June 25, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Boston Financial Qualified Housing Tax Credits L.P. V
Annual Report on Form 10-K for the Year Ended March 31, 1999
Commission File Number 0-19706
Dear Sir / Madam:
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/Stephen Guilmette
Stephen Guilmette
Assistant Controller
QH510K-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, 1999 0-19706
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(Exact name of registrant as specified in its charter)
Massachusetts 04-3054464
(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 non-affiliates of
the registrant.
$60,904,650 as of March 31, 1999
<PAGE>
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.
<TABLE>
<CAPTION>
Part of Report on
Form 10-K into
Which the Document
Documents incorporated by reference is Incorporated
<S> <C>
Post-effective amendments No. 1 - 5 to the
Form S-11 Registration Statement, File # 33-29935 Part I, Item 1
Acquisition Reports Part I, Item 1
Post-effective amendment No. 6 to the Registration
Statement on Form S-11, File # 33-29935 Part III, Item 12
Prospectus - Sections Entitled:
"Estimated Use of Proceeds" Part III, Item 13
"Management Compensations and Fees" Part III, Item 13
"Profits and Losses for Tax Purposes, Tax
Credits and Cash Distributions" Part III, Item 13
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED MARCH 31, 1999
TABLE OF CONTENTS
Page No.
PART I
Item 1 Business K-3
Item 2 Properties K-6
Item 3 Legal Proceedings K-12
Item 4 Submission of Matters to a Vote of
Security Holders K-12
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 7A. Quantitative and Qualitative Disclosures about
Market Risk K-18
Item 8 Financial Statements and Supplementary Data K-18
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure K-18
PART III
Item 10 Directors and Executive Officers
of the Registrant K-18
Item 11 Management Remuneration K-20
Item 12 Security Ownership of Certain Beneficial
Owners and Management K-20
Item 13 Certain Relationships and Related Transactions K-20
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K K-23
SIGNATURES K-24
<PAGE>
PART I
Item 1. Business
Boston Financial Qualified Housing Tax Credits L.P. V (the "Partnership") is a
Massachusetts limited partnership formed on June 16, 1989 under the laws of the
State 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 $68,928,650 ("Gross Proceeds"), net of discounts of $350,
through the sale of 68,929 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 August 31, 1991. No
further sale of Units is expected.
The Partnership is engaged solely in the business of real estate investment. On
March 1, 1997, an affiliate of the Partnership's Managing General Partner,
Boston Financial GP1-LLC, became the Local General Partner of Burbank Limited
Partnership I ("Burbank"). As a result, the Partnership was deemed to have
control over Burbank (the "Combined Entity") 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, 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.
The Partnership has invested as a limited partner in other limited partnerships
("Local Limited Partnerships") which own and operate residential apartment
complexes ("Properties") some 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 the Local Limited
Partnerships. As required by applicable rules, the terms of the acquisition of
each Local Limited Partnership interest have been described in supplements to
the Prospectus and collected in the 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
Date
Properties Owned by Local Interest
Limited Partnerships* Location Acquired
- -------------------------------- ---------------------- --------------
<S> <C> <C>
Strathern Park/Lorne Park (1) Los Angeles, CA 07/05/90
Park Caton Catonsville, MD 08/17/90
Cedar Lane I London, KY 09/10/90
Silver Creek II Berea, KY 08/15/90
Rosecliff Sanford, FL 09/18/90
Brookwood Ypsilanti, MI 10/01/90
Oaks of Dunlop Colonial Heights, VA 01/01/91
Water Oak Orange City, FL 01/01/91
Yester Oaks Lafayette, GA 01/01/91
Ocean View Fernandina Beach, FL 01/01/91
Wheeler House Nashua, NH 01/01/91
Archer Village Archer, FL 01/01/91
Timothy House Towson, MD 03/05/91
Westover Station Newport News, VA 03/30/91
Carib III St. Croix, VI 03/21/91
Carib II St. Croix, VI 03/01/91
Whispering Trace Woodstock, GA 05/01/91
New Center Detroit, MI 06/27/91
Huguenot Park New Paltz, NY 06/26/91
Hillwood Pointe Jacksonville, FL 07/19/91
Pinewood Pointe Jacksonville, FL 07/31/91
Westgate Bismark, ND 07/25/91
Woodlake Hills Pontiac, MI 08/01/91
Bixel House Los Angeles, CA 07/31/91
Magnolia Villas North Hollywood, CA 07/31/91
Schumaker Place Salisbury, MD 09/20/91
Circle Terrace Lansdowne, MD 12/06/91
</TABLE>
* The Partnership's interest in profits and losses of each Local Limited
Partnership arising from normal operations is approximately 99%, except for
a 95% interest in Strathern Park/Lorne Park Apartments and an 88.6%
interest in Huguenot Park. Profits and losses arising from sale or
refinancing transactions are allocated in accordance with the respective
Local Limited Partnership Agreements.
(1) On January 1, 1994, Lorne Park merged into Strathern Park in a business
combination accounted for as a pooling of interests. Lorne Park's total
assets, liabilities and partners' equity were combined with Strathern Park
at their existing book value, and neither partnership recognized a gain or
loss on the merger.
<PAGE>
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, to the extent it reflects 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.
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, 1999, 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: (i)
Timothy House and Maidens Choice, representing 10.04%, have Shelter Development
Corp. as Local General Partner; (ii) Hillwood Pointe, Pinewood Pointe and
Whispering Trace, representing 11.88%, have Flournoy Development Co. as Local
General Partner; (iii) Silver Creek and Cedar Lane, representing .87%, have
Robinson A. Williams as Local General Partner; (iv) Water Oak, Yester Oaks and
Ocean View, representing 1.70%, have Seals & Associates, Inc. & E. Lamar Seals
as Local General Partners; (v) Bixel House and Harmony Apartments, representing
7.04%, have Julian Weinstock Construction Co., Inc. as Local General Partner;
and (vi) Carib Villas II and Carib Villas III, representing 1.21%, have First
Centrum Corp. as Local General Partner (BF Lansing Limited Partnership, an
affiliate of the Managing General Partner, became the Administrative General
Partner in Carib Villas II and Carib Villas III on January 31, 1993). The Local
General Partners of the remaining Local Limited Partnerships are identified in
the Acquisition Reports, which are incorporated herein by this reference.
The Properties owned by the 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 local conditions,
such as competitive over-building, or 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
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 V, Inc., the Managing General Partner
of the Partnership. The other General Partner of the Partnership is Arch Street
V Limited Partnership. The Partnership, which does not have any employees,
reimburses The Boston Financial Group Limited Partnership, an affiliate of the
General Partners, 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 generally
99%, except for Strathern Park/Lorne Park, Westgate and Huguenot Park, where the
Partnership's ownership interests are 95%, 49.5% and 88.6%, respectively.
Each of the Local Limited Partnerships has received an allocation of Tax Credits
from 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. To date, none of the Local Limited Partnerships have suffered an
event of recapture of Tax Credits.
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) loans that have 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 Paid Mortgage loans Occupancy
Local Limited Partnership Number Committed at through payable at Type at
Property Name of March 31, March 31, December 31, of March 31,
Property Location Apt. Units 1999 1999 1998 Subsidy* 1999
- --------------------------------- -------------- ------------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Strathern Park/Lorne Park, a
California Limited Partnership (1)
Strathern Park/Lorne Park
Los Angeles, CA 241 $8,418,667 $8,418,667 $17,428,457 None 98%
Maiden Choice Limited
Partnership
Park Caton
Catonsville, MD 101 2,513,300 2,513,300 4,021,395 None 98%
Cedar Lane I, Ltd.
Cedar Lane I
London, KY 36 288,587 288,587 1,108,259 None 100%
Silver Creek II, Ltd.
Silver Creek II
Berea, KY 24 193,278 193,278 768,386 None 100%
Tompkins/Rosecliff, Ltd.
Rosecliff
Sanford, FL 168 3,604,720 3,604,720 5,562,595 None 88%
Brookwood L.D.H.A.
Brookwood
Ypsilanti, MI 81 2,373,295 2,373,295 3,019,835 None 96%
Water Oak Apartment, L.P.
Water Oak
Orange City, FL 40 293,519 293,519 1,256,023 None 98%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions
Total Paid Mortgage loans Occupancy
Local Limited Partnership Number Committed at through payable at Type at
Property Name of March 31, March 31, December 31, of March 31,
Property Location Apt. Units 1999 1999 1998 Subsidy* 1999
- --------------------------- ----------- ------------ ---------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Yester Oaks, L.P.
Yester Oaks
Lafayette, GA 44 319,254 319,254 1,286,809 FmHA 98%
Ocean View Apartments, L.P.
Ocean View
Fernandina Beach, FL 42 334,177 334,177 1,366,353 None 100%
Burbank Limited Partnership I
Wheeler House
Nashua, NH 17 300,531 300,531 706,873 Section 8 100%
Archer Village, Ltd.
Archer Village
Archer, FL 24 171,380 171,380 708,517 FmHA 95%
The Oaks of Dunlop Farms, L.P.
Oaks of Dunlop
Colonial Heights, VA 144 2,791,280 2,791,280 4,428,393 None 97%
Timothy House Limited
Partnership
Timothy House
Towson, MD 112 3,064,250 3,064,250 2,500,426 None 98%
Westover Station Associates, L.P.
Westover Station
Newport News, VA 108 1,972,947 1,972,947 2,661,411 None 99%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contribution
Total Paid Mortgage loans Occupancy
Local Limited Partnership Number Committed at through payable at Type At
Property Name of March 31, March 31, December 31, of March 31,
Property Location Apt. Units 1999 1999 1998 Subsidy* 1999
- ------------------------------ ------------ ------------- ------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Christiansted Limited Dividend
Housing Association
Carib III
St. Croix, VI 24 322,260 322,260 1,482,307 FmHA 79%
St. Croix II Limited Partnership
Carib II
St. Croix, VI 20 347,680 347,680 1,402,191 FmHA 95%
Whispering Trace Apartments,
A Limited Partnership
Whispering Trace
Woodstock, GA 40 1,093,330 1,093,330 1,376,939 None 88%
Historic New Center Apartments
Limited Partnership
New Center
Detroit, MI 104 2,949,420 2,949,420 2,932,517 Section 8 95%
Huguenot Park Associates, L.P.
Huguenot Park
New Paltz, NY 24 982,358 982,358 1,400,000 None 100%
Cobblestone Place Townhomes,
A Limited Partnership
Hillwood Pointe
Jacksonville, FL 100 2,356,133 2,356,133 2,926,844 None 96%
Kensington Place Townhomes,
A Limited Partnership
Pinewood Pointe
Jacksonville, FL 136 3,153,173 3,153,173 3,962,864 None 97%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions
Total Paid Mortgage loans Occupancy
Local Limited Partnership Number Committed at through payable at Type At
Property Name of March 31, March 31, December 31, of March 31,
Property Location Apt. Units 1999 1999 1998 Subsidy* 1999
- ------------------------------ ----------- ------------- ----------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Westgate Apartments Limited
Partnership
Westgate
Bismark, ND 60 935,893 935,893 1,365,415 None 85%
Woodlake Hills Limited
Partnership
Woodlake Hills
Pontiac, MI 144 4,154,670 4,154,670 3,811,770 None 91%
Bixel House, a California
Limited Partnership
Bixel House
Los Angeles, CA 76 710,677 710,677 1,273,858 Section 8 99%
Harmony Apartments, a California
Limited Partnership
Magnolia Villas
North Hollywood, CA 65 3,203,996 3,203,996 2,238,307 None 99%
Schumaker Place Associates, L.P.
Schumaker Place
Salisbury, MD 96 2,910,453 2,910,453 2,913,267 None 100%
Circle Terrace Associates Limited
Partnership
Circle Terrace
Lansdowne, MD 303 5,811,234 5,811,234 8,872,936 Section 8 99%
------- ------------ ------------ -------------
2,374 $ 55,570,462 $ 55,570,462 $ 82,782,947
======= ============ ============ =============
</TABLE>
<PAGE>
* FmHA This subsidy, which is authorized under Section 515 of the
Housing Act of 1949, can be one or a combination of different
types of financing. 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) a rental assistance
subsidy to tenants which allows 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.
(1) On January 1, 1994, Lorne Park merged into Strathern Park
in a business combination accounted for as a pooling of
interests. Lorne Park's total assets, liabilities and
partners' equity were combined with Strathern Park at their
existing book value, and neither partnership recognized a gain
or loss on the merger. The combined Partnerships constructed a
241 Unit apartment project (Lorne Park: 72 Units, Strathern
Park: 169 Units) for tenants whose income is very low to
moderate.
<PAGE>
Two Local Limited Partnerships invested in by the Partnership each represent
more than 10% of the total capital contributions to be made to Local Limited
Partnerships by the Partnership. The first is Strathern Park/Lorne Park, a
California Limited Partnership. Strathern Park/Lorne Park, representing 15.15%
of the total capital contributions to Local Limited Partnerships, is a 241-unit
apartment complex located in Los Angeles, California.
Strathern Park/Lorne Park is financed by a combination of private and public
sources, including a first mortgage at 9.41% interest and 30 year term with
California Community Reinvestment Corporation, a consortium of private lenders.
Secondary financing has a term of 40 years and is provided by the Community
Redevelopment Agency of the City of Los Angeles and a U.S. Housing and Urban
Development Action Grant, with payments made from the residual receipts of the
project.
The other Local Limited Partnership which represents more than 10% of the total
capital contributions made to Local Limited Partnerships is Circle Terrace
Associates Limited Partnership. Circle Terrace, representing 10.46% of the total
capital contributions to Local Limited Partnerships, is a substantially
renovated 303-unit apartment complex located in Lansdowne, Maryland with 23
garden-style buildings and a newly-constructed community building.
All of the units at Circle Terrace benefit from Section 8 Loan Management Set
Aside Program. Additionally, Circle Terrace assumed a HUD Section 236 mortgage
and financing by Crestar of Richmond Virginia, Inc. and by Maryland's Department
of Housing and Community Rental Housing Program. The Property also has a loan
financed by Baltimore County's Community Development Block Grant program, and it
received weatherization funds from the U.S. Department of Energy.
The duration of the leases for occupancy in the Properties described above are
six to twelve months. The Managing General Partner believes the Properties
described herein are adequately covered by insurance.
Additional information required under this Item, as it pertains to the
Partnership, is contained in Items 1, 7 and 8 of this Report.
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal or administrative
proceeding. However, Tompkins/Rosecliff, Ltd. which owns a property in Sanford,
Florida, is involved in certain litigation with an entity formerly affiliated
with this Partnership and its previous local general partner. Recently, a
tentative settlement agreement was agreed upon. Tompkins/Rosecliff and the
Partnership will contribute a total of $150,000, of which the Partnership will
contribute $100,000. In the opinion of Management, this is an appropriate
settlement, which will eliminate the risk of foreclosure and recapture posed by
this litigation.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
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, 1999, there were 3,234 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, 1999, 1998 and 1997. In the Partnership's
early years, cash available for distribution was derived from the interest
earned on the temporary investment of funds held by the Partnership prior to
paying capital contributions to Local Limited Partnerships. All cash
distributions made to date have constituted a return of capital for generally
accepted accounting principles.
<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 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,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Revenue (E) $ 400,484 $ 321,439 $ 204,683 $ 224,012 $ 171,863
Equity in losses of Local Limited
Partnerships (E) (2,944,720) (4,777,460) (4,044,413) (4,695,617) (4,747,136)
Net loss (3,383,033) (5,838,302) (4,337,761) (4,952,448) (5,110,677)
Per Limited Partnership Unit (A) (48.59) (83.85) (62.30) (71.13) (73.40)
Cash and cash equivalents (E) 450,450 239,932 449,567 243,644 72,535
Marketable securities 2,666,281 3,064,717 2,840,127 3,099,255 3,196,496
Investment in Local Limited
Partnerships 21,538,791 24,775,767 30,531,768 34,878,562 39,667,730
Total assets (B) 25,653,434 28,905,668 33,871,495 38,246,869 42,985,386
Long-term debt (E) 706,873 707,659 - - -
Total liabilities (E) 1,134,775 1,002,330 298,276 318,728 149,379
Cash Distributions - - - - -
Other data:
Passive loss (C) (5,120,476) (5,324,956) (5,154,301) (5,187,774) (5,204,384)
Per Limited Partnership Unit (A,C) (73.54) (76.48) (74.03) (74.51) (74.75)
Portfolio income (C) 340,850 361,519 281,707 350,417 233,083
Per Limited Partnership Unit (A,C) 4.90 5.19 4.05 5.03 3.35
Low-Income Housing Tax Credit (C) 10,405,744 10,512,076 10,512,996 10,506,229 10,519,636
Per Limited Partnership Unit (A,C) 150.97 150.98 150.99 150.90 151.09
Local Limited Partnership interests
owned at end of period (D) 27 27 27 27 27
</TABLE>
(A) Per Limited Partnership Unit data is based upon 68,929 outstanding Units.
(B) Total assets include the net investment in Local Limited Partnerships.
(C) Income tax information is as of December 31, the year end of the Partnership
for income tax purposes.
(D) On January 1, 1994, Strathern Park and Lorne Park merged.
(E) Revenue for the year ended March 31, 1999 includes $119,443 of rental and
other revenues from the Combined Entity that is included in the combined revenue
on the Combined Statement of Operations. Equity in losses of Local Limited
Partnerships in the year ended March 31, 1999 does not include $1,702 of income
from the Combined Entity that has been combined with the Partnership's loss on
the Combined Statement of Operations. Cash and cash equivalents at March 31,
1999 include $519 of cash and cash equivalents from the Combined Entity that has
been combined with the Partnership in the Combined Balance Sheet. Long-term debt
at March 31, 1999 is related to the Combined Entity. Total liabilities includes
$730,296 that has been combined with the Partnership in the Combined Balance
Sheet.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The
Partnership intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements, and are including this
statement for purposes of complying with these safe harbor provisions. Although
the Partnership believes the forward-looking statements are based on reasonable
assumptions, the Partnership can give no assurance that their expectations will
be attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors, including, without limitation, general economic and real
estate conditions, interest rates, and unanticipated delays or expenses on the
part of the Partnership and their suppliers in achieving year 2000 compliance.
Liquidity and Capital Resources
At March 31, 1999, the Partnership (including the Combined Entity) had cash and
cash equivalents of $450,450, compared with $239,932 at March 31, 1998. The
decrease is attributable to net cash used for operations and purchases of
marketable securities, partially offset by proceeds from sales and maturities of
marketable securities and cash distributions received from Local Limited
Partnerships.
Approximately $2,553,000 of marketable securities has been designated as
Reserves by the Managing General Partner. The Reserves were established to be
used for working capital of the Partnership and contingencies related to the
ownership of Local Limited Partnership interests. 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 and any contingencies that may arise.
Reserves may be used to fund Partnership operating deficits, if the Managing
General Partner deems funding appropriate.
Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, at March 31, 1999, the Partnership had no
contractual or other obligation to any Local Limited Partnership which had not
been paid or provided for.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Partnership might deem it in its best interests
to provide such funds, voluntarily, in order to protect its investment. No such
event has occurred to date.
Cash Distributions
No cash distributions were made during the year ended March 31, 1999. In prior
years, cash available for distribution was derived from the interest earned on
the temporary investment of the Partnership's funds, at money market rates,
prior to the funds being contributed to the Partnership's Local Limited
Partnership investments. Based on the results of 1998 operations, the Local
Limited Partnerships are not expected to distribute significant amounts of cash
to the Partnership because such amounts will be needed to fund Property
operating costs. In addition, many of the Properties benefit from some type of
federal or state subsidy and, as a consequence, are subject to restrictions on
cash distributions. Therefore, it is expected that only a limited amount of cash
will be distributed to investors from this source in the future.
Results of Operations
1999 versus 1998
The Partnership's results of operations for the year ended March 31, 1999
resulted in a net loss of $3,383,033 as compared to a net loss of $5,838,302 for
the same period in 1998. The decrease in net loss is primarily attributable to a
decrease in equity in losses of Local Limited Partnerships and an increase in
general and administrative expenses and due to provisions for valuation of Local
Limited Partners and property impairment provisions in 1998 not required in
1999. Equity in losses of Local Limited Partnerships decreased primarily due to
an increase in unrecognized losses for Local Limited Partnerships whose carrying
values have been reduced to zero. Other revenue increased due to an increase in
distributions received by the Partnership from the Local Limited Partnerships.
<PAGE>
1998 versus 1997
The Partnership's results of operations for the year ended March 31, 1998
resulted in a net loss of $5,838,302 as compared to a net loss of $4,337,761 for
the same period in 1997. The increase in net loss is primarily attributable to
an increase in equity in losses of Local Limited Partnerships, a provision for
valuation of rental property and a provision for valuation of Investment in
Local Limited Partnership. Equity in losses of Local Limited Partnerships
increased due to a general increase in operating expenses for the Local Limited
Partnerships. Other revenue increased due to an increase in distributions
received by the Partnership from the Local Limited Partnerships.
Low-Income Housing Tax Credits
The 1998, 1997 and 1996 Tax Credits per Unit were $150.97, $150.98 and $150.99,
respectively. The Tax Credit per Limited Partnership Unit stabilized in 1993 at
approximately $151.00 per Unit. The credits are expected to remain stable
through the year 2000 and then they are expected to decrease as certain
properties reach the end of the ten year credit period. However, because the
compliance periods extend significantly beyond the tax credit periods, the
Partnership is expected to retain most of its interests in the Local Limited
Partnerships for the foreseeable future, which is well beyond 2000.
On November 10, 1997, the Partnership transferred 50% of its interest in capital
and profits of Westgate Apartments to the local general partner in order to
protect the Partnership in the event of a foreclosure-induced recapture of these
tax credits.
Property Discussions
Limited Partnership interests have been acquired in twenty-seven Local Limited
Partnerships that are located in ten states and the Virgin Islands. Five of the
properties, totaling 612 units, were existing properties that underwent
rehabilitation and twenty-two properties, consisting of 1,762 units, were new
construction.
Most of the twenty-seven Local Limited Partnerships have stabilized operations.
The majority of these stabilized properties are operating at break-even or
generating positive operating cash flow.
Historic New Center in Detroit, Michigan has been generating operating deficits
due to low occupancy and collection problems. However, as previously reported,
the Managing General Partner was successful in finalizing the negotiations with
the lenders for a loan modification. This loan modification should allow the
property to meet debt service coverage and provide capital for the physical
improvements. In addition, a new site manager was hired in October 1998. The new
site manager will focus on implementing a new marketing strategy and improving
rent collections. As of December 31, 1998, occupancy for Historic New center
improved slightly to 92%. The Managing General Partner will continue to closely
monitor property operations.
Westgate, located in North Dakota, has been experiencing declining occupancy.
Occupancy as of December 31, 1998 was 84%. Affiliates of the Managing General
Partner have been working with the Local General Partner who has raised some
concerns over the long-term financial health of the property. In an effort to
reduce possible future risk, the Managing General Partner consummated the
transfer of 50% of the Partnership's interest in capital and profits in Westgate
to the Local General Partner. The Managing General Partner has the right to
transfer 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. In addition, the Local General Partner has the right to call
the remaining interest after the tax credit period has expired.
As previously reported, in 1997, the Local General Partner, of Wheeler House,
located in Nashua, New Hampshire was removed due to financial insolvency and an
affiliate of the Managing General Partner stepped-in as temporary Local General
Partner. As the new Local General Partner, the affiliate of the Managing General
Partner proceeded to negotiate with the lender on temporary debt restructuring
to reduce interest rates and extend the due date of the loan to 1998. At the
same time, the Managing General Partner began exploring refinancing
opportunities. A potential lender was identified and performed an appraisal in
March. The appraisal showed inadequate loan to value coverage. The Managing
General Partner is currently negotiating with the lender and is exploring all
measures to protect the remaining tax credits generated by the property.
However, It is possible that the Partnership will not be able to retain its
interest in Wheeler House through 1999. A foreclosure would result in recapture
of credits, the allocation of taxable income to the Fund and loss of future
benefits associated with this property.
<PAGE>
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",
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 carrying value is compared to the undiscounted future cash
flows expected to be derived from the asset 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, 1999, 1998 and 1997.
Since some 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.
Certain of the properties in which the Partnership invests may be located in
areas suffering from poor economic conditions. Such conditions could have an
adverse effect on 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.
Impact of Year 2000
The Managing General Partner's plan to resolve year 2000 issues involves the
following four phases: assessment, remediation, testing and implementation. To
date, the Managing General Partner has fully completed an assessment of all
information systems that may not be operative subsequent to 1999 and has begun
the remediation, testing and implementation phase on both hardware and software
systems. Because the hardware and software systems of both the Partnership and
Local Limited Partnerships are generally the responsibility of obligated third
parties, the plan primarily involves ongoing discussions with and obtaining
written assurances from these third parties that pertinent systems will be 2000
compliant. In addition, neither the Partnership nor the Local Limited
Partnerships are incurring significant additional costs since such expenses are
principally covered under the service contracts with vendors. As of June 1999,
the General Partner is in the final stages of its Year 2000 remediation plan and
believes all major systems are compliant; any systems still being updated are
not considered significant to the Partnership's operations. However, despite the
likelihood that all significant year 2000 issues are expected to be resolved in
a timely manner, the Managing General Partner has no means of ensuring that all
systems of outside vendors or other entities that impact operations will be 2000
compliant. The Managing General Partner does not believe that the inability of
third parties to address their year 2000 issues in a timely manner will have a
material impact on the Partnership. However, the effect of non-compliance by
third parties is not readily determinable.
Management has also evaluated a worst case scenario projection with respect to
the year 2000 and expects any resulting disruption of either the Managing
General Partner's activities or any Local Limited Partnership's operations to be
short-term inconveniences. Such problems, however, are not likely to fully
impede the ability to carry out necessary duties of the Partnership. Moreover,
because expected problems under a worst case scenario are not extensively
detrimental, and because the likelihood that all systems affecting the
Partnership will be compliant before 2000, the Managing General Partner has
determined that a formal contingency plan that responds to material system
failures is not necessary.
<PAGE>
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Partnership has invested in marketable securities with a fair value of
$2,666,281 at March 31, 1999; these securities, with rates ranging from 4.87% to
8.15%, do not subject the Partnership to significant market risk because of
their short term maturities and high liquidity. In addition, the Partnership's
debt obligation is currently due and payable and therefore does not expose the
Partnership to future interest rate risk.
The Partnership has no other exposure to market risk associated with activities
in derivative financial instruments, derivative commodity instruments, or other
financial instruments.
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 V, Inc., a
Massachusetts corporation (the "Managing General Partner" or "Arch Street,
Inc."), an affiliate of The Boston Financial Group Limited Partnership ("Boston
Financial"), a Massachusetts limited partnership. George Fantini, Jr., a Vice
President of the Managing General Partner, resigned his position effective June
30, 1995. Donna Gibson, a Vice President of the Managing General Partner,
resigned from her position on September 13, 1996. 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. Peter G.
Fallon resigned as a Vice President of the General Partner on June 1, 1999.
The Managing General Partner was incorporated in June 1989. 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
William E. Haynsworth Vice President
The other General Partner of the Partnership is Arch Street V Limited
Partnership, a Massachusetts limited partnership ("Arch Street L.P.") that was
organized in June 1989. Arch Street, Inc. is the managing general partner of
Arch Street 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 43, graduated from Harvard University (B.A., 1976) and
received a Master's in Public Policy from Harvard's Kennedy School of Government
in 1982. Ms. Netzer 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, the firm's Executive Committee. 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 42, graduated from Emory University (B.A., 1978)
and Cornell University (J.D.; M.B.A., 1982). Mr. Gladstone joined Boston
Financial in 1985, and is Vice President and General Counsel. He is also a
member of the Senior Leadership Team. Prior to joining Boston Financial, Mr.
Gladstone was associated with the Boston law firm of Herrick & Smith. Mr.
Gladstone is on the Advisory Board of the Housing and Development Reporter. He
is also a member of the Investment Program Association, The National Realty
Committee, Cornell Real Estate Council, National Housing Conference, and the
Massachusetts Bar.
Randolph G. Hawthorne, age 49, is a graduate of Massachusetts Institute of
Technology (S.B., 1971) and Harvard Graduate School of Business (M.B.A., 1973).
Mr. Hawthorne joined Boston Financial in 1973 and is currently a Vice President
responsible for structuring and acquiring real estate investments. Previously,
Mr. Hawthorne served as Treasurer of Boston Financial. 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 41, graduated from Trinity College (B.A.) and Amos Tuck
School at Dartmouth College (M.B.A.). Mr. Hart joined Boston Financial in 1998
and 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 companies,
including those that went on to complete initial public offerings.
Paul F. Coughlan, age 55, is a graduate of Brown University (A.B., 1965). Mr.
Coughlan joined Boston Financial in 1975 and is currently a Senior Vice
President and a member of the Investment Management division with responsibility
for marketing institutional investments. Previously, he was national sales
manager for Boston Financial's retail tax credit funds. Prior to joining Boston
Financial, Mr. Coughlan was an investment broker with Bache & Company and
Reynolds Securities, Inc.
William E. Haynsworth, age 59, is a graduate of Dartmouth College (A.B., 1961)
and Harvard Law School (L.L.B., 1964; L.L.M., 1969). Mr. Haynsworth joined
Boston Financial in 1977 and is a Senior Vice President responsible for the
structuring of real estate investments and the acquisition of property
interests. Prior to joining Boston Financial, 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. 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 and the Board of Directors of Boston Financial.
Mr. Haynsworth has over 25 years of real estate experience.
<PAGE>
Item 11. Management Remuneration
Neither the directors nor officers of Arch Street, Inc., the partners of Arch
Street 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, 1999, the following is the only entity known to the
Partnership to be the beneficial owner of more than 5% of the total number of
Units outstanding:
Amount
Title of Name and Address Beneficially Percent of
Class of Beneficial Owner Owned Class
Limited Oldham Institutional Tax Credits LLC 8,024 Units 11.64%
Partner 101 Arch Street
Boston, MA
Oldham Institutional Tax Credits LLC is an affiliate of Arch Street V, Inc., the
Managing General Partner.
