<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended DECEMBER 31, 1999
Commission File Number
0-18541
NATIONAL TAX CREDIT PARTNERS, L.P.
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. Employer Identification No. 95-4205231
----------
9090 WILSHIRE BOULEVARD, SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
Registrant's Telephone Number, Including Area Code (310) 278-2191
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed with the Commission by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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PART I.
ITEM 1. BUSINESS:
National Tax Credit Partners, L.P. ("NTCP" or the "Partnership") is a limited
partnership formed under the laws of the State of California on March 7, 1989.
The Partnership was formed to acquire limited partnership interests in separate
local limited partnerships ("Local Partnerships"), which own multifamily
apartment complexes that are eligible for low-income housing federal income tax
credits ("Housing Tax Credits"). On June 6, 1989, the Partnership offered 14,000
units consisting of 28,000 limited partnership interests and warrants to
purchase 14,000 additional limited partnership interests (collectively "Limited
Partnership Interests") through a public offering managed by PaineWebber
Incorporated (the "Selling Agent").
The general partner of the Partnership is National Partnership Investments Corp.
("NAPICO"), a California corporation (the "General Partner"). The business of
the Partnership is conducted primarily by NAPICO.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The current members of NAPICO's Board of Directors are
Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden.
In general, an owner of a low-income housing apartment complex ("Apartment
Complex") is entitled to receive Housing Tax Credits in each year of a ten-year
period (the "Credit Period"). The Apartment Complex is subject to a 15-year
compliance period (the "Compliance Period") to preserve the Housing Tax Credits.
In addition to the Housing Tax Credits, tax credits are available for certain
rehabilitation expenditures incurred in improving certified historic structures
("Historic Tax Credits," and together with Housing Tax Credits are referred to
as "Tax Credits"). Tax Credits are available to the Limited Partners to reduce
their federal income tax liability. The ability of a Limited Partner to utilize
Tax Credits or allocated losses may be restricted by the passive activity loss
limitation and the general business tax credit limitation rules. NTCP invests in
Local Partnerships that each own an Apartment Complex that is eligible for (i)
Housing Tax Credits or (ii) in certain cases, Historic Tax Credits and, in some
cases, both. Several of the Local Partnerships also benefit from government
programs promoting low or moderate income housing.
The Partnership's investments in Local Partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate.
Neither the Partnership's investments nor the Apartment Complexes owned by the
Local Partnerships will be readily marketable, and there can be no assurance
that the Partnership will be able to dispose of its Local Partnership Interests,
or that the Local Partnerships will be able to dispose of their Apartment
Complexes, at the end of the Compliance Period. The value of the Partnership's
investments will be subject to changes in national and local economic
conditions, including substantial unemployment, which could adversely impact
vacancy levels, rental payment defaults and operating expenses. This, in turn,
could substantially increase the risk of operating losses for the Apartment
Complexes and the Partnership. The Apartment Complexes will be subject to loss
through foreclosure. In addition, each Local Partnership is subject to risks
relating to environmental hazards which might be uninsurable. Because the
Partnership's ability to control its operations will depend on these and other
factors beyond the control of the General Partner and the local general
partners, there can be no assurance that the Partnership operations will be
profitable or that the anticipated Tax Credits will be available to Limited
Partners.
The Apartment Complexes owned by the Local Partnerships in which NTCP has
invested were developed by the Local Operating General Partners (the "Local
Operating General Partners") who acquired the sites and applied for applicable
mortgages and subsidies, if any. NTCP became the principal limited partner in
these Local Partnerships pursuant to arm's-length negotiations with the Local
Operating General Partners. As a limited partner, NTCP's liability for
obligations of the
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Local Partnership is generally limited to its investment. The Local Operating
General Partner of the Local Partnership retains responsibility for developing,
constructing, maintaining, operating and managing the Apartment Complex. Under
certain circumstances, an affiliate of NAPICO or NTCP may act as the Local
Operating General Partner. An affiliate, National Tax Credit Inc. ("NTC") or
another affiliate, is acting as a non-managing, administrative general partner
or special limited partner of each Local Partnership.
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During 1999, the Apartment Complexes in which NTCP had invested were
substantially rented.
The following is a schedule of the occupancy status as of December 31, 1999, of
the Apartment Complexes owned by Local Partnerships in which NTCP is a limited
partner.
SCHEDULE OF PROJECTS OWNED BY LOCAL PARTNERSHIPS
IN WHICH NTCP HAS AN INVESTMENT
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Percentage of
No. of Units Total Units
Name and Location Units Occupied Occupied
- ----------------- ------ -------- -------------
<S> <C> <C> <C>
Apple Tree
Brigham City, UT 24 24 100%
Blue Lake
Miami, FL 106 75 71%
ComFed Qualified
Omaha, NE 116 115 99%
Concept I & II
Cleveland, OH 40 37 93%
Countryview/Columbus
Columbus, OH 152 147 97%
Dickens
Chicago, IL 34 33 97%
Dynes
Cleveland, OH 42 40 95%
Genoa Plaza
Genoa City, WI 48 47 98%
Glenark
Woonsocket, RI 67 57 85%
Grand Meadows
Grand Blanc, MI 64 62 97%
Grinnell Park
Grinnell, IA 24 24 100%
</TABLE>
3
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SCHEDULE OF PROJECTS OWNED BY LOCAL PARTNERSHIPS
IN WHICH NTCP HAS AN INVESTMENT (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Percentage of
No. of Units Total Units
Name and Location Units Occupied Occupied
- ----------------- ------ -------- -------------
<S> <C> <C> <C>
Hickory Green
Westland, MI 59 50 85%
Holden Village
West Seattle, WA 96 92 96%
Kimberly Court
Seward, AK 24 22 92%
Meadows Apartments
Ypsilanti, MI 114 111 97%
Mountain View - I
Sante Fe, NM 120 106 88%
Mountain View - II
Sante Fe, NM 159 144 91%
Newbury
Oak Creek, WI 164 153 93%
North Liberty
North Liberty, IA 24 18 75%
Paris Hotel
Denver, CO 17 17 100%
Rolling Hills
Pottsgrove Township, PA 232 232 100%
Rose City
Portland, OR 264 261 99%
Summit I - Wallace
Philadelphia, PA 17 15 88%
Summit II - Bergdoll
Philadelphia, PA 9 8 89%
Summit III - Chandler
Philadelphia, PA 25 23 92%
</TABLE>
4
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SCHEDULE OF PROJECTS OWNED BY LOCAL PARTNERSHIPS
IN WHICH NTCP HAS AN INVESTMENT (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Percentage of
No. of Units Total Units
Name and Location Units Occupied Occupied
- ----------------- ------ -------- -------------
<S> <C> <C> <C>
Terrace Gardens
Lemon Grove, CA 150 150 100%
Ticino
Seattle, WA 45 41 91%
Torres de Plata I
Toa Alta, PR 72 72 100%
Tyrone Elderly
Tyrone, PA 100 98 98%
Victorian Park
Streamwood, IL 336 329 98%
Vinton/Park School
Omaha, NE 44 43 98%
----- -----
TOTAL 2,788 2,646 95%
===== =====
</TABLE>
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ITEM 2. PROPERTIES:
Through its investments in Local Partnerships, NTCP holds interests in 31
Apartment Complexes. See Item 1 and Schedule for information pertaining to these
Apartment Complexes.
ITEM 3. LEGAL PROCEEDINGS:
As of December 31, 1999, NTCP's General Partner was a plaintiff or defendant in
several lawsuits. In addition, the Partnership is involved in the following
lawsuits arising from transactions in the ordinary course of business. In the
opinion of management and the General Partner, the claims will not result in any
material liability to the Partnership
In December 1992, Tara Construction, the general contractor for Art Museum
properties (Summit I, II and III), commenced an action in the Court of Common
Pleas, Montgomery County, Pennsylvania entitled Tara Construction v. NTCP et
al., (Case No. 92-23505) against the three Summit Local Partnerships, the
Partnership, NTC, the General Partner, PaineWebber Incorporated, and a
PaineWebber affiliate, seeking damages of approximately $600,000 allegedly due
the general contractor for work done in connection with the completion of
construction plus damages for alleged misrepresentations and punitive damages.
The Partnership believes that the general contractor's claims are barred and/or
subject to offset and it has filed responsive pleadings. The Partnership has not
accrued any liability in the accompanying financial statements as of December
31, 1999 or 1998. Tara Construction's lawsuit has been dormant since 1993.
