ------------
Total Expenses 22,688,775 22,927,145 22,839,508
------------- ------------ ------------
Net Loss $ (2,594,725) $ (3,294,852) $ (2,703,368)
============= ============ ============
Partnership's share of net loss $ (2,891,078) $ (3,606,691) $ (2,974,207)
============= ============ ============
Other Partners' share of net loss $ 296,353 $ 311,839 $ 270,839
============= ============ ============
</TABLE>
The summarized financial information of the Local Limited Partnerships above
does not include Leawood Manor and the Texas Partnerships for the years ended
December 31, 1997, 1996 and 1995. The balance sheets and statements of
operations of these Local Limited Partnerships are combined with the
Partnership's financial statements through the date that these partnerships were
transferred (see Note 9).
<PAGE>
Notes to the Combined Financial Statements (continued)
4. Investments in Local Limited Partnerships (continued)
For the fiscal years ended March 31, 1998, 1997 and 1996, the Partnership has
not recognized $1,549,521, $879,005 and $16,868, respectively, of equity in
losses relating to ten Local Limited Partnerships where cumulative equity in
losses and cumulative distributions exceeded its total investments in these
Local Limited Partnerships.
The Partnership's equity as reflected by the Local Limited Partnerships of
$13,407,318 differs from the Partnerships Investment in Local Limited
Partnerships before adjustment of $15,619,936 primarily because of unrecognized
losses as described above.
5. Transactions with Affiliates
In accordance with the Partnership Agreement, the Partnership was required to
pay certain fees to and reimburse expenses of the Managing General Partner and
others in connection with the organization of the Partnership and the offering
of Limited Partnership Units. Selling commissions and other issuance expenses
aggregating $8,351,601 have been charged directly to Limited Partners' Equity.
Total organizational and offering expenses exclusive of selling commissions did
not exceed 5.5% of the gross offering proceeds, and organizational and offering
expenses inclusive of selling commissions did not exceed 15% of the gross
offering proceeds.
In accordance with the Partnership Agreement, the Partnership was required to
pay acquisition fees to and reimburse acquisition expenses of the Managing
General Partner or its affiliates for selecting, evaluating, structuring,
negotiating and closing the Partnership's investments in Local Limited
Partnerships. Acquisition fees totaled 7.5% of the gross offering proceeds, and
acquisition expenses did not exceed 1.75% of the gross offering proceeds.
Acquisition fees totaling $5,080,756 have been paid to an affiliate of the
Managing General Partner for the closing of the Partnership's Local Limited
Partnership Investments. Approximately $2,125,000 of these fees are classified
as capital contributions to Local Limited Partnerships in the summary of
Investments in Local Limited Partnerships in Note 4 to the Combined Financial
Statements. Acquisition expenses totaling $974,240 were incurred and have been
reimbursed to an affiliate of the Managing General Partner.
An affiliate of the Managing General Partner currently receives $7,352 (as
adjusted by the CPI factor) per Local Limited Partnership annually as the Asset
Management Fee for administering the affairs of the Partnership. Included in the
Combined Statements of Operations are Asset Management Fees of $222,066,
$250,509 and $252,599 for the years ended March 31, 1998, 1997 and 1996,
respectively. Payables to an affiliate of the Managing General Partner relating
to the aforementioned fees and expenses aggregate $536,918 and $314,852 at March
31, 1998 and 1997, respectively.
<PAGE>
Notes to the Combined Financial Statements (continued)
5. Transactions with Affiliates (continued)
An affiliate of the Managing General Partner is reimbursed for the actual cost
of the Partnership's operating expenses. Included in general and administrative
expenses for the years ended March 31, 1998, 1997 and 1996 is $147,039, $136,075
and $155,984, respectively, that has been paid or is payable by the Partnership
as reimbursement for salaries and benefits. At March 31, 1998 and 1997, $18,442
and $34,094, respectively, is payable to an affiliate of the Managing General
Partner.
Boston Financial Property Management ("BFPM"), an affiliate of the Managing
General Partner, is the management agent for Oakview Square, Whitehills II
Apartments, Orchard View and Canfield Crossing, properties in which the
Partnership invested. The property management fee charged is 5% of properties'
gross revenues. Included in operating expenses in the summarized income
statements in Note 4 to the Combined Financial Statements is $77,411, $65,926
and $62,634 of fees earned by BFPM for the years ended December 31, 1997, 1996
and 1995.
Additionally, BFPM is the management agent of the Texas Partnerships and Leawood
Manor, properties in which the Partnership has invested. The property management
fee charged is 5% of the properties' gross revenues. Included in the Combined
Statements of Operations for the years ended March 31, 1998, 1997 and 1996 is
$122,823, $129,241 and $101,364, respectively, of fees earned by BFPM during the
years ended December 31, 1997, 1996 and 1995, respectively. Included in accounts
payable to affiliates at March 31, 1998 and 1997 is $16,014 and $17,243,
respectively, of property management fees due to an affiliate of the Managing
General Partner.
6. Rental Property
Real estate and personal property belonging to the Combined Entities are in
accordance with SFAS 121, the components of which are as follows at December 31:
1997 1996
------------ ------------
Land $ 1,097,749 $ 1,128,060
Building and improvements, net
of impairment writedown 17,041,167 18,036,921
Equipment 925,330 930,975
------------ ------------
19,064,246 20,095,956
Less accumulated depreciation 5,217,693 4,878,760
------------ ------------
Total $ 13,846,553 $ 15,217,196
============ ============
During the years ended December 31, 1997 and 1996, impairment losses of $181,098
and $791,830, respectively, were recognized on the real estate in the Texas
Partnerships, which reduced the carrying values of the Texas Partnerships to
approximately $2,249,000. For the years ended December 31, 1997 and 1996, the
net operating results of the Texas Partnerships increased the loss of the
Partnership (prior to impairment losses) by $253,291 and $373,292, respectively.
See Note 9 for further details on the liquidation of the interests in the Texas
Partnerships.
<PAGE>
Notes to the Combined Financial Statements (continued)
7. Mortgage Notes Payable
Leawood Manor
The amended and restated mortgage note as of December 31, 1997 and 1996 is
payable in the outstanding amount of $7,471,460 and $7,521,294, respectively, by
Leawood Manor in monthly installments of $77,850 for principal and interest in
arrears, with interest accrued at an annual rate of 11.75%. Interest is payable
monthly at the rate of 8% per annum plus 95% of the net cash flows as defined by
the mortgage agreement. Under the terms of the agreement, the difference in the
interest payments at the contract rate of 11.75% and the reduced payment rates
will accrue interest at the rate of 8%, which will be payable from 95% of net
cash flows, if available, or upon maturity of the note. On July 10, 1999 the
reduced payment rate is scheduled to increase to 10%. The note matures in July
2006 and is collateralized by the property. The terms of the mortgage note and
other contract documents require the establishment of restricted deposits and
funded reserves to be held and invested by the mortgagee. These financial
instruments potentially subject Leawood Manor to a concentration of credit risk.
Aggregate annual maturities due on the mortgage note during each of the next
five years are as follows:
1998 $ 56,015
1999 62,963
2000 70,813
2001 79,552
2002 89,420
Due to the unique characteristics of the above transaction and unavailability of
market data for similar loans, management believes it is not practicable to
estimate the fair value of this note as of March 31, 1998.
Texas Partnerships
The Texas Partnerships and RECD have entered into Interest Credit and Rental
Assistance Agreements that have stated interest rates ranging from 9.5% to 7.25%
and provide for an effective interest rate on the notes payable to FmHA of 1
percent, plus all rental income over basic rents as determined by the government
(overages) with maturities ranging from 2016 to 2030. All notes are
collateralized by the respective properties.
The principal balances of the Texas Partnerships' mortgage notes at December
31, 1997 and 1996 are $2,249,399 and $3,590,594, respectively. These mortgages
are currently in default and as a result the entire balance is being accounted
for as current. The decrease is due to the transfer of three of the Texas
Partnerships in the year ended March 31, 1998.
The Partnership believes it is not practical to estimate the fair value of these
mortgage notes payable because loans with similar characteristics are not
currently available to the Partnership.
8. Payable to Developer
Under the terms of Leawood Manor's development agreement, the Developer has
agreed to advance to the property such funds as may be required to pay certain
operating expenses. Any funds so advanced are to be repaid by Leawood Manor only
in certain circumstances. The amount payable to the Developer at December 31,
1997 and 1996 represents the net amount advanced to Leawood Manor under this
agreement, the rights to which have been assigned to the general partner of
Leawood Manor, who is an affiliate of the Partnership.
<PAGE>
Notes to the Combined Financial Statements (continued)
9. Litigation
Bently Court is involved in an audit by the IRS in which the IRS is questioning
the treatment of certain items and included findings for non-compliance in 1993.
On behalf of the Partnership, the Managing General Partner hired attorneys to
respond to the IRS. The Managing General Partner was just advised that the
local general partner for this property has been indicted on various criminal
charges. The Managing General Partner has not yet obtained a copy of this
indictment. In the opinion of management, there is a risk that Bentley Court
will suffer some tax credit recapture or credit disallowance. However,
management cannot quantify the risk at this time.
The Partnership is not a party to any other pending legal or administrative
proceeding, and to the best of its knowledge, no legal or administrative
proceeding is threatened or contemplated against it.
10. Transfer and Liquidation of Interests in Local Limited Partnerships
The Managing General Partner has transferred all of the assets of ten of the
Texas Partnerships, subject to their liabilities, to unaffiliated entities. The
transfers of Grandview Terrace Apartments, Pecan Hills Apartment, Seagraves
Garden Apartments, Hilltop Apartments and Bent Tree Housing were effective
February 21, 1996, February 29, 1996, March 8, 1996, June 6, 1996 and November
20, 1996, respectively. Justin Place Apartments and Valley View Apartments were
transferred July 9, 1997, Nacona Terrace Apartments and Royal Creste Apartments
were transferred August 6, 1997 and Pine Manor Apartments was transferred on
October 28, 1997. The transfers of the two remaining Texas Partnerships,
Pinewood Terrace and Gateway Village, are expected to take place in July 1998
and January 1999, respectively.
For financial reporting purposes, loss on liquidation of interests in Local
Limited Partnerships of $3,922 and extraordinary gain on cancellation of
indebtedness of $1,053,981 were recognized in the year ended March 31, 1998 as a
result the transfer of Justin Place Apartments, Valley View Apartments and Pine
Manor Apartments. The loss on the transfers of Nacona Terrace Apartments and
Royal Creste Apartments had previously been reserved for in the provision for
valuation of investments in Local Limited Partnerships.
On November 10, 1997, the Managing General Partner transferred 50% of its
interest in capital and profits of BK Apartments to an affiliate of the local
general partner. Included in this transfer is a put option. The put option
grants the Managing General Partner the right to put the Partnership's remaining
interest to the local general partner anytime after one year has elapsed. For
financial reporting purposes, the carrying value of this investment is zero.
The Partnership will retain its full share of tax credits until such time
as the remaining interest is put to the local general partner.
For tax purposes, these events will result in both Section 1231 Gain and
cancellation of indebtedness income. In addition, the transfer of ownership will
result in a nominal amount of recapture of tax credits, since the Texas
Partnerships represent only 3% of the Partnership's tax credits.
<PAGE>
Notes to the Combined Financial Statements (continued)
11.Federal Income Taxes
A reconciliation of the net loss reported in the Combined Statements of
Operations for the years ended March 31, 1998, 1997 and 1996 to the net loss
reported for federal income tax purposes for the years ended December 31, 1997,
1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------- ------------ ------------
<S> <C> <C> <C>
Net Loss per Statement of Operations $ (2,311,612) $ (5,503,780) $ (5,046,594)
Amortization of acquisition fees and
expenses not deductible for tax
purposes 90,224 92,053 111,170
Adjustment for equity in losses of Local
Limited Partnerships for financial reporting
purposes over (under) equity in losses for tax purposes (784,701) 499,384 (266,381)
Equity in losses of Local Limited Partnerships not
recognized for financial reporting purposes (1,549,521) (879,005) (16,868)
Provision for valuation of investment in Local
Limited Partnership not deductible for tax purposes 241,236 - -
Operating expenses not deductible in
current year for tax purposes 253,468 507,615 109,272
Operating expenses paid in current year but
expensed for financial reporting purposes in prior year - (62,752) (61,111)
Adjustment to reflect March 31 fiscal year
end to December 31 tax year end (236,277) 40,206 (75,827)
Other (79,696) (145,350) -
------------- ------------ ------------
Net Loss for federal income tax purposes $ (4,376,879) $ (5,451,629) $ (5,246,339)
============= ============ ============
</TABLE>
The differences of the assets and liabilities of the Partnership for financial
reporting purposes and tax reporting purposes for the year ended March 31, 1998
are as follows:
<TABLE>
<CAPTION>
Financial Tax
Reporting Reporting
Purposes Purposes Differences
-------------- ------------ -------------
<S> <C> <C> <C>
Investments in Local Limited Partnerships $ 15,959,055 $ 17,507,057 $ 1,548,002
============== ============ =============
Other assets $ 15,649,069 $ 10,150,731 $ 5,498,338
============== ============ =============
Liabilities $ 13,857,576 $ 87,346 $ 13,770,230
============== ============ =============
</TABLE>
The differences in the assets and liabilities of the Partnership for financial
reporting purposes are primarily attributable to: (i) for financial reporting
purposes, the Partnership combines the financial statements of three Local
Limited Partnerships with its financial statements; for tax reporting purposes,
these entities are carried on the equity method; (ii) the Partnership has not
recognized approximately $2,445,000 of equity in losses relating to Local
Limited partnerships whose cumulative equity in losses exceeded their
invstments; (iii) the Partnership has provided a reserve for valuation of
approximately $2,724,000 against two of its investments in Local Limited
Partnerships for financial reporting purposes; (iv) approximately $836,000 of
amortization has been deducted for financial reporting purposes only (v)
$110,000 of cash distributions received from Local Limited Partnerships during
the fourth quarter ended March 31, 1998 are not included in the Partnerships
Investments in Local Limited Partnerships for tax reporting purposes at December
31, 1997; and (vi) organizational and offering costs of approximately
$8,352,000 have been capitalized for tax reporting purposes but are charged to
Limited Partners' equity for financial reporting purposes.