The equity securities registered by the Partnership under Section 12(g) of the
Act consist of 100,000 Units, 68,929 of which had been sold to the public as of
March 31, 1999. The remaining Units were deregistered in Post-Effective
Amendment No. 6, dated January 21, 1992, herein incorporated by this reference.
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.
As of March 31, 1999, Arch Street L.P. owns five (unregistered) Units not
included in the 68,929 Units sold to the public. Additionally, five registered
Units were sold to an employee of an affiliate of the Managing General Partner
of the Registrant. Such Units were sold at a discount of 7% of the Unit price
for a total discount of $350 and a total purchase price of $4,650.
Except as described in the preceding paragraphs, neither Arch Street, Inc., Arch
Street 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 possesses a right to acquire beneficial ownership of Units.
The Partnership does not know of any existing arrangement that might at a later
date 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 a transaction. All such fees, expenses and distributions paid in the three
years ending March 31, 1999 are described below and in the sections of the
Prospectus entitled "Estimated Use of Proceeds", "Management Compensation and
Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash
Distributions". Such sections are incorporated herein by reference.
<PAGE>
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 required under this item is contained in Note 5 to the financial
statements presented as a separate section of this Report. The affiliates of the
Managing General Partner which have received fee payments and expense
reimbursements from the Partnership are as follows:
Organizational fees and expenses and selling expenses
In accordance with the Partnership Agreement, the Partnership was required to
pay certain fees to and reimburse expenses of the General Partners and others in
connection with the organization of the Partnership and the offering of its
Limited Partnership Units. Selling commissions, fees and accountable expenses
related to the sale of the Units totaling $9,499,984 have been charged directly
to Limited Partners' equity. In connection therewith, $5,858,935 of selling
expenses and $3,641,049 of offering expenses incurred on behalf of the
Partnership have been paid to an affiliate of the General Partners. The
Partnership was required to pay a non-accountable expense allowance for
marketing expenses equal to a maximum of 1% of Gross Proceeds; this is included
in total offering expenses. The Partnership has capitalized an additional
$50,000 which was reimbursed to an affiliate of the General Partners. Total
organization and offering expenses, exclusive of selling commissions, did not
exceed 5.5% of the Gross Proceeds and organizational and offering expenses,
inclusive of selling commissions did not exceed 14.0% of the Gross Proceeds. No
organizational fees and expenses and selling expenses were paid during the three
years ended March 31, 1999.
Acquisition fees and expenses
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% 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, were expected to total 1.5% of the gross offering proceeds. As of
March 31, 1999, acquisition fees totaling $4,825,005 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
$899,430 at March 31, 1999 were incurred and have been reimbursed to an
affiliate of the Managing General Partner. No acquisition fees or expenses were
paid during the three years ended March 31, 1999.
Asset Management Fees
In accordance with the Partnership Agreement, an affiliate of the Managing
General Partner is paid an Asset Management Fee for services in connection with
the administration of the affairs of the Partnership. The affiliate currently
receives the base amount of .351% (as adjusted by the CPI factor) of Gross
Proceeds annually as the Asset Management Fee. Asset Management Fees incurred in
each of the three years ended March 31, 1999 are as follows:
1999 1998 1997
---------- ---------- ----------
Asset Management Fees $ 243,169 $ 238,087 $ 231,035
<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 made in
each of the three years ended March 31, 1999 are as follows:
1999 1998 1997
---------- ---------- -----------
Salaries and benefits
expense reimbursements $ 109,845 $ 127,926 $ 117,763
Cash distributions paid to the General Partners
In accordance with the Partnership Agreement, the General Partners of the
Partnership, Arch Street V, Inc. and Arch Street V Limited Partnership, receive
1% of cash distributions made to partners. No cash distributions were paid to
the General Partners in each of the three years ended March 31, 1999. 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, 1999 is presented in Note 6 to the Financial Statements.
<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 schedule 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 Partnerships relating to the audits
of the financial statements of such Local Limited Partnerships appear in Exhibit
(28)(1) of this Report.
All other financial statement schedules and exhibits for which provision is made
in the applicable accounting regulations of the Securities and Exchange
Commission are not required under related instructions or are inapplicable and
therefore have been omitted.
(a)(3) See Exhibit Index contained herein.
(a)(3)(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the year ended March 31,
1999.
(a)(3)(c) Exhibits
Number and Description in Accordance with
Item 601 of Regulation S-K
27. Financial Data Schedule
28. Additional Exhibits
(a) 28.1 Reports of Other Independent Auditors
(b) Audited financial statements of Local Limited Partnerships
Strathern Park/Lorne Park
Circle Terrace
(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. V
By: Arch Street V, Inc.
its Managing General Partner
By: /s/Randolph G. Hawthorne Date: June 25, 1999
------------------------ -------------
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/William G. Haynsworth Date: June 25, 1999
------------------------------ --------------
William G. Haynsworth,
Managing Director, Vice President and
Chief Operating Officer
By: /s/Michael H. Gladstone Date: June 25, 1999
----------------------- -------------
Michael H. Gladstone,
A Managing Director
Item 8. Financial Statements and Supplementary Data
<PAGE>
<TABLE>
<CAPTION>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
Annual Report on Form 10-K
For The Year Ended March 31, 1999
Index
Page No.
<S> <C>
Report of Independent Accountants
For the years ended March 31, 1999, 1998 and 1997 F-2
Combined Financial Statements
Combined Balance Sheets - March 31, 1999 and 1998 F-3
Combined Statements of Operations - Years Ended
March 31, 1999, 1998 and 1997 F-4
Statements of Changes in Partners' Equity (Deficiency) -
Years Ended March 31, 1999, 1998 and 1997 F-5
Combined Statements of Cash Flows - Years Ended
March 31, 1999, 1998 and 1997 F-6
Notes to the Combined Financial Statements F-7
Financial Statement Schedule
Schedule III - Real Estate and Accumulated Depreciation F-22
</TABLE>
See also Index to Exhibits on Page K-23 for the financial statement of the Local
Limited Partnerships included as a separate exhibit in this Annual Report on
Form 10-K.
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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Boston Financial Qualified Housing Tax Credits L.P. V:
In our opinion, based on our audits and the reports of other auditors, the
combined financial statements listed in the accompanying index present fairly,
in all material respects, the financial position of Boston Financial Qualified
Housing Tax Credits L.P. V (the "Partnership") at March 31, 1999 and 1998, and
the results of its operations and its cash flows for each of the three years in
the period ended March 31, 1999, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related combined financial statements. These financial statements and financial
statement schedule are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We did not audit the financial
statements of certain local limited partnerships for which total assets of
$22,064,425 and $25,246,134, are included in these financial statements as of
March 31, 1999 and 1998, respectively, and for which net losses of $2,943,018,
$4,967,607, and $4,044,413 are included in the accompanying financial statements
as of March 31, 1999, 1998, 1997, respectively. Those statements were audited by
other auditors whose reports thereon have been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included for the Local
Limited Partnerships, is based solely on the reports of the other auditors. We
conducted our audits of these statements in accordance with generally accepted
auditing standard, which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for the
opinions expressed above.
/s/PricewaterhouseCoopers LLP
June 18, 1999
Boston, Massachusetts
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
COMBINED BALANCE SHEETS - MARCH 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------- -------------
Assets
<S> <C> <C>
Cash and cash equivalents $ 450,450 $ 239,932
Accounts receivable from affiliates 173,739 -
Mortgagee escrow deposits - 382
Tenant security deposit escrow 3,758 3,017
Investments in Local Limited Partnerships, net of reserve
for valuation of $590,197 (Note 4) 21,538,791 24,725,581
Marketable securities, at fair value (Notes 1 and 3) 2,666,281 3,064,717
Prepaid assets 1,489 -
Rental property at cost, net of accumulated
depreciation (Note 5) 778,843 829,110
Replacement reserve escrow 7,425 2,888
Other assets 32,658 40,041
------------- -------------
Total Assets $ 25,653,434 $ 28,905,668
============= =============
Liabilities and Partners' Equity
Accounts payable to affiliates (Note 6) $ 143,443 $ 79,210
Accounts payable and accrued expenses 133,838 72,983
Mortgage note payable (Note 7) 706,873 707,659
Tenant security deposits payable 3,803 3,017
Deferred revenue (Note 8) 146,818 139,461
------------- -------------
Total Liabilities 1,134,775 1,002,330
------------- -------------
Minority interest in Local Limited Partnership 116,986 140,554
General, Initial and Investor Limited Partners' Equity 24,394,204 27,777,237
Net unrealized gains (losses) on marketable securities 7,469 (14,453)
------------- -------------
Total Partners' Equity 24,401,673 27,762,784
------------- -------------
Total Liabilities and Partners' Equity $ 25,653,434 $ 28,905,668
============= =============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
Revenue:
<S> <C> <C> <C>
Rental $ 117,971 $ 98,473 $ -
Investment (Note 3) 159,094 179,999 191,349
Other 123,419 42,967 13,334
------------ ------------ ------------
Total Revenue 400,484 321,439 204,683
------------ ------------ ------------
Expenses:
General and administrative
(includes reimbursements to an affiliate
in the amounts of $109,845, $127,926
and $117,763 in 1999, 1998 and 1997,
respectively) (Note 6) 453,057 237,092 237,545
Asset management fees, related party (Note 6) 243,169 238,087 231,035
Provision for valuation of investment in
Local Limited Partnership - 590,197 -
Rental operations, exclusive of depreciation 40,261 30,067 -
Provision for valuation of rental property - 160,000 -
Interest 73,899 64,148 -
Depreciation 27,043 35,299 -
Amortization 24,813 29,291 29,451
------------ ------------ ------------
Total Expenses 862,242 1,384,181 498,031
------------ ------------ ------------
Loss before minority interest in losses of
Local Limited Partnership, equity in
losses of Local Limited Partnerships and
extraordinary item (461,758) (1,062,742) (293,348)
Minority interest in losses of
Local Limited Partnership (17) 1,900 -
Equity in losses of Local Limited
Partnerships (Note 4) (2,944,720) (4,777,460) (4,044,413)
Extraordinary gain on cancellation of indebtedness 23,462 - -
------------ ------------ ------------
Net Loss $ (3,383,033) $ (5,838,302) $ (4,337,761)
============ ============ ============
Net Loss allocated:
General Partners $ (33,830) $ (58,383) $ (43,378)
Limited Partners (3,349,203) (5,779,919) (4,294,383)
------------ ------------ ------------
$ (3,383,033) $ (5,838,302) $ (4,337,761)
============ ============ ============
Net Loss per Limited Partnership
Unit (68,929 Units) $ (48.59) $ (83.85) $ (62.30)
=========== ============== ==============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partners Partner Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 $ (212,573) $ 5,000 $ 38,160,873 $ (25,159) $ 37,928,141
------------ ------------ ------------ ------------ ------------
Comprehensive Loss:
Net change in net unrealized
losses on marketable securities
available for sale - - - (17,161) (17,161)
Net Loss (43,378) - (4,294,383) - (4,337,761)
------------ ------------ ------------ ------------ ------------
Comprehensive Loss (43,378) - (4,294,383) (17,161) (4,354,922)
------------ ------------ ------------ ------------ ------------
Balance at March 31, 1997 (255,951) 5,000 33,866,490 (42,320) 33,573,219
------------ ------------ ------------ ------------ ------------
Comprehensive Income (Loss):
Net change in net unrealized
losses on marketable securities
available for sale - - - 27,867 27,867
Net Loss (58,383) - (5,779,919) - (5,838,302)
------------ ------------ ------------ ------------ ------------
Comprehensive Income (Loss) (58,383) - (5,779,919) 27,867 (5,810,435)
------------ ------------ ------------ ------------ ------------
Balance at March 31, 1998 (314,334) 5,000 28,086,571 (14,453) 27,762,784
------------ ------------ ------------ ------------ ------------
Comprehensive Income (Loss):
Net change in net unrealized
losses on marketable securities
available for sale - - - 21,922 21,922
Net Loss (33,830) - (3,349,203) - (3,383,033)
------------ ------------ ------------ ------------ ------------
Comprehensive Income (Loss) (33,830) - (3,349,203) 21,922 (3,361,111)
------------ ------------ ------------ ------------ ------------
Balance at March 31, 1999 $ (348,164) $ 5,000 $ 24,737,368 $ 7,469 $24,401,673
============ ============ ============ ============ ===========
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------- -------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $ (3,383,033) $ (5,838,302) $ (4,337,761)
Adjustments to reconcile net loss to net
cash used for operating activities:
Equity in losses of Local Limited Partnerships 2,944,720 4,777,460 4,044,413
Provision for valuation of Investment in Local
Limited Partnership - 590,197 -
Provision for valuation of rental property - 160,000 -
Depreciation and amortization 51,856 64,590 29,451
(Gain) Loss on sales and maturities of
marketable securities 14,790 (1,154) (1,560)
Gain on forgiveness of debt (23,462) - -
Minority interest in income (losses) of Local
Limited Partnership 17 (1,900) -
Cash distribution income included in cash
distribution from Local Limited Partnership (65,089) - -
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Tenant security deposits (741) (131) -
Prepaid assets (1,489) - -
Mortgagee escrow deposits (2,041) 3,990 -
Replacement reserve deposits (2,114) (739) -
Other assets 6,383 10,992 (24,625)
Accounts payable to affiliate 64,233 (25,605) 16,700
Accounts payable and accrued expenses 48,557 21,457 (32,191)
Tenant security deposits payable 786 131 -
Deferred revenue 7,357 (34,896) (4,961)
------------- ------------- -------------
Net cash used for operating activities (339,270) (273,910) (310,534)
------------- ------------- -------------
Cash flows from investing activities:
Investments in Local Limited Partnerships (50,420) - -
Purchases of marketable securities (2,523,829) (2,889,608) (755,442)
Proceeds from sales and maturities of
marketable securities 2,929,397 2,694,039 998,969
Additions to rental property (633) - -
Cash distributions received from Local Limited
Partnerships 368,798 241,893 272,930
Advance to affiliate (172,739) (1,000) -
Cash received upon assumption of General Partner
interest in a Combined Entity - 937 -
------------- ------------- -------------
Net cash provided by investing activities 550,574 46,261 516,457
------------- ------------- -------------
Cash flows from financing activities:
General Partner contribution - 23,462 -
Payment of mortgage principal (786) (5,448) -
------------- ------------- -------------
Net cash provided by (used for) financing activities (786) 18,014 -
------------- ------------- -------------
Net increase (decrease) in cash and
cash equivalents 210,518 (209,635) 205,923
Cash and cash equivalents, beginning 239,932 449,567 243,644
------------- ------------- -------------
Cash and cash equivalents, ending $ 450,450 $ 239,932 $ 449,567
============= ============= =============
The accompanying notes are an integral part of these combined financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS
1. Organization
Boston Financial Qualified Housing Tax Credits L.P. V ("the Partnership") was
formed on June 16, 1989 under the laws of the State of Massachusetts for the
primary purpose of investing, as a limited partner, in other limited
partnerships ("Local Limited Partnerships"), some of which own and operate
apartment complexes benefiting from some form of federal, state or local
assistance, and each of which qualifies 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 from property operations 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 V, Inc., a Massachusetts corporation, which serves
as the Managing General Partner, and Arch Street V Limited Partnership, a
Massachusetts Limited Partnership whose general partner consists of Arch Street
V, Inc., 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 (the "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. On August 31, 1991, the
Partnership held its final investor closing. In total, the Partnership received
$68,928,650 of capital contributions, net of discounts, from investors admitted
as Limited Partners for 68,929 Units.
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 Reserves from time to time, as it deems appropriate. At March
31, 1999, the Managing General Partner has designated approximately $2,553,000
of marketable securities as such Reserves.
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 Entity (defined below), using the equity method of
accounting because the Partnership does not have a majority control over 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 income or loss of the Local Limited
Partnerships, additional investments in and cash distributions from the Local
Limited Partnerships. Equity in income or loss of the Local Limited Partnerships
is included currently in the Partnership's operations. The Partnership has no
obligation to fund liabilities of the Local Limited Partnerships beyond its
investment and therefore a Local Limited Partnership's investment will not be
carried below zero. To the extent that equity losses are incurred when a Local
Limited Partnership's respective investment balance has been reduced to zero,
the losses will be suspended to be used against future income. Distributions
received from Local Limited Partnerships whose respective investment balance has
been reduced to zero are included in income.
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.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Basis of Presentation and Combination (continued)
The Partnership recognizes a decline in the carrying value of its investments 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.
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.
On March 1, 1997, an affiliate of the Partnership's Managing General Partner,
Boston Financial GP1-LLC, became the Local General Partner of Burbank Limited
Partnership ("Burbank"), a Local Limited Partnership in which the Partnership
has invested. Since the Local General Partner of Burbank is an affiliate of the
Partnership and has a controlling financial interest in Burbank, as set forth in
paragraph 22 of ARB 51, these combined financial statements include all activity
at Burbank beginning on March 1, 1997. All significant intercompany balances and
transactions have been eliminated. As used herein, the "Combined Entity" refers
to Burbank.
The General Partners have decided to report the results of the Local Limited
Partnerships, including the Combined Entity, on a 90-day lag basis because the
Local Limited Partnerships report their results on a calendar year basis.
Accordingly, the financial information of the Local Limited Partnerships that is
included in the accompanying combined financial statements is as of December 31,
1998, 1997 and 1996.
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.
Cash Equivalents
Cash equivalents consist of short-term money market instruments with original
maturities of 90 days or less at acquisition and approximate fair value.
Marketable Securities
Marketable securities consists 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 are reported at
fair value as reported by the brokerage firm at which the securities are held.
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.
Income Taxes
No provision for income taxes has been made as the liability for such taxes is
an obligation of the partners of the Partnership.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
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 adopted the new standard effective April 1, 1998 and its adoption
did not have a significant effect on the Partnership's financial position or
results of operations. The only component of the Partnership's other accumulated
comprehensive income is net unrealized gains and losses on marketable
securities.
Rental Property
Real estate and personal property of the Combined Entity is recorded in
accordance with SFAS 121. The Combined Entity provides for depreciation using
primarily the straight-line method over its estimated useful lives.
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",
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 carrying value is compared to the undiscounted future cash
flows expected to be derived from the asset and, if there is a significant
impairment in value, a provision to write down the asset to fair value will be
charged against income.
Rental Income
Rental income, principally from short-term leases on the Combined Entity's
apartment units, is recognized as income under the accrual method as the rents
become due.
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, investments accounted for under the
equity method, and all nonfinancial assets such as real property. Unless
otherwise described, 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.
Reclassifications
Certain reclassifications have been made to prior years' financial statements to
conform to the current year presentation.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
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
corporations and agencies $ 2,347,480 $ 11,715 $ (4,787) $ 2,354,408
Mortgage backed securities 311,332 1,865 (1,324) 311,873
------------ ----------- ---------- ------------
Marketable securities at March 31, 1999 $ 2,658,812 $ 13,580 $ (6,111) $ 2,666,281
============ =========== ========== ============
Debt securities issued by the US
Treasury and other US governement
corporations and agencies $ 2,934,294 $ 5,308 $ (21,353) $ 2,918,249
Mortgage backed securities 144,876 1,592 - 146,468
------------ ----------- ---------- ------------
Marketable securities at March 31, 1998 $ 3,079,170 $ 6,900 $ (21,353) $ 3,064,717
============ =========== ========== ============
</TABLE>
The contractual maturities at March 31, 1999 are as follows:
<TABLE>
<CAPTION>
Fair
Cost Value
<S> <C> <C>
Due in less the one year $ 399,788 $ 400,906
Due in one year to five years 1,947,692 1,953,502
Mortgage backed securities 311,332 311,873
----------- -----------
$ 2,658,812 $ 2,666,281
=========== ===========
</TABLE>
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from the sales and
maturities of marketable securities were approximately $451,000, $1,792,000 and
$804,000 during the fiscal years ended March 31, 1999, 1998 and 1997,
respectively. Proceeds from the maturities of marketable securities were
approximately $2,479,000, $902,000 and $195,000 during the fiscal years ended
March 31, 1999, 1998 and 1997, respectively. Included in investment income are
gross gains of $4,895, $7,205 and $2,951 and gross losses of $19,685, $6,051and
$1,391 that were realized on the sales during the fiscal years ended March 31,
1999, 1998 and 1997, respectively.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
4. Investments in Local Limited Partnerships
The Partnership uses the equity method to account for its limited partner
interest in twenty six Local Limited Partnerships, excluding the Combined Entity
in 1999. Each of these Local Limited Partnerships owns and operates multi-family
housing complexes, most of which are government-assisted. The Partnership, as
Investor Limited Partner pursuant to the various Local Limited Partnership
Agreements, has generally acquired a 99% interest in the profits, losses, tax
credits and cash flows from operations of each of the Local Limited
Partnerships, with the exception of Strathern Park/Lorne Park Apartments,
Westgate and Huguenot Park, which are 95%, 49.5% and 88.6%, respectively. Upon
dissolution, proceeds will be distributed according to each respective
partnership agreement.
The following is a summary of Investments in Local Limited Partnerships,
excluding the Combined Entity in 1999 and 1998, at March 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
Capital contributions paid to Local Limited
Partnerships and purchase price paid to
withdrawing partners of Local Limited
<S> <C> <C> <C>
Partnerships $ 55,269,931 $55,219,511 $55,520,042
Cumulative equity in losses of Local Limited
Partnerships (excluding cumulative
unrecognized losses of $1,236,440 and $133,567
in 1999 and 1998, respectively) (32,603,028) (29,735,570) (25,141,481)
Cumulative cash distributions received
from Local Limited Partnerships (1,341,854) (973,056) (731,163)
------------ ------------ ------------
Investments in Local Limited Partnerships
before adjustment 21,325,049 24,510,885 29,647,398
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,006,357 1,006,357 1,006,357
Accumulated amortization of acquisition
fees and expenses (202,418) (201,464) (200,510)
------------ ------------ ------------
Investments in Local Limited Partnerships 22,128,988 25,315,778 30,453,245
Reserve for valuation of Investment in Local
Limited Partnership (590,197) (590,197) -
------------ ------------ ------------
$ 21,538,791 $ 24,725,581 $ 30,453,245
============ ============ ==============
</TABLE>
The Partnership has provided a reserve for valuation for one of its investments
in Local Limited Partnerships, Westgate Apartments, because there is evidence of
a non-temporary decline in the recoverable amount of the investment.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
4. Investments in Local Limited Partnerships (continued)
Summarized financial information as of December 31, 1998, 1997 and 1996 (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 accounted for on the equity method (excluding the Combined Entity
beginning on the date of combination) in which the Partnership has invested as
of that date is as follows:
Summarized Balance Sheets - as of December 31,
<TABLE>
<CAPTION>
1998 1997 1996
-------------- -------------- --------------
Assets:
<S> <C> <C> <C>
Investment property, net $ 108,683,329 $ 113,022,632 $ 119,404,292
Current assets 3,051,869 3,319,977 3,109,145
Other assets 5,864,260 5,949,514 5,944,574
-------------- -------------- --------------
Total Assets $ 117,599,458 $ 122,292,123 $ 128,458,011
============== ============== ==============
Liabilities and Partners' Equity:
Long-term debt, net of current portion $ 82,067,318 $ 84,044,067 $ 85,520,204
Current liabilities (including current portion
of long-term debt) 8,669,686 8,060,589 7,168,891
Other liabilities 2,206,860 1,456,872 1,389,432
-------------- -------------- --------------
Total Liabilities 92,943,864 93,561,528 94,078,527
Partnership's Equity 19,691,908 23,844,561 29,509,002
Other Partners' Equity 4,963,686 4,886,034 4,870,482
-------------- -------------- --------------
Total Liabilities and Partners' Equity $ 117,599,458 $ 122,292,123 $ 128,458,011
============== ============== ==============
Summarized Income Statements - for the years ended December 31,
Rental and other income: $ 14,524,674 $ 14,309,317 $ 14,377,262
-------------- -------------- --------------
Expenses:
Operating 7,835,920 7,622,343 7,389,143
Interest 5,842,850 5,919,806 6,159,027
Depreciation and amortization 4,913,928 5,786,902 4,970,595
-------------- -------------- --------------
Total Expenses 18,592,698 19,329,051 18,518,765
-------------- -------------- --------------
Net Loss $ (4,068,024) $ (5,019,734) $ (4,141,503)
============== ============== ==============
Partnership's share of Net Loss $ (3,970,328) $ (4,908,884) $ (4,046,556)
============== ============== ==============
Other partners' share of Net Loss $ (97,696) $ (110,850) $ (94,947)
============== ============== ==============
</TABLE>
For the years ended March 31, 1999 and 1998, the Partnership has not recognized
$1,102,873 and $131,424, respectively, of equity in losses of Local Limited
Partnerships relating to two Local Limited Partnerships where cumulative equity
in losses exceeded its total investments in these Local Limited Partnerships.
The Partnership's equity as reflected by the Local Limited Partnerships of
$19,610,329 differs from the Partnership's Investments in Local Limited
Partnerships before adjustment of $21,325,049 principally because: a) the
Partnership has not recognized $1,236,440 of equity in losses of five Local
Limited Partnerships whose equity in losses exceeded its total investment; b)
distributions made by Local Limited Partnerships during the quarter ended March
31, 1999 are not reflected in the December 31, 1998 balance sheets of the Local
Limited Partnerships; and c) syndication costs charged to equity by a Local
Limited Partnership are not reflected in the Partnership's investment in the
Local Limited Partnership.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
5. Rental Property
Real estate and personal property belonging to the Combined Entity are recorded
at cost, the components of which, excluding certain acquisition costs of $26,329
and $50,186 as of December 31, 1998 and 1997, respectively, paid by the
Partnership and included in basis, are as follows at December 31:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Land $ 42,000 $ 42,000
Building and improvements 1,005,572 1,004,939
----------- -----------
1,047,572 1,046,939
Less: accumulated depreciation (295,058) (268,015)
----------- -----------
Total $ 752,514 $ 778,924
=========== ===========
</TABLE>
During the year ended December 31, 1997, an impairment loss of $160,000 was
recognized on the real estate in the combined Entity, which decreased the
carrying value to $1,046,939.
6. Transactions with Affiliates
An affiliate of the Managing General Partner currently receives the base amount
of 0.351% (as adjusted by the CPI factor) of Gross Proceeds annually as the
Asset Management Fee for administering the affairs of the Partnership. Asset
Management Fees of $243,169, $238,087 and $231,035 for the years ended March 31,
1999, 1998 and 1997, respectively, have been included in expenses. Included in
accounts payable to affiliate at March 31, 1999 and 1998 are $122,057 and
$60,556, respectively, of asset management fees due to an affiliate of the
Managing General Partner.
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, 1999, 1998 and 1997 are $109,845,
$127,926 and $117,763, respectively, that the Partnership has paid or is payable
as reimbursement for salaries and benefits expenses. The amounts payable for
salaries and benefits at March 31, 1999 and 1998 are $21,385 and $18,654,
respectively.
BF Lansing Limited Partnership ("BF Lansing"), an affiliate of the Managing
General Partner, is the Administrative General Partner in two Local Limited
Partnerships in which the Partnership has invested, St. Croix II, Limited
Partnership ("Carib Villas II") and Christiansted Limited Partnership ("Carib
Villas III"). BF Lansing's only responsibility in relation to the two Local
Limited Partnerships is the selection of a management agent. BF Lansing selected
Lansing Management Company ("LMC"), an affiliate of the Managing General
Partner, as the management agent for Carib Villas II and III. The management fee
charged to each property is equal to 5% of property gross revenues. Included in
operating expenses in the summarized income statements in Note 4 to the
financial statements are $21,120, $21,120 and $15,305, respectively, of fees
paid to LMC for the years ended December 31, 1998, 1997 and 1996.
LMC is also the management agent for Historic New Center, another Local Limited
Partnership in which the Partnership invested. Included in operating expenses in
the summarized income statements in Note 4 to the financial statements are
$24,185, $21,986 and $24,561, respectively, of fees earned by LMC for the years
ended December 31, 1998, 1997 and 1996.
Boston Financial Property Management ("BFPM"), an affiliate of the Managing
General Partner, is the management agent for Woodlake Hills, a Local Limited
Partnership in which the Partnership is invested. The management fee charged to
the property is 4% of property gross revenues. Included in operating expenses in
the summarized income statements in Note 4 to the financial statements are
$35,150, $34,752 and $37,497, respectively, of fees earned by BFPM for the years
ended December 31, 1998, 1997 and 1996.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
7. Mortgage Notes Payable
The Combined Entity has a mortgage note payable in the original amount of
$750,000 amortized over 30 years at a rate of 11.5%. On December 27, 1997, the
mortgage holder of the note reduced the interest rate to 10%; this reduction
changed the monthly payment from $7,427 to $6,143. It was anticipated that by
the end of 1998, the Combined Entity would have negotiated a new financing
agreement with another lending institution. As of December 31, 1998, the
remaining balance on this note is $706,873 and the Managing General Partner is
negotiating with the lender to either refinance or obtain a time extension that
will permit negotiations with another lending institution. It remains uncertain
as to whether foreclosure can be avoided because the note is technically in
default.
8. Deferred Revenue
Under the terms of a Local Limited Partnership Agreement, the Partnership was
required to fund a Supplemental Reserve in the amount of $196,000. The original
purpose of the contribution was to fund the development expenses of the Local
Limited Partnership. In lieu of transferring the Supplemental Reserve to the
Local Limited Partnership, the Partnership designated $196,000 of its cash and
cash equivalents for this purpose. Since the funds were not needed, the Local
Limited Partnership Agreement allows that the established Supplemental Reserve,
along with the interest earned, are available to pay the Partnership its annual
priority distribution. As of March 31, 1999, $99,000 has been released to the
Partnership. The balance of the Supplemental Reserve is included in cash and
cash equivalents. This balance, along with the accrued interest thereon, has
also been accounted for as deferred revenue, as it represents the future annual
priority distributions to be released to the Partnership from this Reserve.