Occupancy levels at the three related Local Partnerships, Summit I, II, and III
(Wallace, Bergdoll, and Chandler School located in Philadelphia) were 88%, 89%,
and 92%, respectively, at December 31, 1999, and the properties have been
operating at a deficit. The local general partner is currently attempting to
negotiate discounted payments and/or payment plans for outstanding payables
which, if unsuccessful, could result in foreclosure proceedings on all three
properties. In 1996, the aggregate carrying value of the investments in Summit
I, Summit II and Summit III of approximately $2,290,000, was written off. Summit
I, II and III represent 3.2%, 1.4% and 4.6%, respectively, of NTCP's original
portfolio investment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY
HOLDER MATTERS:
The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by PaineWebber Incorporated. It is not
anticipated that any active public market will develop for the purchase and sale
of any Limited Partnership Interest. Limited Partnership Interests may not be
transferred but can be assigned only if certain requirements in the Partnership
Agreement are satisfied. At December 31, 1999, there were 3,848 registered
holders of Limited Partnership Interests in NTCP. The Partnership was not
designed to provide cash distributions to Limited Partners in circumstances
other than refinancing or disposition of its investments in Local Partnerships
and then such distributions, if any, may be limited. Distributions have not been
made from the inception of the Partnership to December 31, 1999.
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ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Interest and other Income $ 7,219 $ 14,100 $ 51,975 $ 99,016 $ 75,125
Operating expenses (821,771) (910,831) (903,971) (975,642) (1,207,679)
Distributions from limited
partnership recognized
as income 129,365 204,866 18,381 37,532 --
Equity in loss of limited
partnerships and
amortization of
acquisition costs (2,435,384) (2,082,528) (2,188,630) (2,049,514) (3,828,734)
Write-off of Investment
in Limited Partnerships -- (1,223,100) (560,766) (2,289,875) (1,158,801)
------------ ------------ ------------ ------------ ------------
Net loss $ (3,120,571) $ (3,997,493) $ (3,583,011) $ (5,178,483) $ (6,120,089)
============ ============ ============ ============ ============
Net loss per limited
partnership interest $ (129) $ (166) $ (148) $ (215) $ (254)
============ ============ ============ ============ ============
Total assets $ 9,114,107 $ 11,642,078 $ 14,985,893 $ 17,946,325 $ 22,499,105
============ ============ ============ ============ ============
Investments in Local
Partnerships $ 9,050,981 $ 11,421,621 $ 14,370,207 $ 17,721,398 $ 21,923,823
============ ============ ============ ============ ============
Capital contributions payable $ 266,841 $ 266,841 $ 329,030 $ 392,300 $ 441,300
============ ============ ============ ============ ============
Accrued fees and expenses
due to partners $ 6,113,629 $ 5,420,677 $ 4,727,721 $ 3,996,221 $ 3,266,521
============ ============ ============ ============ ============
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
CAPITAL RESOURCES
The Partnership received proceeds totaling $59,749,000 from the sale of Limited
Partnership Interests, pursuant to a registration statement filed on Form S-11,
which sale commenced in June 1989 and terminated in June 1990. This amount
includes $18,907,500 from the sale of 7,563 Additional Limited Partnership
Interests. The proceeds have been used to invest in local limited partnerships
("Local Partnerships"), which own and operate multifamily housing complexes
("Apartment Complexes") that are eligible for low income housing tax credits or,
in certain cases, historic rehabilitation tax credits. As a limited partner of
the Local Partnerships, the Partnership does not have authority over day-to-day
management of the Local Partnerships or their Apartment Complexes. The general
partners responsible for management of the Local Partnerships (the "Local
Operating General Partners") are in most cases not affiliated with the General
Partner of the Partnership. See, however, the discussion below concerning the
replacement of the local operating general partners of certain Local
Partnerships and the assumption of those management responsibilities by National
Tax Credit, Inc. ("NTC"), or other affiliates of the General Partner. The
Partnership has made capital contributions to 32 Local Partnerships (one of
which was foreclosed upon by the lender in 1995) representing a total investment
of approximately $44,811,000.
It is not expected that any of the Local Partnerships in which the Partnership
invested will generate cash from operations sufficient to provide distributions
to the Limited Partners. Such cash from operations, if any, would first be used
to meet operating expenses of the Partnership. The Partnership's investments are
not readily marketable and may be affected by adverse general economic
conditions which, in turn, could substantially increase the risk of operating
losses for the Apartment Complexes, the Local Partnerships and the Partnership.
These problems may result from a number of factors, many of which cannot be
controlled by the General Partner.
The General Partner has the right to cause distributions received by the
Partnership from the Local Partnerships (that would otherwise be available for
distributions as cash flow) to be dedicated to the increase or replenishment of
reserves at the Partnership level. The reserves are available to satisfy working
capital or operating expense needs of the Partnership (including payment of
partnership management fees) and will also be available to pay any excess
third-party costs or expenses incurred by the Partnership in connection with the
administration of the Partnership, the preparation of reports to the Limited
Partners and other investor servicing obligations of the Partnership. At the
discretion of the General Partner, reserves may be available for contributions
to the Local Partnerships.
The Partnership's unrestricted cash reserves as of December 31, 1999 were
approximately $63,126. In order to replenish NTCP's reserves, NTCP sold to the
local general partner in Rose City an additional portion and further diluted its
limited partner interest in the Rose City local partnership during 1997. The
local general partner will, accordingly, be entitled to an increased allocation
of cash flow and proceeds from the sale or refinancing of the property. NTCP
will continue to receive its allocable portion of housing tax credits, subject
to the allocation made to the additional limited partner identified in a prior
report, through the ten year credit period. As a result of this transaction,
NTCP received $260,000 during 1997. In addition, NTCP sold to an unrelated party
a portion of its limited partner interest in the Countryview local partnership
and received $625,582 during 1997. The amounts received from these sales are
traded as reductions to the Partnership's investment balance in the local
partnerships.
The Partnership does not have the ability to assess Limited Partners for
additional capital contributions to provide capital if needed by the Partnership
or Local Partnerships. Accordingly, if circumstances arise that cause the Local
Partnerships to require capital in addition to that contributed by the
Partnership and any equity of the local general partners, the only sources from
which such capital needs will be able to be satisfied (other than the limited
reserves available at the Partnership level) will be (i) third-party debt
financing (which may not be available if, as expected, the Apartment Complexes
owned by the Local Partnerships are already substantially leveraged), (ii) other
equity sources (which could reduce the amount of Tax Credits being allocated to
the Partnership, adversely affect the Partnership's interest in operating cash
flow and/or proceeds of sale or refinancing of the Apartment Complexes and
possibly even result in adverse tax
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consequences to the Limited Partners), or (iii) the sale or disposition of
Apartment Complexes. There can be no assurance that any of such sources would be
readily available in sufficient proportions to fund the capital requirements of
the Local Partnerships. If such sources are not available, the Local
Partnerships would risk foreclosure on their Apartment Complexes if they were
unable to renegotiate the terms of their first mortgages and any other debt
secured by the Apartment Complexes, which would have significant adverse tax
consequences to the Limited Partners.
LIQUIDITY
Each Local Partnership investment has been analyzed by the General Partner with
respect to its probable impact upon the Partnership's liquidity position. In
this regard, the General Partner took into account projected cash flow generated
from each Apartment Complex, the anticipated debt service requirements of the
existing financing and any restructuring or refinancing of such Apartment
Complex, and the division of cash flow in excess of debt service between the
Partnership and the local operating general partner.
Following an acquisition, adverse business or financial developments could
negatively impact cash flow and the Partnership's liquidity position. The
General Partner has attempted to obtain operating deficit guarantees from
certain local general partners to fund operating deficits for limited periods of
time. In addition, as discussed above the Partnership maintains reserves and the
Local Partnerships are expected to maintain working capital reserves independent
of those maintained by the Partnership to the extent that (i) the terms of
mortgage debt encumbering the Apartment Complexes or the terms of any government
assistance program so require, or (ii) the local general partner determines that
such reserves are necessary or advisable. Although reserves are to be maintained
at both the Partnership and Local Partnership levels, if such reserves and other
available income, if any, are insufficient to cover the Partnership's or any
Local Partnership's operating expenses and liabilities, it may be necessary to
accumulate additional funds from distributions received from Local Partnerships
which would otherwise be available for distribution to the Limited Partners, or
to liquidate the Partnership's investment in one or more Local Partnerships.
Reserves of the Partnership and reserves of the Local Partnerships may be
increased or decreased from time to time by the General Partner or the local
general partner, as the case may be, in order to meet anticipated costs and
expenses. The amount of cash flow available for distributions and/or sale as
refinancing proceeds, if any, which is available for distribution to the Limited
Partners may be affected accordingly.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its Limited Partners
as discussed in Item 1. It is not expected that any of the Local Partnerships in
which the Partnership has invested will generate cash flow sufficient to provide
for distributions to Limited Partners. The Partnership accounts for its
investments in the Local Partnerships on the equity method, thereby adjusting
its investment balance by its proportionate share of the income or loss of the
Local Partnerships.