<PAGE>
Notes to the Combined Financial Statements (continued)
11.Federal Income Taxes (continued)
The differences of the assets and liabilities of the Partnership for financial
reporting purposes and tax reporting purposes for the year ended March 31, 1997
are as follows:
<TABLE>
<CAPTION>
Financial Tax
Reporting Reporting
Purposes Purposes Differences
-------------- ------------ -------------
<S> <C> <C> <C>
Investments in Local Limited Partnerships $ 19,593,420 $ 21,555,773 $ (1,962,353)
============== ============ =============
Other assets $ 17,038,633 $ 10,445,967 $ 6,592,666
============== ============ =============
Liabilities $ 14,948,056 $ 54,419 $ 14,893,637
============== ============ =============
</TABLE>
The differences in the assets and liabilities of the Partnership for financial
reporting purposes are primarily attributable to: (i) for financial reporting
purposes the Partnership combines the financial statements of six Local Limited
Partnerships with its financial statements; for tax reporting purposes, these
entities are carried on the equity method; (ii) the Partnership has provided
a reserve for valuation of approximately $945,000 against four of its
investments in Local Limited Partnerships for financial reporting purposes;
(iii) approximately $748,000 of amortization has been deducted for financial
reporting purposes only and (iv) organizational and offering costs of
approximately $8,352,000 have been capitalized for tax reporting purposes but
are charged to Limited Partners' equity for financial reporting purposes.
<PAGE>
Notes to the Combined Financial Statements (continued)
12.Supplemental Combining Schedules
<TABLE>
<CAPTION>
Balance Sheets
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 272,808 $ 113,251 $ - $ 386,059
Marketable securities, at fair value 985,849 - - 985,849
Accounts receivable, net 358,675 12,759 (358,675) 12,759
Tenant security deposits - 85,340 - 85,340
Investments in Local
Limited Partnerships, net 16,338,159 - (379,104) 15,954,055
Rental property at cost, net - 13,846,553 - 13,846,553
Mortgagee escrow deposits - 114,300 - 114,300
Deferred charges, net - 189,076 - 189,076
Other assets 19,685 9,448 - 29,133
--------------- --------------- ------------- ------------
Total Assets $ 17,975,176 $ 14,370,727 $ (737,779) $ 31,608,124
=============== =============== ============= ============
Liabilities and Partners' Equity
Mortgage notes payable $ - $ 9,720,859 $ - $ 9,720,859
Accounts payable to affiliates 555,360 405,915 (358,675) 602,600
Accounts payable and accrued expenses 101,737 238,837 - 340,574
Interest payable - 627,412 - 627,412
Tenant security deposits payable - 84,131 - 84,131
Payable to affiliated Developer - 2,482,000 - 2,482,000
--------------- --------------- ------------- ------------
Total Liabilities 657,097 13,559,154 (358,675) 13,857,576
--------------- --------------- ------------- ------------
Minority interest in Local Limited
Partnerships - - 432,469 432,469
General, Initial, and Investor
Limited Partners' Equity 17,316,902 811,573 (811,573) 17,316,902
Net unrealized gains on
marketable securities 1,177 - - 1,177
--------------- --------------- ------------- ------------
Total Partners' Equity 17,318,079 811,573 (811,573) 17,318,079
--------------- --------------- ------------- ------------
Total Liabilities and Partners' Equity $ 17,975,176 $ 14,370,727 $ (737,779) $ 31,608,124
=============== =============== ============= ============
</TABLE>
(A) As of March 31, 1998. (B) As of December 31, 1997 - See Note 2.
<PAGE>
Notes to the Combined Financial Statements (continued)
12.Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Operations
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
<S> <C> <C> <C> <C>
Revenue:
Rental $ - $ 1,831,495 $ - $ 1,831,495
Investment 72,438 35,861 - 108,299
Other 77,189 44,605 - 121,794
--------------- --------------- ------------- ------------
Total Revenue 149,627 1,911,961 - 2,061,588
--------------- --------------- ------------- ------------
Expenses:
Asset management fees, related party 222,066 - - 222,066
General and administrative 348,400 - - 348,400
Bad debt expense 176,648 - - 176,648
Rental operations, exclusive of depreciation - 1,025,546 - 1,025,546
Property management fees, related party - 122,823 - 122,823
Interest - 1,012,385 - 1,012,385
Provision for valuation of rental property - 181,098 - 181,098
Provision for valuation of investment in
Local Limited Partnership 1,880,482 - - 1,880,482
Depreciation - 658,377 - 658,377
Amortization 90,224 20,106 - 110,330
--------------- --------------- ------------- ------------
Total Expenses 2,717,820 3,020,335 - 5,738,155
--------------- --------------- ------------- ------------
Loss before equity in losses of Local
Limited Partnerships, minority interest,
loss on liquidation of interests in Local
Limited Partnerships and
extraordinary item (2,568,193) (1,108,374) - (3,676,567)
Equity in losses of Local Limited
Partnerships (1,378,743) - (26,848) (1,405,591)
Minority interest in losses of
Local Limited Partnerships - - 81,241 81,241
Loss on liquidation of interests
in Local Limited Partnerships (3,922) - - (3,922)
--------------- --------------- ------------- ------------
Net loss before extraordinary item (3,950,858) (1,108,374) 54,393 (5,004,839)
Extraordinary gain on cancellation
of indebtedness - 1,053,981 - 1,053,981
--------------- --------------- ------------- ------------
Net Loss $ (3,950,858) $ (54,393) $ 54,393 $ (3,950,858)
</TABLE>
(A) For the year ended March 31, 1998.
<PAGE>
(B) For the year ended December 31, 1997 - See Note 2.
Notes to the Combined Financial Statements (continued)
12.Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Cash Flows
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net Income (Loss) $ (3,950,858) $ (54,393) $ 54,393 $ (3,950,858)
Adjustments to reconcile net income (loss) to
net cash used for
operating activities:
Equity in losses of Local
Limited Partnerships 1,378,743 - 26,848 1,405,591
Extraordinary gain on cancellation
of indebtedness - (1,053,981) - (1,053,981)
Loss on liquidation of
interests in Local Limited
Partnerships 3,922 - - 3,922
Cash distribution income included
in cash distributions from
Local Limited Partnerships (64,034) - - (64,034)
Provision for valuation of investment in
Local Limited Partnership 1,880,482 - - 1,880,482
Other - (5,456) - (5,456)
Bad debt expense 176,648 - - 176,648
Provision for valuation of rental property - 181,098 - 181,098
Depreciation and amortization 90,224 678,483 - 768,707
Loss on sale of marketable securities 1,902 - - 1,902
Minority interest in losses of
Local Limited Partnerships - - (81,241) (81,241)
Increase (decrease) in cash arising from
changes in operating assets and liabilities
Accounts receivable, net - 10,918 - 10,918
Tenant security deposits - 11,385 - 11,385
Mortgagee escrow deposits - (7,945) - (7,945)
Other assets 2,093 1,890 - 3,983
Accounts payable to affiliates 206,414 (609) - 205,805
Accounts payable and accrued expenses 32,079 49,234 - 81,313
Interest payable - 180,471 - 180,471
Tenant security deposits payable - (3,340) - (3,340)
--------------- --------------- ------------- ------------
Net cash used for
operating activities (242,385) (12,245) - (254,630)
--------------- --------------- ------------- ------------
Cash flows from investing activities:
Purchases of marketable securities (623,364) - - (623,364)
Proceeds from sales and maturities
of marketable securities 698,632 - - 698,632
Cash distributions received from
Local Limited Partnerships 318,180 - - 318,180
</TABLE>
Notes to the Combined Financial Statements (continued)
12.Supplemental Combining Schedules (continued)
Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
Boston Financial
Qualified Housing
Tax Credits Combined Combined
L.P. IV (A) Entities (B) Eliminations (A)
<S> <C> <C> <C> <C>
(Advances to) reimbursements from
Local Limited Partnerships (94,982) - 137,115 42,133
Purchase of rental property
and equipment - (81,449) - (81,449)
--------------- --------------- ------------- ------------
Net cash provided by (used for)
investing activities 298,466 (81,449) 137,115 354,132
--------------- --------------- ------------- ------------
Cash flows from financing activities:
Capital contributions received - 92,221 - 92,221
Advances from affiliate - 157,966 (137,115) 20,851
Payment of mortgage principal - (114,668) - (114,668)
--------------- --------------- ------------- ------------
Net cash provided for (used for)
financing activities - 135,519 (137,115) (1,596)
--------------- --------------- ------------- ------------
Net increase in cash
and cash equivalents 56,081 41,825 - 97,906
Cash and cash equivalents, beginning 216,727 71,426 - 288,153
--------------- --------------- ------------- ------------
Cash and cash equivalents, ending $ 272,808 $ 113,251 $ - $ 386,059
=============== =============== ============= ============
</TABLE>
(A) For the year ended March 31, 1998.