9. Litigation
The Partnership is not a party to any pending legal or administrative
proceeding. However, Tompkins/Rosecliff, Ltd. which owns a property in Sanford,
Florida, is involved in certain litigation with an entity formerly affiliated
with this Partnership and its previous local general partner. Recently, a
tentative settlement agreement was agreed upon. Tompkins/Rosecliff and the
Partnership will contribute a total of $150,000, of which the Partnership will
contribute $100,000. In the opinion of Management, this is an appropriate
settlement, which will eliminate the risk of foreclosure and recapture posed by
this litigation.
10. Transfer of Interest in Local Limited Partnership
On November 10, 1997, the Managing General Partner transferred 50% of its
interest in capital and profits of Westgate 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. For financial
reporting purposes, the Partnership has written down the remaining carrying
value of this investment in Local Limited Partnership to zero, because it is
unknown as to whether the Partnership will be able to recover its remaining
invested balance. The Partnership will retain its full share of tax credits
until such time as the remaining interest is put to the local general partner.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
11. Federal Income Taxes
A reconciliation of the loss reported in the Combined Statements of
Operations for the fiscal years ended March 31, 1999, 1998 and 1997 to the
loss reported for federal income tax purposes for the years ended December 31,
1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Net Loss per Statement of Operations $ (3,383,033) $ (5,838,302) $ (4,337,761)
Adjustment for equity in losses of Local Limited
Partnerships for financial reporting purposes
over (under) equity in losses for tax purposes (358,118) (1,419,314) (555,803)
Equity in losses of Local Limited Partnerships not
recognized for financial reporting purposes (1,102,873) (131,424) (2,143)
Adjustment to reflect March 31, fiscal year-end
to December 31, tax year-end 64,611 31,986 (46,742)
Adjustment for expenses not currently deductible for
tax purposes - - 114,572
Related party expenses paid in current year but
expensed for book purposes in prior year - (114,572) (55,889)
Adjustment for accelerated amortization
for tax purposes over amortization
for financial reporting purposes (12,749) (8,383) (10,828)
Provision for valuation of Investment in Local
Limited Partnership not deductible for
tax purposes - 590,197 -
Other 12,536 - 22,000
------------- ------------- -------------
Net Loss for federal income tax
purposes $ (4,779,626) $ (6,889,812) $ (4,872,594)
============= ============= =============
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
11. Federal Income Taxes (continued)
The differences in the assets and liabilities of the Partnership for financial
reporting purposes and tax reporting purposes for the year ended March 31, 1999
are as follows:
<TABLE>
<CAPTION>
Financial Tax
Reporting Reporting
Purposes Purposes Differences
<S> <C> <C> <C>
Investments in Local Limited Partnerships $ 21,538,791 $ 18,320,798 $ 3,217,993
============= ============== ============
Other assets $ 4,114,643 $ 13,039,165 $ (8,924,522)
============= ============= ============
Liabilities $ 1,134,775 $ 204,721 $ 930,054
============= ============= ============
</TABLE>
The differences in 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 one Local Limited
Partnership with its financial statements; for tax reporting purposes, this
entity is carried on the equity method (ii) the cumulative equity in loss from
Local Limited Partnerships, including the Combined Entity, for tax reporting
purposes is approximately $3,689,000 greater than for financial reporting
purposes, including approximately $1,236,000 of losses the Partnership has not
recognized relating to five Local Limited Partnerships whose cumulative equity
in losses exceeded its total investment; (iii) the amortization of acquisition
fees for tax reporting purposes exceeds financial reporting purposes by
approximately $64,000; (iv) approximately $50,000 of cash distributions received
from Local Limited Partnerships during the quarter ended March 31, 1999 are not
included in the Partnership's Investments in Local Limited Partnerships for tax
reporting purposes at December 31, 1998; and (v) organizational and offering
costs of approximately $9,500,000 that have been capitalized for tax reporting
purposes, are charged to Limited Partners' equity for financial reporting
purposes.
The differences in 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 $ 24,775,767 $ 23,114,290 $ 1,661,477
============= ============= ============
Other assets $ 4,129,901 $ 13,054,826 $(8,924,925)
============= ============= ===========
Liabilities $ 1,002,330 $ 217,179 $ 785,151
============= ============= ============
</TABLE>
The differences in 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 one Local Limited
Partnership with its financial statements; for tax reporting purposes, this
entity is carried on the equity method; (ii) the Partnership has provided a
reserve for valuation of approximately $590,000 against one of its investments
in Local Limited Partnerships for financial reporting purposes; (iii) the
cumulative equity in loss from Local Limited Partnerships, including the
Combined Entity, for tax reporting purposes is approximately $2,163,000 greater
than for financial reporting purposes, including approximately $134,000 of
losses the Partnership has not recognized relating to two Local Limited
Partnerships whose cumulative equity in losses exceeded its total investment;
(iv) the amortization of acquisition fees for tax reporting purposes exceeds
financial reporting purposes by approximately $51,000; (v) approximately $34,000
of cash distributions received from Local Limited Partnerships during the
quarter ended March 31, 1999 are not included in the Partnership's Investments
in Local Limited Partnerships for tax reporting purposes at December 31, 1998;
and (vi) organizational and offering costs of approximately $9,500,000 that have
been capitalized for tax reporting purposes, are charged to Limited Partners'
equity for financial reporting purposes.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
12. Supplemental Combining Schedules
<TABLE>
<CAPTION>
Balance Sheets
Boston Financial
Qualified Housing Wheeler
Tax Credits House
L.P V (A) (Burbank) (B) Eliminations Combined (A)
Assets
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 449,931 $ 519 $ - $ 450,450
Accounts receivable from affiliates 174,739 - (1,000) 173,739
Tenant security deposit escrow - 3,758 - 3,758
Investments in Local
Limited Partnerships, net 21,483,543 - 55,248 21,538,791
Marketable securities, at fair value 2,666,281 - - 2,666,281
Prepaid assets - 1,489 - 1,489
Rental property at cost, net of
accumulated depreciation - 752,514 26,329 778,843
Replacement reserve escrow - 7,425 - 7,425
Other assets 32,658 - - 32,658
--------------- --------------- ------------- --------------
Total Assets $ 24,807,152 $ 765,705 $ 80,577 $ 25,653,434
=============== ================ ============== ==============
Liabilities and Partners' Equity
Accounts payable to affiliates $ 143,443 $ 1,000 $ (1,000) $ 143,443
Accounts payable and accrued expenses 115,218 18,620 - 133,838
Mortgage note payable - 706,873 - 706,873
Tenant security deposits payable - 3,803 - 3,803
Deferred revenue 146,818 - - 146,818
--------------- --------------- ------------- --------------
Total Liabilities 405,479 730,296 (1,000) 1,134,775
--------------- --------------- ------------- --------------
Minority interest in Local Limited
Partnership - - 116,986 116,986
--------------- --------------- ------------- --------------
General, Initial and Investor
Limited Partners' Equity 24,394,204 35,409 (35,409) 24,394,204
--------------- --------------- ------------- --------------
Net unrealized gains on
marketable securities 7,469 - - 7,469
--------------- --------------- ------------- --------------
Total Partners' Equity 24,401,673 35,409 (35,409) 24,401,673
--------------- --------------- ------------- --------------
Total Liabilities and Partners' Equity$ 24,807,152 $ 765,705 $ 80,577 $ 25,653,434
=============== =============== ============= ==============
(A) As of March 31, 1999.
(B) As of December 31, 1998 - See Note 2.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
12. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Operations
Boston Financial
Qualified Housing Wheeler
Tax Credits House
L.P. V (A) (Burbank) (B) Eliminations Combined (A)
Revenue:
<S> <C> <C> <C> <C>
Rental $ - $ 117,971 $ - $ 117,971
Investment 158,954 140 - 159,094
Other 122,087 1,332 - 123,419
--------------- --------------- ------------- ------------
Total Revenue 281,041 119,443 - 400,484
--------------- --------------- ------------- ------------
Expenses:
General and administrative 453,057 - - 453,057
Asset management fees, related party 243,169 - - 243,169
Rental operations, exclusive of depreciation - 40,261 - 40,261
Interest - 73,899 - 73,899
Depreciation - 27,043 - 27,043
Amortization 24,813 - - 24,813
--------------- --------------- ------------- ------------
Total Expenses 721,039 141,203 - 862,242
--------------- --------------- ------------- ------------
Loss before minority interest in losses of
Local Limited Partnership, equity in
losses of Local Limited
Partnerships and extraordinary item (439,998) (21,760) - (461,758)
Minority interest in losses of
Local Limited Partnership - - (17) (17)
Equity in losses of Local Limited
Partnerships (2,943,035) - (1,685) (2,944,720)
--------------- --------------- ------------- ------------
Extraordinary gain on cancellation
of indebtedness - 23,462 - 23,462
--------------- --------------- ------------- ------------
Net Loss $ (3,383,033) $ 1,702 $ (1,702) $ (3,383,033)
=============== =============== ============= ============
(A) For the year ended March 31, 1999.
(B) For the year ended December 31, 1998 - See Note 2.
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
12. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Cash Flows
Boston Financial
Qualified Housing Wheeler
Tax Credits House
L.P. V (A) (Burbank) (B) Eliminations Combined (A)
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net Loss $ (3,383,033) $ 1,702 $ (1,702) $ (3,383,033)
Adjustments to reconcile net loss to
net cash used for operating activities:
Equity in losses of Local
Limited Partnerships 2,943,035 - 1,685 2,944,720
Depreciation and amortization 24,813 27,043 - 51,856
Loss on sale and
maturities of
marketable securities 14,790 - - 14,790
Cash distribution income included in
cash distributions from Local
Limited Partnerships (65,089) - - (65,089)
Gain on forgiveness of debt - (23,462) - (23,462)
Minority interest in losses of
Local Limited Partnership - - 17 17
Increase (decrease) in
cash arising from
changes in operating assets and liabilities:
Tenant security deposits - (741) - (741)
Prepaid assets - (1,489) - (1,489)
Mortgagee escrow deposits - (2,041) - (2,041)
Replacement reserve deposits - (2,114) - (2,114)
Other assets 6,383 - - 6,383
Accounts payable to affiliates 64,233 - - 64,233
Accounts payable and
accrued expenses 47,527 1,030 - 48,557
Tenant security deposits payable - 786 - 786
Deferred revenue 7,357 - - 7,357
--------------- --------------- ------------- --------------
Net cash used for operating activities (339,984) 714 - (339,270)
--------------- --------------- ------------- --------------
Cash flows from investing activities:
Investments in Local Limited Partnerships (50,420) - - (50,420)
Purchases of marketable securities (2,523,829) - - (2,523,829)
Proceeds from sales and maturities
of marketable securities 2,929,397 - - 2,929,397
Additions to rental property - (633) - (633)
Cash distributions received from
Local Limited Partnerships 368,798 - - 368,798
Advance to affiliate
from affiliates (173,739) 1,000 - (172,739)
--------------- ------------- ------------ --------------
Net cash provided by investing activities 550,207 367 - 550,574
--------------- ------------- ------------ --------------
</TABLE>
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V
(A Limited Partnership)
NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued)
12. Supplemental Combining Schedules (continued)
<TABLE>
<CAPTION>
Statements of Cash Flows (continued)
Boston Financial
Qualified Housing Wheeler
Tax Credits House
L.P. V (A) (Burbank) (B) Eliminations Combined (A)
Cash flows from financing activities:
<S> <C> <C> <C> <C>
Payment of mortgage principal - (786) - (786)
--------------- ------------- ------------ ----------------
Net cash used for financing activities - (786) - (786)
--------------- ------------- ------------ ----------------
Net increase in cash and cash equivalents 210,223 295 - 210,518
Cash and cash equivalents, beginning 239,708 224 - 239,932
--------------- ------------- ------------ ----------------
Cash and cash equivalents, ending $ 449,931 $ 519 $ - $ 450,450
=============== ============= ============ ================
(A) For the year ended March 31, 1999.
(B) For the year ended December 31, 1998 - See Note 2.
</TABLE>
<PAGE>
Boston Financial Qualified Housing Tax Credits L. P. V
Schedule III - Real Estate and Accumulated Depreciation of Property Owned by
Local Limited Partnerships in which Registrant has invested at March 31, 1999
<TABLE>
GROSS AMOUNT
AT WHICH
CARRIED AT
DECEMBER 31,
COST OF INTEREST AT ACQUISITION DATE 1998
------------------------------------- --------------
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
Strathern Park/Lorne Park 241 $17,428,457 $4,369,500 $10,513,639 $10,997,952 $5,889,320
Los Angeles, CA
Maidens Choice 101 4,021,395 807,791 2,013,769 3,430,551 807,791
Baltimore, MD
Cedar Lane 36 1,108,259 40,000 1,375,512 11,854 40,000
London, KY
Silver Creek 24 768,386 20,000 946,812 0 20,000
Berea, KY
Rosecliff 168 5,562,595 1,200,000 3,304,950 4,578,797 1,120,000
Orlando, FL
Brookwood 81 3,019,835 91,470 344,580 4,561,568 522,673
Ypsilanti Township, MI
Water Oak 40 1,256,023 98,058 1,467,944 5,638 98,058
Orange City, FL
Yester Oaks 44 1,286,809 47,105 1,574,145 2,489 47,105
Lafayette, GA
Ocean View 42 1,366,353 112,620 1,600,421 7,347 112,620
Ferandina Beach, FL
Wheeler House 17 706,873 42,000 1,139,412 (133,840) 42,000
Nashua, NH
Archer Village 24 708,517 40,000 861,288 38,869 40,000
Archer, FL
Oaks of Dunlop 144 4,428,393 631,959 6,492,444 148,134 631,959
Colonial Heights, VA
Timothy House 112 2,500,426 11,638 6,344,664 434,139 11,638
Towson, MD
Westover Station 108 2,661,411 305,645 4,299,613 8,089 305,645
Newport News, VA
Carib Villas III 24 1,482,307 107,582 1,802,466 5,614 239,009
St. Croix, VI
Carib Villas II 20 1,402,191 57,720 1,787,528 5,614 197,195
St. Croix, VI
Whispering Trace 40 1,376,939 218,000 2,413,145 (467,706) 218,000
Woodstock, GA
New Center 104 2,932,517 79,652 3,534,776 2,932,510 96,116
Detroit, MI
</TABLE>
<PAGE>
Boston Financial Qualified Housing Tax Credits L. P. V
Schedule III - Real Estate and Accumulated Depreciation of Property Owned by
Local Limited Partnerships in which Registrant has invested at March 31, 1999
(continued)
<TABLE>
GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31,
1998
------------------------------------------------ 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
Strathern Park/Lorne Park $19,991,771 $25,881,091 $5,972,453 1991 various 07/05/90
Los Angeles, CA
Maidens Choice 5,444,320 6,252,111 1,751,942 1991 various 08/17/90
Baltimore, MD
Cedar Lane 1,387,366 1,427,366 335,526 1991 various 09/10/90
London, KY
Silver Creek 946,812 966,812 235,121 1990 various 08/15/90
Berea, KY
Rosecliff 7,963,747 9,083,747 2,437,766 1991 various 09/18/90
Orlando, FL
Brookwood 4,474,945 4,997,618 1,141,319 1992 various 10/01/90
Ypsilanti Township, MI
Water Oak 1,473,582 1,571,640 421,448 1991 various 01/01/91
Orange City, FL
Yester Oaks 1,576,634 1,623,739 466,846 1991 various 01/01/91
Lafayette, GA
Ocean View 1,607,768 1,720,388 491,142 1991 various 01/01/91
Ferandina Beach, FL
Wheeler House 1,005,572 1,047,572 295,058 1991 various 01/01/91
Nashua, NH
Archer Village 900,157 940,157 271,728 1991 various 01/01/91
Archer, FL
Oaks of Dunlop 6,640,578 7,272,537 2,239,564 1991 various 01/01/91
Colonial Heights, VA
Timothy House 6,778,803 6,790,441 1,347,329 1992 various 03/05/91
Towson, MD
Westover Station 4,307,702 4,613,347 993,754 1991 various 03/30/91
Newport News, VA
Carib Villas III 1,676,653 1,915,662 544,187 1992 various 03/21/91
St. Croix, VI
Carib Villas II 1,653,667 1,850,862 526,156 1991 various 03/01/91
St. Croix, VI
Whispering Trace 1,945,439 2,163,439 715,668 1990 various 05/01/91
Woodstock, GA
New Center 6,450,822 6,546,938 1,640,913 1992 various 06/27/91
Detroit, MI
</TABLE>
<PAGE>
Boston Financial Qualified Housing Tax Credits L. P. V
Schedule III - Real Estate and Accumulated Depreciation of Property Owned by
Local Limited Partnerships in which Registrant has invested at March 31, 1999
(continued)
<TABLE>
GROSS AMOUNT
AT WHICH
CARRIED AT
DECEMBER 31,
COST OF INTEREST AT ACQUISITION DATE 1998
------------------------------------- --------------
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
Huguenot Park 24 1,400,000 83,000 2,088,664 0 83,000
New Paltz, NY
Hillwood Pointe 100 2,926,844 454,185 5,103,711 79,106 454,185
Jacksonville, FL
Pinewood Pointe 136 3,962,864 555,093 6,809,808 556,869 555,093
Jacksonville, FL
Westgate 60 1,365,415 215,168 2,152,519 24,702 238,920
Bismark, ND
Woodlake Hills 144 3,811,770 233,690 6,481,250 2,390,901 187,588
Pontiac, MI
Bixel House 76 1,273,858 190,746 2,294,879 50,061 190,746
Los Angeles, CA
Harmony 65 2,238,307 0 7,020,696 117,826 0
North Hollywood, CA
Schumaker Place 96 2,913,267 531,776 1,627,716 3,603,531 1,023,027
Salisbury, MD
Circle Terrace 303 8,872,936 0 7,884,733 8,635,332 1,104,269
Lansdown, MD
-----------------------------------------------------------------------------------------------
SUBTOTAL 2,374 82,782,947 10,544,398 93,281,084 42,025,947 14,275,957
LESS: Combined Entity 17 706,873 42,000 1,139,412 (133,840) 42,000
-----------------------------------------------------------------------------------------------
TOTAL 2,357 $82,076,074 $10,502,398 $92,141,672 $42,159,787 $14,233,957
===============================================================================================
</TABLE>
(1) The aggregate cost for Federal Income Tax purposes is approximately $
126,889,000.
* 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 8.00% to 11%.
The Partnership has not guaranteed any of these
mortgage notes payable.
<PAGE>
Boston Financial Qualified Housing Tax Credits L. P. V
Schedule III - Real Estate and Accumulated Depreciation of Property Owned by
Local Limited Partnerships in which Registrant has invested at March 31, 1999
(continued)
<TABLE>
GROSS AMOUNT AT WHICH CARRIED AT DECEMBER
31, 1998
--------------------------------------------- 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
Huguenot Park 2,088,664 2,171,664 587,767 1991 various 06/26/91
New Paltz, NY
Hillwood Pointe 5,182,817 5,637,002 1,536,730 1991 various 07/19/91
Jacksonville, FL
Pinewood Pointe 7,366,677 7,921,770 2,165,492 1991 various 07/31/91
Jacksonville, FL
Westgate 2,153,469 2,392,389 588,342 1991 various 07/25/91
Bismark, ND
Woodlake Hills 8,918,253 9,105,841 2,135,350 1992 various 08/01/91
Pontiac, MI
Bixel House 2,344,940 2,535,686 895,823 1991 various 07/31/91
Los Angeles, CA
Harmony 7,138,522 7,138,522 2,079,026 1991 various 07/31/91
North Hollywood, CA
Schumaker Place 4,739,996 5,763,023 1,097,433 1992 various 09/20/91
Salisbury, MD
Circle Terrace 15,415,796 16,520,065 3,501,702 1993 various 12/06/91
Lansdown, MD
---------------------------------------------
SUBTOTAL 131,575,472 145,851,429 36,415,585
LESS: Combined Entity 1,005,572 1,047,572 295,058
---------------------------------------------
TOTAL $130,569,900 $144,803,857 $36,120,527
=============================================
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Summary of property owned and accumulated depreciation:
Property Owned December 31, 1998 Accumulated Depreciation December 31, 1998
- ------------------------------------------------------------------ -------------------------------------------------
Balance at beginning of period $145,480,348 Balance at beginning of period 31,410,776
Additions during Additions during period:
period:
Less current year Wheeler (1,047,572) Less current year Wheeler (295,058)
House House
Other acquisitions 95,346 5,004,809
Depreciation
--------------
Improvements etc. 275,735 Balance at close of period $36,120,527
-------------- ==============
(676,491)
Deductions during
period:
Cost of real 0
estate sold
Impairment of 0
Assets
--------------
0
----------------
Balance at close of $144,803,857
period
================
Property Owned December 31, 1997 Accumulated Depreciation December 31, 1997
- ------------------------------------------------------------------ -------------------------------------------------
Balance at beginning of period $145,480,438 Balance at beginning of period 26,076,146
Additions during Additions during period:
period:
Less current year Wheeler (1,046,939) Less current year Wheeler (268,015)
House House
Other acquisitions 125,851 5,602,645
Depreciation
--------------
Improvements etc. 34,059 Balance at close of period $31,410,776
-------------- ==============
(887,029)
Deductions during
period:
Cost of real 0
estate sold
Impairment of Assets (1) (160,000)
--------------
(160,000)
----------------
Balance at close of $144,433,409
period
================
Property Owned December 31, 1996 Accumulated Depreciation December 31, 1996
- ------------------------------------------------------------------ -------------------------------------------------
Balance at beginning of period $145,304,421 Balance at beginning of period 21,269,750
Additions during Additions during period:
period:
Other acquisitions 13,520 4,806,396
Depreciation
--------------
Improvements etc. 162,497 Balance at close of period $26,076,146
-------------- ==============
176,017
Deductions during
period:
Cost of real 0
estate sold
Reclassification to 0
intangible assets
--------------
0
----------------
Balance at close of $145,480,438
period
================
</TABLE>
(1) During the year ended December 31, 1997, Wheeler House recognized an
impairment loss on its rental property in the net amount of $160,000 as a result
of applying FASB 121,
Accounting for the Impairment of Long Lived Assets and for Long Lived
Assets to be Disposed of.
<PAGE>
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS V
(A Limited Partnership)
Annual Report on form 10-K
For The Year Ended March 31, 1999
Reports of Independent Auditors
<PAGE>
Woodlake Hills
[Letterhead]
[LOGO]
JOHN J. LEHOTAN, C.P.A.
4385 W. Main Street
Brown City, MI 48416
To The Partners of Woodlake Hills
Limited Partnership
Dearborn, Michigan 48124
Independent Auditor's Report
I have audited the accompanying balance sheet of Woodlake Hills Limited
Partnership, a Michigan limited partnership as of December 31, 1998 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 our 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 Woodlake Hills Limited Partnership
as of December 31, 1998 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 Accountant
February 10, 1999
<PAGE>
Woodlake Hills
[Letterhead]
[LOGO]
JOHN J. LEHOTAN, C.P.A.
4385 W. Main Street
Brown City, MI 48416
To The Partners of Woodlake Hills
Limited Partnership
Detroit, Michigan
Independent Auditor's Report
I have audited the accompanying balance sheet of Woodlake Hills 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 our 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 Woodlake Hills 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 Accountant, C.P.A.
February 5, 1998
<PAGE>
Woodlake Hills
[Letterhead]
[LOGO]
JOHN J. LEHOTAN, C.P.A.
Brown City, MI
To The Partners of Woodlake Hills
Limited Partnership
Detroit, Michigan
Independent Auditor's Report
I have audited the accompanying balance sheet of Woodlake Hills 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 our 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 Woodlake Hills 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
February 5, 1997
<PAGE>
Strathern Park
[Letterhead]
[LOGO]
NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP
9454 Wilshire Boulevard, Suite 405
Beverly Hills, California 90212-2907
Independent Auditors' Report
The Partners
Strathern Park
Los Angeles, California
We have audited the accompanying balance sheet of Strathern Park (a California
limited partnership), as of December 31, 1998 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 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 Strathern Park as of December
31, 1998, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information on Schedules I, II and
III 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 statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/Nanas, Stern, Biers, Neinstein and Co., LLP
NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP
February 3, 1999
<PAGE>
Strathern Park
[LOGO]
NANAS, STERN, BIERS, NEINSTEIN AND CO.LLP 9454 Wilshire Boulevard Beverly Hills,
California 90212-2907
Independent Auditors' Report
The Partners
Strathern Park
Los Angeles, California
We have audited the accompanying balance sheet of Strathern Park (a California
limited partnership), as of December 31, 1997 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 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 Strathern Park as of December
31, 1997, 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 additional information on Schedules I, II and
III 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 statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/Nanas, Stern, Biers, Neinstein and Co., LLP
NANAS, STERN, BIERS, NEINSTEIN AND CO.
January 28, 1998
<PAGE>
Strathern Park
[Letterhead]
[LOGO]
NANAS, STERN, BIERS, NEINSTEIN AND CO. , LLP
9454 Wilshire Boulevard
Beverly Hills, California 90212-2907
Independent Auditors' Report
The Partners
Strathern Park
Los Angeles, California
We have audited the accompanying balance sheet of Strathern Park (a California
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 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 Strathern Park 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 additional information on Schedules I, II and
III 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 statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/Nanas, Stern, Biers, Neinstein and Co.
NANAS, STERN, BIERS, NEINSTEIN AND CO.
January 14, 1997
<PAGE>
Maiden Choice Limited Partnership
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Maiden Choice Limited Partnership
We have audited the accompanying balance sheet of Maiden Choice Limited
Partnership as of December 31, 1998, 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 Maiden Choice Limited
Partnership as of December 31, 1998, and the results of its operations, the
changes in partners' equity 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 27
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the audit
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs", we have also issued reports dated January 6,
1999, on our consideration of Maiden Choice Limited Partnership's internal
control and on its compliance with specific requirements applicable to
DHCD-assisted programs, fair housing and non-discrimination, and laws and
regulations applicable to the financial statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer Identification Number:
52-1088612
Audit Principal: William T. Riley, Jr.
January 6, 1999
<PAGE>
Maiden Choice Limited Partnership
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Maiden Choice Limited Partnership
We have audited the accompanying balance sheet of Maiden Choice Limited
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 Maiden Choice Limited
Partnership as of December 31, 1997, and the results of its operations, changes
in partners' equity 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 21 through 33
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited," on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 6,
1998, on our consideration of Maiden Choice Limited Partnership's internal
control and on its compliance with specific requirements applicable to CDA
programs, fair housing and non-discrimination, and laws and regulations
applicable to the financial statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer Identification Number:
52-1088612
Audit Principal: William T. Riley, Jr.
January 6, 1998
<PAGE>
Maiden Choice Limited Partnership
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Maiden Choice Limited Partnership
We have audited the accompanying balance sheet of Maiden Choice Limited
Partnership as of December 31, 1996, 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 Maiden Choice Limited
Partnership as of December 31, 1996, and the results of its operations, changes
in partners' equity 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 20 through 34
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited," on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 6,
1997, on our consideration of Maiden Choice Limited Partnership's internal
control structure and on its compliance with specific requirements applicable to
CDA programs, affirmative fair housing, and laws and regulations applicable to
the financial statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer Identification Number:
52-1088612
Audit Principal: William T. Riley
January 6, 1997
<PAGE>
Cedar Lane I, Ltd.
[Letterhead]
[LOGO]
Miller, Mayer, Sullivan & Stevens LLP
INDEPENDENT AUDITORS' REPORT
To the Partners Rural Development
Cedar Lane I, Ltd. London, Kentucky
We have audited the accompanying balance sheets of Cedar Lane I, Ltd., (a
limited partnership) Case No. 20-063-621358072, as of December 31, 1998 and 1997
and the related statements of operations, changes in partners' equity (deficit),
and cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and the standards for financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States. Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cedar Lane I, Ltd. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards, we have also issued our report
dated February 11, 1999 on our consideration of Cedar Lane I, Lts.'s internal
control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts and grants.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data included in this
report is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements,
and in our opinion, is presented fairly, in all material respects, in relation
to the basic financial statements taken as a whole.
/s/Miller, Mayerm Sullivan & Stevens, LLP
Lexington, Kentucky
February 11, 1999
<PAGE>
Cedar Lane I, Ltd
[Letterhead]
[LOGO]
Miller, Mayer, Sullivan & Stevens LLP
INDEPENDENT AUDITORS' REPORT
To the Partners Rural Development
Cedar Lane I, Ltd. London, Kentucky
We have audited the accompanying balance sheets of Cedar Lane I, Ltd., (a
limited partnership) Case No. 20-063-621358072, as of December 31, 1997 and 1996
and the related statements of operations, changes in partners' equity (deficit),
and cash flows for the years then ended. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing standards
and the standards for financial audits contained in 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 Cedar Lane I, Ltd. 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 27, 1998 on our consideration of Cedar Lane I, Lts.'s internal
control structure and compliance with laws and regulations.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data included in this
report is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements,
and in our opinion, is presented fairly, in all material respects, in relation
to the basic financial statements taken as a whole.
/s/Miller, Mayerm Sullivan & Stevens
Lexington, Kentucky
January 27, 1998
<PAGE>
Silver Creek II, Ltd.
[Letterhead]
[LOGO]
Miller, Mayer, Sullivan & Stevens LLP
INDEPENDENT AUDITORS' REPORT
To the Partners
Silver Creek II, Ltd.