In general, in order to avoid recapture of Tax Credits, the Partnership does not
expect that it will voluntarily dispose of its Local Partnership Interests or
approve the sale by a Local Partnership of any Apartment Complex prior to the
end of the applicable 15-year Compliance Period (although earlier dispositions
of Historic Complexes may occur). Because of (i) the nature of the Apartment
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the inability of the
Partnership to directly cause the sale of Apartment Complexes by local general
partners, but generally only to require such local general partners to use their
respective best efforts to find a purchaser for the Apartment Complexes, it is
not possible at this time to predict whether the liquidation of substantially
all of the Partnership's assets and the disposition of the proceeds, if any, in
accordance with the Partnership Agreement will be able to be accomplished
promptly at the end of the 15-year Compliance Period. If a Local Partnership is
unable to sell an Apartment Complex, it is anticipated that the local general
partner will either continue to operate such Apartment Complex or take such
other actions as the local general partner believes to be in the best interest
of the Local Partnership. In addition, circumstances beyond the control of the
General Partner may occur during the Compliance Period which would require the
Partnership to approve the disposition of an Apartment Complex prior to the end
of the Compliance Period.
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Except for interim investments in highly liquid debt investments, the
Partnership's investments consist entirely of interests in other Local
Partnerships owning Apartment Complexes. Funds temporarily not required for such
investments in projects are invested in these highly liquid debt investments
earning interest income as reflected in the statement of operations. These
interim investments can be easily converted to cash to meet obligations as they
arise.
The Partnership, as a limited partner in the Local Partnerships in which it has
invested, is subject to the risks incident to the construction, management, and
ownership of improved real estate. The Partnership investments are also subject
to adverse general economic conditions, and accordingly, the status of the
national economy, including substantial unemployment and concurrent inflation,
could increase vacancy levels, rental payment defaults, and operating expenses,
which in turn, could substantially increase the risk of operating losses for the
Apartment Complexes. Certain of the Local Partnerships and their respective
Apartment Complexes are subject to litigation and operating problems. See Item 3
"Legal Proceedings" above and the information which follows.
The Meadows Apartments (the "Local Partnership") is a 114-unit building located
in Ypsilanti, Michigan. The first mortgage loan matured on May 15, 1996. After
the lender refused to negotiate an extension of the loan, the Local Partnership
filed Chapter 11 bankruptcy proceedings to avert foreclosure. A plan of
reorganization for the Local Partnership (the "Plan") was approved by the
bankruptcy court on December 16, 1996. Under the Plan, the existing loan in the
principal amount of $2,890,000, at an interest rate of 10%, was reduced to
$2,100,000 with an interest rate of 9%. In exchange, the lender received
one-third of NTCP's local partnership interest, including anticipated
allocations of housing tax credits in the amount of approximately $488,500. The
Partnership's investment in Meadows Apartments was written off in 1995.
Holden Village and Ticino Apartments, located in Seattle, Washington have been
experiencing operating deficits. The high cost of servicing the debt is the
largest contributing factor associated with the deficit operations. In January
1998, NTCP was successful in negotiating an interest rate reduction with the
lender for each of the properties. Based on the loan modifications, the
operating performance of each property is expected to improve. The Partnership's
total investment in Holden Village and Ticino Apartments of approximately
$1,223,100 was written off in 1998.
The Dynes Village Apartments complex is operating at a deficit and the first
mortgage loan encumbering the property was delinquent until it was brought
current by NTCP in November 1997. In addition, the property has been audited by
the IRS with respect to tenant qualifications performed by the prior local
operating general partner. The IRS has disqualified all future housing tax
credits based on what they consider non-compliance by the prior local operating
general partner. As a result, the Partnership's investment in Dynes Village of
$560,766 was written off during 1997.
Pursuant to the terms of a workout, dated January 11, 1995 (the "Workout")
agreed upon between the parties relating to the resolution of an existing
default under the first mortgage loan encumbering Glenark Landing, annual
payments of $42,800 for a five year term, totaling $214,000, are due to the
Rhode Island Housing and Mortgage Finance Corporation (the "Lender"). The
Partnership's investment in Glenark Landing was written off during 1995.
Pursuant to the terms of a loan workout relating to the Blue Lake Local
Partnership, dated March 25, 1995 (the "Workout"), NTCP is required to
contribute an additional $541,300 ($266,841 as of December 31, 1999) to the
local partnership over a ten year period. In exchange, the debt service on the
property is payable out of net cash flow. During 1998 and 1997, approximately
$62,000 and $63,000, respectively, was paid by NTCP to the local partnership
under the Workout. The Partnership's investment in Blue Lake was zero at
December 31, 1999 and 1998. A dispute has arisen as to whether the local
partnership is in default under the Workout. The parties are currently engaged
in settlement discussions regarding this dispute.
During 1997, the Oregon Housing and Community Services Department ("Department")
inspected Rose City Village Limited Partnership's compliance with the low-income
housing credit provisions of the Internal Revenue Code, and determined that the
Partnership was not in compliance. The Department filed Form 8823, Low-Income
Housing Credit Agencies Report of Noncompliance, with the Internal Revenue
Service. Management believes the instances of noncompliance are now corrected;
however, as of the date of this report, resolution of this matter by the
Department and
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the Internal Revenue Service is still outstanding. The effect, if any, of the
noncompliance on the financial statements of the Partnership cannot be
determined at this date. The Partnership's investment in Rose City at December
31, 1999 was $271,115.
The Partnership accounts for its investments in the Local Partnerships on the
equity method, thereby adjusting its investment balance by its proportionate
share of the income or loss of the Local Partnerships. Equity in losses of Local
Partnerships is recognized in the financial statements until the limited
partnership investment account is reduced to a zero balance. Losses incurred
after the limited partnership investment account is reduced to zero are not
recognized. Limited partners are not liable for losses beyond their contributed
capital. The cumulative amount of the unrecognized equity in losses of
unconsolidated limited partnerships was approximately $24,044,000 and
$15,462,000 as of December 31, 1999 and 1998, respectively.
Distributions received from Local Partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent distributions
received are recognized as income.
Operating expenses consist primarily of recurring general and administrative
expenses and professional fees for services rendered to the Partnership. In
addition, an annual partnership management fee in an amount equal to 0.5% of
invested assets is payable to the General Partner and Special Limited Partner.
The management fee represents the annual recurring fee which will be paid to the
General Partner for its continuing management of Partnership affairs. The higher
legal fees for the year ended December 31, 1998, as compared to 1999 and 1997,
is due to legal fees associated with the final settlement of litigation
involving certain Local Partnerships previously discussed.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:
Not applicable.
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NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
DECEMBER 31, 1999
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
National Tax Credit Partners, L.P.