(B) For the year ended December 31, 1997 - See Note 2.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
COST OF INTEREST
AT ACQUISITION DATE GROSS
AMOUNT AT
WHICH
CARRIED AT
DECEMBER
31, 1997
------------------------------ -------------
NET IMPROVEMENTS
NUMBER TOTAL CAPITALIZED
OF ENCUM- BUILDING AND SUBSEQUENT TO
DESCRIPTION UNITS BRANCES * LAND IMPROVEMENTS ACQUISITION LAND
- ----------- ----- --------- ---- ------------ ----------- ----
<S> <C> <C> <C> <C> <C> <C>
Low and Moderate
Income Apartment Complexes
Brooks Crossing Apartments 224 $5,508,316 $878,034 $4,468,624 $3,973,858 $878,034
Atlanta, GA
Willow Ridge 134 3,080,713 345,600 4,722,160 (444,082) 345,600
Prescott, AZ
Dorsett Apartments 58 2,236,792 38,599 2,617,152 3,546,637 42,112
Philadelphia, PA
Hampton Lane Apartments 24 717,351 15,120 25,930 849,554 33,397
Buena Vista, GA
Audubon Apartments 37 3,127,020 0 1,714,176 3,969,553 0
Boston, MA
Sencit Towne House 201 6,966,525 371,854 9,716,234 720,693 371,854
Shillington, PA
Allentown Towne House 160 6,574,639 236,460 7,917,331 336,197 236,460
Allentown, PA
Prince Street Housing 201 7,980,992 371,734 9,788,527 575,534 371,734
Lancaster, PA
Hilltop Apartments (A) 0 0 8,683 389,661 (398,344) 0
Rhome, TX
Royal Crest Apartments (B) 0 0 13,985 906,750 (920,735) 0
(D)
Bowie, TX
Pine Manor Apart. (C) (D) 0 0 19,991 0 (19,991) 0
Jacksonboro, TX
Bryson Place (A) 0 0 1,200 0 (1,200) 0
Bryson, TX
Leawood Manor** 254 7,471,460 971,742 12,044,206 3,294,348 1,048,640
Kansas City, KS
Pinewood Terrace I** (C)(E) 84 1,087,288 6,897 1,400,102 (27,736) 14,147
Rusk, TX
Valley View Apts (C) (D) 0 0 4,835 466,237 (471,072) 0
Valley View, TX
Grandview Apartments (A) 0 0 8,660 0 (8,660) 0
Grandview, TX
Bent Tree Apts (A) 0 0 14,533 0 (14,533) 0
Jacksonboro, TX
Bentley Court 273 6,925,240 0 0 13,362,725 1,679,225
Columbia, SC
Nocona Terrace (B) (D) 0 0 7,050 741,550 (748,600) 0
Nocona, TX
Justin Place (C) (D) 0 0 5,485 0 (5,485) 0
Justin, TX
Orocovix IV 40 1,645,417 60,000 1,175,705 882,349 60,000
Orocovix, PR
Carolina Woods 48 1,132,541 121,710 2,160,614 6,903 121,710
Greensboro, NC
Mayfair Mansions 569 21,403,483 2,080,022 27,784,358 299,790 2,080,022
Washington, DC
Oakview Square 192 6,040,777 530,411 7,353,548 3,854,341 530,411
Chesterfield, MI
Whitehills 24 754,485 40,200 934,444 7,409 121,848
Howell, MI
Gobles Apts. 24 738,752 12,500 939,518 1,401 51,736
Gobles, MI
Brown Kaplan 60 7,851,941 0 7,096,932 1,989,928 0
Boston, MA
Green Tree 24 658,485 21,120 788,935 3,015 21,120
Greenville, GA
Milan Apartments 32 1,017,410 50,500 1,254,727 50,378 164,803
Milan, MI
Findlay 49 1,332,929 19,533 3,165,904 565,969 19,533
Cincinnati, OH
Seagraves (A) 0 0 20,000 634,518 (654,518) 0
Seagraves, TX
Lakeside 308 6,178,202 400,000 9,416,579 1,079,269 400,000
Chicago, IL
Lincoln Green 30 1,209,526 156,725 1,924,700 87,857 160,874
Old Town, ME
West Pine 38 1,677,531 74,800 944,818 1,086,747 74,800
Allegheny County, PA
BK Apartments 48 875,000 30,000 983,020 275,906 34,151
Jamestown, ND
46th & Vincennes 28 1,311,435 16,200 1,901,527 75,871 16,200
Chicago, IL
Gateway**(E) 50 1,162,111 119,110 1,355,075 (99,498) 140,636
Azle, TX
------------------------------------------------------------------------------------------
SUBTOTAL 3,214 106,666,361 7,073,293 126,733,562 37,081,778 9,019,047
LESS: Combined Entities ** 388 9,720,859 1,128,060 15,265,620 2,670,566 1,203,423
------------------------------------------------------------------------------------------
TOTAL 2,825 $96,945,502 $5,945,233 $111,467,942 $34,411,212 $7,815,624
==========================================================================================
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIFE ON WHICH
DEPRECIATION
BUILDING AND ACCUMULATED DATE IS COMPUTED DATE
DESCRIPTION IMPROVEMENTS TOTAL DEPRECIATION BUILT (YEARS) ACQUIRED
- ----------- ------------ ----- ------------ ----- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Low and Moderate
Income Apartment Complexes
Brooks Crossing Apartments $8,442,482 $9,320,516 $2,482,617 1990 various 06/30/89
Atlanta, GA
Willow Ridge 4,278,078 4,623,678 944,854 1989 various 8/28/89
Prescott, AZ
Dorsett Apartments 6,160,276 6,202,388 1,081,189 1990 various 10/20/89
Philadelphia, PA
Hampton Lane Apartments 857,207 890,604 263,315 1990 various 12/20/89
Buena Vista, GA
Audubon Apartments 5,683,729 5,683,729 1,157,121 1990 various 12/22/89
Boston, MA
Sencit Towne House 10,436,927 10,808,781 2,563,611 1989 various 12/26/89
Shillington, PA
Allentown Towne House 8,253,528 8,489,988 1,836,669 1989 various 12/26/89
Allentown, PA
Prince Street Housing 10,364,061 10,735,795 2,396,042 1989 various 12/26/89
Lancaster, PA
Hilltop Apartments (A) 0 0 0 1989 N/A 12/27/89
Rhome, TX
Royal Crest Apartments (B) 0 0 0 1989 various 12/27/89
(D)
Bowie, TX
Pine Manor Apart. (C) (D) 0 0 0 1989 various 12/27/89
Jacksonboro, TX
Bryson Place (A) 0 0 0 1990 N/A 12/28/89
Bryson, TX
Leawood Manor** 15,261,656 16,310,296 4,713,142 1989 various 12/29/89
Kansas City, KS
Pinewood Terrace I** (C)(E) 1,365,116 1,379,263 291,975 1989 various 12/27/89
Rusk, TX
Valley View Apts (C) (D) 0 0 0 1989 various 12/27/89
Valley View, TX
Grandview Apartments (A) 0 0 0 1990 N/A 12/27/89
Grandview, TX
Bent Tree Apts (A) 0 0 0 1989 N/A 12/27/89
Jacksonboro, TX
Bentley Court 11,683,500 13,362,725 3,840,297 1990 various 12/26/89
Columbia, SC
Nocona Terrace (B) (D) 0 0 0 1989 various 12/27/89
Nocona, TX
Justin Place (C) (D) 0 0 0 1990 various 12/27/89
Justin, TX
Orocovix IV 2,058,054 2,118,054 445,344 1990 various 12/30/89
Orocovix, PR
Carolina Woods 2,167,517 2,289,227 480,540 1990 various 01/31/90
Greensboro, NC
Mayfair Mansions 28,084,148 30,164,170 9,714,212 1990 various 3/21/90
Washington, DC
Oakview Square 11,207,889 11,738,300 1,905,240 1991 various 3/22/89
Chesterfield, MI
Whitehills 860,205 982,053 319,975 1990 various 4/21/90
Howell, MI
Gobles Apts. 901,683 953,419 303,059 1990 various 4/29/90
Gobles, MI
Brown Kaplan 9,086,860 9,086,860 1,985,243 1991 various 7/1/90
Boston, MA
Green Tree 791,950 813,070 233,323 1990 various 7/6/90
Greenville, GA
Milan Apartments 1,190,802 1,355,605 415,563 1990 various 8/20/90
Milan, MI
Findlay 3,731,873 3,751,406 500,987 1990 various 8/15/90
Cincinnati, OH
Seagraves (A) 0 0 0 1990 N/A 11/28/90
Seagraves, TX
Lakeside 10,495,848 10,895,848 3,024,059 1991 various 5/17/90
Chicago, IL
Lincoln Green 2,008,408 2,169,282 500,732 1989 various 3/21/90
Old Town, ME
West Pine 2,031,565 2,106,365 420,221 1991 various 12/31/90
Allegheny County, PA
BK Apartments 1,254,775 1,288,926 250,654 1991 various 12/1/90
Jamestown, ND
46th & Vincennes 1,977,398 1,993,598 542,959 1990 various 3/29/91
Chicago, IL
Gateway**(E) 1,234,051 1,374,687 212,576 1991 various 6/24/91
Azle, TX
----------------------------------------------------------
SUBTOTAL 161,869,586 170,888,633 42,825,519
LESS: Combined Entities ** 17,860,823 19,064,246 5,217,693
----------------------------------------------------------
TOTAL $144,008,763 $151,824,387 $37,607,826
==========================================================
</TABLE>
<PAGE>
(1) The aggregate cost for Federal Income Tax purposes is approximately $
171,862,000.
(A) During the year ended March 31, 1997, the Partnership has transferred all of
the assets of five of the Texas Partnerships subject to their liabilities to
unaffiliated entities.
(B) Balances at December 31, 1995 are restated to reflect that the properties
previously stated as having been transferred at March 31, 1996 were transferred
during the year ended March 31, 1997 and were accounted for on the equity method
of accounting at March 31, 1996.
(D) During the year ended March 31, 1998, the Partnership has transferred all of
the assets of five of the Texas Partnerships subject to their liabilities to
unaffiliated entities.
* Mortgage notes payable generally represent
non-recourse financing of low-income housing
projects payable with terms of up to 40 years with
interest payable at rates ranging from 9.75% to
12%. The Partnership has not guaranteed any of
these mortgage notes payable.
<PAGE>
Summary of property owned and accumulated depreciation:
Property Owned December 31, 1997
- -----------------------------------------------------------------------------
Balance at beginning of period $153,104,249
Additions during period:
Acquisitions through foreclosure $0
Other acquisitions 92,036
Improvements etc. 390,536
----------------
482,572
Deductions during period:
Cost of real estate sold 0
Write down of building resulting from
a non-temporary decline in value (E) (181,098)
Eliminations -1996 Combined Entities 20,095,959
Eliminations - Combined Entities** (19,064,246)
Disposals from transferred properties(D) (2,613,049)
----------------
(1,762,434)
-------------------
Balance at close of period $151,824,387
===================
Property Owned December 31, 1996
- -----------------------------------------------------------------------------
Balance at beginning of period $153,974,533
Additions during period:
Acquisitions through foreclosure $0
Other acquisitions 62,414
Improvements etc. 1,770,452
----------------
1,832,866
Deductions during period:
Cost of real estate sold (4,622)
Write down of building resulting from
a non-temporary decline in value (c) (791,830)
Eliminations -1995 Combined Entities 20,760,503
Eliminations - Combined Entities** (20,095,959)
Disposals from transferred properties(A) (2,571,242)
----------------
(2,703,150)
-------------------
Balance at close of period $153,104,249
===================
Property Owned December 31, 1995
- -----------------------------------------------------------------------------
Balance at beginning of period $149,462,145
Additions during period:
Acquisitions through foreclosure $0
Other acquisitions 88,018
Improvements etc. 308,211
----------------
396,229
Deductions during period:
Cost of real estate sold (544)
Eliminations -1994 Combined Entities 24,877,206
Eliminations - Combined Entities (20,760,503)
Disposals from transferred properties(B) 0
----------------
4,116,159
-------------------
Balance at close of period $153,974,533
===================
Accumulated Depreciation December 31, 1997
- -----------------------------------------------------------
Balance at beginning of period
before Combined Entities $33,135,477
Additions during period:
Eliminations - 1996 Combined Entities 4,878,763
Eliminations - Combined Entities** (5,217,693)
Properties disposed of (D) (553,079)
Depreciation 5,364,358
===================
Balance at close of period $37,607,826
===================
Accumulated Depreciation December 31, 1996
- -----------------------------------------------------------
Balance at beginning of period
before Combined Entities $28,735,999
Additions during period:
Eliminations - 1995 Combined Entities 4,131,931
Eliminations - Combined Entities** (4,878,763)
Properties disposed of (A) (386,880)
Depreciation 5,533,190
===================
Balance at close of period $33,135,477
===================
Accumulated Depreciation December 31, 1995
- -----------------------------------------------------------
Balance at beginning of period
before Combined Entities $23,272,301
Additions during period:
Eliminations - 1994 Combined Entities 3,872,447
Eliminations - Combined Entities (4,131,931)
Depreciation 5,723,182
Properties disposed of (B) 0
-------------------
Balance at close of period $28,735,999
===================
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS IV
(A Limited Partnership)
Annual Report on form 10-K
For The Year Ended March 31, 1998
Reports of Independent Auditors
<PAGE>
[Letterhead]
[LOGO]
Haran & Associates
INDEPENDENT AUDITORS REPORT
To the Partners HUD Field Office Director
46th & VINCENNES LIMITED PARTNERSHIP Chicago, Illinois
Chicago, Illinois
We have audited the accompanying balance sheet of 46th & VINCENNES LIMITED
PARTNERSHIP, Project No. 071-35594, as of December 31, 1996, and the related
statements of profit and loss, changes in partners' equity and statement of cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the 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 46th & VINCENNES LIMITED
PARTNERSHIP, as of December 31, 1996, and its profit or loss, changes in
partners' equity, and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 1997 on our consideration of 46th & VINCENNES LIMITED
PARTNERSHIP's internal control structure and reports dated January 21, 1997 on
its compliance with specific requirements applicable to Major HUD Programs,
specific requirements applicable to Affirmative Fair Housing, and specific
requirements applicable to Nonmajor HUD Programs.
The accompanying supplementary information (shown on pages 15 to 19) is
presented for the purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/Haran & Associates Ltd.
Haran & Associates LTD
Certified Public Accountants
Wilmette, Illinois
Illinois Certificate No. 060-002892
Federal Certification No. 36-3097692
Audit Partner: James E. Haran
January 21, 1997
<PAGE>
[Letterhead]
[LOGO]
Haran & Associates
INDEPENDENT AUDITORS REPORT
To the Partners HUD Field Office Director
46th & VINCENNES LIMITED PARTNERSHIP Chicago, Illinois
Chicago, Illinois
We have audited the accompanying balance sheet of 46th & VINCENNES LIMITED
PARTNERSHIP, Project No. 071-35594, as of December 31, 1995, and the related
statements of profit and loss, changes in partners' equity and statement of cash
flows for the year then ended. These financial statements are the responsibility
of the project's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As more fully described in the notes to the financial statements, the
Partnership has expensed construction period interest and real estate taxes
associated with the building. In our opinion, construction period interest and
taxes should be capitalized and depreciated over the life of the building to
conform to generally accepted accounting principles. The effects on the
financial statements of the preceding practices are not reasonably determinable.