We have audited the accompanying balance sheets of Silver Creek II, Ltd., (a
limited partnership), as of December 31, 1998 and 1997, and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Silver Creek II, Ltd. as of
December 31, 1998 and 1997 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
Our audits was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data included in this
report is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements,
and in our opinion, is presented fairly in all material respects, in relation to
the basic financial statements taken as a whole.
/s/Miller, Mayerm Sullivan & Stevens, LLP
Lexington, Kentucky
January 2, 1999
<PAGE>
Silver Creek II, Ltd.
[Letterhead]
[LOGO]
Miller, Mayer, Sullivan & Stevens LLP
INDEPENDENT AUDITORS' REPORT
To the Partners
Silver Creek II, Ltd.
We have audited the accompanying balance sheets of Silver Creek II, Ltd., (a
limited partnership), as of December 31, 1997 and 1996, and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our 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 Silver Creek II, Ltd. 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 audits was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental data included in this
report is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements,
and in our opinion, is presented fairly in all material respects, in relation to
the basic financial statements taken as a whole.
/s/Miller, Mayerm Sullivan & Stevens
Lexington, Kentucky
January 27, 1998
<PAGE>
Tomkins/Rosecliff, Ltd.:
[Letterhead]
[LOGO]
Deloitte & Touche LLP
Suite 1800
200 South Orange Avenue
Orlando, Florida 32801
INDEPENDENT AUDITORS' REPORT
To the General Partner and Limited Partners of
Tomkins/Rosecliff, Ltd.:
We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a
Florida Limited Partnership) as of December 31, 1998, 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 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 Tomkins/Rosecliff, Ltd. (a
Florida Limited Partnership) as of December 31, 1998, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/Deloitte & Touche LLP
January 29, 1999
<PAGE>
Tomkins/Rosecliff, Ltd.:
[Letterhead]
[LOGO]
Deloitte & Touche LLP
Suite 1800
200 South Orange Avenue
Orlando, Florida 32801
INDEPENDENT AUDITORS' REPORT
To the General Partner and Limited Partners of
Tomkins/Rosecliff, Ltd.:
We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a
Florida Limited Partnership) as of December 31, 1997, 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 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 Tomkins/Rosecliff, Ltd. (a
Florida 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/Deloitte & Touche LLP
January 24, 1998
<PAGE>
Tomkins/Rosecliff, Ltd.:
[Letterhead]
[LOGO]
Deloitte & Touche LLP
Suite 1800
200 South Orange Avenue
Orlando, Florida 32801
INDEPENDENT AUDITORS' REPORT
To the General Partner and Limited Partners of
Tomkins/Rosecliff, Ltd.:
We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a
Florida 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 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 Tomkins/Rosecliff, Ltd. (a
Florida 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/Deloitte & Touche LLP
January 24, 1997
<PAGE>
Brookwood L.D.H.A
[Letterhead]
[LOGO]
Follmer, Rudzewicz & Co., P.C.
INDEPENDENT AUDITORS' REPORT
To the Partners of:
Brookwood L.D.H.A. Limited Partnership
28388 Franklin Road
Southfield, Michigan 48034
We have audited the accompanying balance sheet of Brookwood L.D.H.A. Limited
Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of
December 31, 1998 and the related statement of profit and loss, changes in
accumulated earnings 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, such financial statements present fairly, in all material
respects, the financial position of Brookwood L.D.H.A. Limited Partnership,
MSHDA No. 832 as of December 31, 1998, and the results of its operations, the
changes in its cumulative income and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Brookwood
L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented
for the purpose 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, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 1999 on our consideration of the partnership's internal
control structure and on its compliance with laws and regulations.
/s/Follmer, Rudzewicz & Co., P.C.
Follmer,Rudzewicz & Co. P.C.
Certified Public Accountants
Southfield, Michigan
38-1910111
<PAGE>
Brookwood L.D.H.A.
[Letterhead]
[LOGO]
Follmer, Rudzewicz & Co., P.C.
INDEPENDENT AUDITORS' REPORT
To the Partners of:
Brookwood L.D.H.A. Limited Partnership
28388 Franklin Road
Southfield, Michigan 48034
We have audited the accompanying Balance sheet of Brookwood L.D.H.A. Limited
Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of
December 31, 1997 and the related Statement of Profit and Loss, changes in in
accumulated earnings 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, such financial statements present fairly, in all material
respects, the financial position of Brookwood L.D.H.A. Limited Partnership,
MSHDA No. 832 as of December 31, 1997, and the results of its operations, the
changes in its cumulative income and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Brookwood
L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented
for the purpose 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, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 22, 1998 on our consideration of the partnership's internal
control structure and a report dated January 22, 1998 on its compliance with
laws and regulations.
/s/Follmer, Rudzewicz & Co., P.C.
Follmer,Rudzewicz & Co. P.C.
Certified Public Accountants
Southfield, Michigan
38-1910111
<PAGE>
Brookwood L.D.H.A.
[Letterhead]
[LOGO]
Follmer, Rudzewicz & Co., P.C.
INDEPENDENT AUDITORS' REPORT
To the Partners
Brookwood L.D.H.A. Limited Partnership
28388 Franklin Road
Southfield, Michigan 48034
We have audited the accompanying Balance sheet of Brookwood L.D.H.A. Limited
Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of
December 31, 1996 and the related Statement of Profit and Loss, changes in in
accumulated earnings 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 positions of Brookwood L.D.H.A. Limited
Partnership, MSHDA No. 832 as of December 31, 1996, and the results of its
operations, the changes in its cumulative income and its cash flows for the year
then ended in conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information of Brookwood
L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented
for the purpose 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, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 30, 1997 on our consideration of the partnership's internal
control structure and a report dated January 30, 1997 on its compliance with
laws and regulations.
/s/Follmer, Rudzewicz & Co., P.C.
Follmer,Rudzewicz & Co. P.C.
Certified Public Accountants
Southfield, Michigan
38-1910111
<PAGE>
Burbank Limited Partnership I
[Letterhead]
Otis, Atwell & Timberlake
Professional Association
The Partners
Burbank Limited Partnership I
I have audited the accompanying balance sheet of Burbank Limited
Partnership I as of December 31, 1998, and the related statements of income,
partners' equity (deficit) and cash flows for the years then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our 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 statements 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 Burbank Limited
Partnership
I as of December 31, 1998, and the results of its operations, changes in
partners' equity (deficit) and cash flows for the year then ended, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 2 to the
financial statements, the Partnership's first mortgage note has matured and has
not yet been refinanced, which raises substantial doubt about the Partnership's
ability to continue as a going concern. Management's plans regarding this matter
are described in Note 8. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/Otis, Atwell & Timberlake, P.A.
Certified Public Accountants
January 25, 1999
Portland, Maine
<PAGE>
Burbank Limited Partnership I
[Letterhead]
BILLIE J. BURNETT,CPA
5 Benton Drive
Nashua, NH 03060
(603) 883-4230
To The Partners
Burbank Limited Partnership I
I have audited the accompanying balance sheets of Burbank Limited
Partnership I as of December 31, 1997 and 1996, and the related statements of
income, partners' equity and cash flows for the years then ended. The 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
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 statements presentation.
I believe that my audits, provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Burbank Limited Partnership
I 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/Billie J. Burnett
Billie J. Burnett
January 8, 1998
<PAGE>
Virginia Housing Development Authority
[Letterhead]
[LOGO]
Wall Einhorn & Chernitzer., P.C.
Certified Public Accountants
First Virginia Bank Tower
555 Main Street
Suite 1500
Post Office Box 3610
Norfolk, Virginia 23514
Alvin A. Wall, CPA Telephone (757)625-4700
Martin A. Einhorn, CPA, CVA Telephone (757)625-0527
Jeffrey S. Chernitzer, CPA
INDEPENDENT AUDITORS' REPORT
To the Partners Virginia Housing Development Authority
The Oaks of Dunlop Farms, L. P. 601 South Belvidere Street
(A Limited Partnership) Richmond, Virginia 23220
Norfolk, Virginia
We have audited the accompanying balance sheets of The Oaks of Dunlop Farms,
L.P. (A Limited Partnership), VHDA Project Number 90-0300-C, as of December 31,
1998 and 1997, and the related statements of operations , partners' equity, 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 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 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 VHDA Project Number 90-0300-C
as of December 31, 1998 and 1997, and the results of its operations, changes in
partners' equity, and cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying supplementary information (shown on pages 10 to 17) 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 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/Wall, Einhorn & Chernitzer, P.C.
Norfolk, Virginia
February 1, 1999
<PAGE>
Virginia Housing Development Authority
[Letterhead]
[LOGO]
Wall Einchorn & Chernitzer., P.C.
Certified Public Accountants
First Virginia Bank Towers
555 Main Street
Suite 1500
Post Office Box 3610
Norfolk, Virginia 23514
Alvin A. Wall, CPA Telephone (757)625-4700
Martin A. Einhorn, CPA Telephone (757)625-0527
Jeffrey S. Chernitzer, CPA
INDEPENDENT AUDITORS' REPORT
To the Partners Virginia Housing Development Authority
The Oaks of Dunlop Farms, L. P. 601 South Belvidere Street
(A Limited Partnership) Richmond, Virginia 23220
Norfolk, Virginia
We have audited the accompanying balance sheets of The Oaks of Dunlop Farms,
L.P. (A. Limited Partnership), VHDA Project Number 90-0300-C, 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 VHDA Project Number 90-0300-C
as of December 31, 1997 and 1996, and the results of its operations, changes in
partners' equity, and cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying supplementary information (shown on pages 9 to 12) 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 statements and
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/Wall, Einhorn & Chernitzer, P.C.
Norfolk, Virginia
January 22, 1998
<PAGE>
Timothy House Limited Partnership
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Timothy House Limited Partnership
We have audited the accompanying balance sheet of Timothy House Limited
Partnership as of December 31, 1998 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 Timothy House Limited
Partnership as of December 31, 1998, and the results of its operations, the
changes in partners' equity 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 27
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited," on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs", we have also issued reports dated January 13,
1999, on our consideration of Timothy House Limited Partnership's internal
control structure and on its compliance with requirements applicable to
DHCD-assisted programs, fair housing and non-discrimination, and laws and
regulations applicable to the financial statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer
January 13, 1999 Identification Number:
52-1088612
Audit Principal: William T. Riley, Jr.
<PAGE>
Timothy House Limited Partnership
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Timothy House Limited Partnership
We have audited the accompanying balance sheet of Timothy House Limited
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 Timothy House Limited
Partnership as of December 31, 1997, and the results of its operations, changes
in partners' equity 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 21 through 33
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited," on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 10,
1998, on our consideration of Timothy House Limited Partnership's internal
control structure and on its compliance with requirements applicable to CDA
programs, fair housing, and laws and regulations applicable to the financial
statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer
January 10, 1998 Identification Number:
52-1088612
Audit Principal: William T. Riley, Jr.
<PAGE>
Timothy House Limited Partnership
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Timothy House Limited Partnership
We have audited the accompanying balance sheet of Timothy House Limited
Partnership as of December 31, 1996, 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 Timothy House Limited
Partnership as of December 31, 1996, and the results of its operations, changes
in partners' equity 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 20 through 34
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited," on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 14,
1997, on our consideration of Timothy House Limited Partnership's internal
control structure and on its compliance with specific requirements applicable to
CDA programs, affirmative fair housing, and laws and regulations applicable to
the financial statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer
January 14, 1997 Identification Number:
52-1088612
Audit Principal: William T. Riley, Jr.
<PAGE>
Westover Station Associates, L.P.
[Letterhead]
Wilfore & Wynn
A Professional Corporation
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
The Partners Virginia Housing Development
Westover Station Associates, L.P. Authority
(A Limited Partnership) 601 South Belvidere Street
Newport News, Virginia Richmond, Virginia 23220
We have audited the accompanying balance sheets of Westover Station Associates,
L.P., VHDA Project Number 90-0303-C, as of December 31, 1998 and 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 audits.
We conducted our audits in accordance with generally accepted auditing standards
and the Virginia Housing Development Authority's Mortgagor/Grantee's Audit
Guide.
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 Westover Station Associates,
L.P. at December 31, 1998 and 1997, and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules included in
the report are presented for purposes of additional analysis and are not a
required part of the basic financial statements of Westover Station Associates,
L.P. Such information has been subjected to the auditing procedures applied in
the audit of the basis financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/Wilfore & Wynn
Wilfore & Wynn
Virginia Beach, Virginia
February 3, 1999
4530 Professional Circle Virginia Beach, Virginia 23455-6498
Telephone (757)456-0111 Fax (757)473-1095
<PAGE>
Westover Station Associates, L.P.
[Letterhead]
Wilfore & Wynn
A Professional Corporation
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
The Partners
Westover Station Associates, L.P.
(A Limited Partnership)
Newport News, Virginia
We have audited the accompanying balance sheets of Westover Station Associates,
L.P., VHDA Project Number 90,0303-C, as of December 31, 1997 and 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 audits in accordance with generally accepted auditing standards
and the Virginia Housing Development Authority's Mortgagor/Grantee's Audit
Guide.
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 Westover Station Associates,
L.P. 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 was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules included in
the report are presented for purposes of additional analysis and are not a
required part of the basic financial statements of Westover Station Associates,
L.P. Such information has been subjected to the auditing procedures applied in
the audit of the basis financial statements and, in our opinion, is fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/Wilfore & Wynn
Wilfore & Wynn
Virginia Beach, Virginia
February 5, 1998
4530 Professional Circle Virginia Beach, Virginia 23455-6498
Telephone (804)456-0111 Fax (804)473-1095
<PAGE>
Christiansted Limited Dividend Housing
[Letterhead]
Kirschner Hutton Perlin, P.C.
Certified Public Accountants
26913 Northwestern Hwy. Suite 510
Southfield, Michigan 48034-8444
Telephone: (248) 356-3880
Facsimile: (248) 356-3885
Independent Auditors' Report
January 23, 1999
Partners
Christiansted Limited Dividend Housing
Association Limited Partnership
We have audited the accompanying balance sheet of Christiansted Limited Dividend
Housing Association Limited Partnership as of December 31, 1998 and 1997, 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 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 Christiansted Limited Dividend
Housing Association Limited Partnership as of December 31, 1998 and 1997, and
the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/Kirshner Huton Perlin, P.C.
<PAGE>
Christiansted Limited Dividend Housing
[Letterhead]
Kirschner Hutton Perlin, P.C.
Certified Public Accountants
26913 Northwestern Hwy. Suite 510
Southfield, Michigan 48034-8444
Telephone: (810) 356-3880
Facsimile: (810) 356-3885
Independent Auditors' Report
Partners January 19, 1998
Christiansted Limited Dividend Housing
Association Limited Partnership
We have audited the accompanying balance sheet of Christiansted Limited Dividend
Housing Association 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 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 audits 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 Christiansted 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/Kirshner Huton Perlin, P.C.
<PAGE>
St. Croix II. Limited Partnership
[Letterhead]
Kirschner Hutton Perlin, P.C.
Certified Public Accountants
26913 Northwestern Hwy. Suite 510
Southfield, Michigan 48034-8444
Telephone: (248) 356-3880
Facsimile: (248) 356-3885
Independent Auditors' Report
January 20, 1999
Partners
St. Croix II. Limited Partnership
We have audited the accompanying balance sheet of St. Croix II, Limited
Partnership as of December 31, 1998 and 1997, 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, the financial statements referred to above present fairly, in
all material respects, the financial position of St. Croix II, Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/Kirshner Huton Perlin, P.C.
<PAGE>
St. Croix II. Limited Partnership
[Letterhead]
Kirschner Hutton Perlin, P.C.
Certified Public Accountants
26913 Northwestern Hwy. Suite 510
Southfield, Michigan 48034-8444
Telephone: (810) 356-3880
Facsimile: (810) 356-3885
Independent Auditors' Report
Partners January 17, 1998
St. Croix II. Limited Partnership
We have audited the accompanying balance sheet of St. Croix II, 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 St. Croix II, 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/Kirshner Huton Perlin, P.C.
<PAGE>
Kensignton Place Townhomes,
Letterhead]
[LOGO]
KPMG Peat Marwick LLP 303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
Independent Auditors' Report
The Partners
Kensignton Place Townhomes,
A Limited Partnership:
We have audited the accompanying balance sheets of Kensignton Place Townhomes, A
Limited Partnership as of December 31, 1998 and 1997, and the related statements
of loss, partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 Kensignton Place Townhomes, A
Limited Partnership as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
February 26, 1999
<PAGE>
Kensignton Place Townhomes,
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP 303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
Independent Auditors' Report
The Partners
Kensignton Place Townhomes,
A Limited Partnership:
We have audited the accompanying balance sheets of Kensignton Place Townhomes, A
Limited Partnership as of December 31, 1997 and 1996, and the related statements
of loss, partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kensignton Place Townhomes, A
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/ KPMG Peat Marwick LLP
February 16, 1998
<PAGE>
Cobblestone Place Townhomes,
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP 303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
Independent Auditors' Report
The Partners
Cobblestone Place Townhomes,
A Limited Partnership:
We have audited the accompanying balance sheets of Cobblestone Place Townhomes,
A Limited Partnership as of December 31, 1998 and 1997, and the related
statements of loss, partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 Cobblestone Place Townhomes, A
Limited Partnership as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
February 26, 1999
<PAGE>
Cobblestone Place Townhomes
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP 303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
Independent Auditors' Report
The Partners
Cobblestone Place Townhomes,
A Limited Partnership:
We have audited the accompanying balance sheets of Cobblestone Place Townhomes,
A Limited Partnership as of December 31, 1997 and 1996, and the related
statements of loss, partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cobblestone Place Townhomes, A
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/ KPMG Peat Marwick LLP
February 16, 1998
<PAGE>
Whispering Trace Apartments
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP 303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
Independent Auditors' Report
The Partners
Whispering Trace Apartments,
A Limited Partnership:
We have audited the accompanying balance sheets of Whispering Trace Apartments,
A Limited Partnership as of December 31, 1998 and 1997, and the related
statements of loss, partners' capital (deficit), and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whispering Trace Apartments, A
Limited Partnership as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
February 26, 1999
<PAGE>
Whispering Trace Apartments
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP 303 Peachtree Street, N.E.
Suite 2000
Atlanta, GA 30308
Independent Auditors' Report
The Partners
Whispering Trace Apartments,
A Limited Partnership:
We have audited the accompanying balance sheets of Whispering Trace Apartments,
A Limited Partnership as of December 31, 1997 and 1996, and the related
statements of loss, partners' capital (deficit), and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
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 statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Whispering Trace Apartments, A
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/ KPMG Peat Marwick LLP
February 16, 1998
<PAGE>
Huguenot Park Associates, L.P.
[letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS REPORT
To the Partners
Huguenot Park Associates, L.P.
We have audited the accompanying balance sheet of Huguenot Park Associates, L.P.
as of December 31, 1998 and 1997, and the related statements of operations,
partners' capital and cash flows for the years then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial 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 Huguenot Park Associates, L.P.
as of December 31, 1998 and 1997, and the results of its operations, the changes
in partners' capital and cash flows for the year then ended, in conformity with
generally accepted accounting principles.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 20, 1999
<PAGE>
Huguenot Park Associates, L.P.
[letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS REPORT
To the Partners
Huguenot Park Associates, L.P.
We have audited the accompanying balance sheet of Huguenot Park Associates, L.P.
as of December 31, 1997 and 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 Huguenot Park Associates, L.P.
as of December 31, 1997 and 1996, and the results of its operations, the changes
in partners' capital and cash flows for the year then ended, in conformity with
generally accepted accounting principles.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 20, 1998
<PAGE>
Westgate Apartments Limited Partnesrhip
[Letterhead]
[LOGO]
EideBailly LLP
Consultants, Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
The Partners
Westgate Apartments Limited Partnesrhip
Wahpeton, North Dakota
We have audited the accompanying balance sheets of Westgate Apartments Limited
Partnership as of December 31, 1998 and 1997, 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 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 Westgate Apartments Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations,
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/EideBailly LLP
Fargo, North Dakota
January 22, 1999, except for Note 10,
as to which the date is January 25, 1999
<PAGE>
Westgate Apartments Limited Partnesrhip
[Letterhead]
[LOGO]
Charles Bailly & Company P.L.L.P.
INDEPENDENT AUDITOR'S REPORT
The Partners
Westgate Apartments Limited Partnesrhip
Wahpeton, North Dakota
We have audited the accompanying balance sheets of Westagate 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 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 Westgate 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.
/s/Charles Bailly & Company P.L.L.P.
Fargo, North Dakota
January 21, 1998
<PAGE>
Bixel House
[Letterhead]
SUAREZ ACCOUNTANCY CORPORATION
150 W. Seventh Street Suite 100
San Pedro, CA 90731 Richard Suarez, Jr., CPA
Telephone (310) 832-7887
Fax (310) 832-6563
Independent Auditor's Report
To The Partners of
Bixel House
Los Angeles, California
I have audited the accompanying balance sheet of Bixel House as of
December 31, 1998, and the related statements of operations, changes in
partners' capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. 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 position of Bixel House at December 31,
1998, and the results of its operations and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
/s/Suarez Accountancy Corporation
San Pedro, California
February 28, 1999
<PAGE>
Bixel House
[Letterhead]
SUAREZ ACCOUNTANCY CORPORATION
150 W. Seventh Street Suite 100
San Pedro, CA 90731 Richard Suarez, Jr., CPA
Telephone (310) 832-7887
Fax (310) 832-6563
Independent Auditor's Report
To The Partners of
Bixel House
Los Angeles, California
I have audited the accompanying balance sheet of Bixel House as of
December 31, 1997, and the related statements of operations, changes in
partners' capital, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. 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 statements presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bixel House at December 31,
1997, and the results of its operations and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
/s/Suarez Accountancy Corporation
San Pedro, California
January 15, 1998
<PAGE>
Bixel House
[Letterhead]
SUAREZ ACCOUNTANCY CORPORATION
150 W. Seventh Street Suite 100
San Pedro, CA 900731 Richard Suarez
Telephone (310) 832-7887
Fax (310) 832-6563
Independent Auditor's Report
To The Partners of
Bixel House
Los Angeles, California
I have audited the accompanying balance sheet of Bixel House as of
December 31, 1996, and the related statements of operations, changes in
partners' capital, and cash flows for the year then ended. The 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 auditing standards. Those standards
require that I plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statements presentation. I believe that my
audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bixel House at 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/Suarez Accountancy Corporation
Certified Public Accountant
San Pedro, California
February 14, 1997
<PAGE>
Harmony Apartments
[Letterhead]
SUAREZ ACCOUNTANCY CORPORATION
150 W. Seventh Street Suite 100
San Pedro, CA 900731 Richard Suarez
Telephone (310) 832-7887
Fax (310) 832-6563
Independent Auditor's Report
To The Partners of
Harmony Apartments
Los Angeles, California
I have audited the accompanying balance sheet of Harmony Apartments as of
December 31, 1998, and the related statements of operations, changes in
partners' capital, and cash flows for the year ended December 31, 1998. 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 statements presentation.
I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harmony Apartments at
December 31, 1998, and the results of its operations and cash flows for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
/s/Suarez Accountancy Corporation
San Pedro, California
February 28, 1999
<PAGE>
Harmony Apartments
[Letterhead]
SUAREZ ACCOUNTANCY CORPORATION
150 W. Seventh Street Suite 100
San Pedro, CA 900731 Richard Suarez
Telephone (310) 832-7887
Fax (310) 832-6563
Independent Auditor's Report
To The Partners of
Harmony Apartments
Los Angeles, California
I have audited the accompanying balance sheet of Harmony Apartments as of
December 31, 1997, and the related statements of operations, changes in
partners' capital, and cash flows for the year ended December 31, 1997. 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 statements presentation.
I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harmony Apartments at
December 31, 1997, and the results of its operations and cash flows for the year
ended December 31, 1997 in conformity with generally accepted accounting
principles.
/s/Suarez Accountancy Corporation
San Pedro, California
February 11, 1998
<PAGE>
Harmony Apartments
[Letterhead]
SUAREZ ACCOUNTANCY CORPORATION
150 W. Seventh Street Suite 100
San Pedro, CA 900731 Richard Suarez
Telephone (310) 832-7887
Fax (310) 832-6563
Independent Auditor's Report
To The Partners of
Harmony Apartments
Los Angeles, California
I have audited the accompanying balance sheet of Harmony Apartments as of
December 31, 1996, and the related statements of operations, changes in
partners' capital, and cash flows for the year ended December 31, 1996. The
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 auditing standards. Those standards
require that I plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statements presentation. I believe that my
audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harmony Apartments at
December 31, 1996, and the results of its operations and cash flows for the year
ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/Suarez Accountancy Corporation
Certified Public Accountant
San Pedro, California
February 14, 1997
<PAGE>
Schumaker Place Associates, L.P.
[Letterhead]
[LOGO]
Halbert, Katz & Co., P.C.
121 South Broad Street
Philadelphia, Pennsylvania 19107
INDEPENDENT AUDITORS' REPORT
To the Partners
Schumaker Place Associates, L.P.
Wilmington, Delaware
We have audited the accompanying balance sheets of Schumaker Place Associates,
L.P., as of December 31, 1998 and December 31, 1997, 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
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Schumaker Place Associates,
L.P., as of December 31, 1998 and December 31, 1997, and the results of its
operations, changes in partners' capital (capital deficiency) and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
Our audit 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 12) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of
Schumaker Place Associates, L.P. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/Halbert Katz & Co., P.C.
January 29, 1999
<PAGE>
Schumaker Place Associates, L.P.
[Letterhead]
[LOGO]
Halbert, Katz & Co., P.C.
121 South Broad Street
Philadelphia, Pennsylvania 19107
INDEPENDENT AUDITORS' REPORT
To the Partners
Schumaker Place Associates, L.P.
Wilmington, Delaware
We have audited the accompanying balance sheets of Schumaker Place Associates,
L.P., 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
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Schumaker Place Associates,
L.P., as of December 31, 1997 and December 31, 1996, and the results of its
operations, changes in partners' capital (capital deficiency) and its cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
Our audit 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 12) is presented for the purpose of additional
analysis and is not a required part of the basic financial statements of
Schumaker Place Associates, L.P. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/Halbert Katz &Co
January 30, 1998
<PAGE>
Circle Terrace Associates
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Circle Terrace Associates
Limited Partnership
We have audited the accompanying balance sheet of Circle Terrace Associates
Limited Partnership as of December 31, 1998, 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 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 Circle Terrace Associates
Limited Partnership as of December 31, 1998, and the results of its operations,
the changes in partners' equity (deficit) and cash flows for the year then
ended, in conformity with generally accepted accounting principles.
The Housing Assistance Payment contracts covering all 303 units expired on
November 30, 1998 and November 30, 1997. It is uncertain whether HUD will renew
these contracts under terms that are consistent with the successful operations
of the project (see note G).
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 28 through 37
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs", we have also issued reports dated January 20,
1999 on our consideration of Circle Terrace Associates Limited Partnership's
internal control and on its compliance with specific requirements applicable to
Major HUD and DHCD-assisted programs, fair housing and non-discrimination, and
laws and regulations applicable to the financial statements.
/s/Reznick Fedder & Silverman
Bethesda, Maryland Federal Employer
January 20, 1999 Identification Number:
52-1088612
Audit Principal: Lester Kanis
<PAGE>
Circle Terrace Associates
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Circle Terrace Associates
Limited Partnership
We have audited the accompanying balance sheet of Circle Terrace Associates
Limited 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 Circle TerraceAssociates
Limited Partnership as of December 31, 1997, and the results of its operations,
the changes in partners' equity and 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 25 through 37
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited," on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs", we have also issued reports dated January 21,
1998, on our consideration of Circle Terrace Associates Limited Partnership's
internal control and on its compliance with specific requirements applicable to
Major HUD and CDA programs, fair housing and non-discrimination, and laws and
regulations applicable to the financial statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer
January 21, 1998 Identification Number:
52-1088612
Audit Principal: Lester A. Kanis
<PAGE>
Circle Terrace Associates
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Circle Terrace Associates
Limited Partnership
We have audited the accompanying balance sheet of Circle Terrace Associates
Limited Partnership as of December 31, 1996, 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 Circle TerraceAssociates
Limited Partnership as of December 31, 1996, and the results of its operations,
the changes in partners' equity and 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 26 trough 40
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited," on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs", we have also issued reports dated January 18,
1997, on our consideration of Circle Terrace Associates Limited Partnership's
internal control structure and on its compliance with specific requirements
applicable to Major HUD and CDA programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.
/s/Reznick Fedder & Silverman
Baltimore, Maryland Federal Employer
January 14, 1997 Identification Number:
52-1088612
Audit Principal: Lester A. Kanis
<PAGE>
Water Oaks
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS REPORT
To the Partners
Water Oaks Apartments, L.P.
We have audited the accompanying balance sheets of Water Oaks Apartments, L.P.,
RHS Project No. 09-64-581801555 as of December 31, 1998 and 1997 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
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Water Oaks Apartments, L.P.,
RHS Project No. 09-64-581801555 as of December 31, 1998 and 1997, and the
results of its operations, the changes in partners' equity (deficit), 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 supplemental information on pages 16
through 22 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the 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.
In accordance with Government Auditing Standards, we have also issued reports
dated January 28, 1999, on our consideration of Water Oak Apartments, L.P.'s
internal control and on its compliance with laws and regulations applicable to
the financial statements.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 28, 1999
<PAGE>
Water Oaks Apartments
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS REPORT
To the Partners
Water Oaks Apartments, Ltd.
We have audited the accompanying balance sheets of Water Oaks Apartments, L.P.,
RHS Project No. 09-64-581801555 as of December 31, 1997 and 1996 and the related
statements of operations, partners' 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 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 Water Oaks Apartments, L.P.,
RECD Project No. 09-64-581801555 as of December 31, 1997 and 1996, and the
results of its operations, changes in partners' equity and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 15
through 22 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
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 we have also issued reports
dated January 9, 1998, on our consideration of Water Oak Apartments L.P.'s
internal control and on its compliance with laws and regulations applicable to
the financial statements.