(A California limited partnership)
We have audited the accompanying balance sheets of National Tax Credit Partners,
L.P. (a California limited partnership) as of December 31, 1999 and 1998, and
the related statements of operations, partners' equity (deficiency) and cash
flows for each of the three years in the period ended December 31, 1999. Our
audits also included the financial statement schedules listed in the index in
item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain investee limited partnerships, the investments in which are reflected in
the accompanying financial statements using the equity method of accounting. The
investments in these limited partnerships represent 38 percent and 26 percent of
total assets as of December 31, 1999 and 1998, respectively, and the equity in
loss of these limited partnerships represents 22 percent, 21 percent and 44
percent of the total net loss of the Partnership for the years ended December
31, 1999, 1998 and 1997, respectively, and represent a substantial portion of
the investee information in Note 2 and the financial statement schedules. The
financial statements of these limited partnerships were audited by other
auditors. Their reports have been furnished to us and our opinion, insofar as it
relates to the amounts included for those limited partnerships, is based solely
on 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 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 and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of National Tax Credit Partners, L.P. as of December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles. Also, in our opinion, based on our
audits and the reports of other auditors, such financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 31, 2000
13
<PAGE> 15
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS
(Notes 1 and 2) $ 9,050,981 $11,421,621
CASH AND CASH EQUIVALENTS (Note 1) 63,126 220,457
----------- -----------
TOTAL ASSETS $ 9,114,107 $11,642,078
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accrued fees and expenses due to partners (Notes 4 and 7) $ 6,113,629 $ 5,420,677
Capital contributions payable (Note 3) 266,841 266,841
Accounts payable and accrued expenses 147,262 247,614
----------- -----------
6,527,732 5,935,132
----------- -----------
CONTINGENCIES (Note 6)
PARTNERS' EQUITY 2,586,375 5,706,946
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 9,114,107 $11,642,078
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 16
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST AND OTHER INCOME $ 7,219 $ 14,100 $ 51,975
----------- ----------- -----------
OPERATING EXPENSES:
Management fees - partners (Note 4) 692,952 692,956 692,956
Legal and accounting 43,333 124,921 66,790
General and administrative (Note 4) 85,486 92,954 144,225
----------- ----------- -----------
Total operating expenses 821,771 910,831 903,971
----------- ----------- -----------
LOSS FROM PARTNERSHIP OPERATIONS (814,552) (896,731) (851,996)
WRITE OFF OF INVESTMENT IN
LIMITED PARTNERSHIPS (Note 2) -- (1,223,100) (560,766)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED
AS INCOME 129,365 204,866 18,381
EQUITY IN LOSS OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) (2,435,384) (2,082,528) (2,188,630)
----------- ----------- -----------
NET LOSS $(3,120,571) $(3,997,493) $(3,583,011)
=========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST (Note 1) $ (129) $ (166) $ (148)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 17
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Special
Limited General Limited
Partners Partners Partners Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PARTNERS' EQUITY (DEFICIENCY),
January 1, 1997 $ 1,000 $ (385,949) $ 13,672,399 $ 13,287,450
Net loss for 1997 -- (35,830) (3,547,181) (3,583,011)
------------ ------------ ------------ ------------
PARTNERS' EQUITY (DEFICIENCY),
December 31, 1997 1,000 (421,779) 10,125,218 9,704,439
Net loss for 1998 -- (39,975) (3,957,518) (3,997,493)
------------ ------------ ------------ ------------
PARTNERS' EQUITY (DEFICIENCY),
December 31, 1998 1,000 (461,754) 6,167,700 5,706,946
Net loss for 1999 -- (31,206) (3,089,365) (3,120,571)
------------ ------------ ------------ ------------
PARTNERS' EQUITY (DEFICIENCY),
December 31, 1999 $ 1,000 $ (492,960) $ 3,078,335 $ 2,586,375
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 18
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,120,571) $(3,997,493) $(3,583,011)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in losses of limited partnerships
and amortization of acquisition costs 2,435,384 2,082,528 2,188,630
Write-off of investment in limited partnership -- 1,223,100 560,766
Decrease in restricted cash -- 75,000 --
(Decrease) increase in:
Accrued fees and expenses due to partners 692,952 692,956 731,500
Accounts payable and accrued expenses (100,352) 22,911 (45,651)
----------- ----------- -----------
Net cash (used in) provided by operating activities (92,587) 99,002 (147,766)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in investee partnerships:
Capital (contributions) recoveries from
limited partnerships (120,420) (455,569) 494,576
Capitalized acquisition costs and fees -- 305
Distributions recognized as a return of capital 55,676 98,527 106,914
Decrease in capital contributions payable -- (62,189) (63,270)
----------- ----------- -----------
Net cash provided by (used in) investing activities (64,744) (419,231) 538,525
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (157,331) (320,229) 390,759
CASH AND CASH EQUIVALENTS,
beginning of year 220,457 540,686 149,927
----------- ----------- -----------
CASH AND CASH EQUIVALENTS,
end of year $ 63,126 $ 220,457 $ 540,686
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 19
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
National Tax Credit Partners, L.P. (the "Partnership") was formed under
the California Revised Limited Partnership Act and organized on March 7,
1989. The Partnership was formed to invest primarily in other limited
partnerships which own and operate multifamily housing complexes that
are eligible for low income housing tax credits or, in certain cases,
for historic rehabilitation tax credits. The general partner of the
Partnership (the "General Partner") is National Partnership Investments
Corp., a California corporation ("NAPICO"). Casden Investment
Corporation owns 100% of NAPICO's stock. The special limited partner of
the Partnership (the "Special Limited Partner") is PaineWebber T.C.,
Inc., a Delaware corporation.
The Partnership originally registered 14,000 units, consisting of 28,000
Limited Partnership Interests ("LPI"), and warrants to purchase a
maximum of 14,000 Additional Limited Partnership Interests ("ALPI"). The
term of the offering expired in June 1990, at which date the Partnership
raised $59,749,000 from the sale of 16,336 LPI and warrants representing
7,563 ALPI.
The General Partner has a 1% interest in operating profits and losses of
the Partnership. The limited partners will be allocated the remaining
99% interest in proportion to their respective investments.
The Partnership shall continue in full force and effect until December
31, 2029, unless terminated prior to that, pursuant to the partnership
agreement or law.
Upon total or partial liquidation of the Partnership or the disposition
or partial disposition of a project or project interest and distribution
of the proceeds, the General Partner will be entitled to a property
disposition fee as mentioned in the partnership agreement. The limited
partners will have a priority item equal to their invested capital plus
a 10% priority return as defined in the partnership agreement. This
property disposition fee may accrue but shall not be paid until the
limited partners have received distributions equal to 100% of their
capital contributions plus the 10% priority return.
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
18
<PAGE> 20
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Method of Accounting for Investments in Limited Partnerships
The investments in limited partnerships are accounted for using the
equity method. Acquisition, selection and other costs related to the
acquisition of the projects acquired are capitalized as part of the
investment accounts and are being amortized on a straight line basis
over the estimated lives of the underlying assets, which is generally 30
years.
Net Loss Per Limited Partnership Interest
Net loss per limited partnership interest was computed by dividing the
limited partners' share of net loss by the number of limited partnership
interests outstanding during the year. The number of limited partnership
interests was 23,899 for all years presented.
Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash
equivalents.
Impairment of Long-Lived Assets
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
If the sum of the expected future cash flows is less than the carrying
amount of the assets, the Partnership recognizes an impairment loss.
During 1999, 1998 and 1997, the Partnership recognized impairment losses
of approximately $0, $1,223,000 and $561,000, respectively, related to
certain of the investments in local limited partnerships.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 31 local limited
partnerships (the "Local Partnerships"). As a limited partner of the
Local Partnerships, the Partnership does not have authority over
day-to-day management of the Local Partnerships or their properties (the
"Apartment Complexes"). The general partners responsible for management
of the Local Partnerships (the "Local Operating General Partners") are
not affiliated with the General Partner of the Partnership, except as
discussed below.
19
<PAGE> 21
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
At December 31, 1999, the Local Partnerships own residential projects
consisting of 2,788 apartment units.
The Partnership, as a limited partner in each Local Partnership, is
generally entitled to 99 percent of the operating profits and losses of
the Local Partnerships. National Tax Credit, Inc. (NTC), an affiliate of
the General Partner, serves either as a special limited partner or
non-managing administrative general partner in which case it receives
.01 percent of operating profits and losses of the Local Partnership, or
as the Local Operating General Partner of the Local Partnership in which
case it is entitled to .09 percent of operating profits and losses of
the Local Partnership. The Partnership is also generally entitled to
receive 50 percent of the net cash flow generated by the Apartment
Complexes, subject to repayment of any loans made to the Local
Partnerships (including loans provided by NTC or an affiliate),
repayment for funding of development deficit and operating deficit
guarantees by the Local Operating General Partners or their affiliates
(excluding NTC and its affiliates), and certain priority payments to the
Local Operating General Partners other than NTC or its affiliates.
The Partnership's allocable share of losses from Local Partnerships are
recognized in the financial statements until the related investment
account is reduced to a zero balance. Losses incurred after the
investment account is reduced to zero are not recognized. The cumulative
amount of the unrecognized equity in losses of unconsolidated limited
partnerships was approximately $24,044,000 and $15,462,000 as of
December 31, 1999 and 1998, respectively.
Distributions from the Local Partnerships are accounted for as a return
of capital until the investment balance is reduced to zero or to a
negative amount equal to further capital contributions required.
Subsequent distributions received will be recognized as income.
The following is a summary of the investments in and advances to
Local Partnerships and reconciliation to the Local Partnerships
accounts:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Investment balance, beginning of year $ 11,421,621 $ 14,370,207
Capital contributions to limited partnerships 120,420 455,569
Equity in loss of limited partnerships (2,075,259) (1,946,271)
Write off of investee partnership -- (1,223,100)
Amortization of capitalized acquisition costs and fees (360,125) (136,257)
Distributions recognized as a return of capital (55,676) (98,527)
------------ ------------
Investment balance, end of year $ 9,050,981 $ 11,421,621
============ ============
</TABLE>
20
<PAGE> 22
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
In 1997, the Partnership received approximately $886,000 from the sale
of a portion of its limited partner interests in two Local Partnerships.
The difference between the investment per the accompanying balance
sheets at December 31, 1999 and 1998, and the equity per the Local
Partnerships' combined financial statements is due primarily to
cumulative unrecognized equity in losses of certain Local Partnerships,
the Partnership's recording of capital contributions payable to the
Local Partnerships in its investment balance, costs capitalized to the
investment account and recognition of impairment losses.