In our opinion, except for the effects of the matters discussed in the preceding
paragraph, the financial statements referred to in the first paragraph present
fairly, in all material respects, the financial position of 46th & VINCENNES
LIMITED PARTNERSHIP, as of December 31, 1995, and its profit and loss, changes
in partners' equity, and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 1996 on our consideration of 46th & VINCENNES LIMITED
PARTNERSHIP's internal control structure and reports dated January 26, 1996 on
its compliance with specific requirements applicable to Major HUD Programs,
specific requirements applicable to Affirmative Fair Housing, and specific
requirements applicable to Nonmajor HUD Programs. <PAGE>
[LETTERHEAD]
[LOGO]
Haran & Associates
INDEPENDENT AUDITORS REPORT (CONTINUED)
The accompanying supplementary information (shown on pages 16 to 20) is
presented for the purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statement and,
in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/Haran & Associates Ltd.
Haran & Associates LTD
Wilmette, IL
January 26, 1996
<PAGE>
[Letterhead]
[LOGO]
Ziner & Company, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Audobon Group Limited Partnership
We have audited the accompanying balance sheet (MHFA Forms F.C.-3A & -3B) of
Audobon Group Limited Partnership (a Massachusetts limited partnership) (Project
No. 89-008-R) as of December 31, 1997, and the related statements changes in
partners' equity (deficiency) (MHFA Forms F.C.-3C), operations (MHFA Forms
F.C.-2A), cash flows (MHFA Forms F.C.-4A & -4C) for the year then ended. These
financial statements are the responsibility of the general partner. 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
misstatements. 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 Audobon Group Limited
Partnership, as of December 31, 1997, and the results of its operations, its
changes in partners' equity 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 F to the
financial statements, the Partnership's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Ziner & Company, P.C.
Boston, MA
February 10, 1998
<PAGE>
[Letterhead]
[LOGO]
Ziner & Company, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Audobon Group Limited Partnership
We have audited the accompanying balance sheet (MHFA Forms F.C.-3A & -3B) of
Audobon Group Limited Partnership (a Massachusetts limited partnership)(Project
No. 89-008-R) as of December 31, 1996, and the related statements changes in
partners' equity (deficiency) (MHFA Forms F.C.-3C), operations (MHFA Forms
F.C.-2A), cash flows (MHFA Forms F.C.-4A & -4C) for the year then ended. These
financial statements are the responsibility of the general partner. 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
misstatements. 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 Audobon Group Limited
Partnership, as of December 31, 1996, and the results of its operations, its
changes in partners' equity 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 F to the
financial statements, the Partnership's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Ziner & Company, P.C.
Boston, MA
February 22, 1997
<PAGE>
[Letterhead]
[LOGO]
Ziner & Company, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Audobon Group Limited Partnership
We have audited the accompanying balance sheet (MHFA Forms F.C.-3A & -3B) of
Audobon Group Limited Partnership (a Massachusetts limited partnership)(Project
No. 89-008-R) as of December 31, 1995, and the related statements changes in
partners' equity (deficiency) (MHFA Forms F.C.-3C), operations (MHFA Forms
F.C.-2A), cash flows (MHFA Forms F.C.-4A & -4C) for the year then ended. These
financial statements are the responsibility of the general partner. 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
misstatements. 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 Audobon Group Limited
Partnership, as of December 31, 1995, and the results of its operations, its
changes in partners' equity and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/Ziner & Company, P.C.
Boston, MA
January 26, 1996
<PAGE>
[Letterhead]
[LOGO]
Habif, Arogeti & Wynne, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners
Bentley Court II, Limited Partnership
We have audited the accompanying balance sheet of Bentley Court II, Limited
Partnership (a South Carolina Limited Partnership), FHA Project No. 054-36622,
as of December 31, 1995, and the related statements of changes in partners'
equity, profit and loss, and cash flows for the year then ended. These financial
statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. 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 Bentley Court II, Limited
Partnership as of December 31, 1995, and its changes in partners' equity, the
results of its operations, and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 29, 1996 on our consideration of Bentley Court II, Limited
Partnership's internal control structure and a report dated January 29, 1996 on
its compliance with laws and regulations.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting information included in the report
(shown on pages 12 - 16) is presented for the purpose of additional analysis and
is not a required part of the 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.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note I to the
financial statements, the Company has suffered recurring losses from operations
and is in default under its mortgage agreement, which raises substantial doubt
about its ability to continue as a going concern.
/s/ Habif, Arogeti & Wynne, P.C.
Altanta, GA
January 29, 1996
<PAGE>
[Letterhead]
[LOGO]
Charles Bailly & Company P.L.L.P.
INDEPENDENT AUDITORS REPORT
The Partners
B-K Apartments Limited Partnership
Wahpeton, North Dakota
We have audited the accompanying balance sheets of B-K Apartments Limited
Partnership as of December 31, 1997 and 1996, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of B-K Apartments Limited
Partnership as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 9 to the
financial statements, the Partnership has suffered recurring vacancies and cash
deficiencies that raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 9. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Charles Bailly & Company P.L.L.P.
Fargo, North Dakota
February 18, 1998
<PAGE>
[Letterhead]
[LOGO]
Charles Bailly & Company P.L.L.P.
INDEPENDENT AUDITORS REPORT
The Partners
B-K Apartments Limited Partnership
Wahpeton, North Dakota
We have audited the accompanying balance sheets of B-K Apartments Limited
Partnership as of December 31, 1996 and 1995, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of B-K Apartments Limited
Partnership as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 9 to the
financial statements, the Partnership has suffered recurring vacancies and cash
deficiencies that raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 9. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Charles Bailly & Company P.L.L.P.
Fargo, North Dakota
February 18, 1997
<PAGE>
[Letterhead]
[LOGO]
Mueller, Walla & Albertson, P.C.
INDEPENDENT AUDITORS REPORT
The Partners,
Brookscrossing Apartments, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheets of Brookscrossing Apartments,
L.P. (a limited partnership) as of December 31, 1997, and the related statements
of operations, partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brookscrossing Apartments, L.P.
as of December 31, 1997, and the results of its operations, changes in partners'
capital and its cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ Mueller, Walla & Albertson, P.C.
Certified Public Accountants
Kirkwood, MS
February 19, 1998
<PAGE>
[Letterhead]
[LOGO]
Mueller, Walla & Albertson, P.C.
INDEPENDENT AUDITORS REPORT
The Partners,
Brookscrossing Apartments, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheets of Brookscrossing Apartments,
L.P. (a limited partnership) as of December 31, 1996, and the related statements
of operations, partners' capital and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brookscrossing Apartments, L.P.
as of December 31, 1996, and the results of its operations, changes in partners'
capital and its cash flows for the year then ended in conformity with generally
accepted accounting principles.
/s/ Mueller, Walla & Albertson, P.C.
Certified Public Accountants
Kirkwood, MS
February 11, 1997
<PAGE>
[Letterhead]
[LOGO]
Mueller, Walla & Albertson, P.C.
INDEPENDENT AUDITORS REPORT
The Partners,
Brookscrossing Apartments, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheets of Brookscrossing Apartments,
L.P. (a limited partnership), as of December 31, 1995, and the related
statements of operations, partners' capital and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 Brookscrossing Apartments, L.P.
as of December 31, 1995, and the results of its operations, changes in partners'
capital and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Mueller,Walla & Albertson, P.C.
Kirkwood, MS
February 7, 1996
<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS REPORT
To the Partners of
Brown-Kaplan Limited Partnership
We have audited the accompanying balance sheet (MHFA Forms F.C.-3a and 3b) of
Brown-Kaplan Limited Partnership as of December 31, 1997, and the related
statements of operations (MHFA Form F.C.-2A), partners' equity (deficiency)
(MHFA Form F.C.-3C) and cash flows (MHFA Form F.C.-4A,4B, and 4C) for the year
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by he Comptroller general of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Brown-Kaplan Limited
Partnership as of December 31, 1997, the results of its operations, changes in
partners' equity (deficiency) and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 22 through 29
is presented for purposed of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 23,
1998 on or consideration of Brown-Kaplan Limited Partnership's internal control
and on its compliance with specific requirements applicable to major HUD
programs, fair housing and non-discrimination, and laws and regulations
applicable to the financial statements.
/s/Reznick Fedder & Silverman
Boston, Massachusetts Federal Employer
January 23, 1998 Identification Number
52-1088612
Audit Principal: Philip A. Weitzel
<PAGE>
February 7, 1998
<PAGE>
[Letterhead]
[LOGO]
Ziner & Company, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Brown-Kaplan Limited Partnership
We have audited the accompanying balance sheet of Brown-Kaplan Limited
Partnership (a Massachusetts limited partnership) (MHFA Project No. 88-002) as
of December 31, 1996, and the related statements changes in partners' equity,
operations 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.
These 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 the
partnership's 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 Brown-Kaplan Limited
Partnership as of December 31, 1996, and the changes in partners' equity, the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/Ziner & Company, P.C.
Boston, MA
February 7, 1997
<PAGE>
[Letterhead]
[LOGO]
Ziner & Company, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Brown-Kaplan Limited Partnership
We have audited the accompanying balance sheet of Brown-Kaplan Limited
Partnership (a Massachusetts limited partnership) (MHFA Project No. 88-002) as
of December 31, 1995, and the related statements changes in partners' equity,
operations 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.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the 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 Brown-Kaplan Limited
Partnership, as of December 31, 1995, and the changes in partners' equity, the
results in its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/Ziner & Company, P.C.
Boston, MA
February 17, 1996
<PAGE>
[Letterhead]
[LOGO]
David G. Pelliccione, C.P.A., P.C.
INDEPENDENT AUDITORS REPORT
To the Partners
Buena Vista Limited Partnership
We have audited the accompanying balance sheet of BUENA VISTA LIMITED
PARTNERSHIP (A Limited Partnership), as of December 31, 1997 and 1996, and the
related statement of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the 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 BUENA VISTA LIMITED PARTNERSHIP
as of December 31, 1997 and 1996, and the results in its operations and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ David G. Pelliccione
Savannah, Georgia
February 23, 1998
<PAGE>
[Letterhead]
[LOGO]
David G. Pelliccione, C.P.A., P.C.
INDEPENDENT AUDITORS REPORT
To the Partners
Buena Vista Limited Partnership
We have audited the accompanying balance sheet of BUENA VISTA LIMITED
PARTNERSHIP (A Limited Partnership), as of December 31, 1996 and 1995, and the
related statement of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the 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 BUENA VISTA LIMITED PARTNERSHIP
as of December 31, 1996 and 1995, and the results in its operations and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ David G. Pelliccione
Savannah, Georgia
February 25, 1997
<PAGE>
[Letterhead]
[LOGO]
Halbert, Katz & Co., P.C.
INDEPENDENT AUDITORS REPORT
To the Partners
Carolina Woods Associates, Limited Partnership
Wilmington, Delaware
We have audited the accompanying balance sheet of Carolina Woods Associates,
Limited Partnership, as of December 31, 1997 and December 31, 1996, and the
related statements of loss, partners' capital (capital deficiency) and cash
flows for the years then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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 Carolina Woods Associates,
Limited Partnership, as of December 31, 1997 and December 31, 1996, and the
results of its operations, changes in partners' capital and 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 supporting information included in
the report (shown on page 11) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of
Carolina Woods Associates, Limited Partnership. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
/s/Halbert, Katz & Co., P.C.
Philadelphia, PA
January 30, 1998
<PAGE>
[Letterhead]
[LOGO]
Halbert, Katz & Co., P.C.
INDEPENDENT AUDITORS REPORT
To the Partners
Carolina Woods Associates, Limited Partnership
Wilmington, Delaware
We have audited the accompanying balance sheet of Carolina Woods Associates,
Limited Partnership, as of December 31, 1996 and December 31, 1995, and the
related statements of loss, partners' capital (capital deficiency) and cash
flows for the years then ended. These financial statements are the
responsibility of the project's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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 Carolina Woods Associates,
Limited Partnership, as of December 31, 1996 and December 31, 1995, and the
results of its operations, changes in partners' capital and 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 supporting information included in
the report (shown on page 11) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of
Carolina Woods Associates, Limited Partnership. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
/s/Halbert, Katz & Co., P.C.
Philadelphia, PA
January 30, 1997
<PAGE>
[Letterhead]
[LOGO]
Fishbein & Company, P.C.
{Letterhead}
INDEPENDENT AUDITORS REPORT
February 5, 1998
Partners
Dorsett Limited Partnership
We have audited the accompanying balance sheets of DORSETT LIMITED PARTNERSHIP
as of December 31, 1997 and 1996, and the related statements of operations,
partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 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 Dorsett Limited Partnership as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information included in
this report (shown on pages 10 and 11) is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Partnership. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/Fishbein & Company P.C.
Elkins Park, PA
<PAGE>
[Letterhead]
[LOGO]
Fishbein & Company, P.C.