/s/Reznick Fedder & Silverman
Atalnta, Georgia
January 9, 1998
<PAGE>
Archer Village
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Archer Village, Ltd.
We have audited the accompanying balance sheets of Archer Village, Ltd., RHS
Project No.: 09-001-267869575, as of December 31, 1998 and 1997, 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
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Archer Village, Ltd., RHS
Project No.: 09-001-267869575 as of December 31, 1998 and 1997, and the results
of its operations, the changes in partners' equity (deficit) 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 supplemental information on pages 16
through 22 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the 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.
In accordance with Government Auditing Standards, we have also issued reports
dated January 28, 1999, on our consideration of Archer Village, Ltd.'s internal
control and its compliance with laws and regulations applicable to the financial
statements.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 28, 1999
<PAGE>
Archer Village
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Archer Village, Ltd.
We have audited the accompanying balance sheets of Archer Village, Ltd., RHS
Project No.: 09-001-267869575 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 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 Archer Village, Ltd., RHS
Project No.: 09-001-267869575 as of December 31, 1997 and 1996, and the results
of its operations, changes in partners' equity and its cash flows for the years
then ended, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 16
through 22 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 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.
In accordance with Government Auditing Standards we have also issued reports
dated January 9, 1998, on our consideration of Archer Village, Ltd.'s internal
control structure and its compliance with laws and regulations applicable to the
financial statements.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 9, 1998
<PAGE>
Ocean View Apartments
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Ocean View Apartments, L.P.
We have audited the accompanying balance sheets of Ocean View Apartments, L.P.,
RHS Project No.: 09-45-581801553, as of December 31, 1998 and 1997, and the
related statements of operations, changes in partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ocean View Apartments, L.P.,
RHS Project No.: 09-45-581801553, as of December 31, 1998 and 1997, and the
results of its operations, the changes in partners' equity (deficit) and 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 supplemental information on pages 16
through 22 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
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 we have also issued reports
dated January 28, 1999 on our consideration of Ocean View Apartments, L.P.'s
internal control structure and on its compliance with laws and regulations
applicable to the financial statements.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 9, 1999
<PAGE>
Ocean View Apartments
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Ocean View Apartments, L.P.
We have audited the accompanying balance sheets of Ocean View Apartments,
L.P.,RHS Project No.: 09-45-581801553, 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 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 Ocean View Apartments, L.P.,
RHS Project No.: 09-45-581801553, as of December 31, 1997 and 1996, and the
results of its operations, the changes in partners' equity and 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 supplemental information on pages 15
through 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
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 we have also issued reports
dated January 9, 1998 on our consideration of Ocean View Apartments, L.P.'s
internal control structure and on its compliance with laws and regulations
applicable to the financial statements.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 9, 1998
<PAGE>
Yester Oaks
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Yester Oaks, L.P.
We have audited the accompanying balance sheets of Yester Oaks, L.P.,RHS Project
No.: 11-046-0581814319, as of December 31, 1998 and 1997, and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Yester Oaks, L.P., RHS Project
No.: 11-046-0581814319 as of December 31, 1998 and 1997, and the results of its
operations, the changes in partners' equity (deficit), 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 supplemental information on pages
16 through 17 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 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.
In accordance with Government Auditing Standards, we have also issued reports
dated January 28, 1999, on our consideration of Yester Oaks L.P.'s internal
control and on its compliance with laws and regulations applicable to the
financial statements.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 28, 1999
<PAGE>
Yester Oaks
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Yester Oaks, L.P.
We have audited the accompanying balance sheets of Yester Oaks, L.P.,RHS Project
No.: 11-046-0581814319, 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 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 Yester Oaks, L.P., RHS Project
No.: 11-046-0581814319 as of December 31, 1997 and 1996, and the results of its
operations, changes in partners' equity and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages
____ through ____ 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 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.
In accordance with Government Auditing Standards, we have also issued reports
dated January 9, 1998, on our consideration of Yester Oaks L.P.'s internal
control and on its compliance with laws and regulations applicable to the
financial statements.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 9, 1998
<PAGE>
HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSH
[letterhead]
Haran & Associates Ltd.
INDEPENDENT AUDITOR'S REPORT
To the Partners
HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP
Detroit, Michigan
We have audited the accompanying balance sheet of HISTORIC NEW CENTER APARTMENTS
LIMITED PARTNERSHIP (a Limited Partnership) as of December 31, 1998, 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.
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 HISTORIC NEW CENTER APARTMENTS
LIMITED PARTNERSHIP as of December 31, 1998, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/Haran & Associates Ltd.
Certified Public Accountants
Wilmette, Illinois
Illnois Certificate No. 060-3097692
February 3, 1999
<PAGE>
HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP
[letterhead]
Haran & Associates Ltd.
INDEPENDENT AUDITOR'S REPORT
To the Partners
HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP
Detroit, Michigan
We have audited the accompanying balance sheet of HISTORIC NEW CENTER APARTMENTS
LIMITED PARTNERSHIP as of December 31, 1997, 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.
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 HISTORIC NEW CENTER APARTMENTS
LIMITED PARTNERSHIP as of December 31, 1997, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/Haran & Associates Ltd.
Certified Public Accountants
Wilmette, Illnois
Illnois Certificate No. 060-3097692
January 29, 1998
<PAGE>
HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP
[letterhead]
Haran & Associates Ltd.
INDEPENDENT AUDITOR'S REPORT
To the Partners
HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP
Detroit, Michigan
We have audited the accompanying balance sheet of HISTORIC NEW CENTER APARTMENTS
LIMITED PARTNERSHIP 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.
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 HISTORIC NEW CENTER APARTMENTS
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.
/s/Haran & Associates Ltd.
Certified Public Accountants
Wilmette, Illnois
Illnois Certificate No. 060-3097692
January 29, 1997
<PAGE>
<PAGE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
CIRCLE TERRACE ASSOCIATES
LIMITED PARTNERSHIP
HUD PROJECT NO.: 052-44056-LDP
DECEMBER 31, 1996
<PAGE>
TABLE OF CONTENTS
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
PAGE
MORTGAGOR'S CERTIFICATION 4
MANAGING AGENT'S CERTIFICATION 5
INDEPENDENT AUDITORS' REPORT 6
FINANCIAL STATEMENTS
BALANCE SHEET 8
STATEMENT OF PROFIT AND LOSS 10
STATEMENT OF PARTNERS' EQUITY 12
STATEMENT OF CASH FLOWS 13
NOTES TO FINANCIAL STATEMENTS 15
SUPPLEMENTAL INFORMATION
ACCOUNTS AND NOTES RECEIVABLE 26
DELINQUENT TENANT ACCOUNTS RECEIVABLE 26
CONTRIBUTIONS DUE 26
MORTGAGE ESCROW DEPOSITS 26
TENANT SECURITY DEPOSITS 27
RESERVE FOR REPLACEMENTS 27
RESIDUAL RECEIPTS 27
PAINTING RESERVE 27
ACCOUNTS PAYABLE 28
ACCRUED TAXES 28
LETTERS OF CREDIT 28
LOANS AND NOTES PAYABLE 28
MORTGAGES PAYABLE 29
<PAGE>
TABLE OF CONTENTS - CONTINUED
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
MORTGAGES PAYABLE FROM SURPLUS CASH 29
COMPENSATION OF PARTNERS 29
UNAUTHORIZED DISTRIBUTIONS OF
PROJECT INCOME TO PARTNERS 29
IDENTITY OF INTEREST COMPANIES AND ACTIVITIES 30
NON-REVENUE PRODUCING UNITS 30
DECLARATION OF OWNERSHIP - UNAUDITED 30
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS 31
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL
RECEIPTS AS OF JUNE 30, 1996 - UNAUDITED 32
SCHEDULE OF FUNDS IN FINANCIAL INSTITUTIONS 33
CHANGES IN FIXED ASSET ACCOUNTS 34
COMPARISON OF BUDGET TO ACTUAL INCOME AND EXPENSES 35
MONTHLY INCOME AND EXPENSE STATEMENT - CASH BASIS 38
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
STRUCTURE 41
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND
CDA PROGRAMS 43
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING 45
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND
REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS 46
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 48
ANNUAL AUDIT QUESTIONNAIRE 49
<PAGE>
December 31, 1996
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
MORTGAGOR'S CERTIFICATION
I hereby certify that I have examined the accompanying financial statements and
supplemental data of Circle Terrace Associates Limited Partnership and, to the
best of my knowledge and belief, the same is complete and accurate.
GENERAL PARTNER
/s/ Judith Siegel 2/24/97
- ---------------------------------------
Judith Siegel Date
Partnership Employer
Identification Number:
05-0461953
<PAGE>
MANAGING AGENT'S CERTIFICATION
I hereby certify that I have examined the accompanying financial statements and
supplemental data of Circle Terrace Associates Limited Partnership and, to the
best of my knowledge and belief, the same is complete and accurate.
MANAGING AGENT
Rental Housing Management
Partnership
- ---------------------------------------
Eric Richelson Date
David Staley Managing Agent Employer
Property Manager Identification Number:
13-3580730
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Circle Terrace Associates
Limited Partnership
We have audited the accompanying balance sheet of Circle Terrace Associates
Limited Partnership as of December 31, 1996, 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 Circle Terrace Associates
Limited Partnership as of December 31, 1996, and the results of its operations,
the changes in partners' equity and 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 26 through 40
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for that portion marked
"unaudited", on which we express no opinion, 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 18,
1997 on our consideration of Circle Terrace Associates Limited Partnership's
internal control structure and on its compliance with specific requirements
applicable to major HUD and CDA programs, affirmative fair housing, and laws and
regulations applicable to the financial statements.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland Federal Employer
January 18, 1997 Identification Number: 52-1088612
Audit Principal: Lester A. Kanis
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
CURRENT ASSETS
1110 Petty cash $ 1,400
1120 Cash in bank 280,303
1121 Cash - partnership 109,693
1130 Tenant accounts receivable 37,113
1131 Accounts receivable - HUD 10,645
1133 Due from affiliates 600
1240 Prepaid property insurance 64,979
-----------------
Total current assets 504,733
DEPOSITS HELD IN TRUST - FUNDED
1191 Tenant security deposits 38,026
RESTRICITED DEPOSITS AND FUNDED RESERVES
1310 Mortgage escrow deposits $ 111,692
1320 Reserve for replacements 390,217
1330 Painting reserve 81,496
---------------
583,405
RENTAL PROPERTY
1410 Land 1,104,269
1420 Buildings and improvements 15,214,660
1440 Building equipment - fixed 34,325
1440 Building equipment - portable 18,164
1460 Furnishings 8,378
--------------
16,379,796
1495 Less accumulated depreciation 2,369,146
-----------
14,010,650
OTHER ASSETS
1901 Mortgage costs, less accumulated
amortization of $71,187 235,733
-----------
$ 15,372,547
===========
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
BALANCE SHEET-Continued
DECEMBER 31, 1996
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
2110 Accounts payable $ 32,827
2130 Accrued interest payable 34,889
2150 Accrued P.I.L.O.T. 32,813
2190 Accrued management fees 22,482
2350 Developer fee payable 34,554
2210 Rent deferred credits 1,793
2320 Current maturities of long term debt 260,332
-------
Total Current Liabilities 419,690
DEPOSITS LIABILITIES
2191 Tenant security deposits (contra) 29,470
LONG TERM LIABILITIES
2320 Long term debt, net of current maturities $ 9,702,438
2335 Accrued interest 81,029
-------------
9,783,467
CONTINGENCY -
3130 PARTNERS' EQUITY 5,139,920
----------
$ 15,372,547
==========
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
STATEMENT OF PROFIT AND LOSS
DECEMBER 31, 1996
<TABLE>
RENTAL INCOME
<S> <C> <C>
5120 Apartments or member carrying charges (Coops) $ 264,754
5121 Tenant assistance payments 2,032,314
5190 Miscellaneous HAP Contract Billing Adjustment 192,753
-------
Total rent revenue potential at 100% occupancy $2,489,821
VACANCIES
5200 Apartments (32,041)
--------------
Total vacancies (32,041)
Net rental revenue 2,457,780
FINANCIAL REVENUE
5410 Interest Income -project operations 25,403
5440 Income from investments - reserve for replacement 2,148
5490 Income from investments - miscellaneous 1,254
-----
Total financial revenue 28,805
OTHER REVENUE
5910 Laundry and vending 12,031
5920 NSF and late charges 3,488
-----
Total other revenue 15,519
---------
Total revenue 2,502,104
---------
</TABLE>
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
STATEMENT OF PROFIT AND LOSS (continued)
DECEMBER 31, 1996
<TABLE>
ADMINISTRATIVE EXPENSES
<S> <C> <C>
6210 Advertising and marketing 7,875
6250 Other renting expenses 3,404
6310 Office salaries 88,713
6311 Office Supplies 41,395
6320 Management fee 130,164
6331 Manager or superintendent rent free unit 7,868
6340 Legal expenses - project 8,991
6350 Auditing expenses - project 9,946
6351 Bookkeeping fees/accounting services 16,368
6360 Telephone and answering services 11,654
6370 Bad debts 1,538
6390 Miscellaneous administrative expenses 22,905
------
Total administrative expenses 350,821
UTILITIES EXPENSE
6450 Electricity 46,261
6451 Water 19,300
6452 Gas 110,539
Total utilities expense 176,100
OPERATING AND MAINTENANCE EXPENSES
6515 Janitor and cleaning supplies 13,469
6517 Janitor and cleaning contract 3,510
6519 Exterminating payroll / contract 2,362
6520 Exterminating supplies 553
6525 Garbage and trash removal 40,836
6530 Security payroll/contract 145,421
6536 Grounds supplies 1,011
6537 Grounds contract 29,930
6540 Repairs payroll 111,325
6541 Repairs material 95,128
6542 Repairs contract 8,567
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
STATEMENT OF PROFIT AND LOSS (continued)
DECEMBER 31, 1996
6546 Heating/cooling repairs and maintenance 9,313
6548 Snow removal 2,801
6560 Decorating payroll contract 11,945
6561 Decorating supplies 8,117
6570 Other 4,042
6590 Miscellaneous operating and maintenance expenses 698
-----------
Total operating and maintenance expenses 489,028
TAXES AND INSURANCE
6710 Real estate taxes 110,225
6711 Payroll taxes (FICA) 35,444
6719 Miscellaneous taxes, licenses and permits 441
6720 Property and liability insurance (Hazard) 92,000
6721 Fidelity bond insurance 934
6722 Workmen's compensation 14,378
6723 Heath insurance and other employee benefits 29,051
------
Total taxes and insurance 282,473
FINANCIAL EXPENSES
6820 Interest on mortgage payable 456,888
6840 Interest on notes payable - short-term 411
6850 Mortgage insurance premium/service charge 47,116
------
Total financial expenses 504,415
DEPRECIATION AND AMORTIZATION
Total cost of operations before depreciation 1,802,837
Profit (Loss) before depreciation 699,267
Depreciation and amortization 578,028
Operating Profit or (Loss) 121,239
CORPORATE OR MORTGAGOR ENTITY EXPENSES
7190 Other (revenue)/expenses (910)
Total corporate expenses (910)
----
Net Profit 122,149
See notes to financial statements =======
</TABLE>
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
STATEMENT OF PARTNER'S EQUITY
DECEMBER 31, 1996
Special Investor
General Limited Limited
Partner Partner Partner Total
Partners' equity,
Beginning $405,549 - $4,802,276 $5,207,825
Distributions (190,054) - - (190,054)
Net Profit 2,211 - 119,938 122,149
--------- ------------- --------- -----------
Partners' equity,
End $ 217,706 - $ 4,922,214 $ 5,139,920
--------- ----------- -----------
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Statement OF CASH FLOWS
DECEMBER 31, 1996
Cash flows from operating activities
Rental income received $ 2,462,268
HAP contract billing adjustment (391,217)
Interest received 28,805
Other income received 15,519
Administrative expenses paid (116,065)
Management fees paid (130,164)
Utilities paid (176,100)
Salaries and wages paid (359,766)
Operating and maintenance paid (217,944)
Real estate taxes paid (127,407)
Payroll taxes paid (35,444)
Property insurance paid (89,115)
Other taxes and insurance paid (29,492)
Interest paid on mortgage (459,610)
Mortgage insurance premium paid (47,116)
Increase in mortgage escrow deposits (3,819)
Mortgagor entity income received, net 910
Net tenant security deposits received 1
--------------
Net cash provided by operating activities 324,244
--------------
Cash flows from investing activities
Deposits to reserve for placement (86,687)
Deposits to painting reserve (41,249)
Investment in rental property (34,554)
-------------
Net cash used in investing activities (162,490)
-------------
Cash flow from financing activities
Mortgage principal payments (242,054)
Payments on note payable (3,434)
Distributions to partners (190,054)
----------------
Net cash used in financing activities (435,542)
NET DECREASE IN CASH (273,788)
Cash, beginning 665,184
Cash, end $ 391,396
===============
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
STATEMENT OF CASH FLOWS (CONTINUED)
DECEMBER 31, 1996
Reconciliation of net profit to net cash
provided by operating activities
Net Profit $ 122,149
Adjustments to reconcile net profit to net cash
provided by operating activities
Depreciation 560,357
Amortization 17,671
Mortgagor entity income, net (910)
Mortgagor entity income received, net 910
Changes in asset and liability accounts
(Increase) decrease in assets
Tenant accounts receivable (29,612)
Accounts receivable H.U.D. 43,462
Prepaid property insurance 18,197
Tenant security deposits - net 1
Mortgage escrow accounts (3,819)
Increase (decrease) in liabilities
Accounts payable 5,138
Accrued payable - other 1,366
Accrued interest payable (2,311)
Accrued P.I.L.O.T. (17,182)
Rent deferred credits 44
HAP contract billing adjustment (391,217)
--------------
Net cash provided by (used in) operating activities $ 324,244
---------
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements
December 31, 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Circle Terrace Associates Limited Partnership was organized under the laws of
the State of Maryland on March 28, 1990, for the purpose of acquiring and
operating a rental housing project under Section 236 of the National Housing
Act. The project consists of 303 units located in Lansdowne, Maryland, and is
currently operating under the name of Circle Terrace Apartments. The property is
managed by an affiliate of the general partner based on a fee of $35.80 per unit
per month.
Cash distributions are limited by agreements between the partnership and the
United States Department of Housing and Urban Development (HUD) to an annual
amount of $30,340 per year to the extent of surplus cash as defined by HUD.
Undistributed amounts are cumulative and may be distributed in subsequent years
if future operations provide surplus cash in excess of current requirements.
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 these regulations during each of 15 consecutive years in order to remain
qualified to receive the credits. In addition, Circle Terrace Associates Limited
Partnership has executed an Extended Low-income Housing Agreement/Land Deed
Restriction/Extended Use Commitment which requires the utilization of the
project pursuant to Section 42 for a minimum of 30 years, even after the
disposition of the project by the partnership.
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.
<PAGE>
Notes to Financial Statements - continued
December 31, 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Rental Property
Rental property is recorded at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives using the straight-line method over a 27.5-year life.
Personal property is recorded at cost and is depreciated over its estimated
service life of 5-7 years using accelerated methods. Improvements are
capitalized, while expenditures for maintenance and repairs are charged to
expense as incurred. Upon disposal of depreciable property, the appropriate
property accounts are reduced by the related costs and accumulated depreciation.
The resulting gains and losses are reflected in the statement of profit and
loss.
Amortization
Mortgage costs are amortized over the term of the respective loan using the
effective interest method.
Provision for Doubtful Accounts
The partnership considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If amounts become
uncollectible, they will be charged to operations upon such determination.
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.
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
tenants of the property are operating leases.
Notes to Financial Statements - continued
December 31, 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments
Investments in U.S. Treasury bills are carried at amortized cost, which
approximates fair market value, and are classified as held to maturity. Such
investments are included in the reserve for replacements in the accompanying
balance sheet.
NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS
The partnership has one general partner - Cooperative Associates Limited
Partnership and two limited partners - SLP, Inc. (the special limited partner)
and Boston Financial Qualified Housing Tax Credits L.P. V, a Limited Partnership
(the investor limited partner). The general partner has made capital
contributions of $413,562. SLP, Inc. is required to make a capital contribution
of $10. The investor limited partner has made capital contributions totaling
$5,615,234.
NOTE C - LONG-TERM DEBT
First Mortgage
The partnership is obligated under the terms of a mortgage note which is insured
by the Federal Housing Administration (FHA) and bears interest at the rate of
7%, less a varying interest subsidy in the current amount of $17,879 per month.
Monthly payments of principal and interest in the reduced amount of $10,564 are
due through maturity in February 2017. The total interest subsidy of $213,447 is
reflected as a reduction of interest expense. Principal and accrued interest due
at December 31, 1996 are $3,682,653 and $3,730, respectively.
Under agreements with the mortgage lender and FHA, the partnership is required
to make monthly escrow deposits for taxes, insurance and replacement of project
assets, and is subject to restrictions as to operating policies, rental charges,
operating expenditures and distributions to partners.
The liability of the partnership under the mortgage note is limited to the
underlying value of the real estate collateral plus other amounts deposited with
the lender.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements - (continued)
December 31, 1996
NOTE C - LONG-TERM DEBT (Continued)
Second Mortgage
The partnership is obligated under the terms of a mortgage note in the original
amount of $4,000,000, which is insured by the Maryland Housing Fund (MHF)
payable to Crestar of Richmond Virginia, Inc. The note bears interest at the
rate of 8%. Monthly payments of principal and interest in the amount of $34,576
are due through maturity in December 2011. Principal and accrued interest due at
December 31, 1996 are $3,614,775 and $24,099, respectively.
The liability of the partnership under the terms of the mortgage is limited to
the underlying value of the real estate collateral plus other amounts deposited
with the lender.
Third Mortgage
The partnership is obligated under the terms of a mortgage note in the original
amount of $2,227,330 payable to the Department of Housing and Community
Development of the State of Maryland (CDA). The note bears interest at 4.5%.
Monthly payments of principal and interest of $11,373 are due through July 1,
2023. Principal and accrued interest due at December 31, 1996 are $2,113,786 and
$7,060, respectively.
The liability of the partnership under the terms of the mortgage is limited to
the underlying value of the real estate collateral.
Promissory Note
The partnership is obligated under the terms of an unsecured promissory note
payable to Baltimore County, Maryland. Interest accrues at the rate of 4%.
Annual interest payments commenced January 1, 1996. Annual payments of principal
will be due commencing January 1, 2000 and will extend for 30 years through
maturity on December 31, 2030. Payments may be made only to the extent of
surplus cash as defined by HUD. Principal and accrued interest due at December
31, 1996 are $550,000 and $81,029, respectively.
Note Payable
The partnership is obligated under the terms of a note payable for the purchase
of a truck. The note bears interest at 11.9% and requires monthly payments of
principal and interest of $320 through maturity in May 1997.
The principal due at December 31, 1996 is $1,556.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements - (continued)
December 31, 1996
NOTE C - LONG-TERM DEBT (Continued)
Note Payable (Continued)
Management believes it is not practicable to estimate the fair value of the
partnership's mortgages and promissory note because programs with similar
characteristics are not currently available to the partnership. The carrying
amount of the note payable for the purchase of the truck approximates fair
value.
Aggregate annual maturities of long-term debt for each of the next five years
are as follows:
- --------------------------------------------- -- ----------------
December 31, 1997 $ 260,332
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
1998 277,639
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
1999 298,056
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2000 320,024
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2001 343,653
- --------------------------------------------- -- ----------------
NOTE D - RELATED PARTY TRANSACTIONS
Working Capital Advances
The general partner is obligated to make working capital advances to the
partnership as needed, up to an aggregate of $100,000. Such advances are
noninterest bearing and can be repaid out of available net cash flow as defined
in the partnership agreement. No such advances were required as of December 31,
1996.
In the event cash flow does not provide sufficient funds to pay the investor
limited partner its minimum distribution, such amount required will be advanced
by the general partner and will be considered a project expense loan.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements - (continued)
December 31, 1996
Note D - Related Party Transactions (continued)
Management Agreement
The property is managed by an affiliate of the general partner. The management
fee is based on a charge of $35.80 per unit per month. The management agent also
receives fees of $4.50 per unit per month for accounting services provided to
the partnership. Management and accounting fees charged to operations during
1996 were $130,164 and $16,368, respectively, of which $22,482 of management fee
is payable at December 31, 1996.
Insurance
The sole shareholder of an affiliate of the general partner provided debt
financing for the capitalization of LaMere Associates, Inc. (LaMere). In
connection with such debt financing, the shareholder received 20% of the stock
of LaMere. LaMere was paid premiums in connection with the following insurance
coverage provided to the partnership: property and liability, fidelity bond and
auto. In connection with such insurance coverage, the partnership incurred
$107,312 in premiums for the year ended December 31, 1996.
Development Fee
Based on final costs of the project and HUD and CDA's approval, an additional
development fee was incurred by the partnership for services rendered by the
general partner in a prior year. The balance payable of such fee as of December
31, 1996 is $34,554 and is payable from partnership cash.
Due from Affiliates
The partnership had advanced $1,570 out of development cash on behalf of two
affiliates of the general partner. Such advances are noninterest bearing and due
on demand. As of December 31, 1996, $600 is due on the advances.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements - (continued)
December 31, 1996
NOTE E - CONTRACT WITH BALTIMORE COUNTY (IN LIEU OF TAXES)
Computer Services
In accordance with HUD Regulations 4381.5 Rev-2, Paragraph 6.38, the partnership
uses the services of a computer consultant company to provide the following
services: purchase and install personal computers and the related equipment and
software for the project's rental office; provide training and technical
support, and consult on software upgrades. Dynamic Information Services, Inc.
(DIS), which is owned by a relative of an officer of the management company, is
a licensed representative of Project Data Systems, Inc., a nationally known
provider of computer system software for the subsidized housing industry. DIS
derives 40% of its consulting service revenues from third-party clients not
affiliated with the management company. In 1996, the partnership paid DIS $2,174
for equipment and software, representing actual cost, and $1,697 for technical
support and training services based on billable hours.
The partnership has entered into an agreement with Baltimore County, Maryland,
whereby the partnership is to pay the County $162.50 per apartment unit per year
(the minimum payment) in lieu of real estate taxes. To the extent there is net
cash flow, as defined in the agreement, such amount is to be applied toward
additional payments. The minimum payment has been increased 10% annually. The
amount incurred during 1996 under the terms of this agreement was $53,025 of
which $32,813 is unpaid at December 31, 1996. This amount is included with other
city and county real estate taxes in the statement of profit and loss.
NOTE F - HOUSING ASSISTANCE PAYMENT (HAP) CONTRACT AGREEMENTS
HUD has contracted with the partnership under the United States Housing Act of
1937 to make housing assistance payments to the partnership on behalf of
qualified tenants. The terms of the contract covering 142 units expires on
November 30, 1998 and the contract covering 161 units expires on November 30,
1997. The contracts do not have renewal options.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements - (continued)
December 31, 1996
NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
All profits and losses are allocated 1% to the general partner and 99% to the
investor limited partner.
Cash flow, as defined in the partnership agreement, is to be distributed as
follows:
1. 99% to the investor limited partner and 1% to the general partner until the
investor limited partner has received distributions, in the aggregate, equal to
the cumulative priority distribution.
2. To the repayment of any project expense loans.
3. To the general partner until it has received cumulatively an amount equal to
the cumulative amount paid to the investor limited partner as defined above.
4. 50% to the general partner and 50% to the investor limited partner.
Gain, if any, from a sale, exchange or other disposition is allocable as
follows:
1. To all partners having negative balances in their capital accounts prior to
the distribution of any sale or refinancing proceeds, an amount of such gain to
increase their negative balance to zero.
2. To each partner until the positive capital account balance is equal to the
amount of cash available for distribution as a result of the transaction, as
defined in the partnership agreement.
Loss from a sale is allocable as follows:
1. To the partners in proportion to their positive capital account balances. In
the event the loss is less than the sum of the positive capital accounts, the
loss is to be allocated such that the resulting capital account balance is as
near as possible to the amount of cash to be distributed as a result of the
transaction.
2. 1% to the general partner and 99% to the investor limited partner.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements - (continued)
December 31, 1996
NOTE H - TAXABLE LOSS
A reconciliation of the financial statement net profit to the income tax net
loss of the partnership for the year ended December 31, 1996 is as follows:
----------------------------------------------------------------------
Financial statement net profit $ 122,149
----------------------------------------------------------------------
----------------------------------------------------------------------
Reduction in rents received in advance, net (391,219)
----------------------------------------------------------------------
----------------------------------------------------------------------
Excess depreciation for income tax purposes (6,393)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Income net tax loss $ (275,463)
----------------------------------------------------------------------
NOTE I - INVESTMENT IN REAL ESTATE
A reconciliation of the basis of the investment in real estate for financial
reporting purposes to that for income tax purposes as of December 31, 1996 is as
follows:
----------------------------------------------------------------------
Investment in real estate for financial reporting $ 14,010,650
----------------------------------------------------------------------
----------------------------------------------------------------------
Excess accumulated depreciation for income tax purposes (45,094)
----------------------------------------------------------------------
----------------------------------------------------------------------
Interest expense portion of subsidy capitalized for
income tax purposes 177,337
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Investment in real estate for income tax purposes $ 14,142,893
----------------------------------------------------------------------
NOTE J - CONCENTRATION OF CREDIT RISK
The partnership maintains its cash balances in several banks. The balances are
insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 by
the banks. As of December 31, 1996, the uninsured portion of the cash balances
held at one bank was $172,788.