Victorian Park
Victorian Park Associates, which owns a 336-unit Apartment Complex
located in Illinois, defaulted on its mortgage in July 1991 principally
because the unaffiliated Local Operating General Partners failed to pay
$800,000 of real property taxes required under their guarantees. On
March 25, 1992, the Partnership commenced litigation against the Local
Operating General Partners to enforce its rights. On November 13, 1992
the Partnership was advised that a Chapter 11 petition in bankruptcy was
filed by the Local Operating General Partners on behalf of the Local
Partnership and that the lender, Patrician Mortgage ("Patrician"), had
accelerated its mortgage. On January 7, 1993, the Partnership obtained
an order compelling the Local Operating General Partners to perform
under their Guarantees, which order was reversed by the U.S. Court of
Appeals for the Seventh Circuit. The Local Operating General Partners'
Seventh Amended Plan of Reorganization (the "Plan") was approved.
Pursuant to the Plan, Patrician is required to reissue and/or reduce the
principal on the first mortgage bonds and the Local Operating General
Partners are required to (i) pay $1,000,000 cash to implement the Plan
and (ii) pay an agreed upon monthly guarantee payment. No assurances can
be given that the Plan will be successfully implemented. As of December
31, 1999 and 1998, the Partnership's carrying value of the investment in
the Victorian Local Partnership (which represents approximately 5.7
percent of the Partnership's total equity initially invested in Local
Partnerships) was zero.
Summit I, II and III
The general contractor for three related Local Partnerships, Summit I,
Summit II and Summit III, initiated a lawsuit in December 1992 against
the Local Partnerships and the Partnership seeking damages in the amount
of approximately $600,000 allegedly due pursuant to the respective
general contracts plus damages for alleged misrepresentations and
punitive damages. The Partnership believes that the general contractor's
claims are barred and/or subject to offset
21
<PAGE> 23
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
and it has filed responsive pleadings. The Partnership has not accrued
any liability in the accompanying financial statements as of December
31, 1999 and 1998. The lawsuit has been dormant since 1993. Occupancy
levels at the three related Local Partnerships, Summit I, II, and III
(Wallace, Bergdoll, and Chandler School located in Philadelphia) were
88%, 89%, and 92%, respectively, at December 31, 1999, and the
properties have been operating at a deficit. The local general partner
is currently attempting to negotiate discounted payments and/or payment
plans for outstanding payables which, if unsuccessful, could result in
foreclosure proceedings on all three properties. In 1996, the aggregate
carrying value of the investments in Summit I, Summit II and Summit III
of approximately $2,290,000 was written off. Summits I, II and III
represent 3.2%, 1.4% and 4.6%, respectively, of NTCP's original
portfolio investment.
Meadows
The Meadows Apartments (the "Local Partnership") is a 114-unit building
located in Ypsilanti, Michigan. The first mortgage loan matured on May
15, 1996. After the lender refused to negotiate an extension of the
loan, the Local Partnership filed Chapter 11 bankruptcy proceedings to
avert foreclosure. A plan of reorganization for the Local Partnership
(the "Plan") was approved by the bankruptcy court on December 16, 1996.
Under the Plan, the existing loan in the principal amount of $2,890,000,
at an interest rate of 10%, was reduced to $2,100,000 with an interest
rate of 9%. In exchange, the lender received one-third of NTCP's local
partnership interest, including anticipated allocations of housing tax
credits in the amount of approximately $488,500. As of December 31, 1999
and 1998, the Partnership's carrying value of the investment in the
Meadows Apartments was zero.
Glenark
Pursuant to the terms of a workout, dated January 11, 1995 (the
"Workout") agreed upon between the parties relating to the resolution of
an existing default under the first mortgage loan encumbering Glenark
Landing, annual payments of $42,800 for a five year term, totaling
$214,000, are due to the Rhode Island Housing and Mortgage Finance
Corporation (the "Lender"). The lender issued a notice of default with
respect to the Workout on September 24, 1999.
The Partnership's investment in Glenark was zero at December 31, 1999
and 1998.
Holden Village and Ticino Apartments
Holden Village and Ticino Apartments, located in Seattle, Washington
have been experiencing operating deficits. The high cost of servicing
the debt was the largest contributing factor associated with the deficit
operations. In January 1998, NTCP was successful in negotiating
22
<PAGE> 24
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
an interest rate reduction with the lender for each of the properties.
Based on the loan modifications, the operating performance of each
property is expected to improve. The Partnership's total investment in
Holden Village and Ticino Apartments of approximately $1,223,000 was
written off in 1998.
Dynes Village
The Dynes Village Apartments complex is operating at a deficit and the
first mortgage loan encumbering the property was delinquent until it was
brought current by NTCP in November 1997. In addition, the property has
been audited by the IRS with respect to tenant qualifications performed
by the prior local operating general partner. The IRS has disqualified
all future housing tax credits based on what they consider
non-compliance by the prior local operating general partner. As a
result, the Partnership's investment in Dynes Village of $560,766 was
written off during 1997.
Blue Lake
Pursuant to the terms of a loan workout, dated March 25, 1995 (the
"Workout"), NTCP is required to contribute an additional $541,300 to the
local partnership over a ten year period. In exchange, the debt service
on the property is payable out of net cash flow. During 1998 and 1997,
approximately $62,000 and $63,000, respectively, was paid by NTCP to the
local partnership under the Workout (see Note 3). The Partnership's
investment in Blue Lake at December 31, 1999 and 1997 was zero.
Rose City
During 1997, the Oregon Housing and Community Services Department
("Department") inspected Rose City Village Limited Partnership's
compliance with the low-income housing credit provisions of the Internal
Revenue Code, and determined that the Partnership was not in compliance.
The Department filed Form 8823, Low-Income Housing Credit Agencies
Report of Noncompliance, with the Internal Revenue Service. Management
believes the instances of noncompliance are now corrected; however, as
of the date of this report, resolution of this matter by the Department
and the Internal Revenue Service is still outstanding. The effect, if
any, of the noncompliance on the financial statements of the Partnership
cannot be determined at this date. The Partnership's investment in Rose
City at December 31, 1999 was $271,115.
Selected financial information from the combined financial statements of
the Local Partnerships at December 31, 1999 and 1998 and for each of the
three years in the period ended December 31, 1999 is as follows:
23
<PAGE> 25
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Balance Sheets
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(in thousands)
<S> <C> <C>
Land and buildings, net $ 95,159 $ 99,498
========= =========
Total assets $ 101,484 $ 105,811
========= =========
Mortgages payable secured by real property $ 89,202 $ 87,586
========= =========
Total liabilities $ 115,429 $ 107,672
========= =========
Deficiency of National Tax Credit Partners, L.P. $ (15,668) $ (6,628)
========= =========
Equity of other partners $ 1,723 $ 4,767
========= =========
</TABLE>
Statements of Operations
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total revenues $ 18,350 $ 17,699 $ 18,087
======== ======== ========
Interest expense $ 7,336 $ 7,538 $ 7,687
======== ======== ========
Depreciation $ 4,230 $ 4,325 $ 4,269
======== ======== ========
Total expenses $ 27,650 $ 21,408 $ 21,546
======== ======== ========
Net loss $ (9,300) $ (3,710) $ (3,459)
======== ======== ========
Net loss allocable to the Partnership $ (8,830) $ (3,374) $ (3,466)
======== ======== ========
</TABLE>
Included in expenses for 1999 are impairment losses related to certain
Local Partnerships, in which the Partnership has a zero investment
balance.
An affiliate of the General Partner is the Local Operating General
Partner in sixteen of the Local Partnerships included above, and another
affiliate receives property management fees of approximately 5 percent
of gross revenues from eight of these Local Partnerships. The following
sets forth the significant combined data for the Local Partnerships in
which an affiliate of the General Partner was the Local Operating
General Partner, reflected in the accompanying financial statements
using the equity method of accounting:
24
<PAGE> 26
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total assets $ 43,618 $ 47,383
======== ========
Total liabilities $ 48,628 $ 48,083
======== ========
Deficiency of National Tax Credit Partners, L.P. $ (8,675) $ (4,674)
======== ========
Equity of other partners $ 3,665 $ 3,973
======== ========
Total revenue $ 7,462 $ 7,328 $ 7,503
======== ======== ========
Net loss $ (1,566) $ (2,273) $ (1,971)
======== ======== ========
</TABLE>
3. CAPITAL CONTRIBUTIONS PAYABLE
Pursuant to the terms of a loan workout relating to the Blue Lake Local
Partnership, capital contributions of approximately $70,000 are due
annually, until paid in full, for the investment in the Blue Lake Local
Partnership. The capital contributions payable are unsecured and
non-interest bearing. No payments have been made in 1999 and a dispute
has arisen as to whether the local partnership is in default under the
workout. The parties are currently engaged in settlement discussions
regarding this dispute.