{Letterhead}
INDEPENDENT AUDITORS REPORT
January 31, 1997
Partners
Dorsett Limited Partnership
We have audited the accompanying balance sheets of DORSETT LIMITED PARTNERSHIP
as of December 31, 1996, and the related statements of operations, partners'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 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 Dorsett Limited Partnership as
of December 31, 1996, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information included in
this report (shown on pages 9 and 10) is presented for purposes of additional
analysis and is not a required part of the basic financial statements of the
Partnership . Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/Fishbein & Company P.C.
Elkins Park, PA
<PAGE>
[Letterhead]
[LOGO]
FEGLEY & ASSOCIATES
INDEPENDENT AUDITORS REPORT
To the Partners
Dorsett Limited Partnership
We have audited the accompanying balance sheets of Dorsett Limited Partnership,
as of December 31, 1995 and 1994, and the related statements operations,
partners' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. 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 Dorsett Limited Partnership as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/Fegley & Associates
Elkins Park, PA
February 2, 1996
<PAGE>
[Letterhead]
[LOGO]
MISCHLER, NURRE, WAITE
INDEPENDENT AUDITORS REPORT
To the Partners of
Findlay Market Limited Partnership
Boston, Massachusetts
We have audited the accompanying balance sheet of Findlay Market Limited
Partnership, as of December 31, 1995, and the related statements of revenue and
expenses, changes in partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Project'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
misstatements. 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 Findlay Market Limited
Partnership, as of December 31, 1995 and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles. <PAGE>
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in the report
shown on pages 13-14 is presented for the purposes of additional analysis and is
not a required part of the basic financial statements of Findlay Market Limited
Partnership. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statement and, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/ MISCHLER, NURRE, WAITE, Ltd.
MISCHLER, NURRE, WAITE, Certified Public Accountants
Cincinnati, Ohio
February 23, 1996
<PAGE>
[Letterhead]
[LOGO]
Kirschner Hutton Perlin, P.C.
INDEPENDENT AUDITORS REPORT
January 27, 1998
Gobles Limited Dividend Housing Association
Limited Partnership
We have audited the accompanying balance sheet of Gobles Limited Dividend
Housing Association Limited Partnership as of December 31, 1997 and 1996, and
the related statements of operations, partners' equity (deficit) and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our 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 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 Gobles Limited Dividend Housing
Association Limited Partnership as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Kirschner Hutton Perlin, P.C.
Southfield, MI
<PAGE>
[Letterhead]
[LOGO]
Kirschner Hutton Perlin, P.C.
INDEPENDENT AUDITORS REPORT
January 22, 1997
Gobles Limited Dividend Housing Association
Limited Partnership
We have audited the accompanying balance sheet of Gobles Limited Dividend
Housing Association Limited Partnership as of December 31, 1996 and 1995, and
the related statements of operations, partners' equity (deficit) and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our 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 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 Gobles Limited Dividend Housing
Association Limited Partnership as of December 31, 1996 and 1995, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Kirschner Hutton Perlin, P.C.
Southfield, MI
<PAGE>
[Letterhead]
FLOYD & COMPANY
306 Commercial Drive, Suite 202 Post Office Box 14251
Savannah, Georgia 31406 Savannah, Georgia
Phone: (912) 355-9969
INDEPENDENT AUDITORS REPORT
To the General Partners of
Greentree Village Limited Partnership
We have audited the accompanying balance sheets of Greentree Village Limited
Partnership (a Georgia Limited Partnership), as of December 31, 1997 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 audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. 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 Greentree Village Limited
Partnership (a Georgia Limited Partnership), as of December 31, 1997 and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
Floyd & Company, C.P.A.
/s/R. Doug Floyd
February 28, 1998
<PAGE>
[Letterhead]
FLOYD & COMPANY
306 Commercial Drive, Suite 202 Post Office Box 14251
Savannah, Georgia 31406 Savannah, Georgia
Phone: (912) 355-9969
INDEPENDENT AUDITORS REPORT
To the General Partners of
Greentree Village Limited Partnership
We have audited the accompanying balance sheets of Greentree Village Limited
Partnership (a Georgia Limited Partnership), as of December 31, 1996 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 audits.
The financial statement information for the year ending December 31, 1995 was
audited by another independent certified public accountant who expressed an
opinion dated March 16, 1996.
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
misstatements. 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 Greentree Village Limited
Partnership (a Georgia Limited Partnership), as of December 31, 1996 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 made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information listed in the
table of contents is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
the portion market "unaudited", on which we express no opinion, has been
subjected to the procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
Floyd & Company, C.P.A.
/s/R. Doug Floyd
February 28, 1997
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David C. Moja, C.P.A., P.C.
INDEPENDENT AUDITORS REPORT
To the General Partners of
Greentree Village Limited Partnership
We have audited the accompanying balance sheets of Greentree Village Limited
Partnership (a Georgia Limited Partnership), as of December 31, 1995 and
December 31, 1994, and the related statements of operations, partners' equity
(deficit) and cash flows for the years then ended. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our 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
misstatements. 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 Greentree Village Limited
Partnership (a Georgia Limited Partnership), as of December 31, 1995 and
December 31, 1994, 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 made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information listed in the
table of contents is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
the portion market "unaudited", on which we express no opinion, has been
subjected to the procedures applied in the audits of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/David C. Moja. C.P.A., P.C.
David C. Moja. C.P.A., P.C
March 11, 1996
Savannah, Georgia
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VACEK, LANGE, & WESTERFIELD, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Lakeside Square Limited Partnership
We have audited the accompanying balance sheets of Lakeside Square Limited
Partnership, a limited partnership, (HUD Project No. IL06-E000-093), as of
December 31, 1997, and the related statements of profit and loss, changes in
partners' capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's Managing general partner.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the managing general partner, 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 Lakeside Square Limited
Partnership as of December 31, 1997, and the results of its operations, changes
in partners' capital and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
The supplementary data included in the report (shown on pages 13 to 20) are
presented for the purposes of additional analysis and are not a required part of
the basic financial statements of Lakeside Square Limited Partnership. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly presented in
all material respects, in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued reports
dated January 23, 1998 on our consideration of Lakeside Square Limited
Partnership's (the "Partnership") internal control structure and the
Partnership's compliance with laws and regulations.
/s/ VACEK, LANGE, & WESTERFIELD, P.C.
Houston, Texas
January 23, 1998
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VACEK, LANGE, & WESTERFIELD, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Lakeside Square Limited Partnership
We have audited the accompanying balance sheets of Lakeside Square Limited
Partnership, a limited partnership, (HUD Project No. IL06-E000-093), as of
December 31, 1996, and the related statements of profit and loss, changes in
partners' capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's Managing general partner.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the managing general partner, 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 Lakeside Square Limited
Partnership as of December 31, 1996, and the results of its operations, changes
in partners' capital and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued reports
dated January 22 and January 24, 1997 on our consideration of Lakeside Square
Limited Partnership's (the "Partnership") internal control structure and the
Partnership's compliance with laws and regulations, respectively.
The supplementary data included in the report (shown on pages 13 to 20) are
presented for the purposes of additional analysis and are not a required part of
the basic financial statements of Lakeside Square Limited Partnership. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly presented in
all material respects, in relation to the financial statements taken as a whole.
/s/ VACEK, LANGE, & WESTERFIELD, P.C.
Houston, Texas
January 22, 1997
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VACEK, LANGE, & WESTERFIELD, P.C.
INDEPENDENT AUDITORS REPORT
To the Partners of
Lakeside Square Limited Partnership
We have audited the accompanying balance sheets of Lakeside Square Limited
Partnership, a limited partnership (HUD Project No. IL06-E000-093), as of
December 31, 1995, and the related statements of profit and loss, partners'
capital, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnership's general partner. 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
misstatements. 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 Lakeside Square Limited
Partnership, as of December 31, 1995, and the results of its operations, changes
in partners' capital and its cash flows for the year then ended in conformity
with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued reports
dated January 26, 1996 on our consideration of Lakeside Square Limited
Partnership's (the "Partnership") internal control structure and the
Partnership's compliance with laws and regulations.
The supplementary data included in the report (shown on pages 13 to 20) are
presented for the purposes of additional analysis and are not a required part of
the basic financial statements of Lakeside Square Limited Partnership. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ VACEK, LANGE, & WESTERFIELD, P.C.
Houston, Texas
January 26, 1996
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Reznick Fedder & Silverman
INDEPENDENT AUDITORS REPORT
To the Partners
Leawood Associates, L.P.
We have audited the accompanying balance sheets of Leawood Associates, L.P., as
of December 31, 1997 and 1996, and the related statements of operations,
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
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 Leawood Associates, L.P., as of
December 31, 1997 and 1996, and the results of its operations, changes in
partners' capital and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Reznick Fedder & Silverman
Boston, Massachusetts
February 2, 1998
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Reznick Fedder & Silverman
INDEPENDENT AUDITORS REPORT
To the Partners
Leawood Associates, L.P.
We have audited the accompanying balance sheets of Leawood Associates, L.P., as
of December 31, 1996 and 1995, and the related statements of operations,
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
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 Leawood Associates, L.P., as of
December 31, 1996 and 1995, and the results of its operations, changes in
partners' capital and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Reznick Fedder & Silverman
Boston, Massachusetts
January 25, 1997
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OUELLETTE, LABONTE, ROBERGE & ALLEN, P.A.
INDEPENDENT AUDITORS REPORT
The Partners
Lincoln Green Associates
Limited Partnership
We have audited the accompanying balance sheets of Lincoln Green Associates
Limited Partnership, as of December 31, 1997 and 1996, and the related
statements of income (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 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
misstatements. 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 Lincoln Green Associates
Limited Partnership, as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The additional information included in the
Schedules 1 through 2 is presented for the purposes of additional analysis and
are not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ OUELLETTE, LABONTE, ROBERGE & ALLEN
February 3, 1998
Lewiston, Maine
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OUELLETTE, LABONTE, ROBERGE & ALLEN, P.A.
INDEPENDENT AUDITORS REPORT
The Partners
Lincoln Green Associates
Limited Partnership
We have audited the accompanying balance sheets of Lincoln Green Associates
Limited Partnership, a limited partnership (HUD Project No. IL06-E000-093), as
of December 31, 1996 and 1995, and the related statements of income (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 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
misstatements. 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 Lincoln Green Associates
Limited Partnership, as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The additional information included in the
Schedules 1 through 2 is presented for the purposes of additional analysis and
are not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ OUELLETTE, LABONTE, ROBERGE & ALLEN
February 4, 1997
Lewiston, Maine
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Ernst & Young LLP Suite 500 Phone 202-775-1880
1150 18th Street, N.W. Fax 202-833-2019
Washington D. C. 20036
INDEPENDENT AUDITORS REPORT
To the Partners
Kenilworth Associates Ltd.
We have audited the accompanying balance sheet of Kenilworth Associates Ltd., a
Limited Partnership, FHA Project No. 000-44160/000-35349 (the "Partnership"), as
of December 31, 1997, and the related statements of profit and loss (on HUD Form
No. 92410), partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller general of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kenilworth Associates Ltd., a
Limited Partnership, as of December 31, 1997, and the results of its operations
and cash flows for the years then ended in conformity with generally accepted
accounting principles.
Our audit was conducted fro the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
the report, referred to as "Supplementary Information" in the accompanying Table
of Contents, is presented for the purposed of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements, unless otherwise noted, and in our opinion is fairly stated in all
material respect in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued our report
dated January 30, 1998, on our consideration of Keilworth Associates LTD's, a
Limited Partnerships, internal control over financial reporting and our report
dated January 30, 1998, on its compliance with certain provisions of laws,
regulations and contracts.
/s/ Ernst & Young LLP
January 30, 1998
Washington, DC
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[Letterhead]
[LOGO]
Ernst & Young LLP Suite 500 Phone 202-775-1880
1150 18th Street, N.W. Fax 202-833-2019
Washington D. C. 20036
INDEPENDENT AUDITORS REPORT
To the Partners
Kenilworth Associates Ltd.
We have audited the accompanying balance sheet of Kenilworth Associates Ltd., a
Limited Partnership, (the "Partnership"), as of December 31, 1996, and the
related statements of profit and loss, partners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 Kenilworth Associates Ltd., a
Limited Partnership, as of December 31, 1996, and the results of its operations
and cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
January 31, 1997
Washington, DC
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Kenneth Leventhal & Company
INDEPENDENT AUDITORS REPORT
To the Partners
Kenilworth Associates Ltd.
Washington, D.C.
We have audited the accompanying balance sheet of Kenilworth Associates Ltd., a
Limited Partnership, (the "Partnership") as of December 31, 1995, and the
related statements of profit and loss, partners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the 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 Kenilworth Associates Ltd. a
Limited Partnership, as of December 31, 1995, and the results of its operations
and cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Washington, DC
January 26, 1996
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Orocovix Limited Dividend Partnership, S.E.
San Juan, Puerto Rico
We have audited the accompanying balance sheets of Orocovix Limited Dividend
Partnership, S.E. as of December 31, 1997 and 1996, and the related statements
of operations, partners' equity (deficiency) and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 Orocovix Limited Dividend
Partnership, S.E. as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/HORWATH VELEZ SEMPRIT NIEVES & CO.