NOTE K - CONTINGENCY
The partnership has two HAP contracts which provide rental assistance for 303
units. One of the contracts covering 161 units is due to expire on November 30,
1997. No extension to this contract has been granted by HUD as of January 18,
1997. Payments received under this contract represent a significant portion of
the partnership's revenue. Management's plan is to apply for an extension with
HUD during 1997 to obtain an additional term for the HAP contract.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Notes to Financial Statements - (continued)
December 31, 1996
NOTE K - CONTINGENCY (Continued)
The partnership'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 capital contributed by the
investor limited partner.
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
SUPPLEMENTAL INFORMATION
SUPPORTING DATA REQUIRED BY HUD
December 31, 1996
ACCOUNTS AND NOTES RECEIVABLE (OTHER THAN FROM REGULAR TENANTS)
<TABLE>
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Name of borrower Original Interest Terms Original amount Balance due
date rate
------------------------------------------------------- ----------------------------------------------------
------------------------------------------------------- ----------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
General partner 1993 N/A Demand $ 1,570 $ 600
affiliates
--------------------------------------------------------------------------------------------------------------
</TABLE>
DELINQUENT TENANT ACCOUNTS RECEIVABLE
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------
Number of Amount
tenants past due
----------------------------------
----------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 30 days 51 $ 6,080
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 31-60 days 36 1,761
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 61-90 days 28 7,731
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent over 90 days 46 21,541
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
161 $ 37,113
---------------------------------------------------------------------------------------------------------------
CONTRIBUTIONS DUE
---------------------------------------------------------------------------------------------------------------
SLP, Inc. $ 10
---------------------------------------------------------------------------------------------------------------
MORTGAGE ESCROW DEPOSITS
---------------------------------------------------------------------------------------------------------------
Estimated amount required as of December 31, 1996, for future payment of:
City, state and county taxes (P.I.L.O.T) $ 35,367
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Property insurance 40,434
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Mortgage insurance 22,568
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
98,369
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Amount on deposit in excess of estimated requirements 13,323
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Total confirmed by mortgagee $ 111,692
---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD
December 31, 1996
TENANT SECURITY DEPOSITS
Tenant security deposits are held in a separate bank account in the name of the
project.
RESERVE FOR REPLACEMENTS
In accordance with the provisions of the regulatory agreement, restricted cash
is held by Mellon Mortgage Company to be used for replacement of property with
the approval of HUD as follows:
<TABLE>
<S> <C>
---------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ 303,529
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Monthly deposits
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
$7,045 x 12 84,540
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Interest earned 2,148
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------- ---
-------------------------------------------------------------------------- ---
Balance at December 31, 1996 $ 390,217
confirmed by mortgagee
-------------------------------------------------------------------------- --------------------
</TABLE>
RESIDUAL RECEIPTS
NONE
PAINTING RESERVE
The partnership has established a reserve for painting of the property. The
restricted cash is held by the partnership.
<TABLE>
<S> <C>
---------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ 40,246
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Monthly deposits
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
$3,333 x 12 39,996
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Interest earned 1,254
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------- ---
-------------------------------------------------------------------------- ---
Balance at December 31, 1996 $ 81,496
-------------------------------------------------------------------------- --------------------
</TABLE>
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD
December 31, 1996
ACCOUNTS PAYABLE (OTHER THAN TRADE CREDITORS)
NONE
ACCRUED TAXES
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Description of tax Basis for accrual Period covered Date due Amount accrued
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Baltimore County, Maryland P.I.L.O.T. 1996 12/31/96 $ 32,813
P.I.L.O.T.
--------------------------------------------------------------------------------------------------------------
</TABLE>
LETTERS OF CREDIT
NONE
LOANS AND NOTES PAYABLE (OTHER THAN THE INSURED MORTGAGE)
<TABLE>
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Creditor Interest Collateral Date incurred Terms Original amount Balance due
rate
-------------------------------------------------------------------------------- ----------------- ----------------
-------------------------------------------------------------------------------- ----------------- ----------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
GMAC 11.9% Truck 7/92 5 yr $ 14,437 $ 1,556
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Crestar of 8% Second trust 12/91 20 yr $ 4,000,000 $ 3,614,775
Richmond,
Virginia, Inc.
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
State of 4.5% Third trust 12/91 20 yr $ 2,227,330 $ 2,113,786
Maryland CDA
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Baltimore 4.0% Unsecured 11/90 40 yr $ 550,000 $ 550,000
County, Maryland
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD
December 31, 1996
MORTGAGES PAYABLE
---------------------------------------------------------------------------
Creditor Address of creditor
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
HUD Washington, D.C.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Crestar of Richmond, Virginia, Inc. Richmond, Virginia
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Department of Housing and Community Crownsville, Maryland
Development of the State of Maryland
---------------------------------------------------------------------------
Servicer Address of servicer
Mellon Mortgage Company Cleveland, Ohio
Crestar of Richmond, Virginia, Inc. Richmond, Virginia
Bogman, Inc. Bethesda, Maryland
MORTGAGES PAYABLE FROM SURPLUS CASH
NONE
COMPENSATION OF PARTNERS
NONE
UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS
NONE
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD
December 31, 1996
<TABLE>
IDENTITY OF INTEREST COMPANIES AND ACTIVITIES
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Company name Services rendered Amount paid Amount payable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Rental Housing Management $ 130,164 $ 22,482
Partnership
Property management
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Rental Housing Management $ 16,368 $ -
Partnership
Accounting fees
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
LaMere Associates, Inc. $ 107,312 $ -
Insurance coverage
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Dynamic Information Equipment, software, technical support $ 3,871 $ -
Services, Inc. and training services
--------------------------------------------------------------------------------------------------------------
NON-REVENUE PRODUCING UNITS
------------------------------------------------------------------------------------------------------------
Name of occupant Connection with project
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Willfred Chatterton Assistant Supervisor
------------------------------------------------------------------------------------------------------------
DECLARATION OF OWNERSHIP - UNAUDITED
----------------------------------------------------------------------------------------------------------------
Type of partner Name of partner Capital Ownership
contributed percentage
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
General Partner Cooperative Associates Limited $ 1 1%
Partnership
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Special Limited Partner SLP, Inc. $ 0 0%
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Limited Partner Boston Financial Qualified Housing $ 5,615,234 $ 99%
Partnership
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD
December 31, 1996
SCHEDULE OF FUNDS IN FINANCIAL INSTITUTIONS
<TABLE>
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Funds held by mortgagor, operating accounts
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
1. Citibank N.A., checking $ 8,043
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
2. Citibank N.A., money market 2.5% 38,175
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
3. Bank of New York, money market, 2.6% 22,968
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
4. Chase Manhattan Bank, money market, 2.6% 1,200
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
5. NationsBank, checking 3,737
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
6. Chemical Bank, money market, 2.75% 43,085
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
7. Fleet Bank, nominee checking 163,095
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Total 280,303
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Funds held by mortgagor, development account
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
1. Fleet Bank, checking 4.6% 109,693
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Funds held by mortgagor, in trust - tenant security deposits
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
1. Citibank N.A., checking, 1.00% 38,026
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Funds held by mortgagor, in trust - painting reserve
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
1. Nat West Savings Bank, savings, 2.75% 81,496
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Total funds held by mortgagor 509,518
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Funds held by mortgagee, (in trust)
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
1. Tax and insurance escrow, Chemical Mortgage Company 66,188
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
2. Reserve for replacements, Chemical Mortgage Company
Money market account 3.67% 390,217
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
3. MIP reserve, Crestar of Richmond, Virginia, Inc. 45,504
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Total funds held by mortgagee 501,909
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Total funds in financial institutions $ 1,011,427
---------------------------------------------------------------------------------------------------------------
</TABLE>
The amounts above have been confirmed Fleet Bank on January 5, 1997.
Crestar of Richmond, Virginia, Inc. on January 5, 1997
Mellon Mortgage Company on January 15, 1997
all cash accounts held by mortgagor have been agreed to December 1996
bank statement.
<PAGE>
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates Limited
Partnership as of and for the year ended December 31, 1996, and have issued our
report thereon dated January 18, 1997. We have also audited Circle Terrace
Associates Limited Partnership's compliance with requirements applicable to
major HUD-assisted and CDA programs and have issued our report thereon dated
January 18, 1997.
We conducted our audits in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General of
the United States; the "Consolidated Audit Guide for Audits of HUD Programs"
(the Guide), issued by the U.S. Department of Housing and Urban Development,
Office of Inspector General in July 1993; and the Maryland Department of Housing
and Community Development, Community Development Audit Guide dated October 1996.
Those standards and the two guides require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement and about whether Circle Terrace Associates Limited
Partnership complied with laws and regulations, noncompliance with which would
be material to a major HUD-assisted and CDA program.
The management of the partnership is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of internal control structure policies and
procedures. The objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, that transactions
are executed in accordance with management's authorization and recorded properly
to permit the preparation of financial statements in accordance with generally
accepted accounting principles, and that HUD-assisted and CDA programs are
managed in compliance with applicable laws and regulations. Because of inherent
limitations in any internal control structure, errors, irregularities or
instances of noncompliance may nevertheless occur and not be detected. Also,
projection of any evaluation of the structure to future periods is subject to
the risk that procedures may become inadequate because of changes in conditions
or that the effectiveness of the design and operation of policies and procedures
may deteriorate.
<PAGE>
In planning and performing our audits of the partnership for the year ended
December 31, 1996, we obtained an understanding of the design of the relevant
internal control structure policies and procedures and determined whether they
have been placed in operation, and we assessed control risk in order to
determine our auditing procedures for the purpose of expressing our opinions on
the partnership's financial statements and on its compliance with specific
requirements applicable to major HUD-assisted and CDA programs and to report on
the internal control structure in accordance with the provisions of the Guide
and not to provide an opinion on the internal control structure.
We performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of internal control structure policies
and procedures that we considered relevant to preventing or detecting material
noncompliance with specific requirements that are applicable to the
partnership's HUD-assisted and CDA programs. Our procedures were less in scope
than would be necessary to render an opinion on these internal control structure
policies and procedures. Accordingly, we do not express such an opinion.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by The American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control structure elements does not
reduce to a relatively low level the risk that errors, irregularities or
instances of noncompliance with laws and regulations in amounts that would be
material in relation to the financial statements being audited or a HUD-assisted
and CDA program may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We noted
no matters involving the internal control structure and its operation that we
consider to be material weaknesses as defined above.
This report is intended for the information of the audit committee, management,
and the Department of Housing and Urban Development and the Maryland Department
of Housing and Community Development Administration. However, this report is a
matter of public record and its distribution is not limited.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 18, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
COMPLIANCE WITH SPECIFIC REQUIREMENTS
APPLICABLE TO MAJOR HUD AND CDA PROGRAMS
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates Limited
Partnership as of and for the year ended December 31, 1996, and have issued our
report thereon dated January 18, 1997.
We have also audited Circle Terrace Associates Limited Partnership's compliance
with the specific program requirements governing federal financial reports;
mortgage status; replacement reserve; residual receipts; security deposits; cash
receipts and disbursements; distributions to owners; tenant application,
eligibility, and recertification; and management functions that are applicable
to its major HUD-assisted and CDA programs for the year ended December 31, 1996.
The management of Circle Terrace Associates Limited Partnership is responsible
for compliance with those requirements. Our responsibility is to express an
opinion on compliance with those requirements based on our audit.
We conducted our audit of compliance with specific program requirements in
accordance with generally accepted auditing standards, Government Auditing
Standards, issued by the Comptroller General of the United States; the
"Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the
U.S. Department of Housing and Urban Development, Office of Inspector General in
July 1993; and the Maryland Department of Housing and Community Development,
Community Development Audit Guide dated October 1996. Those standards and the
two guides require that we plan and perform the audit to obtain reasonable
assurance about whether material noncompliance with the requirements referred to
above occurred. An audit includes examining, on a test basis, evidence about
Circle Terrace Associates Limited Partnership's compliance with those
requirements. We believe that our audit provides a reasonable basis for our
opinion.
<PAGE>
The results of our audit procedures disclosed an immaterial instance of
noncompliance with the requirements referred to above, which is described in the
accompanying Schedule of Findings and Questioned Costs. We considered this
instance of noncompliance in forming our opinion on compliance, which is
expressed in the following paragraph.
In our opinion, Circle Terrace Associates Limited Partnership complied, in all
material respects, with the specific program requirements that are applicable to
its major HUD-assisted and CDA programs for the year ended December 31, 1996.
This report is intended for the information of the audit committee, management,
the Department of Housing and Urban Development and the Maryland Department of
Housing and Community Development Administration. However, this report is a
matter of public record and its distribution is not limited.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 18, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH SPECIFIC REQUIREMENTS APPLICABLE TO
AFFIRMATIVE FAIR HOUSING
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates Limited
Partnership as of and for the year ended December 31, 1996, and have issued our
report thereon dated January 18, 1997. We have also audited Circle Terrace
Associates Limited Partnership's compliance with requirements applicable to
major HUD-assisted and CDA programs and have issued our report thereon dated
January 18, 1997.
We have applied procedures to test Circle Terrace Associates Limited
Partnership's compliance with the Affirmative Fair Housing requirements
applicable to its HUD-assisted and CDA programs for the year ended December 31,
1996.
Our procedures were limited to the applicable procedures described in the
"Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the
U.S. Department of Housing and Urban Development, Office of Inspector General in
July 1993 and the Maryland Department of Housing and Community Development,
Community Development Audit Guide dated October 1996. Our procedures were
substantially less in scope than an audit, the objective of which is the
expression of an opinion on Circle Terrace Associates Limited Partnership's
compliance with the Affirmative Fair Housing requirements. Accordingly, we do
not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended for the information of the audit committee, management,
the Department of Housing and Urban Development and the Maryland Department of
Housing and Community Development Administration. However, this report is a
matter of public record and its distribution is not limited.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 18, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH LAWS AND REGULATIONS APPLICABLE
TO THE FINANCIAL STATEMENTS
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates Limited
Partnership as of and for the year ended December 31, 1996, and have issued our
report thereon dated January 18, 1997.
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.
Compliance with laws, regulations, contracts, and grants applicable to Circle
Terrace Associates Limited Partnership is the responsibility of Circle Terrace
Associates Limited Partnership's management. As part of obtaining reasonable
assurance about whether the financial statements are free of material
misstatement, we performed tests of Circle Terrace Associates Limited
Partnership's compliance with certain provisions of laws, regulations,
contracts, and grants. However, the objective of our audit of the financial
statements was not to provide an opinion on overall compliance with such
provisions. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are
required to be reported herein under Government Auditing Standards.
However, the results of our tests disclosed a certain immaterial instance of
noncompliance that is described in the accompanying Schedule of Findings and
Questioned Costs. This report is intended for the information of the audit
committee, management, the Department of Housing and Urban Development and the
Maryland Department of Housing and Community Development Administration.
However, this report is a matter of public record and its distribution is not
limited.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 18, 1997
<PAGE>
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
December 31, 1996
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
Finding
In performing our lease tests on the tenant files, we noted the following
findings:
1) One lease did not have the manager's signature.
2) One recertification did not have the manager's signature.
Recommendation
Management should strengthen procedures to ensure that all forms are signed by
the appropriate individuals.
<PAGE>
- 52 -
ANNUAL AUDIT QUESTIONNAIRE
PROJECT NAME Circle Terrace Associates
CDA PROJECT NUMBER 28.04.0010
FISCAL YEAR END 12/31/96
Answers to these questions should be based upon review of procedures and/or an
actual test of transactions. "NO" answers are indicative of an adverse condition
which must be described in the audit report unless the mortgagor has written
permission from DHCD to deviate from the regular mortgage requirements.
<TABLE>
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
EXAMINATION STATUS YES NO N/A WORKING PAPER REFERENCE
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1. Mortgage Status
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
a. Are payments on all mortgages current?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Position 1 X AA-1
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------- ---------------------------------------
- ------------------------------------------------------------------------------------- ---------------------------------------
Position 2 X AA-4
- --------------------------------------------------------------------------------------------- ------------------------------------
- --------------------------------------------------------------------------------------------- ------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Position 3 X AA-2
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Position 4
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Position 5
- --------------------------------------------------------------------------------- -----------------------------------------------
- --------------------------------------------------------------------------------- -----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
b. Has the mortgagor complied with the terms X AA- section
and conditions of the Regulatory Agreement and/or
workout arrangements?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------- --------------------------------------------------------------
- -------------------------------------------------------------- --------------------------------------------------------------
2. Books and Records
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
a. Are a complete set of books and records X common file
maintained in a satisfactory manner?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
b. Does the mortgagor make frequent postings X common file
(at least monthly) to the ledger accounts?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
3. Cash Activities
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
a. Are the cash receipts deposited in the X common file
name of the project in a bank whose deposits are
federally insured?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
b. Are security deposits kept separate and X A-10
apart from all other funds of the project in
an insured institution?
- ---------------------------------------------------------------------- -----------------------------------------------------------
- ---------------------------------------------------------------------- -----------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
c. Does the mortgagor keep sufficient funds X DD-1
in the security deposit account to equal or exceed
the aggregate of all outstanding obligations to the
depositors?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
d. Does the owner or his management agent X common file
have a fidelity bond in an amount at least equal to potential collections
for two months plus the full security deposit liability which provides
coverage for all employees handling assets of the project?
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------
3. Cash Activities (continued)
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
e. Did cash disbursements exclude payments for items listed below:
- ----------------------------------------------------------
- ----------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
I. Legal expenses incurred in the sale of X common file
partnership interest?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------- ---------------------------------------
- ------------------------------------------------------------------------------------- ---------------------------------------
ii. The fee for the preparation of a X
partner's, shareholder's or individual's federal,
state or local income tax returns?
- --------------------------------------------------------------------------------------------- ------------------------------------
- --------------------------------------------------------------------------------------------- ------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
iii. Advice to an owner on tax consequences of X
foreclosure?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
iv. Reimbursement to the owners of affiliates X
while the mortgage is in default, or under
workout arrangements for prior advances, capital
expenditures and/or project acquisition costs?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
v. Letter of credit fees? X
- --------------------------------------------------------------------------------- -----------------------------------------------
- --------------------------------------------------------------------------------- -----------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
f. Were distributions made to, or on behalf X A-8
of, the owners limited to those authorized by the Regulator Agreement or
the distributions in accordance with prior written approval of CDA while
the project was in a "surplus cash" position?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------- --------------------------------------------------------------
- -------------------------------------------------------------- --------------------------------------------------------------
I. Distribution to non-profit mortgagor X
entities or principles may not be permitted by the
Regulatory Agreement.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
ii. The use of rental proceeds to pay for X
costs included in the mortgagor's cost
certification are unauthorized distributions of
project income.
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
iii. Was surplus cash available for payment on
cash flow debt per the Regulatory Agreement and
Note?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
g. Were residual receipts deposited with the X
mortgagee within ninety days
after the close of the mortgagors annual account period?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
h. Were excess rental collections in section X common file
236 project remitted to HUD each month?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
I. Does the mortgagor have a formal X common file
collection policy?
- ---------------------------------------------------------------------- -----------------------------------------------------------
- ---------------------------------------------------------------------- -----------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
j. Is the collection policy enforced? X common file
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
k. Do tenant accounts receivable consist X B-1
exclusively of amounts due from other than employees?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------- ----- ----
- -------------------------------------------------------------- ----- ----
l. Have "write-offs" of tenants' accounts X 21
been less than one percent of the gross rent?
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------- ---- ----- ----
- -------------------------------------------------------------- ---- ----- ----
- -------------------------------------------------------------- ---- ----- ----
- -----------------------------------------------------------------------------------------------------------------------------------
3. Cash Activities (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
m. Are accounts receivable other than X B-2
tenants' receivables composed
exclusively of amounts due from unrelated persons or firms?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
n. Were there indications that payments for X common file
services, supplies or materials were not in excess of amounts
normally paid for such services?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
o. If applicable, were utility allowance X
payments to residents paid on a monthly basis?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------- -------------------------------------------
- --------------------------------------------------------------------------------- -------------------------------------------
4. Management Compensation
- ---------------------------------------------------------- ----- ----
- ---------------------------------------------------------- ----- ----
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
a. Was compensation to the management agent X 20
limited to the amounts prescribed in the
management agreements written or amended?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
5. Rents and Occupancy
- ---------------------------------------------------------- ----- ---- -----
- ---------------------------------------------------------- ----- ---- -----
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
a. Is the gross potential rental income X 10
from apartments equal to or less than that
approved by DHCD?
- ------------------------------------------------------------------------------ ---------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
b. In subsidized projects, are dwelling X common file
unit contract rental rates and Fair Market rental rates in Section 236
projects the same as those approved by DHCD?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------- ------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
6. DHCD/HUD Subsidy Payments (Section 8/RAP Projects Only)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
a. Were the amounts requested from DHCD/ X B-2
HUD adequately supported by the accounting
records?
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
b. Were subsidy payments received recorded X B-2
in the prior proper accounts?
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
CIRCLE TERRACE ASSOCIATES
LIMITED PARTNERSHIP
HUD PROJECT NO.: 052-44056-LDP
CDA PROJECT NO.: 28.04.0010
DECEMBER 31, 1997
<PAGE>
TABLE OF CONTENTS - CONTINUED
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
PAGE
MORTGAGOR'S CERTIFICATION 4
MANAGING AGENT'S CERTIFICATION 5
INDEPENDENT AUDITORS' REPORT 6
FINANCIAL STATEMENTS
BALANCE SHEET 8
STATEMENT OF PROFIT AND LOSS 10
STATEMENT OF PARTNERS' EQUITY 12
STATEMENT OF CASH FLOWS 13
NOTES TO FINANCIAL STATEMENTS 15
SUPPLEMENTAL INFORMATION
ACCOUNTS AND NOTES RECEIVABLE 25
CONTRIBUTIONS DUE 25
MORTGAGE ESCROW DEPOSITS 25
TENANT SECURITY DEPOSITS 26
RESERVE FOR REPLACEMENTS 26
RESIDUAL RECEIPTS 26
PAINTING RESERVE 26
ACCOUNTS PAYABLE 27
ACCRUED TAXES 27
LETTERS OF CREDIT 27
LOANS AND NOTES PAYABLE 27
MORTGAGES PAYABLE 28
MORTGAGES PAYABLE FROM SURPLUS CASH 28
COMPENSATION OF PARTNERS 28
UNAUTHORIZED DISTRIBUTIONS OF
PROJECT INCOME TO PARTNERS 28
IDENTITY OF INTEREST COMPANIES AND ACTIVITIES 29
NON-REVENUE PRODUCING UNITS 29
DECLARATION OF OWNERSHIP - UNAUDITED 29
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS 30
CHANGES IN FIXED ASSET ACCOUNTS 31
COMPARISON OF BUDGET TO ACTUAL INCOME AND EXPENSES 32
MONTHLY INCOME AND EXPENSE STATEMENT - CASH BASIS 35
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL 38
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND
CDA PROGRAMS 40
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO FAIR HOUSING AND
NON-DISCRIMINATION 42
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND
REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS 43
SCHEDULE OF FINDINGS AND QUESTIONED COSTS 45
ANNUAL AUDIT QUESTIONNAIRE 46
<PAGE>
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
MORTGAGOR'S CERTIFICATION
I hereby certify that I have examined the accompanying financial
statements and supplemental data of Circle Terrace Associates Limited
Partnership and, to the best of my knowledge and belief, the same is complete
and accurate.
GENERAL PARTNER
---------------------------------------
Judith Siegel Date
Partnership Employer
Identification Number:
05-0461953
<PAGE>
MANAGING AGENT'S CERTIFICATION
I hereby certify that I have examined the accompanying financial
statements and supplemental data of Circle Terrace Associates Limited
Partnership and, to the best of my knowledge and belief, the same is complete
and accurate.
MANAGING AGENT
Rental Housing Management
Partnership
---------------------------------------
Eric Richelson Date
David Staley Managing Agent Employer
Property Manager Identification Number:
13-3580730
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Circle Terrace Associates
Limited Partnership
We have audited the accompanying balance sheet of Circle Terrace
Associates Limited 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 Circle Terrace
Associates Limited Partnership as of December 31, 1997, and the results of its
operations, the changes in partners' equity and 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 25
through 37 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information, except for
that portion marked "unaudited", on which we express no opinion, 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.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 21, 1998 on our consideration of Circle Terrace Associates Limited
Partnership's internal control and on its compliance with specific requirements
applicable to major HUD and CDA programs, fair housing and non-discrimination,
and laws and regulations applicable to the financial statements.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland Federal Employer
January 21, 1998 Identification Number:
52-1088612
Audit Principal: Lester A. Kanis
<PAGE>
Circle Terrance Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS
1110 Petty cash $ 1,400
1120 Cash in bank 143,737
1121 Cash - partnership 247,311
1130 Tenant accounts receivable 11,720
1131 Accounts receivable - HUD 178,313
1240 Prepaid property insurance 37,733
1250 Prepaid mortgage insurance 16,332
1270 Prepaid real estate taxes 34,169
-----------------
Total current assets 670,715
DEPOSITS HELD IN TRUST - FUNDED
1191 Tenant security deposits 40,834
RESTRICITAD DEPOSITS AND FUNDED RESERVES
1310 Mortgage escrow deposits $ 108,992
1320 Reserve for replacements 486,850
1330 Painting reserve 123,993
---------------
719,835
RENTAL PROPERTY
1410 Land 1,104,269
1420 Buildings and improvements 15,214,660
1440 Building equipment - fixed 34,325
1440 Building equipment - portable 18,164
1450 Personal property 18,440
1460 Furnishings 8,378
--------------
16,398,236
1495 Less accumulated depreciation 2,929,726
-----------
13,468,510
OTHERASSETS
1901 Mortgage costs, less accumulated
amortization of $85,191 221,729
--------
$ 15,121,623
==========
See Notes to Financial Statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
BALANCE SHEET-Continued
DECEMBER 31, 1997
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
2110 Accounts payable $ 23,487
2130 Accrued interest payable 34,763
2150 Accrued P.I.L.O.T. 91,140
2190 Accrued management fees 22,482
2210 Rent deferred credits 675
2320 Current maturities of long term debt 283,526
-------
Total Current Liabilities 456,073
DEPOSITS LIABILITIES
2191 Tenant security deposits (contra) 34,440
LONG TERM LIABILITIES
2320 Long term debt, net of current maturities $ 9,435,867
2335 Accrued interest 103,030
-------------
9,538,897
CONTINGENCY -
3130 PARTNERS' EQUITY 5,092,113
-------------
$15,121,523
=============
See notes to financial statements
<PAGE>
Circle Terrance Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
STATEMENT OF PROFIT AND LOSS
DECEMBER 31, 1997
<TABLE>
RENTAL INCOME
<S> <C> <C>
5120 Apartments or member carrying charges (Coops) $ 305,325
5121 Tenant assistance payments 1,988,739
-------
Total rent revenue potential at 100% occupancy $2,294,064
VACANCIES
5220 Apartments (7,223)
--------------
Total vacancies (7,223)
Net rental revenue 2,286,841
FINANCIAL REVENUE
5410 Interest Income -project operations 6,619
5440 Income from investments - reserve for replacement 12,093
-----
Total financial revenue 18,712
OTHER REVENUE
5910 Laundry and vending 9,482
5920 NSF and late charges 4,117
-----
Total other revenue 13,599
---------
Total revenue 2,319,152
=========
</TABLE>
<PAGE>
STATEMENT OF PROFIT AND LOSS (continued)
DECEMBER 31, 1997
<TABLE>
ADMINISTRATIVE EXPENSES
<S> <C> <C>
6210 Advertising and marketing 8,719
6250 Other renting expenses 5,778
6310 Office salaries 89,954
6311 Office Supplies 26,989
6320 Management fee 130,164
6331 Manager or superintendent rent free unit 7,548
6340 Legal expenses - project 13,711
6350 Auditing expenses - project 9,600
6351 Bookkeeping fees/accounting services 16,368
6360 Telephone and answering services 11,916
6370 Bad debts 4,749
6390 Miscellaneous administrative expenses 23,761
------
Total administrative expenses 349,257
UTILITIES EXPENSE
6450 Electricity 17,224
6451 Water 14,777
6452 Gas 109,333
Total utilities expense 141,334
OPERATING AND MAINTENANCE EXPENSES
6515 Janitor and cleaning supplies 9,387
6517 Janitor and cleaning contract 3,843
6520 Exterminating supplies 734
6525 Garbage and trash removal 38,158
6530 Security payroll/contract 166,940
6536 Grounds supplies 893
6537 Grounds contract 35,980
6540 Repairs payroll 127,205
6541 Repairs material 102,277
6542 Repairs contract 11,242
STATEMENT OF PROFIT AND LOSS (continued)
DECEMBER 31, 1997
6546 Heating/cooling repairs and maintenance 8,406
6548 Snow removal 1,275
6560 Decorating payroll contract 22,135
6561 Decorating supplies 7,557
6570 Other 9,544
6590 Miscellaneous operating and maintenance expenses 236
-----------
Total operating and maintenance expenses 545,812
TAXES AND INSURANCE
6710 Real estate taxes 123,445
6711 Payroll taxes (FICA) 29,527
6719 Miscellaneous taxes, licenses and permits 400
6720 Property and liability insurance (Hazard) 88,162
6721 Fidelity bond insurance 914
6722 Workmen's compensation 11,018
6723 Heath insurance and other employee benefits 28,951
------
Total taxes and insurance 282,417
FINANCIAL EXPENSES
6820 Interest on mortgage payable 435,537
6840 Interest on notes payable - short-term 1,342
6850 Mortgage insurance premium/service charge 45,753
------
Total financial expenses 482,632
DEPRECIATION AND AMORTIZATION
Total cost of operations before depreciation 1,801,452
Profit (Loss) before depreciation 517,700
Depreciation and amortization 574,584
Operating Profit or (Loss) (56,884)
CORPORATE OR MORTGAGOR ENTITY EXPENSES
7190 Other (revenue)/expenses (9,077)
Total corporate expenses (9,077)
----
Net Profit (47,807)
======
</TABLE>
<PAGE>
Circle Terrance Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
STATEMENT OF PARTNER'S EQUITY
DECEMBER 31, 1997
Special Investor
General Limited Limited
Partner Partner Partner Total
Partners' equity,
Beginning $217,706 - $4,922,214 $5,139,920
Net Loss (478) - (47,329) (47,807)
--------- ------------ --------- -----------
Partners' equity,
End $ 217,228 - $ 4,874,885 $ 5,092,113
--------- ----------- -----------
See notes to financial statements
<PAGE>
Statement OF CASH FLOWS
DECEMBER 31, 1997
Cash flows from operating activities
Rental income received $ 2,131,151
Interest received 18,709
Other income received 13,599
Administrative expenses paid (133,228)
Management fees paid (130,164)
Utilities paid (145,670)
Salaries and wages paid (406,234)
Operating and maintenance paid (217,547)
Real estate taxes paid (65,118)
Payroll taxes paid (29,527)
Property insurance paid (124,576)
Other taxes and insurance paid (29,351)
Interest paid on mortgage (413,662)
Interest paid on notes (1,342)
Mortgage insurance premium paid (45,753)
Decrease in mortgage escrow deposits 2,700
Mortgagor entity income received, net 9,077
Net tenant security deposits received 2,163
--------------
Net cash provided by operating activities 435,227
--------------
Cash flows from investing activities
Deposits to reserve for replacement (96,633)
Deposits to painting reserve (42,497)
Payment of developer fees payable (34,554)
Purchase of fixed assets (18,440)
-------------
Net cash used in investing activities (192,124)
-------------
Cash flow from financing activities
Mortgage and note principal payments (261,217)
Proceeds from note payable 17,940
----------------
Net cash used in financing activities (243,277)
NET DECREASE IN CASH (174)
Cash, beginning 392,622
Cash, end $ 392,448
===============
See notes to Financial Statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Circle Terrace Associates Limited Partnership was organized under the laws
of the State of Maryland on March 28, 1990, for the purpose of acquiring and
operating a rental housing project under Section 236 of the National Housing
Act. The project consists of 303 units located in Lansdowne, Maryland, and
is currently operating under the name of Circle Terrace Apartments. The
property is managed by an affiliate of the general partner based on a fee of
$35.80 per unit per month.