4. RELATED-PARTY TRANSACTIONS
Under the terms of the Restated Certificate and Agreement of the Limited
Partnership, the Partnership is obligated to the General Partner and the
Special Limited Partner for the following fees:
(a) An annual Partnership management fee in an annual amount equal
to 0.5 percent of invested assets (as defined in the partnership
agreement) is payable to the General Partner and Special Limited
Partner. Partnership management fees expensed were $692,952 for
1999 and $692,956 for 1998 and 1997. At December 31, 1999 and
1998, $6,113,629 and $5,420,677, respectively, was due the
General Partner and Special Limited Partner.
As of December 31, 1999, the fees and expenses due the General
Partner and Special Limited Partner exceeded the Partnership's
cash. The partners, during the forthcoming year, will not demand
payment of amounts due in excess of such cash or such that the
Partnership would not have sufficient operating cash; however,
the Partnership will remain liable for all such amounts.
25
<PAGE> 27
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
4. RELATED-PARTY TRANSACTIONS (CONTINUED)
(b) A property disposition fee is payable to the General Partner in
an amount equal to the lesser of (i) one-half of the competitive
real estate commission that would have been charged by
unaffiliated third parties providing comparable services in the
area where the apartment complex is located, or (ii) 3 percent
of the sales price received in connection with the sale or
disposition of the apartment complex or local partnership
interest, but in no event will the property disposition fee and
all amounts payable to unaffiliated real estate brokers in
connection with any such sale exceed in the aggregate, the
lesser of the competitive rate (as described above) or 6 percent
of such sale price. Receipt of the property disposition fee will
be subordinated to the distribution of sale or refinancing
proceeds by the Partnership until the limited partners have
received distributions from sale or refinancing proceeds in an
aggregate amount equal to (i) their 10 percent priority return
for any year not theretofore satisfied (as defined in the
partnership agreement) and (ii) an amount equal to the aggregate
adjusted investment (as defined in the partnership agreement) of
the limited partners. No disposition fees have been paid.
(c) The Partnership reimburses certain expenses to the General
Partner. The reimbursement due to the General Partner was $0, $0
and $38,544 for the years ended December 31, 1999, 1998 and
1997, respectively, and is included in general and
administrative expenses.
NTC is the Local Operating General Partner in sixteen of the
Partnership's 31 Local Partnerships. In addition, NTC is either a
special limited partner or a non-managing, administrative general
partner in each Local Partnership.
An affiliate of the General Partner is responsible for the on-site
property management for eight, two and two Local Partnerships (Note 2)
in 1999, 1998 and 1997, respectively. The Local Partnerships paid the
affiliate property management fees of $108,654, $59,249 and $67,157 in
1999, 1998 and 1997, respectively.
5. INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of the
individual partners. The major differences in tax and financial
statement losses result from the use of different bases and depreciation
methods for the properties held by the Local Partnerships. Additional
differences in tax and financial losses arises when financial statement
losses are not recognized after the investment balance has been reduced
to zero or to a negative amount equal to further capital contributions
required.
26
<PAGE> 28
NATIONAL TAX CREDIT PARTNERS, L.P.
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
6. CONTINGENCIES
The General Partner of the Partnership is a plaintiff in various
lawsuits and has also been named as a defendant in other lawsuits
arising from transactions in the ordinary course of business. In
addition, the Partnership is involved in several suits. In the opinion
of management and the General Partner, the claims will not result in any
material liability to the Partnership (Note 2).
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, when it is practicable to
estimate that value. The operations generated by the investee limited
partnerships, which account for the Partnership's primary source of
funds, are subject to various government rules, regulations and
restrictions which make it impracticable to estimate the fair value of
the accrued fees due to partners. The carrying amount of other assets
and liabilities reported on the balance sheets that require such
disclosure approximates fair value due to their short-term maturity.
8. FOURTH-QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in the loss of limited
partnerships on a quarterly basis using estimated financial information
furnished by the various local operating general partners. The equity in
loss reflected in the accompanying annual financial statements is based
primarily upon audited financial statements of the investee limited
partnerships. The increase, in equity in loss of approximately
$1,757,000, between the estimated nine-month equity in loss and the
actual 1999 year end equity in loss has been recorded in the fourth
quarter.
27
<PAGE> 29
NATIONAL TAX CREDIT PARTNERS, L.P. SCHEDULE
INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE CAPITALIZED EQUITY AMORTIZATION BALANCE CAPITAL
LIMITED JANUARY 1, CAPITAL ACQUISITION CASH INCOME OF CAPITALIZED DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS 1999 CONTRIBUTIONS COSTS DISTRIBUTIONS (LOSS) ACQ. COSTS 1999 PAYABLE
- ------------------- ------------ ------------- ------------ ------------- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Apple Tree $ 142,544 $ $ $ (1,900) $ (25,023) $ (1,418) $ 114,203 $
Blue Lake -- -- -- -- 266,841
ComFed -- -- -- --
Concept I & II -- 15,000 (15,000) -- --
Countryview Columbus 1,237,019 -- (948,273) (288,746) --
Dickens -- -- -- --
Dynes Village -- 31,000 (31,000) -- --
Genoa Plaza 98,843 480 (18,768) (529) 80,026
Glenark -- 89,000 (89,000) -- --
Grand Meadows 806,657 (115,721) (3,812) 687,124
Grinnell Park 105,688 (1,518) (7,857) (215) 96,098
Hickory Green 344,932 (78,281) (5,279) 261,372
Holden Village -- 45,954 (45,954) --
Kimberly Court 75,800 (25,749) (1,663) 48,388
The Meadows -- 8,153 (8,153) -- --
Mountain View I 887,560 (72,392) (7,990) 807,178
Mountain View II 1,223,306 (50,000) (89,741) (7,990) 1,075,575
Newbury Place 2,016,514 (175,464) (14,698) 1,826,352
North Liberty Park -- --
Paris Hotel -- --
Rolling Hills -- --
Rose City 532,337 (1,000) (256,281) (3,941) 271,115
Summit I -- (6,389) 6,389 --
Summit II -- (6,389) 6,389 --
Summit III -- (6,389) 6,389 --
Torres de Plata I -- --
Terrace Gardens 1,746,196 (35,000) (99,604) (13,253) 1,598,339
Ticino -- --
Tyrone Elderly 973,913 (16,258) 52,296 (5,188) 1,004,763
Victorian Park -- --
Vinton Park School 1,230,312 (44,461) (5,403) 1,180,448
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 11,421,621 $ 120,420 $ -- $ (55,676) $ (2,075,259) $ (360,125) $ 9,050,981 $ 266,841
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
28
<PAGE> 30
NATIONAL TAX CREDIT PARTNERS, L.P. SCHEDULE
INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE CAPITALIZED EQUITY IN AMORTIZATION BALANCE CAPITAL
LIMITED JANUARY 1, CAPITAL ACQUISITION CASH INCOME OF CAPITALIZED DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS 1998 CONTRIBUTIONS COSTS DISTRIBUTIONS (LOSS) ACQ. COSTS 1998 PAYABLE
- ------------------- ------------ ------------- ------------ ------------- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Apple Tree $ 157,169 $ $ $ (1,900) $ (11,307) $ (1,418) $ 142,544 $
Blue Lake -- -- -- -- 266,841
ComFed -- -- -- --
Concept I & II 131,929 75,000 (200,611) (6,318) --
Countryview Columbus 1,466,729 (76,827) (139,876) (13,007) 1,237,019
Dickens -- -- -- --
Dynes Village -- -- -- -- --
Genoa Plaza 131,364 (5,691) (26,302) (529) 98,842
Glenark -- 28,874 (28,874) -- --
Grand Meadows 899,405 (88,936) (3,812) 806,657