San Juan, PR
February 2, 1998
<PAGE>
Orocovix Limited Dividend Partnership, S.E.
San Juan, Puerto Rico
We have audited the accompanying balance sheets of Orocovix Limited Dividend
Partnership, S.E. as of December 31, 1996 and 1995, and the related statements
of operations, partners' equity (deficiency) and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 Orocovix Limited Dividend
Partnership, S.E. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/HORWATH VELEZ SEMPRIT NIEVES & CO.
San Juan, PR
February 4, 1997
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J.A. PLUMER & CO., P.A.
INDEPENDENT AUDITOR'S REPORT
February 6, 1998
Partners
Prince Street Towers Limited Partnership
Washington, D.C.
We have audited the accompanying statements of financial position of Prince
Street Towers Limited Partnership, PHFA Project No. R-414-8E, A Limited
Partnership, as of December 31, 1997 and 1996, and the related statements of
profit and loss (on HUD Form No. 92410), partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Prince Street Towers Limited
Partnership at December 31, 1997 and 1996, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ J.A. PLUMER & CO., P.A.
Certified Public Accountants
Bethesda, Maryland
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J.A. PLUMER & CO., P.A.
INDEPENDENT AUDITOR'S REPORT
February 10, 1997
Partners
Prince Street Towers Limited Partnership
Washington, D.C.
We have audited the accompanying statements of financial position of Prince
Street Towers Limited Partnership, PHFA Project No. R-414-8E, A Limited
Partnership, as of December 31, 1996 and 1995, and the related statements of
profit and loss (on HUD Form No. 92410), partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Prince Street Towers Limited
Partnership at December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ J.A. PLUMER & CO., P.A.
Certified Public Accountants
Bethesda, Maryland
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KIRSCHNER HUTTON PERLIN, P.C.
INDEPENDENT AUDITORS REPORT
January 16, 1998
Partners
Milan Apartments Company Limited Partnership
We have audited the accompanying balance sheet of Milan Apartments Company
Limited Partnership, RECD Project No. 26-58-382867000, as of December 31, 1997
and 1996, and the related statements of operations, partners' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Milan Apartments Company
Limited Partnership as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 16, 1998, on our consideration of Milan Apartments Company Limited
Dividend Housing Association Limited Partnership's internal control structure
and a report dated January 16, 1998, on its compliance with laws and
regulations.
/s/ Kirschner Hutton Perlin, P.C.
Southfield, MI
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KIRSCHNER HUTTON PERLIN, P.C.
INDEPENDENT AUDITORS REPORT
January 14, 1997
Partners
Milan Apartments Company Limited Partnership
We have audited the accompanying balance sheet of Milan Apartments Company
Limited Partnership, RECD Project No. 26-58-382867000, as of December 31, 1996
and 1995, and the related statements of operations, partners' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Milan Apartments Company
Limited Partnership as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 14, 1997, on our consideration of Milan Apartments Company Limited
Dividend Housing Association Limited Partnership's internal control structure
and a report dated January 14, 1997, on its compliance with laws and
regulations.
/s/ Kirschner Hutton Perlin, P.C.
Southfield, MI
<PAGE>
[Letterhead]
[LOGO]
JOHN J. LEHOTAN C.P.A.
To The Partners of Oakview Square
Limited Partnership
Detroit, Michigan
INDEPENDENT AUDITORS REPORT
I have audited the accompanying balance sheet of Oakview Square Limited
Partnership, a Michigan limited partnership, as of December 31, 1997, and the
related statements of profit and loss, partners' equity and cash flow for the
year then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial positions of Oakview Square Limited Partnership
as of December 31, 1997 and the results of its operations and its cash flow for
the year then ended in conformity with generally accepted accounting principles.
/s/John J. Lehotan
Certified Public Accountants
Brown City, MI
February 7, 1998
<PAGE>
[Letterhead]
[LOGO]
JOHN J. LEHOTAN C.P.A.
To The Partners of Oakview Square
Limited Partnership
Detroit, Michigan
INDEPENDENT AUDITORS REPORT
I have audited the accompanying balance sheet of Oakview Square Limited
Partnership, a Michigan limited partnership, as of December 31, 1996, and the
related statements of profit and loss, partners' equity and cash flow for the
year then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial positions of Oakview Square Limited Partnership
as of December 31, 1996 and the results of its operations and its cash flow for
the year then ended in conformity with generally accepted accounting principles.
/s/John J. Lehotan
Certified Public Accountants
Brown City, MI
February 6, 1997
<PAGE>
[Letterhead]
[LOGO]
JOHN J. LEHOTAN C.P.A.
To The Partners of Oakview Square
Limited Partnership
Detroit, Michigan
INDEPENDENT AUDITORS REPORT
I have audited the accompanying balance sheet of Oakview Square Limited
Partnership, a Michigan limited partnership, as of December 31, 1995, and the
related statements of profit and loss, partners' equity and cash flow for the
year then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial positions of Oakview Square Limited Partnership
as of December 31, 1995 and the results of its operations and its cash flow for
the year then ended in conformity with generally accepted accounting principles.
/s/John J. Lehotan
Certified Public Accountants
February 14, 1996
Brown City, MI
[Letterhead]
[LOGO]
PLANTE & MORAN, LLP
To the Partners
East Rusk Housing Associates, Ltd.
(d/b/a Pinewood Terrace Apartments)
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheets of East Rusk Housing Associates,
Ltd., (a Texas limited partnership) (d/b/a Pinewood Terrace Apartments), RECD
Project No. 49-037-752269877, as of December 31, 1995, 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
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As discussed in Note 4 to the financial statements, the Partnership has entered
into an option with a prospective purchaser for the sale of assets and transfer
of certain liabilities of the Partnership. It is presently not determinable
whether the amounts realizable from the disposition of the assets or the amounts
that RECD agrees to accept in settlement of the obligations due it will differ
materially from the amounts shown in the accompanying financial statements.
As described in Note 3 to the financial statements, the Partnership is in
noncompliance with RECD loan covenants and RECD regulations.
In accordance with Government Auditing Standards, we have also issued a report
dated February 3, 1996, on our consideration of the Partnership's internal
control structure and a report dated February 3, 1996, on its compliance with
laws and regulations.
/s/Plante & Moran LLP
East Lansing, MI
February 3, 1996
<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP
INDEPENDENT AUDITORS' REPORT
To the Partners of
Sencit Towne House Limited Partnership
Washington, D.C.
Pennsylvania Housing Finance Agency
2101 North Front Street
PO Box 8029
Harrisburg, PA
We have audited the accompanying statements of financial position of Sencit
Towne House Limited Partnership A Limited Partnership, PHFA Project No. R389-8E,
as of December 31, 1997 and 1996, and the related statements of profit and loss
(on HUD Form No. 92410), partners' equity (deficit) and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. 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, such financial statements present fairly, in all material
respects, the financial statements of Sencit Towne House Limited Partnership at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
Our audit were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information referred to in the Table
of Contents, is presented for the purposed of additional analysis and is not a
required part of the basic financial statements. This additional information is
the responsibility of the Partnership's management. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion , the additional information is fairly stated, in
all material respect, in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued our report
dated February 4, 1998, on our consideration of the Partnership's internal
control over financial reporting and our report dated February 4, 1998, on its
compliance with laws and regulations.
/s/Deloitte & Touche LLP
Washington, DC
February 4, 1998
<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP
INDEPENDENT AUDITORS' REPORT
To the Partners of
Sencit Towne House Limited Partnership
Washington, D.C.
We have audited the accompanying statements of financial position of Sencit
Towne House Limited Partnership A Limited Partnership, PHFA Project No. R389-8E,
as of December 31, 1996 and 1995, and the related statements of profit and loss
(on HUD Form No. 92410), partners' equity (deficit) and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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, such financial statements present fairly, in all material
respects, the financial statements of Sencit Towne House Limited Partnership at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/Deloitte & Touche LLP
Washington, DC
January 27, 1997
<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP
INDEPENDENT AUDITORS' REPORT
To the Partners of
Allentown Towne House Limited Partnership
Washington, D.C.
Pennsylvania Housing Finance Agency
2101 North Front Street
PO Box 8029
Harrisburg, PA
We have audited the accompanying statements of financial position of Allentown
Towne House Limited Partnership, A Limited Partnership, PHFA Project No.
R187-8E, as of December 31, 1997 and 1996, and the related statements of profit
and loss (on HUD Form No. 92410), partners' equity (deficit) and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. 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, such financial statements present fairly, in all material
respects, the financial statements of Allentown Towne House Limited Partnership
at December 31, 1997 and 1996, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Our audit were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information referred to in the Table
of Contents, is presented for the purposed of additional analysis and is not a
required part of the basic financial statements. This additional information is
the responsibility of the Partnership's management. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion , the additional information is fairly stated, in
all material respect, in relation to the financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued our report
dated January 26, 1998, on our consideration of the Partnership's internal
control over financial reporting and our report dated January 26, 1998, on its
compliance with laws and regulations.
/s/Deloitte & Touche LLP
Washington, DC
January 26, 1998
<PAGE>
[Letterhead]
[LOGO]
Deloitte & Touche LLP
INDEPENDENT AUDITORS' REPORT
To the Partners of
Allentown Towne House Limited Partnership
Washington, D.C.
We have audited the accompanying statements of financial position of Allentown
Towne House Limited Partnership A Limited Partnership, PHFA Project No.
R-187-8E, as of December 31, 1996 and 1995, and the related statements of profit
and loss (on HUD Form No. 92410), partners' equity (deficit) and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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, such financial statements present fairly, in all material
respects, the financial statements of Allentown Towne House Limited Partnership
at December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/Deloitte & Touche LLP
Washington, DC
January 19, 1997
<PAGE>
[Letterhead]
[LOGO]
Paul E. Campbell
INDEPENDENT AUDITORS' REPORT
To the Partners
of West Pine Associates
Huntington, West Virginia 25704
I have audited the accompanying balance sheets of West Pine Associates, as of
December 31, 1997 and 1996, and the related statements of income, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for my
opinion.
In my opinion, such financial statements present fairly, in all material
respects, the financial statements of West Pine Associates as of December 31,
1997 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
My audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole.
/s/Paul E. Campbell
Huntington, West VA
January 8, 1998
<PAGE>
[Letterhead]
[LOGO]
Paul E. Campbell
INDEPENDENT AUDITORS' REPORT
To the Partners
of West Pine Associates
Huntington, West Virginia 25704
I have audited the accompanying balance sheets of West Pine Associates, as of
December 31, 1996 and 1995, and the related statements of income, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
United States. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for my
opinion.
In my opinion, such financial statements present fairly, in all material
respects, the financial statements of West Pine Associates as of December 31,
1996 and 1995, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
My audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole.
/s/Paul E. Campbell
Huntington, West VA
January 16, 1997
<PAGE>
[Letterhead]
[LOGO]
Kirschner Hutton Perlin, P.C.
INDEPENDENT AUDITORS' REPORT
January 21, 1998
Partners
Whitehills II Apartments Company Limited Partnership
We have audited the accompanying balance sheet of Whitehills II Apartments
Company Limited Partnership as of December 31, 1997 and 1996, and the related
statements of operations, partners' equity (deficit) and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of Whitehills II Apartments
Company Limited Partnership as of December 31, 1997 and 1996, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Kirschner Hutton Perlin, P.C.
Southfield, MI
<PAGE>
[Letterhead]
[LOGO]
Kirschner Hutton Perlin, P.C.
INDEPENDENT AUDITORS' REPORT
January 23, 1997
Partners
Whitehills II Apartments Company Limited Partnership
We have audited the accompanying balance sheet of Whitehills II Apartments
Company Limited Partnership as of December 31, 1996 and 1995, and the related
statements of operations, partners' equity (deficit) and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of Whitehills II Apartments
Company Limited Partnership as of December 31, 1996 and 1995, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Kirschner Hutton Perlin, P.C.
Southfield, MI
[Letterhead]
[LOGO]
Cleveland & Company, P.C.
INDEPENDENT AUDITORS' REPORT
To the Partners of
Willow Ridge Development Company Limited Partnership
Prescott, Arizona
We have audited the accompanying balance sheet of Willow Ridge Development
Company Limited Partnership (FHA Project No. 123-94010, formerly Project No.
123-36610) as of December 31, 1997, and the related statements of operations,
changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our 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 Willow Ridge Development
Company Limited Partnership (FHA Project No. 123-94010 formerly Project No.
123-36610), as of December 31, 1997, and the results of its operations, and the
changes in partner's equity and cash flows for the year then ended in conformity
with generally accepted accounting principles.
The accompanying supplementary information (shown on pages 13-32) are presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits for HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 21, 1998, on our
consideration of Willow Ridge Development Company Limited Partnership's internal
control structure, and reports dated February 21, 1997, on its compliance with
specific requirements applicable to major HUD programs, and specific
requirements applicable to Affirmative Fair Housing.