Cash distributions are limited by agreements between the partnership and the
United States Department of Housing and Urban Development (HUD) to an annual
amount of $30,340 per year to the extent of surplus cash as defined by HUD.
Undistributed amounts are cumulative and may be distributed in subsequent
years if future operations provide surplus cash in excess of current
requirements.
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 these regulations during each of 15 consecutive years in
order to remain qualified to receive the credits. In addition, Circle
Terrace Associates Limited Partnership has executed an Extended Low-income
Housing Agreement/Land Deed Restriction/Extended Use Commitment which
requires the utilization of the project pursuant to Section 42 for a minimum
of 30 years, even after the disposition of the project by the partnership.
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Rental Property
Rental property is recorded at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives using the straight-line method over a 27.5-year
life. Personal property is recorded at cost and is depreciated over its
estimated service life of 5-7 years using accelerated methods. Improvements
are capitalized, while expenditures for maintenance and repairs are charged
to expense as incurred. Upon disposal of depreciable property, the
appropriate property accounts are reduced by the related costs and
accumulated depreciation. The resulting gains and losses are reflected in
the statement of profit and loss.
Amortization
Mortgage costs are amortized over the term of the respective loan using the
straight-line method.
Provision for Doubtful Accounts
The partnership considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If amounts
become uncollectible, they will be charged to operations upon such
determination.
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.
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
tenants of the property are operating leases.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments
Investments in U.S. Treasury bills are carried at amortized cost, which
approximates fair market value, and are classified as held to maturity. Such
investments are included in the reserve for replacements in the accompanying
balance sheet.
NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS
The partnership has one general partner - Cooperative Associates Limited
Partnership and two limited partners - SLP, Inc. (the special limited
partner) and Boston Financial Qualified Housing Tax Credits L.P. V, a
Limited Partnership (the investor limited partner). The general partner has
made capital contributions of $413,562. SLP, Inc. is required to make a
capital contribution of $10. The investor limited partner has made capital
contributions totaling $5,615,234.
NOTE C - LONG-TERM DEBT
First Mortgage
The partnership is obligated under the terms of a mortgage note which is
insured by the Federal Housing Administration (FHA) and bears interest at
the rate of 7%, less a varying interest subsidy in the current amount of
$17,879 per month. Monthly payments of principal and interest in the reduced
amount of $10,564 are due through maturity in February 2017. The total
interest subsidy of $213,447 is reflected as a reduction of interest
expense. Principal and accrued interest due at December 31, 1997 are
$3,596,386 and $2,897, respectively.
Under agreements with the mortgage lender and FHA, the partnership is
required to make monthly escrow deposits for taxes, insurance and
replacement of project assets, and is subject to restrictions as to
operating policies, rental charges, operating expenditures and distributions
to partners.
The liability of the partnership under the mortgage note is limited to the
underlying value of the real estate collateral plus other amounts deposited
with the lender.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE C - LONG-TERM DEBT (Continued)
Second Mortgage
The partnership is obligated under the terms of a mortgage note in the
original amount of $4,000,000, which is insured by the Maryland Housing Fund
(MHF) payable to Crestar of Richmond, Virginia, Inc. The note bears interest
at the rate of 8%. Monthly payments of principal and interest in the amount
of $34,576 are due through maturity in December 2011. Principal and accrued
interest due at December 31, 1997 are $3,483,497 and $24,099, respectively.
The liability of the partnership under the terms of the mortgage is limited
to the underlying value of the real estate collateral plus other amounts
deposited with the lender.
Third Mortgage
The partnership is obligated under the terms of a mortgage note in the
original amount of $2,227,330 payable to the Department of Housing and
Community Development of the State of Maryland (CDA). The note bears
interest at 4.5%. Monthly payments of principal and interest of $11,373 are
due through July 1, 2023. Principal and accrued interest due at December 31,
1997 are $2,071,870 and $7,767, respectively.
The liability of the partnership under the terms of the mortgage is limited
to the underlying value of the real estate collateral.
Promissory Note
The partnership is obligated under the terms of an unsecured promissory note
payable to Baltimore County, Maryland. Interest accrues at the rate of 4%.
Annual interest payments commenced January 1, 1996. Annual payments of
principal will be due commencing January 1, 2000 and will extend for 30
years through maturity on December 31, 2030. Payments may be made only to
the extent of surplus cash as defined by HUD. Principal and accrued interest
due at December 31, 1997 are $550,000 and $103,030, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE C - LONG-TERM DEBT (Continued)
Note Payable
The partnership is obligated under the terms of a note payable for the
purchase of a truck. The note bears interest at 8.75% and requires monthly
payments of principal and interest of $588 through maturity in October 2000.
The amount payable at December 31, 1997 is $17,640.
Aggregate annual maturities of long-term debt for each of the next five
years are as follows:
- --------------------------------------------- -- ----------------
December 31, 1998 $ 283,526
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
1999 304,471
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2000 325,839
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2001 343,827
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2002 369,264
- --------------------------------------------- -- ----------------
NOTE D - RELATED PARTY TRANSACTIONS
Working Capital Advances
The general partner is obligated to make working capital advances to the
partnership as needed, up to an aggregate of $100,000. Such advances are
noninterest bearing and can be repaid out of available net cash flow as
defined in the partnership agreement. No such advances were required as of
December 31, 1997.
In the event cash flow does not provide sufficient funds to pay the investor
limited partner its minimum distribution, such amount required will be
advanced by the general partner and will be considered a project expense
loan.
Management Agreement
The property is managed by an affiliate of the general partner. The
management fee is based on a charge of $35.80 per unit per month. The
management agent also receives fees of $4.50 per unit per month for
accounting services provided to the partnership. Management and accounting
fees charged to operations during 1997 were $130,164 and $16,368,
respectively, of which $22,482 of management fee is payable at December 31,
1997.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE D - RELATED PARTY TRANSACTIONS (Continued)
Insurance
The sole shareholder of an affiliate of the general partner provided debt
financing for the capitalization of LaMere Associates, Inc. (LaMere). In
connection with such debt financing, the shareholder received 20% of the
stock of LaMere. LaMere was paid premiums in connection with the following
insurance coverage provided to the partnership: property and liability,
fidelity bond and auto. In connection with such insurance coverage, the
partnership incurred $100,094 in premiums for the year ended December 31,
1997.
Computer Services
In accordance with HUD Regulations 4381.5 Rev-2, Paragraph 6.38, the
partnership uses the services of a computer consultant company to provide
the following services: purchase and install personal computers and the
related equipment and software for the project's rental office; provide
training and technical support, and consult on software upgrades. Dynamic
Information Services, Inc. (DIS), which is owned by a relative of an officer
of the management company, is a licensed representative of Project Data
Systems, Inc., a nationally known provider of computer system software for
the subsidized housing industry. DIS derives 40% of its consulting service
revenues from third-party clients not affiliated with the management
company. In 1997, the partnership paid DIS $2,174 for equipment and
software, representing actual cost, and $1,697 for technical support and
training services based on billable hours.
NOTE E - CONTRACT WITH BALTIMORE COUNTY (IN LIEU OF TAXES)
The partnership has entered into an agreement with Baltimore County,
Maryland, whereby the partnership is to pay the County $162.50 per apartment
unit per year (the minimum payment) in lieu of real estate taxes. To the
extent there is net cash flow, as defined in the agreement, such amount is
to be applied toward additional payments. The minimum payment has been
increased 10% annually. The amount incurred during 1997 under the terms of
this agreement was $58,327. This amount is included with other city and
county real estate taxes in the statement of profit and loss. As of December
31, 1997, $91,140 remains payable.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE F - HOUSING ASSISTANCE PAYMENT (HAP) CONTRACT AGREEMENTS
HUD has contracted with the partnership under the United States Housing Act
of 1937 to make housing assistance payments to the partnership on behalf of
qualified tenants. The terms of the contract covering 142 units expires on
November 30, 1998 and the contract covering 161 units expired on November
30, 1997. The contracts do not have renewal options.
With Congressional passage in October 1997 of the Multifamily Assisted
Housing and Reform and Affordability Act (the Act), HUD has been given
budgetary authority to approve requests for one-year renewals on all Section
8 contracts expiring through September 30, 1998. Thus, one of the
partnership's HAP agreements will be eligible for a one-year renewal through
March 31, 1999.
Under provisions of the Act, renewal of Section 8 contracts expiring after
September 30, 1998 are subject to evaluation and assessment under a complex
set of requirements as prescribed by this "mark-to-market" legislation.
Further, implementing regulations by HUD affecting administration over the
renewal process have not been finalized. As a result, it is uncertain
whether HUD will renew these contracts under terms that are consistent with
the successful operation of the project. The project is economically
dependent upon the rental income received from both of its agreements. If
HUD were not to extend either one, the project's operating cash flow would
be adversely affected.
NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
All profits and losses are allocated 1% to the general partner and 99% to
the investor limited partner.
Cash flow, as defined in the partnership agreement, is to be distributed as
follows:
1. 99% to the investor limited partner and 1% to the general partner until
the investor limited partner has received distributions, in the
aggregate, equal to the cumulative priority distribution.
2. To the repayment of any project expense loans.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS (Continued)
3. To the general partner until it has received cumulatively an amount
equal to the cumulative amount paid to the investor limited partner as
defined above.
4. 50% to the general partner and 50% to the investor limited partner.
Gain, if any, from a sale, exchange or other disposition is allocable as
follows:
1. To all partners having negative balances in their capital accounts prior
to the distribution of any sale or refinancing proceeds, an amount of
such gain to increase their negative balance to zero.
2. To each partner until the positive capital account balance is equal to
the amount of cash available for distribution as a result of the
transaction, as defined in the partnership agreement.
Loss from a sale is allocable as follows:
1. To the partners in proportion to their positive capital account
balances. In the event the loss is less than the sum of the positive
capital accounts, the loss is to be allocated such that the resulting
capital account balance is as near as possible to the amount of cash to
be distributed as a result of the transaction.
2. 1% to the general partner and 99% to the investor limited partner.
NOTE H - TAXABLE LOSS
A reconciliation of the financial statement net loss to the income tax net
loss of the partnership for the year ended December 31, 1997 is as follows:
----------------------------------------------------------------------
Financial statement net loss $ (47,807)
----------------------------------------------------------------------
----------------------------------------------------------------------
Excess depreciation for income tax purposes (5,750)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Income net tax loss $ (53,557)
----------------------------------------------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE I - INVESTMENT IN REAL ESTATE
A reconciliation of the basis of the investment in real estate for financial
reporting purposes to that for income tax purposes as of December 31, 1997
is as follows:
- -------------------------------------------------------------------------------
Investment in real estate for financial reporting $ 13,468,510
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Excess accumulated depreciation for income tax purposes (50,844)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Interest expense portion of subsidy capitalized for income tax purposes 177,337
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Investment in real estate for income tax purposes $ 13,595,003
- -------------------------------------------------------------------------------
NOTE J - CONCENTRATION OF CREDIT RISK
The partnership maintains its cash balances in several banks. The balances
are insured by the Federal Deposit Insurance Corporation (FDIC) up to
$100,000 per bank. As of December 31, 1997, the uninsured portion of the
partnership cash balances held at one bank was $147,311.
NOTE K - CONTINGENCY
The partnership'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 capital contributed
by the investor limited partner.
NOTE L - OTHER MORTGAGOR ENTITY EXPENSES (ACCOUNT NO. 7190)
Other mortgagor entity expenses consist of the following:
------------------------------------------------------------------------
Interest income - partnership accounts $ 9,077
------------------------------------------------------------------------
<PAGE>
SUPPLEMENTAL INFORMATION
SUPPORTING DATA REQUIRED BY HUD AND CDA
<PAGE>
SUPPLEMENTAL INFORMATION
SUPPORTING DATA REQUIRED BY HUD AND CDA
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
- 52 -
ACCOUNTS AND NOTES RECEIVABLE (OTHER THAN FROM REGULAR TENANTS)
<TABLE>
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Name of borrower Original date Terms Original amount Balance due
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
U.S. Department of Housing and Oct. - Dec. 1/98 $ 178,313 $ 178,313
Urban Development 1997
---------------------------------------------------------------------------------------------------------------
DELINQUENT TENANT ACCOUNTS RECEIVABLE
---------------------------------------------------------------------------------------------------------------
Number of Amount
tenants past due
----------------------------------
----------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 30 days 56 $ 1,980
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 31-60 days 52 1,807
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 61-90 days 32 2,022
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent over 90 days 49 5,911
----------------------------------------------------------------------------- --------------------
----------------------------------------------------------------------------- --------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
$ 11,720
----------------------------------------------------------------------------- --------------------
CONTRIBUTIONS DUE
---------------------------------------------------------------------------------------------------------------
SLP, Inc. $ 10
---------------------------------------------------------------------------------------------------------------
MORTGAGE ESCROW DEPOSITS
---------------------------------------------------------------------------------------------------------------
Estimated amount required as of December 31, 1997, for future payment of:
---
---
City, state and county taxes (P.I.L.O.T) $ 37,836
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Property insurance 31,915
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Mortgage insurance 13,314
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
83,065
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Amount on deposit in excess of estimated requirements 25,927
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Total confirmed by mortgagee $ 108,992
---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD AND CDA
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
TENANT SECURITY DEPOSITS
Tenant security deposits are held in a separate bank account in the name of
the project.
RESERVE FOR REPLACEMENTS
In accordance with the provisions of the regulatory agreement, restricted
cash is held by Mellon Mortgage Company to be used for replacement of
property with the approval of HUD as follows:
----------------------------------------------------------------------
Balance at December 31, 1996 $ 390,217
----------------------------------------------------------------------
----------------------------------------------------------------------
Monthly deposits
----------------------------------------------------------------------
----------------------------------------------------------------------
$7,045 x 12 84,540
----------------------------------------------------------------------
----------------------------------------------------------------------
Interest earned 12,093
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Balance at December 31, 1997, confirmed by mortgagee $ 486,850
----------------------------------------------------------------------
RESIDUAL RECEIPTS
NONE
PAINTING RESERVE
The partnership has established a reserve for painting of the property. The
restricted cash is held by the partnership.
----------------------------------------------------------------------
Balance at December 31, 1996 $ 81,496
----------------------------------------------------------------------
----------------------------------------------------------------------
Monthly deposits
----------------------------------------------------------------------
----------------------------------------------------------------------
$3,333 x 12 39,996
----------------------------------------------------------------------
----------------------------------------------------------------------
Interest earned 2,501
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Balance at December 31, 1997 $ 123,993
----------------------------------------------------------------------
<PAGE>
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD AND CDA
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
ACCOUNTS PAYABLE (OTHER THAN TRADE CREDITORS)
NONE
<TABLE>
ACCRUED TAXES
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Description of tax Basis for accrual Period covered Date due Amount accrued
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Baltimore County, Maryland P.I.L.O.T. 1997 12/31/97 $ 91,140
P.I.L.O.T.
--------------------------------------------------------------------------------------------------------------
LETTERS OF CREDIT
NONE
LOANS AND NOTES PAYABLE (OTHER THAN THE INSURED MORTGAGE)
---------------------------------------------------------------------------------------------------------------
Creditor Interest Collateral Date Terms Original amount Balance due
rate incurred
-------------------------------------------------------------------------- ----------------- -----------------
-------------------------------------------------------------------------- ----------------- -----------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Crestar of 8% Second trust 12/91 20 yrs 4,000,000 $ 3,483,497
Richmond,
Virginia, Inc.
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
State of Maryland 4.5% Third trust 12/91 20 yrs 2,227,330 $ 2,071,870
CDA
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Baltimore County, 4.0% Unsecured 11/90 40 yrs 550,000 $ 550,000
Maryland
---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD AND CDA
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
MORTGAGES PAYABLE
---------------------------------------------------------------------------
Creditor Address of creditor
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
HUD Washington, D.C.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Crestar of Richmond, Virginia, Inc. Richmond, Virginia
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Department of Housing and Community Crownsville, Maryland
Development of the State of Maryland
---------------------------------------------------------------------------
Servicer Address of servicer
Mellon Mortgage Company Cleveland, Ohio
Crestar of Richmond, Virginia, Inc. Richmond, Virginia
Bogman, Inc. Bethesda, Maryland
MORTGAGES PAYABLE FROM SURPLUS CASH
NONE
COMPENSATION OF PARTNERS
NONE
UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS
NONE
<PAGE>
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD AND CDA
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
IDENTITY OF INTEREST COMPANIES AND ACTIVITIES
<TABLE>
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Company name Services rendered Amount paid Amount payable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Rental Housing Management $ 130,164 $ 22,482
Partnership
Property management
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Rental Housing Management $ 16,368 $ -
Partnership
Accounting fees
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
LaMere Associates, Inc. $ 100,094 $ -
Insurance coverage
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Dynamic Information Equipment, software, technical support $ 3,871 $ -
Services, Inc. and training services
--------------------------------------------------------------------------------------------------------------
NON-REVENUE PRODUCING UNITS
------------------------------------------------------------------------------------------------------------
Name of occupant Connection with project
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Willfred Chatterton Assistant Supervisor
------------------------------------------------------------------------------------------------------------
DECLARATION OF OWNERSHIP - UNAUDITED
----------------------------------------------------------------------------------------------------------------
Type of partner Name of partner Capital Ownership
contributed percentage
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
General Partner Cooperative Associates Limited $ 413,562 1%
Partnership
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Special Limited Partner SLP, Inc. $ 0 0%
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Limited Partner Boston Financial Qualified $ 5,615,234 $ 99%
Housing Partnership
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1997, and have
issued our report thereon dated January 21, 1998. We have also audited Circle
Terrace Associates Limited Partnership's compliance with specific requirements
applicable to major HUD-assisted and CDA programs and have issued our report
thereon dated January 21, 1998.
We conducted our audits in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General of
the United States, the "Consolidated Audit Guide for Audits of HUD Programs"
(the Guide), issued by the U.S. Department of Housing and Urban Development,
Office of the Inspector General and the Maryland Department of Housing and
Community Development, Community Development Administration Audit Guide dated
October 1997. Those standards and the two guides require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement and about whether Circle Terrace
Associates Limited Partnership complied with laws and regulations, noncompliance
with which would be material to major HUD-assisted and CDA programs.
The management of the partnership is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. The objectives of internal control are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, that transactions are executed in
accordance with management's authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted
accounting principles, and that HUD-assisted and CDA programs are managed in
compliance with applicable laws and regulations. Because of inherent limitations
in internal control, errors, fraud or instances of noncompliance may
nevertheless occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that procedures may
become inadequate because of changes in conditions or that the effectiveness of
the design of controls may deteriorate.
<PAGE>
In planning and performing our audits of the partnership for the year
ended December 31, 1997, we obtained an understanding of the design of the
relevant controls and determined whether they have been placed in operation, and
we assessed control risk in order to determine our auditing procedures for the
purpose of expressing our opinions on the partnership's financial statements and
on its compliance with specific requirements applicable to major HUD-assisted
and CDA programs and to report on internal control in accordance with the
provisions of the Guide and not to provide an opinion on internal control.
We performed tests of controls, as required by the Guide, to evaluate
the effectiveness of the design and operation of controls that we considered
relevant to preventing or detecting material noncompliance with specific
requirements that are applicable to the partnership's HUD-assisted and CDA
programs. Our procedures were less in scope than would be necessary to render an
opinion on internal control. Accordingly, we do not express such an opinion.
Our consideration of internal control would not necessarily disclose
all matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public Accountants.
A material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that errors or fraud in amounts that would be material in
relation to the financial statements or that noncompliance with laws and
regulations that would be material to a HUD-assisted or CDA program may occur
and not be detected within a timely period by employees in the normal course of
performing their assigned functions. We noted no matters involving internal
control and its operation that we consider to be material weaknesses as defined
above.
This report is intended for the information of the audit committee,
management, the Department of Housing and Urban Development and the Maryland
Community Development Administration. However, this report is a matter of public
record and its distribution is not limited.
/S/Reznick Fedder & Silverman
Bethesda, Maryland
January 21, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
COMPLIANCE WITH SPECIFIC REQUIREMENTS
APPLICABLE TO MAJOR HUD AND CDA PROGRAMS
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1997, and have
issued our report thereon dated January 21, 1998.
We have also audited Circle Terrace Associates Limited Partnership's
compliance with specific program requirements governing federal financial
reports; mortgage status; replacement reserve; residual receipts; security
deposits; cash receipts and disbursements; distributions to owners; tenant
application, eligibility, and recertification; and management functions that are
applicable to its major HUD-assisted and CDA programs for the year ended
December 31, 1997. The management of Circle Terrace Associates Limited
Partnership is responsible for compliance with those requirements. Our
responsibility is to express an opinion on compliance with those requirements
based on our audit.
We conducted our audit of compliance with specific program requirements
in accordance with generally accepted auditing standards, Government Auditing
Standards, issued by the Comptroller General of the United States, the
"Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the
U.S. Department of Housing and Urban Development, Office of the Inspector
General and the Maryland Department of Housing and Community Development,
Community Development Administration Audit Guide dated October 1997. Those
standards and the two guides require that we plan and perform the audit to
obtain reasonable assurance about whether material noncompliance with the
requirements referred to above occurred. An audit includes examining, on a test
basis, evidence about Circle Terrace Associates Limited Partnership's compliance
with those requirements. We believe that our audit provides a reasonable basis
for our opinion.
The results of our audit procedures disclosed immaterial instances of
noncompliance with the requirements referred to above, which are described in
the accompanying Schedule of Findings and Questioned Costs. We considered these
instances of noncompliance in forming our opinion on compliance, which is
expressed in the following paragraph.
<PAGE>
In our opinion, Circle Terrace Associates Limited Partnership complied,
in all material respects, with the specific program requirements that are
applicable to its major HUD-assisted and CDA programs for the year ended
December 31, 1997.
This report is intended for the information of the audit committee,
management, the Department of Housing and Urban Development and the Maryland
Community Development Administration. However, this report is a matter of public
record and its distribution is not limited.
/S/Reznick Fedder & Silverman
Bethesda, Maryland
January 21, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH SPECIFIC REQUIREMENTS APPLICABLE TO
FAIR HOUSING AND NON-DISCRIMINATION
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1997, and have
issued our report thereon dated January 21, 1998. We have also audited Circle
Terrace Associates Limited Partnership's compliance with specific requirements
applicable to major HUD-assisted and CDA programs and have issued our report
thereon dated January 21, 1998.
We have applied procedures to test Circle Terrace Associates Limited
Partnership's compliance with the Fair Housing and Non-Discrimination
requirements applicable to its HUD-assisted and CDA programs for the year ended
December 31, 1997.
Our procedures were limited to the applicable procedures described in
the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by
the U.S. Department of Housing and Urban Development, Office of the Inspector
General. Our procedures were substantially less in scope than an audit, the
objective of which is the expression of an opinion on Circle Terrace Associates
Limited Partnership's compliance with the Fair Housing and Non-Discrimination
requirements. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that
are required to be reported herein under the Guide.
This report is intended for the information of the audit committee,
management, the Department of Housing and Urban Development and the Maryland
Community Development Administration. However, this report is a matter of public
record and its distribution is not limited.
/S/Reznick Fedder & Silverman
Bethesda, Maryland
January 21, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH LAWS AND REGULATIONS APPLICABLE
TO THE FINANCIAL STATEMENTS
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1997, and have
issued our report thereon dated January 21, 1998.
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.
Compliance with laws, regulations, contracts, and grants applicable to
Circle Terrace Associates Limited Partnership is the responsibility of Circle
Terrace Associates Limited Partnership's management. As part of obtaining
reasonable assurance about whether the financial statements are free of material
misstatement, we performed tests of Circle Terrace Associates Limited
Partnership's compliance with certain provisions of laws, regulations,
contracts, and grants. However, the objective of our audit of the financial
statements was not to provide an opinion on overall compliance with such
provisions. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that
are required to be reported herein under Government Auditing Standards.
However, the results of our tests disclosed certain immaterial
instances of noncompliance that are described in the accompanying Schedule of
Findings and Questioned Costs.
This report is intended for the information of the audit committee,
management, the Department of Housing and Urban Development and the Maryland
Community Development Administration. However, this report is a matter of public
record and its distribution is not limited.
/S/Reznick Fedder & Silverman
Bethesda, Maryland
January 21, 1998
<PAGE>
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
December 31, 1997
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
Finding
In performing our lease tests on the tenant files, we noted the following
findings:
1) One lease did not have the manager's signature.
2) One recertification did not have the manager's signature.
Recommendation
Management should strengthen procedures to ensure that all forms are signed
by the appropriate individuals.
<PAGE>
CLIENT NAME Circle Terrace Apartments
CLOSING DATE December 31, 1997
<TABLE>
ANNUAL AUDIT
QUESTIONNAIRE
CDA PROJECTS
Answers to these questions should be based upon a review of procedures
and/or an actual test of transactions. "NO" answers are indicative of an adverse
condition which must be described in the audit report unless the mortgagor has
written permission from DHCD to deviate from the regular mortgage requirements.
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Examination Item Yes, No or N/A Working
(Not Applicable) Paper
Reference
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1. Mortgage Status
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Are payments on all mortgages current?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 1 Yes AA-2
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 2 Yes AA-3
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 3 Yes AA-3
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 4
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 5
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Has the mortgagor complied with the terms and conditions of the Yes AA
Regulatory Agreement and/or workout arrangements?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
2. Books and Records
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Are a complete set of books and records maintained in a Yes CF
satisfactory manner?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Does the mortgagor make frequent postings (at least monthly) to the Yes CF
ledger accounts?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
3. Cash Activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Are the cash receipts deposited in the name of the project in a Yes CF
bank whose deposits are federally-insured?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Are security deposits kept separate and apart from all other funds Yes A-9
of the project in an insured institution?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
c. Does the mortgagor keep sufficient funds in the security deposit Yes DD-1
account to equal or exceed the aggregate of all outstanding
obligations to the depositors?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
d. Does the owner or his/her management agent have a fidelity bond in Yes CF
an amount at least equal to potential collections for two months
plus the full security deposit liability which provides coverage for
all employees handling assets of the project?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
e. Did cash disbursements exclude payments for items listed below:
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1) Legal expenses incurred in the sale of partnership interest? Yes CF
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
2) The fee for the preparation of a partner's, shareholder's or Yes CF
individual's federal, state or local income tax returns?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
3) Advice to an owner on tax consequences of foreclosure? Yes CF
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
4) Reimbursement to the owners or affiliates while the mortgage N/A
is in default, or under workout arrangements for prior
advances, capital expenditures and/or project acquisition
costs?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
5) Letter of credit fees? N/A
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
f. Were distributions made to, or on behalf of, the owners limited to Yes A-1
those authorized by the Regulatory Agreement or the distributions
in accordance with prior written approval of CDA while the project was
in a "surplus cash" position?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
NOTE
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1) Distribution to nonprofit mortgagor entities or principals may N/A
not be permitted by the Regulatory Agreement.
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
2) The use of rental proceeds to pay for costs included in the N/A
mortgagor's costs certification are unauthorized distributions
of project income.