Grinnell Park 111,783 (5,880) (215) 105,688
Hickory Green 394,244 (44,033) (5,279) 344,932
Holden Village 809,801 104,651 (906,855) (7,597) --
Kimberly Court 126,411 (48,948) (1,663) 75,800
The Meadows -- -- --
Mountain View I 966,090 (70,540) (7,990) 887,560
Mountain View II 1,308,716 (77,420) (7,990) 1,223,306
Newbury Place 2,119,337 (88,125) (14,698) 2,016,514
North Liberty Park 10,105 (9,188) (917) --
Paris Hotel 303,152 (300,318) (2,834) --
Rolling Hills 116,938 (49,445) (58,692) (8,800) --
Rose City 685,558 (1,000) (148,280) (3,941) 532,337
Summit I -- --
Summit II -- --
Summit III -- --
Torres de Plata I 45,328 (6,450) (18,479) (20,399) --
Terrace Gardens 1,855,253 (17,708) (78,096) (13,253) 1,746,196
Ticino 496,516 323,871 (815,381) (5,006) --
Tyrone Elderly 969,112 (16,333) 26,322 (5,188) 973,913
Victorian Park -- --
Vinton Park School 1,265,267 (29,552) (5,403) 1,230,312
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 14,370,207 $ 455,569 $ -- $ (98,527) $ (3,169,371) $ (136,257) $ 11,421,621 $ 266,841
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
29
<PAGE> 31
NATIONAL TAX CREDIT PARTNERS, L.P. SCHEDULE
INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE CAPITALIZED EQUITY IN AMORTIZATION BALANCE CAPITAL
LIMITED JANUARY 1, CAPITAL ACQUISITION CASH INCOME OF CAPITALIZED DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS 1997 CONTRIBUTIONS COSTS DISTRIBUTIONS (LOSS) ACQ. COSTS 1997 PAYABLE
------------ ------------- ------------ ------------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Apple Tree $ 173,648 $ $ $ (1,900) $ (13,161) $ (1,418) $ 157,169 $
Blue Lake -- -- -- -- 329,030
ComFed -- -- -- --
Concept I & II 140,282 (2,035) (6,318) 131,929
Countryview Columbus 2,230,431 (625,582) (125,113) (13,007) 1,466,729
Dickens 117,438 (117,438) -- --
Dynes Village 630,428 53,900 (671,696) (12,632) --
Genoa Plaza 152,794 (3,779) (17,122) (529) 131,364
Glenark -- 36,400 (36,400) -- --
Grand Meadows 996,605 (93,388) (3,812) 899,405
Grinnell Park 119,821 (7,823) (215) 111,783
Hickory Green 432,097 (32,574) (5,279) 394,244
Holden Village 944,835 22,000 (149,437) (7,597) 809,801
Kimberly Court 173,339 (1,724) (43,541) (1,663) 126,411
The Meadows -- 262,492 (262,492) -- --
Mountain View I 1,057,747 (6,000) (77,667) (7,990) 966,090
Mountain View II 1,417,710 (3,000) (98,004) (7,990) 1,308,716
Newbury Place 2,431,711 (10,000) (287,676) (14,698) 2,119,337
North Liberty Park 34,268 (23,246) (917) 10,105
Paris Hotel 330,589 (24,603) (2,834) 303,152
Rolling Hills 777,946 (49,445) (602,763) (8,800) 116,938
Rose City 604,078 (260,000) (1,750) 347,171 (3,941) 685,558
Summit I -- 2,354 (2,354)
Summit II -- 10,023 (10,023)
Summit III -- 5,837 (5,837)
Torres de Plata I 141,674 (6,450) (89,064) (832) 45,328
Terrace Gardens 1,975,852 (107,346) (13,253) 1,855,253
Ticino 588,003 8,000 (305) (94,176) (5,006) 496,516
Tyrone Elderly 959,066 (32,866) 48,100 (5,188) 969,112
Victorian Park -- --
Vinton Park School 1,291,036 (20,366) (5,403) 1,265,267
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 17,721,398 $ (494,576) $ (305) $ (106,914) $ (2,620,074) $ (129,322) $ 14,370,207 $ 329,030
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
30
<PAGE> 32
SCHEDULE
(CONTINUED)
NATIONAL TAX CREDIT PARTNERS, L.P.
INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTES: 1. Equity in losses represents the Partnership's allocable share of
the net loss from the Local Partnerships for the year. Equity in
losses of the Local Partnerships will be recognized until the
investment balance is reduced to zero or a negative balance
equal to further commitments by the Partnership.
2. Cash distributions from the Local Partnerships are treated as a
return of the investment and reduce the investment balance until
such time as the investment is reduced to zero or a negative
balance equal to further commitments by the Partnership.
Distributions subsequently received will be recognized as
income.
31
<PAGE> 33
NATIONAL TAX CREDIT PARTNERS, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS SCHEDULE III
IN WHICH NTCP HAS INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Buildings,
Furnishings Total
& Equipment Land and
Number Outstanding Amount Carried Buildings
of Mortgage at Close of Furnishings Accumulated
Partnership/Location Units Loan Land Period & Equipment Depreciation
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Apple Tree Associates 24 $ 888,521 $ 74,000 $ 1,215,548 $ 1,289,548 $ 313,801
Brigham City, UT
Art Museum - Summit I (Wallace) 17 1,595,160 0 0 -- 0
Philadelphia, PA
Art Museum - Summit II (Bergdoll) 9 50,328 0 0 -- 0
Philadelphia, PA
Art Museum - Summit III (Chandler) 25 2,391,333 0 0 -- 0
Philadelphia, PA
Blue Lake 106 4,750,000 335,000 2,821,992 3,156,992 1,788,810
Miami, FL
ComFed Qualified Housing Limited 116 2,534,117 385,467 4,219,956 4,605,423 1,715,197
Partnership III
Omaha, NE
Concept I & II Limited Partnerships 40 1,528,166 131,600 2,440,871 2,572,471 725,613
Cleveland, OH
Countryview Columbus Limited 152 3,765,441 320,000 7,290,177 7,610,177 1,774,815
Columbus, OH
Dickens Associates II 34 1,255,351 105,000 2,299,724 2,404,724 602,719
Chicago, IL
Dynes Village Associates Limited 42 758,705 65,000 1,080,420 1,145,420 170,693
Cleveland, OH
Genoa Plaza Limited Partnership 48 1,325,233 98,024 1,689,094 1,787,118 467,869
Genoa City, WI
Glenark Associates Limited 67 2,816,233 45,525 4,195,223 4,240,748 449,657
Woonsocket, RI
Grand Meadows II Limited 64 1,894,194 112,000 3,476,179 3,588,179 920,342
Grand Blanc, MI
Grinnell Park Limited 24 601,399 48,400 798,415 846,815 220,095
Grinnell, PA
Hickory Green Limited Partnership 59 1,386,352 215,000 2,703,386 2,918,386 914,546
Westland, MI
Holden Village Limited Partnership 96 2,560,253 280,000 4,179,848 4,459,848 1,459,883
West Seattle, WA
Kimberly Court 24 1,476,192 233,900 1,787,734 2,021,634 476,818
Seward, AK
The Meadows Limited Partnership 114 2,032,959 123,900 1,969,205 2,093,105 231,847
Ypsilanti, MI
Mountain View Limited I 120 2,672,568 685,819 4,181,840 4,867,659 1,137,168
Lawrence, MA
Mountain View Limited II 159 3,891,560 866,212 5,191,215 6,057,427 1,404,524
Lawrence, MA
Newbury Limited Partnership 164 3,650,949 739,882 8,018,575 8,758,457 2,063,080
Oak Creek, WI
North Liberty Park Limited 24 599,612 47,811 735,190 783,001 233,872
</TABLE>
32
<PAGE> 34
<TABLE>
<CAPTION>
Buildings,
Furnishings
& Equipment
Land and
Number Outstanding Amount Carried Buildings Total
of Mortgage at Close of Furnishings Accumulated
Partnership/Location Units Loan Land Period & Equipment Depreciation
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
North Liberty, IA
Paris Hotel Limited Partnership 17 975,483 179,160 1,675,053 1,854,213 422,239
Denver, CO
Rolling Hills Apts. Limited 232 4,881,182 800,000 11,631,730 12,431,730 3,192,133
Pottsgrove Township, PA
Rose City 264 8,726,739 463,955 9,780,323 10,244,278 3,156,530
Portland, OR
Terrace Gardens Limited Partnership 150 4,924,607 1,522,369 8,110,161 9,632,530 3,196,351
Lemon Grove, CA
Ticino Apts. Limited Partnership 45 1,173,315 101,066 2,129,970 2,231,036 559,115
Seattle, WA
Torres de Plata I 72 3,009,901 161,280 3,724,730 3,886,010 1,238,300
Toa Alta, PR
Tyrone Elderly Limited Partnership 100 3,036,658 100,000 4,840,602 4,940,602 1,263,914
Tyrone, PA
Victorian Park 336 17,963,006 1,737,727 18,118,263 19,855,990 7,349,522
Streamwood, IL
Vinton/Park School Apts. Limited 44 685,985 145,500 2,733,586 2,879,086 554,625
Omaha, NE
--------------------------------------------------------------------------------------------
TOTAL 2,788 $ 89,801,502 $ 10,123,597 $123,039,010 $133,162,607 $ 38,004,078
============================================================================================
</TABLE>
33
<PAGE> 35
SCHEDULE III
(CONTINUED)
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL PARTNERSHIPS
IN WHICH NTCP HAS INVESTMENTS
DECEMBER 31, 1999
NOTES: 1. Each Local Partnership has developed and now owns and operates
an Apartment Complex. Substantially all project costs, including
construction period interest expense, were capitalized by the
Local Partnerships.