/s/Cleveland & Company, P.C.
Certified Public Accountants
Phoenix, AZ
Federal Employer I.D. No. 86-0564541
February 21, 1998
<PAGE>
[Letterhead]
[LOGO]
Cleveland & Company, P.C.
INDEPENDENT AUDITORS' REPORT
To the Partners of
Willow Ridge Development Company Limited Partnership
Prescott, Arizona
We have audited the accompanying balance sheet of Willow Ridge Development
Company Limited Partnership (FHA Project No. 123-94010, formerly Project No.
123-36610) as of December 31, 1996, and the related statements of operations,
changes in partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our 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 Willow Ridge Development
Company Limited Partnership (FHA Project No. 123-94010 formerly Project No.
123-36610), as of December 31, 1996, and the results of its operations, and the
changes in partner's equity and cash flows for the year then ended in conformity
with generally accepted accounting principles.
In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits for HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 10, 1997, on our
consideration of Willow Ridge Development Company Limited Partnership's internal
control structure, and reports dated February 10, 1997, on its compliance with
specific requirements applicable to major HUD programs, and specific
requirements applicable to Affirmative Fair Housing.
The accompanying supplementary information (shown on pages 11-24) are presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/Cleveland & Company, P.C.
Certified Public Accountants
Phoenix, AZ
Federal Employer I.D. No. 86-0564541
February 10, 1997
<PAGE>
[Letterhead]
[LOGO]
Cleveland & Company, P.C.
INDEPENDENT AUDITORS' REPORT
To the Partners of
Willow Ridge Development Company Limited Partnership
Prescott, Arizona
We have audited the accompanying balance sheet of Willow Ridge Development
Company Limited Partnership (FHA Project No. 123-94010, formerly Project No.
123-36610), as of December 31, 1995, and the related statements of operations,
changes in partners' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing standards
Government Auditing Standards, issued by the Comptroller General of the United
States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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, such financial statements present fairly, in all material
respects, the financial statements of Willow Ridge Development Company Limited
Partnership (FHA Project No. 123-94010, formerly Project No. 123-36610), as of
December 31, 1995, and the results of its operations, and the changes in
partner's equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 24, 1996, on our consideration of Willow Ridge Development Company
Limited Partnership's internal control structure, and reports dated January 24,
1996, on its compliance with specific requirements applicable to major HUD
programs, and specific requirements applicable to Affirmative Fair Housing.
The accompanying supplementary information (shown on pages 11-24) are presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/Cleveland & Company, P.C.
Phoenix, AZ
January 24, 1996
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
LEAWOOD ASSOCIATES, L.P.
(A LIMITED PARTNERSHIP)
DECEMBER 31, 1997 AND 1996
<PAGE>
Leawood Associates, L.P.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEETS 4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF PARTNERS' EQUITY 6
STATEMENTS OF CASH FLOWS 7
NOTES TO FINANCIAL STATEMENTS 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Leawood Associates, L.P.
We have audited the accompanying balance sheets of Leawood Associates,
L.P., as of December 31, 1997 and 1996, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
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 Leawood Associates,
L.P. as of December 31, 1997 and 1996, and the results of its operations, the
changes in partners' equity and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
/s/Reznick Fedder & Silverman
Boston, Massachusetts
February 2, 1998
Reznick Fedder & Silverman
745 Atlantic Avenue
Suite 800
Boston, Massachusetts 02111-2735
Phone (617) 423-5855
Fax (617) 423-6651
<PAGE>
Leawood Associates, L.P.
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS 1997 1996
----------------- -----------------------
<S> <C> <C>
Cash $ 106,300 $ 61,806
Accounts receivable - tenants 1,221 1,190
Accounts receivable - other 9,763 13,018
Tenants' security deposits 77,455 84,183
Prepaid insurance 5,451 9,700
------------------ -------------------
Total current assets 200,190 169,897
ESCROWS
Mortgage escrow 113,691 105,443
RENTAL PROPERTY
Land 971,742 971,742
Land improvements 76,898 32,611
Building 14,378,601 14,378,601
Building improvements 119,198 95,697
Furniture and equipment 763,857 750,196
----------------- -----------------------
16,310,296 16,228,847
Less accumulated depreciation 4,713,142 4,162,528
----------------- -----------------------
11,597,154 12,066,319
OTHER ASSETS
Mortgage financing costs, net of accumulated
amortization of $126,768 and $106,662 189,076 209,182
----------------- -----------------------
$ 12,100,111 $ 12,550,841
================= =======================
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current maturities of mortgage payable $ 56,015 $ 49,834
Accrued expenses 14,772 14,159
Prepaid rent 326 1,582
Accrued real estate taxes 71,268 70,709
Accrued expenses -other 12,609 6,265
Tenants' security deposits 76,243 74,923
----------------- -----------------------
Total current liabilities 231,233 217,472
LONG-TERM LIABILITIES
Mortgage payable, net of current maturities 7,415,445 7,471,460
Accrued interest payable 385,877 312,318
Due to Limited Partner 63,702 63,702
Due to General Partner 2,482,000 2,482,000
----------------- -----------------------
10,347,024 10,329,480
CONTINGENCY - -
PARTNERS' EQUITY 1,521,854 2,003,889
----------------- -----------------------
$ 12,100,111 $ 12,550,841
================= =======================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
STATEMENTS OF OPERATIONS
Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
<S> <C> <C>
Revenue
Rental income $ 1,632,418 $ 1,541,522
Other income 35,365 40,891
Interest income 35,844 42,246
------------------ ------------------
Total income 1,703,627 1,624,659
------------------ ------------------
Expenses
Administrative 253,723 272,063
Utilities 77,899 79,922
Maintenance and repairs 270,048 258,235
Taxes and insurance 224,368 224,654
------------------ ------------------
826,038 834,874
------------------ ------------------
Income before interest,
depreciation and amortization 877,589 789,785
------------------ ------------------
Interest expense - mortgages 881,125 886,624
Depreciation and amortization 570,720 634,625
------------------ ------------------
1,451,845 1,521,249
------------------ ------------------
Excess of expenses over revenue $ (574,256) $ (731,464)
================== ==================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
STATEMENTS OF PARTNERS' EQUITY
Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Special Total
General Limited Limited Equity
Partner Partner Partner (Deficit)
----------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 $ 311,165 $ (68,464) $ 2,400,431 $ 2,643,132
Capital contributions - 92,221 - 92,221
Excess of expenses over
revenue (7,315) (73,146) (651,003) (731,464)
----------------- ------------------ ------------------ ------------------
Balance, December 31, 1996 303,580 (49,389) 1,749,428 2,003,889
Capital contributions - 92,221 - 92,221
Excess of expenses over
revenue (5,742) (57,426) (511,088) (574,256)
----------------- ------------------ ------------------ ------------------
Balance, December 31, 1997 $ 298,108 $ (14,594) $ 1,238,340 $ 1,521,854
================= ================== ================== ==================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
STATEMENTS OF CASH FLOWS
Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------------- -------------------
<S> <C> <C>
Cash flows from operating activities
Excess of expenses over revenue $ (574,256) $ (731,464)
Adjustments to reconcile excess of expenses over revenue to
net cash provided by (used in)
operating activities
Depreciation and amortization 570,720 634,625
Decrease (increase) in accounts receivable - tenants (31) 2,697
Increase in prepaid expenses 4,249 (236)
Decrease in accounts payable - (793)
Decrease in accrued expenses 7,516 1,201
Decrease in prepaid rent (1,256) (1,083)
Increase in accrued interest 73,559 121,418
Decrease in tenants' security deposits, net 8,048 10,199
Increase in mortgage escrow deposits, net (8,248) (5,356)
Decrease in accounts receivable - other 3,255 3,126
------------------- -------------------
Net cash provided by operating activities 83,556 34,334
------------------- -------------------
Cash flows from investing activities
Additions to building and equipment (81,449) (124,627)
------------------- -------------------
Net cash used in investing activities (81,449) (124,627)
------------------- -------------------
Cash flows form financing activities
Payments on mortgage (49,834) (44,334)
Capital contributions 92,221 92,221
------------------- -------------------
Net cash provided by financing activities 42,387 47,887
------------------- -------------------
NET INCREASE IN CASH 44,494 (42,406)
Cash, beginning 61,806 104,212
------------------- -------------------
Cash, ending $ 106,300 $ 61,806
=================== ===================
Supplemental disclosure of cash flow information
cash paid during the year for interest $ 807,566 $ 765,206
=================== ===================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The Partnership was formed as a limited partnership under the laws of the
State of Kansas in 1988 for the purpose of constructing and operating a
rental housing project pursuant to Section 42 of the Internal Revenue Code.
The project consists of 254 units located in Leawood, Kansas and is
currently operating under the name of Leawood Manor.
Each building of the project has qualified and been allocated low-income
housing credits pursuant to Internal Revenue Code Section 42 (Section 42)
which regulates the use of the project as to occupant eligibility and unit
gross rent, among other requirements. Each building of the project must
meet the provisions of the regulations during each of fifteen consecutive
years in order to remain qualified to receive the credits.
Use of Estimates
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 revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Rental Property
Rental property is carried at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over
their estimated service lives by use of the straight-line and accelerated
methods for financial reporting purposes. For income tax purposes,
accelerated lives and methods are used.
Amortization
Mortgage financing costs are amortized over the term of the mortgage using
the straight-line method.
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Income Taxes
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash equivalents include money market
funds and certificates of deposit with maturities of 90 days or less when
acquired.
Rental Income
Rental income is recognized as rentals become due. Rental payments received
in advance are deferred until earned. All leases between the Partnership
and the tenants of the property are operating leases.
NOTE B - MORTGAGE PAYABLE
Under the terms of the amended and restated note agreement, the mortgage is
payable in monthly installments of $77,850 of principal and interest in
arrears, with interest accrued at an annual rate of 11.75%. Interest is
payable monthly at the rate of 8% per annum plus 95% of all net cash flows
as defined by the mortgage agreement. Under the terms of the agreement, the
difference in the interest payments at the contract rate of 11.75% and
reduced payment rates, will accrue interest at the rate of 8%, which will
be payable from 95% of net cash flows, if available or upon maturity of the
mortgage. On July 10, 1999 the reduced payment rate is scheduled to
increase to 10%. The mortgage matures in July 2006 and is collateralized by
the property.
The terms of the mortgage and other contract documents require the
establishment of restricted deposits and funded reserves to be held and
invested by the mortgagee. These financial instruments potentially subject
the Partnership to a concentration of credit risk.
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997 and 1996
NOTE B - MORTGAGE PAYABLE (Continued)
The liability of the Partnership under the mortgage is limited to the
underlying value of the real estate collateral plus other amounts deposited
with the lender.
Aggregate annual maturities of the mortgage payable over each of the next
five years are as follows:
December 31, 1998 $ 56,015
1999 62,963
2000 70,813
2001 79,552
2002 89,420
Management believes it is not practical to estimate the fair value of the
mortgage because loans with similar characteristics are not currently
available to the Partnership.
NOTE C - RELATED PARTY TRANSACTIONS
The property is managed by Boston Financial Group Limited Partnership, an
affiliate of the general partner. The current management agreement provides
for a management fee of 5% of monthly rental collections. Such fees charged
to operations during 1997 and 1996 were $79,904 and $75,182 respectively. As
of December 31, 1997 and 1996, $13,419 and $12,953, respectively, was due to
the management agent and is included in accrued expenses.
As of December 31, 1997 and 1996 the Partnership owed $63,702 to the limited
partner for noninterest-bearing advances made to the Partnership for
financing costs.
Due to general partner represents unpaid development fees, the rights to
which have been assigned to the general partner. Under the terms of the
agreement, there is no specified repayment date and the Partnership is
charged no interest.
The mortgage payable is held by the Special Limited Partner. During 1997 and
1996, total payments of $857,400 and $809,540, respectively, were paid for
principal and interest. At December 31, 1997 and 1996 the Partnership owes
$7,857,337 and $7,833,612 in principal and accrued interest respectively.
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
NOTE D - CAPITAL CONTRIBUTIONS
During 1994, the Partnership admitted a Special Limited Partner. The Special
Limited Partner agreed to provide capital contributions of $490,638
consisting of $100 in cash and the balance in the form of a promissory note
bearing interest at an annual rate of 7%. During 1997, 1996, and 1995,
capital contributions of $92,221, $92,221, and $29,432 plus accrued interest
of $22,780, $32,064, and $34,320 was received, respectively. The capital
contributions receivable is not reflected on the balance sheet. The capital
contribution less payments received to date by the property, has been
deposited and is being held in escrow.
Annual capital contributions are due on July 1 of each year, as follows:
1998 $ 92,221
1999 92,221
2000 92,221
2002 92,221
NOTE E - CONTINGENCY
The Project's low-income housing credits are contingent on its ability to
maintain compliance with applicable sections of Section 42. Failure to
maintain compliance with occupant eligibility, and/or unit gross rent, or to
correct noncompliance within a specified time period could result in
recapture of previously taken tax credits plus interest. In addition, such
potential noncompliance may require an adjustment to the contributed capital
by the limited partners.
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
LEAWOOD ASSOCIATES, L.P.
(A LIMITED PARTNERSHIP)
DECEMBER 31, 1996 AND 1995
<PAGE>
Leawood Associates, L.P.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEETS 4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF PARTNERS' EQUITY 6
STATEMENTS OF CASH FLOWS 7
NOTES TO FINANCIAL STATEMENTS 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Leawood Associates, L.P.
We have audited the accompanying balance sheet of Leawood Associates,
L.P., as of December 31, 1996 and 1995, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
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 Leawood Associates,
L.P. as of December 31, 1996 and 1995, and the results of its operations, the
changes in partners' equity and its cash flows for the years then ended, in
conformity with generally accepted accounting principles.
Boston, Massachusetts
January 25, 1997
<PAGE>
Leawood Associates, L.P.
BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
CURRENT ASSETS 1996 1995
------------------ ------------------
Cash $ 61,806 $ 104,212
Accounts receivable - tenants 1,190 3,887
Accounts receivable - other 13,018 16,143
Tenants' security deposits 84,183 85,620
Prepaid insurance 9,700 9,465
------------------ ------------------
Total current assets 169,897 219,327
ESCROWS
Mortgage escrow 105,443 100,086
RENTAL PROPERTY
Land 971,742 971,742
Land improvements 32,611 3,681
Building 14,378,601 14,378,601
Building improvements 95,697 -
Furniture and equipment 750,196 750,196
------------------ ------------------
16,228,847 16,104,220
Less accumulated depreciation 4,162,528 3,543,634
------------------ ------------------
12,066,319 12,560,586
OTHER ASSETS
Mortgage financing costs, net of accumulated
amortization of $106,662 and $90,931 209,182 224,913
------------------ ------------------
$ 12,550,841 $ 13,104,912
================== ==================
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of mortgage payable $ 49,834 $ 44,335
Accrued expenses 14,159 7,933
Prepaid rent 1,582 2,666
Accrued real estate taxes 70,709 71,956
Accrued expenses -other 6,265 10,833
Tenants' security deposits 74,923 66,161
------------------ ------------------
Total current liabilities 215,472 203,884
LONG-TERM LIABILITIES
Mortgage payable, net of current maturities 7,471,460 7,521,294
Accrued interest 312,318 190,900
Due to Limited Partner 63,702 63,702
Due to General Partner 2,482,000 2,482,000
------------------ ------------------
10,329,480 10,257,896
CONTINGENCY - -
PARTNERS' EQUITY 2,003,889 2,643,132
------------------ ------------------
$ 12,550,841 $ 13,104,912
================== ==================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
STATEMENTS OF OPERATIONS
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
------------------ ------------------
Income
Rental income $ 1,541,522 $ 1,459,419
Other income 40,891 27,592
Interest income 42,246 53,529
------------------ ------------------
Total income 1,624,659 1,540,540
------------------ ------------------
Expenses
Administrative 272,063 216,305
Utilities 79,922 75,270
Maintenance and repairs 258,235 204,209
Taxes and insurance 224,654 218,621
------------------ ------------------
834,874 714,405
------------------ ------------------
Income before interest,
depreciation and amortization 789,786 826,135
Interest expense - mortgages 886,624 891,513
Depreciation and amortization 634,625 655,000
------------------ ------------------
1,521,249 1,546,513
------------------ ------------------
NET LOSS $ (731,464) $ (720,378)
================== ==================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
STATEMENTS OF PARTNERS' EQUITY
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Special Total
General Limited Limited Equity
Partner Partner Partner (Deficit)
------------------ ----------------- ------------------ ------------------
Balance, December 31, 1994 $ 318,369 $ (25,858) $ 3,041,567 $ 3,334,078
Capital contributions - 29,432 - 29,432
Net loss (7,204) (72,038) (641,136) (720,378)
------------------ ----------------- ------------------ ------------------
Balance, December 31, 1995 311,165 (68,464) 2,400,431 2,643,132
Capital contributions - 92,221 - 92,221
Net loss (7,315) (73,146) (651,003) (731,464)
------------------ ----------------- ------------------ ------------------
Balance, December 31, 1996 $ 303,850 $ (49,389) $ 1,749,428 $ 2,003,889
================== ================= ================== ==================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
STATEMENTS OF CASH FLOWS
Years ended December 31, 1996 and 1995
<TABLE>
<S> <C> <C>
1996 1995
------------------ ------------------
Cash flows from operating activities
Net loss $ (731,464) $ (720,378)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities
Depreciation and amortization 634,625 655,000
Decrease (increase) in accounts receivable - tenants 2,697 (2,014)
Increase in prepaid expenses (236) (1,984)
Decrease in accounts payable (793) -
Decrease (increase) in accrued expenses 1,201 (9,113)
Increase (decrease) in prepaid rent (1,083) 1,671
Increase in accrued interest 121,418 72,162
Decrease (increase) in tenants' 10,199 (15,574)
security deposits, net
Increase in mortgage escrow deposits, net (5,356) (5,710)
Decrease (increase) in accounts receivable - other 3,126 (16,143)
------------------ ------------------
Net cash provided by (used in) operating activities 34,334 (42,083)
------------------ ------------------
Cash flows from investing activities
Additions to building and equipment (124,627) (9,860)
------------------ ------------------
Net cash used in investing activities (124,627) (9,860)
------------------ ------------------
Cash flows form financing activities
Payments on mortgage (44,334) (39,442)
Capital contributions 92,221 29,432
Advances by limited partner - 54
------------------ ------------------
Net cash provided by (used in)
financing activities 47,887 (9,956)
------------------ ------------------
NET DECREASE IN CASH (42,406) (61,899)
Cash, beginning 104,212 166,111
------------------ ------------------
Cash, ending $ 61,806 $ 104,212
================== ==================
Supplemental disclosure of cash flow information
cash paid during the year for interest $ 765,206 $ 855,355
================== ==================
</TABLE>
See notes to financial statements
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The Partnership was formed as a limited partnership under the laws of the
State of Kansas in 1988 for the purpose of constructing and operating a
rental housing project pursuant to Section 42 of the Internal Revenue Code.
The project consists of 254 units located in Leawood, Kansas and is
currently operating under the name of Leawood Manor.
Each building of the project has qualified and been allocated low-income
housing credits pursuant to Internal Revenue Code Section 42 (Section 42)
which regulates the use of the project as to occupant eligibility and unit
gross rent, among other requirements. Each building of the project must
meet the provisions of the regulations during each of fifteen consecutive
years in order to remain qualified to receive the credits.
Use of Estimates
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 revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Rental Property
Rental property is carried at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over
their estimated service lives by use of the straight-line and accelerated
methods for financial reporting purposes. For income tax purposes,
accelerated lives and methods are used.
Amortization
Mortgage financing costs are amortized over the term of the mortgage using
the straight-line method.
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Income Taxes
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash equivalents include money market
funds and certificates of deposit with maturities of 90 days or less when
acquired.
Rental Income
Rental income is recognized as rentals become due. Rental payments received
in advance are deferred until earned. All leases between the Partnership
and the tenants of the property are operating leases.
Reclassifications
Certain items for 1995 have been reclassified to conform with the 1996
presentation.
NOTE B - MORTGAGE PAYABLE
Under the terms of the amended and restated note agreement, the mortgage is
payable in monthly installments of $77,850 of principal and interest in
arrears, with interest accrued at an annual rate of 11.75%. Interest is
payable monthly at the rate of 8% per annum plus 95% of all net cash flows
as defined by the mortgage agreement. Under the terms of the agreement, the
difference in the interest payments at the contract rate of 11.75% and
reduced payment rates, will accrue interest at the rate of 8%, which will
be payable from 95% of net cash flows, if available or upon maturity of the
mortgage. On July 10, 1999 the reduced payment rate is scheduled to
increase to 10%. The mortgage matures in July 2006 and is collateralized by
the property.
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1996 and 1995
NOTE B - MORTGAGE PAYABLE (Continued)
The terms of the mortgage and other contract documents require the
establishment of restricted deposits and funded reserves to be held and
invested by the mortgagee. These financial instruments potentially subject
the Partnership to a concentration of credit risk.
The liability of the Partnership under the mortgage is limited to the
underlying value of the real estate collateral plus other amounts deposited
with the lender.
Aggregate annual maturities of the mortgage payable over each of the next
five years are as follows:
December 31, 1997 $ 49,834
1998 56,015
1999 62,963
2000 70,813
2001 79,552
Management believes it is not practical to estimate the fair value of the
mortgage because loans with similar characteristics are not currently
available to the Partnership.
NOTE C - RELATED PARTY TRANSACTIONS
The property is managed by Boston Financial Group Limited Partnership, an
affiliate of the general partner. The current management agreement provides
for a management fee of 5% of monthly rental collections. Such fees charged
to operations during 1996 and 1995 were $75,182 and $72,134 respectively. As
of December 31, 1996 and 1995, $12,953 and $5,936, respectively, was due to
the management agent and is included in accrued expenses.
As of December 31, 1996 and 1995 the Partnership owed $63,702 to the limited
partner for noninterest-bearing advances made to the Partnership for
financing costs.
Due to general partner represents unpaid development fees, the rights to
which have been assigned to the general partner. Under the terms of the
agreement, there is no specified repayment date and the Partnership is
charged no interest.
<PAGE>
Leawood Associates, L.P.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE C - RELATED PARTY TRANSACTIONS (Continued)
The mortgage payable is held by an affiliate of the Special Limited Partner.
During 1996 and 1995 total payments of $809,540 and $894,797, respectively,
were paid for principal and interest. At December 31, 1996 and 1995 the
Partnership owes $7,833,612 and $7,756,529 in principal and accrued interest
respectively.
NOTE D - CAPITAL CONTRIBUTIONS
During 1994, the Partnership admitted a Special Limited Partner. The Special
Limited Partner agreed to provide capital contributions of $490,638
consisting of $100 in cash and the balance in the form of a promissory note
bearing interest at an annual rate of 7%. During 1995 the first capital
contribution payment on the promissory note of $29,432 plus accrued interest
of $34,320 was received. During 1996, the second capital contribution
payment on the promissory note of $92,221 plus accrued interest of $32,064
was received. The capital contributions receivable is not reflected on the
balance sheet. The capital contribution less payments received to date by
the property, has been deposited and is being held in escrow. Annual capital
contributions are due on July 1 of each year, as follows:
1997 $ 92,221
1998 92,221
1999 92,221
2000 92,221
NOTE E - CONTINGENCY
The Project's low-income housing credits are contingent on its ability to
maintain compliance with applicable sections of Section 42. Failure to
maintain compliance with occupant eligibility, and/or unit gross rent, or to
correct noncompliance within a specified time period could result in
recapture of previously taken tax credits plus interest. In addition, such
potential noncompliance may require an adjustment to the contributed capital
by the limited partners.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 386,059
<SECURITIES> 985,849
<RECEIVABLES> 12,759
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 13,846,553
<DEPRECIATION> 000
<TOTAL-ASSETS> 31,608,124<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 17,318,079
<TOTAL-LIABILITY-AND-EQUITY> 31,608,124<F2>
<SALES> 000
<TOTAL-REVENUES> 2,061,588<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 4,725,770<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 1,012,385
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 1,053,981
<CHANGES> 000
<NET-INCOME> (3,950,858)<F5>
<EPS-PRIMARY> (57.48)
<EPS-DILUTED> 000
<FN>
<F1>Included in Total Assets: Tenant security deposits of $85,340, Investments
in Local Limited Partnerships of $15,959,055, Mortgage escrow deposits of
$114,300, Deferred charges, net of $189,076 and Other assets of $29,133.
<F2>Included in Total Liabilities and Equity: Accounts payable to affiliates of
$602,600, Accounts payable and accrued expenses of $340,574, Mortgage notes
payable of $9,720,859, Interest payable of $627,412, Tenant security deposits
payable of $84,131, Payable to affiliated developer of $2,482,000 and Minority
interest in Local Limited Partnerships of $432,469. <F3>Total Revenue includes:
Rental of $1,831,495, Investment of $108,299 and Other of $121,979. <F4>Included
in Other Expenses: Asset management fees, related party of $222,066, Bad debt
expense of $176,648 General and administrative of $348,400, Rental operations,
exclusive of depreciation of $1,025,546, Property management fees of $122,823,
Provision for valuation of rental property of $181,098, Provision for valuation
of investment in Local Limited Partnership of $1,880,482,Depreciation of
$658,377 and Amortization of $110,330. <F5>Net Loss reflects: Equity in losses
of Local Limited Partnerships of $1,405,591, Minority interest in losses of
Local Limited Partnerships of $81,241 and loss on liquidation of interests in
Local Limited Partnerships of $3,922.
</FN>
</TABLE>