2. Depreciation is provided for by various methods over the
estimated useful lives of the Apartment Complexes. The estimated
composite useful lives of the buildings are generally from 25 to
40 years.
3. Investments in property and equipment:
<TABLE>
<CAPTION>
Buildings,
Furnishings,
Land Equipment Total
------------- ------------- -------------
<S> <C> <C> <C>
Balance, January 1, 1997 $ 10,355,997 $ 125,025,523 $ 135,381,520
Net dispositions during the year (232,400) (415,672) (648,072)
------------- ------------- -------------
Balance, December 31, 1997 10,123,597 124,609,851 134,733,448
Net addition during the year -- 1,716,284 1,716,284
------------- ------------- -------------
Balance, December 31, 1998 10,123,597 126,326,135 136,449,732
Net addition during the year -- (3,287,125) (3,287,125)
------------- ------------- -------------
Balance, December 31, 1999 $ 10,123,597 $ 123,039,010 $ 133,162,607
============= ============= =============
</TABLE>
34
<PAGE> 36
SCHEDULE III
(CONTINUED)
NATIONAL TAX CREDIT PARTNERS, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL PARTNERSHIPS
IN WHICH NTCP HAS INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Buildings,
Furnishings
Accumulated Depreciation: And Equipment
- ------------------------- -------------
<S> <C>
Balance, January 1, 1997 $29,466,900
Net additions during the year 2,272,604
-----------
Balance, December 31, 1997 31,739,504
Net additions during the year 5,211,767
-----------
Balance, December 31, 1998 36,951,271
Net additions during the year 1,052,807
-----------
Balance, December 31, 1999 $38,004,078
===========
</TABLE>
35
<PAGE> 37
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
NATIONAL TAX CREDIT PARTNERS, L.P. (the "Partnership") has no directors or
executive officers of its own.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The following biographical information is presented for the
directors and executive officers of NAPICO with principal responsibility for the
Partnership's affairs.
CHARLES H. BOXENBAUM, 70, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.
Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
In 1963, he was the winner of the Snyder Award, the highest annual award offered
by the National Association of Real Estate Boards for Best Exchange. He is one
of the founders and a past director of the First Los Angeles Bank, organized in
November 1974. Mr. Boxenbaum was a member of the Board of Directors of the
National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree
from the University of Chicago.
BRUCE E. NELSON, 48, President and a director of NAPICO.
Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor
of Arts degree from the University of Wisconsin and is a graduate of the
University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.
ALAN I. CASDEN, 54, Chairman of Casden Properties Inc., a director and member of
the audit committee of NAPICO, and chairman of the Executive Committee of
NAPICO.
Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.
Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, and the President's Council of the California
Building Industry Association. He also serves on the advisory board to the
School of Accounting of the University of Southern
36
<PAGE> 38
California. He holds a Bachelor of Science degree and a Masters in Business
Administration degree from the University of Southern California.
PAUL PATIERNO, 43, Chief Financial Officer.
Mr. Patierno joined NAPICO in 1998 and is responsible for its financial affairs,
as well as the limited partnerships sponsored by it. From 1995 until joining
NAPICO in September 1998, Mr. Patierno was a senior manager in the affordable
housing group of Altschuler, Melvoin and Glasser LLP, a national public
accounting firm. From 1990 to 1995, he practiced public accounting with a firm
specializing in real estate syndication. Mr. Patierno received his bachelor of
science degree in accounting from California State University at Northridge, and
is a member of the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants.
PATRICIA W. TOY, 70, Senior Vice President - Communications and Assistant
Secretary.
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 39, Executive Vice President, General Counsel and Assistant
Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther
worked in the San Francisco law firm of Browne and Kahn which specialized in
construction litigation. Mr. Walther received his Bachelor of Arts Degree in
Political Science from the University of California, Santa Barbara and is a
graduate of the University of California, Davis, School of Law. He is a member
of the State Bar of Hawaii.
37
<PAGE> 39
NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and does
not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.
38
<PAGE> 40
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS:
National Tax Credit Partners, L.P. has no officers, employees, or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to the General Partner and Special
Limited Partner for the following fees:
(a) An annual partnership management fee in an amount equal to 0.5 percent
of invested assets (as defined) is payable to the General Partner and
Special Limited Partner. For each of the years ended December 31, 1999,
1997 and 1996, fees of $692,956 have been incurred.
(b) A property disposition fee is payable to the General Partner in an
amount equal to the lesser of (i) one-half of the competitive real
estate commission that would have been charged by unaffiliated third
parties providing comparable services in the area where the Apartment
Complex is located, or (ii) 3 percent of the sale price received in
connection with the sale or disposition of the Apartment Complex or
Local Partnership Interest, but in no event will the Property
Disposition Fee and all amounts payable to unaffiliated real estate
brokers in connection with any such sale exceed in the aggregate the
lesser of the competitive rate (as described above) or 6 percent of such
sale price. Receipt of the Property Disposition Fee will be subordinated
to the distribution of Sale or Refinancing Proceeds by the Partnership
until the Limited Partners have received distributions of Sale or
Refinancing Proceeds in an aggregate amount equal to (i) their 10
percent Priority Return for any year not theretofore satisfied and (ii)
an amount equal to the aggregate adjusted investment (as defined) of the
limited partners. No disposition fees have been paid.
(c) The Partnership reimburses certain expenses to the General Partner. For
the years ended December 31, 1999, 1998 and 1997, $0, $38,544 and
$36,744, respectively, has been paid.
(d) An affiliate of the General Partner is responsible for the on-site
property management for eight, two and two Local Partnerships in 1999,
1998 and 1997, respectively. The Local Partnerships paid the affiliate
property management fees of $108,654, $59,249, $67,157 in 1999, 1998 and
1997, respectively.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
The General Partner owns all of the outstanding general partnership
interests of NTCP; no person is known to own beneficially in excess of 5
percent of the outstanding Limited Partnership Interests.
(b) None of the officers or directors of the General Partner own directly or
beneficially any Limited Partnership Interests in NTCP.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Partnership has no officers, directors, or employees of its own. All of its
affairs are managed by the General Partner, National Partnership Investments
Corp. , and the Special Limited Partner, PaineWebber T.C., Inc. The transactions
with the Special Limited Partner are primarily in the form of fees paid by the
Partnership to the General Partner for services rendered to the Partnership, as
discussed in Item 11 and in the notes to the accompanying financial statements.
39
<PAGE> 41
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS.
FINANCIAL STATEMENTS
Report of Independent Public Accountants.
Balance Sheets as of December 31, 1999 and 1998.
Statements of Operations for the years ended December 31, 1999, 1998 and 1997.
Statements of Partners' Equity (Deficiency) for the years ended December 31,
1999, 1998 and 1997.
Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997.
Notes to Financial Statements.
FINANCIAL STATEMENT SCHEDULES APPLICABLE TO NATIONAL TAX CREDIT PARTNERS, L.P.
AND THE LIMITED PARTNERSHIPS IN WHICH NATIONAL TAX CREDIT PARTNERS, L.P. HAS
INVESTMENTS
Schedule - Investments in Local Limited Partnerships, December 31, 1999, 1998
and 1997.
Schedule III - Real Estate and Accumulated Depreciation, December 31, 1999.
The remaining schedules are omitted because any required information is included
in the financial statements and notes thereto, or they are not applicable, or
not required.
EXHIBITS
<TABLE>
<S> <C>
(3) Articles of incorporation and bylaws: The registrant is not
incorporated. The Partnership Agreement was filed with Form S-11
Registration #33-27658 incorporated herein by reference.
(10) Material contracts: The registrant is not party to any material
contracts, other than the Restated Certificate and Agreement of
Limited Partnership dated March 7, 1989 previously filed and which is
hereby incorporated by reference.
</TABLE>
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1999.
40
<PAGE> 42
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 in the City of Los Angeles,
State of California.
NATIONAL TAX CREDIT PARTNERS, L.P.
By: NATIONAL PARTNERSHIP INVESTMENTS CORP.
General Partner
/s/ Charles H. Boxenbaum
- ----------------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer
/s/ Bruce E. Nelson
- ----------------------------------------
Bruce E. Nelson
Director and President
/s/ Alan I. Casden
- ----------------------------------------
Alan I. Casden
Director
/s/ Paul Patierno
- ----------------------------------------
Paul Patierno
Chief Financial Officer
41
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 63,126
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 63,126
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,114,107
<CURRENT-LIABILITIES> 147,262
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,586,375
<TOTAL-LIABILITY-AND-EQUITY> 9,114,107
<SALES> 0
<TOTAL-REVENUES> 136,584
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,257,155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,120,571)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,120,571)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,120,571)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