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
g. Was surplus cash available for payment on cash flow debt for the
Regulatory Agreement and Note?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
h. Were residual receipts deposited with the mortgagee within 90 days N/A
after the close of the mortgagor's annual accounting period?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
i. Were excess rental collections in Section 236 projects remitted to Yes CF
HUD each month?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
j. Does the mortgagor have a formal collection policy? Yes CF
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
k. Is the collection policy enforced? Yes CF
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
l. Do tenant accounts receivable consist exclusively of amounts due Yes B-1
from other than employees?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
m. Have "write-offs" of tenants' accounts been less than 1% of the Yes B-1
gross rent?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
n. Are accounts receivable other than tenants' receivables composed Yes B-2
exclusively of amounts due from unrelated persons or firms?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
o. Were there indications that payments for services, supplies or Yes CF
materials were not in excess of amounts normally paid for such
services?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
p. If applicable, were utility allowance payments to residents paid on N/A
a monthly basis?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
4. Management Compensation
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Was compensation to the management agent limited to the amounts Yes 25
prescribed in the management agreement or amendments thereto?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
5. Rents and Occupancy
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Is the gross potential income from apartments equal to or less than Yes 10
that approved by DHCD?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. In subsidized projects, are dwelling unit contract rental rates and Yes CF
Fair Market rental rates in Section 236 projects the same as those
approved by DHCD?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
6. DHCD/HUD Subsidy Payments (Section 8/RAP Projects Only)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Were the amounts requested from DHCD/HUD adequately supported by Yes B-2
the accounting records?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Were subsidy payments received recorded in the proper accounts? Yes B-2
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
CIRCLE TERRACE ASSOCIATES
LIMITED PARTNERSHIP
HUD PROJECT NO.: 052-44056-LDP
CDA PROJECT NO.: 28.04.0010
DECEMBER 31, 1998
<PAGE>
TABLE OF CONTENTS - CONTINUED
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
PAGE
MORTGAGOR'S CERTIFICATION 5
MANAGEMENT AGENT'S CERTIFICATION 6
INDEPENDENT AUDITORS' REPORT 7
FINANCIAL STATEMENTS
BALANCE SHEET 9
STATEMENT OF OPERATIONS 11
STATEMENT OF PARTNERS' EQUITY (DEFICIT) 14
STATEMENT OF CASH FLOWS 15
NOTES TO FINANCIAL STATEMENTS 17
SUPPLEMENTAL INFORMATION
ACCOUNTS AND NOTES RECEIVABLE 28
DELINQUENT TENANT ACCOUNTS RECEIVABLE 28
CONTRIBUTIONS RECEIVABLE 28
MORTGAGE ESCROW DEPOSITS 29
RESERVE FOR REPLACEMENTS 29
RESIDUAL RECEIPTS RESERVE 29
ACCOUNTS PAYABLE 30
ACCRUED EXPENSES 30
LETTERS OF CREDIT 30
LOANS AND NOTES PAYABLE 31
MORTGAGES PAYABLE 31
MORTGAGES PAYABLE FROM SURPLUS CASH 31
UNAUTHORIZED DISTRIBUTIONS OF
PROJECT INCOME TO PARTNERS 31
IDENTITY OF INTEREST COMPANIES AND ACTIVITIES 32
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND
RESIDUAL RECEIPTS 33
CHANGES IN FIXED ASSET ACCOUNTS 34
DETAIL OF ACCOUNTS - STATEMENT OF OPERATIONS 35
OTHER INFORMATION 37
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL 38
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND
DHCD-ASSISTED PROGRAMS 40
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
SPECIFIC REQUIREMENTS APPLICABLE TO
FAIR HOUSING AND NON-DISCRIMINATION 42
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
LAWS AND REGULATIONS APPLICABLE TO THE
FINANCIAL STATEMENTS 43
ANNUAL AUDIT QUESTIONNAIRE 44
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
December 31, 1998
MORTGAGOR'S CERTIFICATION
I hereby certify that I have examined the accompanying financial
statements and supplemental data of Circle Terrace Associates Limited
Partnership and, to the best of my knowledge and belief, the same is complete
and accurate.
GENERAL PARTNER
/s/Peter Siegel 3/30/99
---------------------------------------
Peter Siegel, Vice President Date
Landex of Maryland, Inc. for Cooperative
Associates Limited Partnership as General
Partner of Circle Terrace Limited Partnership
Partnership Employer
Identification Number:
05-0461953
Telephone Number: (703) 516-6690
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
December 31, 1998
MANAGEMENT AGENT'S CERTIFICATION
I hereby certify that I have examined the accompanying financial
statements and supplemental data of Circle Terrace Associates Limited
Partnership and, to the best of my knowledge and belief, the same is complete
and accurate.
MANAGING AGENT
Rental Housing Management
Partnership
---------------------------------------
Eric Richelson Date
David Staley Managing Agent Employer
Property Manager Identification Number:
13-3580730
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the accompanying balance sheet of Circle Terrace
Associates Limited Partnership as of December 31, 1998, 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 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 Circle Terrace
Associates Limited Partnership as of December 31, 1998, and the results of its
operations, the changes in partners' equity (deficit) and cash flows for the
year then ended, in conformity with generally accepted accounting principles.
The Housing Assistance Payment contracts covering all 303 units expired
on November 30, 1998 and November 30, 1997. It is uncertain whether HUD will
renew these contracts under terms that are consistent with the successful
operations of the project (see note G).
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 28
through 37 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
<PAGE>
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated
Audit Guide for Audits of HUD Programs," we have also issued reports dated
January 20, 1999 on our consideration of Circle Terrace Associates Limited
Partnership's internal control and on its compliance with specific requirements
applicable to major HUD and DHCD-assisted programs, fair housing and
non-discrimination, and laws and regulations applicable to the financial
statements.
/s/Reznick Fedder & Silverman
Bethesda, Maryland Federal Employer
January 20, 1999 Identification Number:
52-1088612
Audit Principal: Lester Kanis
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
CURRENT ASSETS
1120 Cash - Operstions $ 232,306
1125 Cash - Entity 80,337
1130 Tenant accounts receivable 15,651
1135 Accounts receivable - HUD 160,117
1140 Accounts and notes receivable - operations 9,477
1145 Accounts and notes receivable - entity 860
1200 Miscellaneous prepaid expenses 78,039
-------------------
Total current assets 576,787
DEPOSITS HELD IN TRUST - FUNDED
1191 Tenant deposits 42,824
RESTRICITAD DEPOSITS AND FUNDED RESERVES
1310 Escrow deposits 75,274
1320 Reserve for replacements 586,618
1330 Other reserves 233,968
895,860
RENTAL PROPERTY
1410 Land 1,104,269
1420 Buildings 15,271,257
1440 Building and equipment - portable 31,654
1460 Furnishings 8,378
1480 motor vehicles 18,340
1490 Miscellaneous fixed assets 86,167
------
16,520,065
1495 Less accumulated depreciation 3,501,702
---------
13,018,363
OTHERASSETS
1520 Intangible assets, net of accumulated
amortization of $99,195 207,725
-------
14,741,559
==========
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
December 31, 1998
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
2110 Accounts payable 77,228
2121 Accrued payroll taxes payable 178
2123 Accrued management fee payable 22,482
2131 Accrued interest payable - first mortgage 2,393
2132 Accrued interest payable - second mortgage 22,275
2134 Accrued interest payable - other loans/notes 7,603
2160 Notes payable, current maturities 6,257
2170 Mortgage payable - first mortgage, current maturities 99,190
2172 Mortgage payable - second mortgage, current maturities 152,678
2174 Other loans/noted payable, current maturities 46,346
2190 Miscellaneous current liabilities 21,144
2210 Prepaid revenue 2,791
Total Current Liabilities 460,565
DEPOSITS LIABILITY
2191 Tenant deposits held in trust(contra) 39,580
LONG TERM LIABILITIES
2133 Accrued interest payable -
other loans/notes(surplus cash) 103,030
2310 Notes payable, net of current maturities 5,648
2311 Notes payable - surplus cash 550,000
2320 Mortgage payable - first mortgage,
net of current maturities 3,404,737
2322 Mortgage payable - second mortgage,
net of current maturities 3,188,620
2324 Other loans/notes payable,
net of current maturities 1,981,365
9,233,400
CONTINGENCY -
3130 PARTNERS' EQUITY (DEFICIT) 5,008,014
---------
$ 14,741,559
==========
See notes to the Financial Statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
Statement of Operations
December 31, 1998
RENTAL REVENUE
5120 Rent revenue - gross potential $ 335,564
5121 Tenant assistance payments 1,958,686
---------
Total rental revenue $2,294,250
VACANCIES
5220 Apartments (13,871)
5250 Rental concessions (2,830)
-------
Total vacancies (16,701)
Net rental revenue 2,277,549
FINANCIAL REVENUE
5410 Financial revenue - project operations 8,469
5440 Revenue from investment - replacement reserve 15,228
------
Total financial revenue 23,697
OTHER REVENUE
5910 Laundry and vending 12,848
5920 Tenant charges 5,917
5990 Miscellaneous revenue 1,575
-----
Total other revenue 20,340
------
Total revenue 2,321,586
=========
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
December 31, 1998
ADMINISTRATIVE EXPENSES
6210 Advertising and marketing 3,199
6250 Other renting expenses 1,749
6310 Office salaries 136,160
6311Office expenses 49,522
6320 Management fee 130,164
6331 Administrative rent free unit 5,661
6340 Legal expense - project 15,346
6350 Auditing expense 9,600
6351 Bookkeeping fees/accounting service 16,368
6370 Bad debts 10,697
6390 Miscellaneous administrative expenses 43,940
------
Total administrative expenses 422,406
UTILITIES EXPENSE
6450 Electricity 28,145
6451 Water 25,465
6452 Gas 87,218
Total utility expense 140,828
OPERATING AND MAINTENANCE EXPENSES
6510 Payroll 142,202
6515 Supplies 35,595
6520 Contracts 88,217
6525 Garbage and trash removal 32,202
6530 Security payroll/contract 139,709
6546 Heating/cooling repairs and maintenance 13,319
6548 Snow removal 571
6570 Vehicle and maintenance equipment operation and repairs26,639
6590 Miscellaneous operating and maintenance expenses 70,148
------
Total operating and maintenance expenses 548,602
TAXES AND INSURANCE
6710 Real estate taxes 126,078
6711 payroll taxes 26,199
6720 Property and liability insurance 83,542
6723 Heath insurance and other employee benefits 21,323
------
Total taxes and insurance 257,142
FINANCIAL EXPENSES
6820 Interest on mortgage payable 395,638
6830 Interest on notes payable - long-term 1,317
6850 Mortgage insurance premium/service charge 43,848
------
Total financial expenses 440,803
DEPRECIATION AND AMORTIZATION
6600 Depreciation expense 571,976
6610 Amortization expense 14,004
------
Total depreciation and amortization 585,980
CORPORATE OR MORTGAGOR ENTITY REVENUE AND EXPENSES
7140 Interest income (12,945)
7141 Interest on notes payable 22,000
7190 Other (revenue)/expenses 870
---
Total corporate or mortgagor entity revenue and expenses 9,925
-----
Total expenses 2,405,686
---------
Net income (loss) (84,100)
=========
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
Statement of Partner's Equity/Deficit
Year ended December 31, 1998
General partners Limited partners Total
Partners' equity (deficit),
December 31, 1997 $217,228 $4,874,886 $5,092,114
Net income (loss) (841) (83,259) (84,100)
----- ------- --------
Partners' equity (deficit),
December 31, 1998 $ 216,387 $ 4,791,627 $ 5,008,014
--------- ----------- -----------
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
Statement of Cash Flows
Year ended December 31, 1998
Cash flows from operating activities
Rental receipts $ 2,277,573
Interest receipts 23,697
Other operating receipts 10,003
Administrative expenses paid (129,954)
Management fees paid (130,164)
Utilities paid (140,167)
Salaries and wages paid (418,071)
Operating and maintenance paid (222,341)
Real estate taxes paid (216,629)
Property insurance paid (74,523)
Net tenant security deposits received (paid) 3,150
Other operating expenses paid (27,240)
Interest paid on mortgages (397,965)
Interest paid on notes (1,482)
Mortgage insurance premium paid (43,261)
Entity expenses received (paid)
Interest income 12,945
Professional fees (870)
Interest expense (22,000)
--------
Net cash provided by (used in) operating activities 502,701
Cash flows from investing activities
Net withdrawals from mortgage escrows 33,718
Net deposits to reserve for replacements (99,768)
Net deposits to other reserves (109,975)
Net purchases of fixed assets (121,929)
---------
Net cash provided by (used in) investing activities (297,954)
Cash flow from financing activities
Mortgage principal payments (284,552)
---------
Net cash provided by (used in) financing activities (284,552)
---------
NET INCREASE (DECREASE) IN CASH (79,805)
Cash, beginning 392,447
-------
Cash, end $ 312,642
---------------
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
Statement of Cash Flows (continued)
Year ended December 31, 1998
Reconciliation of net income (loss) to net
Cash provided by (used in) operating activities
Net income (loss) $ (84,100)
-------------
Adjustments to reconcile net income (loss) to net
Cash provided by (used in) operating activities
Depreciation 571,976
Amortization 14,004
Changes in asset and liability accounts
(Increase) decrease in assets
Tenant account receivable 3,929
Miscellaneous prepaid expenses 10,195
Tenant security deposits funded (1,990)
Increase (decrease) in liabilities
Accounts payable 65,069
Accrued liabilities (81,146)
Accrued interest payable (2,492)
Tenant security deposits held in trust 5,140
Prepaid revenue 2,116
-----
Total adjustments 586,801
Net cash provided by (used in) operating activities $ 502,701
---------
See notes to financial statements
<PAGE>
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
Notes to Financial Statements
December 31, 1998
NOTE A - ORGANIZATION
Circle Terrace Associates Limited Partnership was organized under the laws
of the State of Maryland on March 28, 1990, for the purpose of acquiring and
operating a rental housing project under Section 236 of the National Housing
Act. The project consists of 303 units located in Lansdowne, Maryland, and
is currently operating under the name of Circle Terrace Apartments.
Cash distributions are limited by agreements between the partnership and the
United States Department of Housing and Urban Development (HUD) to an annual
amount of $30,340 per year to the extent of surplus cash as defined by HUD.
Undistributed amounts are cumulative and may be distributed in subsequent
years if future operations provide surplus cash in excess of current
requirements.
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 these regulations during each of 15 consecutive years in
order to remain qualified to receive the credits. In addition, Circle
Terrace Associates Limited Partnership has executed an Extended Low-income
Housing Agreement/Land Deed Restriction/Extended Use Commitment which
requires the utilization of the project pursuant to Section 42 for a minimum
of 30 years, even after the disposition of the project by the partnership.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Rental Property
Rental property is recorded at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives using the straight-line method over a 27.5-year
life. Personal property is recorded at cost and is depreciated over its
estimated service life of five to seven years using accelerated methods.
Improvements are capitalized, while expenditures for maintenance and repairs
are charged to expense as incurred. Upon disposal of depreciable property,
the appropriate property accounts are reduced by the related costs and
accumulated depreciation. The resulting gains and losses are reflected in
the statement of operations.
Intangible Assets and Amortization
Mortgage costs are amortized over the term of the respective loan using the
effective interest method.
Provision for Doubtful Accounts
The partnership considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If amounts
become uncollectible, they will be charged to operations upon such
determination.
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.
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
tenants of the property are operating leases.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
SFAS No. 121
The partnership has implemented Statement of Financial Accounting Standards
No. 121 - Accounting for the Impairment of Long-Lives Assets which requires
the partnership under certain circumstances to receive long-lived assets to
determine if the carrying value exceeds the fair value. If the carrying
value exceeds the fair value then recorded amounts of the assets will be
reduced to their fair value.
NOTE C - MORTGAGES PAYABLE
First Mortgage
The partnership is obligated under the terms of a mortgage note which is
insured by the Federal Housing Administration (FHA) and bears interest at
the rate of 7%, less a varying interest subsidy in the current amount of
$18,052 per month. Monthly payments of principal and interest in the reduced
amount of $10,564 are due through maturity in February 2017. The total
interest subsidy of $216,628 is reflected as a reduction of interest
expense. Principal and accrued interest due at December 31, 1998 are
$3,503,927 and $2,393, respectively.
Under agreements with the mortgage lender and FHA, the partnership is
required to make monthly escrow deposits for taxes, insurance and
replacement of project assets, and is subject to restrictions as to
operating policies, rental charges, operating expenditures and distributions
to partners.
Second Mortgage
The partnership is obligated under the terms of a mortgage note in the
original amount of $4,000,000, which is insured by the Maryland Housing Fund
(MHF) payable to Crestar of Richmond, Virginia, Inc. The note bears interest
at the rate of 8%. Monthly payments of principal and interest in the amount
of $34,645 are due through maturity in December 2011. Principal and accrued
interest due at December 31, 1998 are $3,341,298 and $22,275, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE C - MORTGAGES PAYABLE (Continued)
Third Mortgage
The partnership is obligated under the terms of a mortgage note in the
original amount of $2,227,330 payable to the Department of Housing and
Community Development of the State of Maryland (CDA). The note bears
interest at 4.5%. Monthly payments of principal and interest of $11,373 are
due through July 1, 2023. Principal and accrued interest due at December 31,
1998 are $2,027,711 and $7,603, respectively.
The liability of the partnership under the terms of all of these mortgages
is limited to the underlying value of the real estate collateral plus
deposits held by the lenders.
Aggregate annual maturities of mortgages payable for each of the next five
years and thereafter are as follows:
- --------------------------------------------- -- ----------------
December 31, 1999 $ 298,214
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2000 318,873
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2001 343,827
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2002 369,264
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2003 396,638
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
Thereafter 7,146,120
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
$ 8,872,936
- --------------------------------------------- -- ----------------
NOTE D - NOTES PAYABLE
The partnership is obligated under the terms of an unsecured promissory note
payable to Baltimore County, Maryland. Interest accrues at the rate of 4%.
Annual interest payments commenced January 1, 1996. Annual payments of
principal will be due commencing January 1, 2000 and will extend for 30
years through maturity on December 31, 2030. Payments may be made only to
the extent of surplus cash as defined by HUD. Principal and accrued interest
due at December 31, 1998 are $550,000 and $103,030, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE D - NOTES PAYABLE (Continued)
The partnership is obligated under the terms of a note payable for the
purchase of a truck. The note bears interest at 8.75% and requires monthly
payments of principal and interest of $588 through maturity in October 2000.
The amount payable at December 31, 1998 is $11,905.
Aggregate annual maturities of notes payable for each of the next five years
and thereafter are as follows:
- --------------------------------------------- -- ----------------
December 31, 1999 $ 6,257
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2000 5,648
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2001 -
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2002 -
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
2003 -
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
Thereafter 550,000
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
- --------------------------------------------- -- ----------------
$ 561,905
- --------------------------------------------- -- ----------------
NOTE E - RELATED PARTY TRANSACTIONS
Working Capital Advances
The general partner is obligated to make working capital advances to the
partnership as needed, up to an aggregate of $100,000. Such advances are
noninterest bearing and can be repaid out of available net cash flow as
defined in the partnership agreement. No such advances were required as of
December 31, 1998.
In the event cash flow does not provide sufficient funds to pay the investor
limited partner its minimum distribution, such amount required will be
advanced by the general partner and will be considered a project expense
loan to be paid from surplus cash after required distributions as defined in
the partnership agreement.
Insurance
The sole shareholder of an affiliate of the general partner provided debt
financing for the capitalization of LaMere Associates, Inc. (LaMere). In
connection with such debt financing, the shareholder received 20% of the
stock of LaMere. LaMere was paid premiums in connection with the following
insurance coverage provided to the partnership: property and liability,
fidelity bond and auto. In connection with such insurance coverage, the
partnership incurred $83,542 in premiums for the year ended December 31,
1998.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE E - RELATED PARTY TRANSACTIONS (Continued)
Shared Project Payroll Costs
The site superintendent was shared with another project in the area and
payroll costs were allocated based on time spent on each project.
Computer Services
In accordance with HUD Regulations 4381.5 Rev-2, Paragraph 6.38, the
partnership uses the services of a computer consultant company to provide
the following services: purchase and install personal computers and the
related equipment and software for the project's rental office; provide
training and technical support, and consult on software upgrades. Dynamic
Information Services, Inc. (DIS), which is owned by a relative of an officer
of the management company, is a licensed representative of Project Data
Systems, Inc., a nationally known provider of computer system software for
the subsidized housing industry. DIS derives 40% of its consulting service
revenues from third-party clients not affiliated with the management
company. In 1998, the partnership paid DIS $1,710 for technical support and
training services based on billable hours.
Laundry Lease
The partnership has entered into a lease agreement with Moonbeam Equipment
and Communications, LLC ("Moonbeam"), an affiliate of the general partner
and management agent, which permits Moonbeam to install coin operated
laundry equipment for use by the tenants.
The partnership retains 55% of the income on the coin operated equipment as
reimbursement of utility and janitorial expenses incurred by the partnership
to maintain the common area laundry facilities; the balance is remitted to
Moonbeam. The lease agreement expires in January 2023 and, among other
terms, states that expenses relating to the maintenance and repair of the
equipment are the obligation of Moonbeam.
Moonbeam earned $9,591 from the proceeds of the laundry room collections
during 1998. As of December 31, 1998, Moonbeam owes the partnership $860 for
maintenance expenses relating to installed equipment, which was paid
subsequent to December 31, 1998.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE G - HOUSING ASSISTANCE PAYMENT (HAP) CONTRACT AGREEMENTS
HUD has contracted with the partnership under the United States Housing Act
of 1937 to make housing assistance payments to the partnership on behalf of
qualified tenants. The terms of the contract covering 142 units expired on
November 30, 1998 and the contract covering 161 units expired on November
30, 1997. The contracts do not have renewal options.
Under the Multifamily Assisted Housing and Reform and Affordability Act
(MAHRAA) of 1997, Congress set forth the legislation for a permanent
"mark-to-market" program and provided for permanent authority for the
renewal of Section 8 contracts. On September 11, 1998, HUD issued an interim
rule to provide clarification of the implementation of the mark-to-market
program. Owners with Section 8 contracts expiring after September 30, 1998
are subject to the provisions of MAHRAA. As such, the partnership may choose
to either opt out of the Section 8 program, request mortgage restructuring
and renewal of the Section 8 contract, or request renewal of the Section 8
contract without mortgage restructuring. Each option contains a specific set
of rules and procedures that must be followed in order to comply with the
requirements of MAHRAA. As of the date of the report, the partnership has
extended both contracts from October 1, 1998 through September 30, 1999.
It is uncertain whether HUD will renew these contracts under terms that are
consistent with the successful operation of the project. The project is
economically dependent upon the rental income received from both of its
agreements. If HUD were not to extend either one, the project's operating
cash flow would be adversely affected.
NOTE H - PARTNERS' CAPITAL CONTRIBUTIONS
The partnership has one general partner - Cooperative Associates Limited
Partnership and two limited partners - SLP, Inc. (the special limited
partner) and Boston Financial Qualified Housing Tax Credits L.P. V, a
Limited Partnership (the investor limited partner). The general partner has
made capital contributions of $413,562. SLP, Inc. is required to make a
capital contribution of $10. The investor limited partner has made capital
contributions totaling $5,615,234.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE I - CONTRACT WITH BALTIMORE COUNTY (IN LIEU OF TAXES)
The partnership has entered into an agreement with Baltimore County,
Maryland, whereby the partnership is to pay the County $162.50 per apartment
unit per year (the minimum payment) in lieu of real estate taxes. To the
extent there is net cash flow, as defined in the agreement, such amount is
to be applied toward additional payments. The minimum payment has been
increased 10% annually. The amount incurred during 1998 under the terms of
this agreement was $58,329. This amount is included with other city and
county real estate taxes in the statement of operations. The County has
advised the partnership that $239,359 is due for additional taxes and
interest applicable to 1992 through 1995 and has placed a lien on the
property. The partnership believes that such payments are not due in
accordance with the P.I.L.O.T. agreement. Such amount has not been recorded
until this matter is resolved.
NOTE J - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
All profits and losses are allocated 1% to the general partner and 99% to
the investor limited partner.
Cash flow, as defined in the partnership agreement, is to be distributed as
follows:
1. 99% to the investor limited partner and 1% to the general partner until
the investor limited partner has received distributions, in the
aggregate, equal to the cumulative priority distribution.
2. To the repayment of any project expense loans.
3. To the general partner until it has received cumulatively an amount
equal to the cumulative amount paid to the investor limited partner as
defined above.
4. 50% to the general partner and 50% to the investor limited partner.
Gain, if any, from a sale, exchange or other disposition is allocable as
follows:
1. To all partners having negative balances in their capital accounts prior
to the distribution of any sale or refinancing proceeds, an amount of
such gain to increase their negative balance to zero.
2. To each partner until the positive capital account balance is equal to
the amount of cash available for distribution as a result of the
transaction, as defined in the partnership agreement.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE J - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS (Continued)
Loss from a sale is allocable as follows:
1. To the partners in proportion to their positive capital account
balances. In the event the loss is less than the sum of the positive
capital accounts, the loss is to be allocated such that the resulting
capital account balance is as near as possible to the amount of cash to
be distributed as a result of the transaction.
2. 1% to the general partner and 99% to the investor limited partner.
NOTE K - TAXABLE LOSS
A reconciliation of the financial statement net loss to the income tax net
loss of the partnership for the year ended December 31, 1998 is as follows:
Financial statement net loss $ (84,100)
Excess depreciation for income tax purposes (13,329)
Prepaid rent 2,791
Income net tax loss $ (94,638)
==================
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
NOTE L - INVESTMENT IN REAL ESTATE
A reconciliation of the basis of the investment in real estate for financial
reporting purposes to that for income tax purposes as of December 31, 1998
is as follows:
Investment in real estate for financial reporting $ 13,018,363
Excess accumulated depreciation for income tax purposes (53,042)
Interest expense portion of subsidy capitalized for
income tax purposes 177,317
Investment in real estate for income tax purposes $ 13,142,638
==================
NOTE M - CONCENTRATION OF CREDIT RISK
The partnership maintains its cash balances and escrow in several banks. The
balances are insured by the Federal Deposit Insurance Corporation (FDIC) up
to $100,000 per bank. As of December 31, 1998, the uninsured portion of the
cash balances held at two banks was $285,780.
NOTE N - CONTINGENCY
The partnership'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 capital contributed
by the investor limited partner.
Baltimore County has advised the partnership that $239,359 is due for
additional taxes and interest applicable to 1992 through 1995 and has placed
a lien on the property. The partnership believes that such payments are not
due in accordance with the P.I.L.O.T agreement. Such amount has not been
recorded until this matter is resolved.
NOTE O - YEAR 2000 ISSUE (UNAUDITED)
The Managing Agent/General Partner has assessed the partnership's exposure
to date sensitive computer software programs that may not be operative
subsequent to 1999 and has implemented a requisite course of action to
minimize Year 2000 risk and ensure that neither significant costs nor
disruption of normal business operations are encountered. However, because
there is no guarantee that all systems of outside vendors or other entities
affecting the partnership's operation will be Year 2000 compliant, the
partnership remains susceptible to consequences of the Year 2000 Issue.
<PAGE>
SUPPLEMENTAL INFORMATION
SUPPORTING DATA REQUIRED BY HUD AND CDA
<PAGE>
SUPPLEMENTAL INFORMATION
SUPPORTING DATA REQUIRED BY HUD AND CDA
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
- 54 -
ACCOUNTS AND NOTES RECEIVABLE (OTHER THAN FROM REGULAR TENANTS)
<TABLE>
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Name of borrower Original date Terms Original amount Balance due
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
U.S. Department of Housing and Oct. - Nov. 1998 Demand $ 160,117 $ 160,117
Urban Development
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Travelers Sept. - Oct. 1998 Demand $ 28,312 $ 9,477
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Moonbeam Dec. 1998 Demand $ 860 $ 860
---------------------------------------------------------------------------------------------------------------
DELINQUENT TENANT ACCOUNTS RECEIVABLE
---------------------------------------------------------------------------------------------------------------
Number of Amount
tenants past due
----------------------------------
----------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 30 days 41 $ 6,775
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 31-60 days 9 1,356
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent 61-90 days 13 2,131
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Delinquent over 90 days 19 5,389
----------------------------------------------------------------------------- --------------------
----------------------------------------------------------------------------- --------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
$ 15,651
----------------------------------------------------------------------------- --------------------
CONTRIBUTIONS RECEIVABLE
---------------------------------------------------------------------------------------------------------------
SLP, Inc. $ 10
---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD AND CDA
December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
MORTGAGE ESCROW DEPOSITS
--------------------------------------------------------------------------
Estimated amount required as of December 31, 1998, for future payment of:
---
---
City, state and county taxes (P.I.L.O.T) $ 38,632
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Property insurance 31,136
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Mortgage insurance 8,826
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
78,594
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Amount on deposit in deficient of estimated requirements (3,320)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Total confirmed by mortgagee $ 75,274
--------------------------------------------------------------------------
RESERVE FOR REPLACEMENTS
In accordance with the provisions of the regulatory agreement, restricted
cash is held by Mellon Mortgage Company to be used for replacement of
property with the approval of HUD as follows:
----------------------------------------------------------------------
Balance at December 31, 1997 $ 486,850
----------------------------------------------------------------------
----------------------------------------------------------------------
Monthly deposits
----------------------------------------------------------------------
----------------------------------------------------------------------
$7,045 x 12 84,540
----------------------------------------------------------------------
----------------------------------------------------------------------
Interest earned 15,228
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
Balance at December 31, 1998, confirmed by mortgagee $ 586,618
----------------------------------------------------------------------
RESIDUAL RECEIPTS RESERVE
NONE
<PAGE>
ACCOUNTS PAYABLE
---------------------------------------------------------------------------
Payable within 30 days $ 77,228
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Payable within 31-60 days -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Payable within 61-90 days -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Payable more than 90 days -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Balance $ 77,228
---------------------------------------------------------------------------
ACCRUED EXPENSES
<TABLE>
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
Description Basis for Owed to Date due Amount accrued
accrual
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Payroll taxes 12/98 F.W.I./FICA 1/99 $ 178
Rental Housing Management
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Management fee 12/98 Management Partnership 1/99 $ 22,482
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Interest - first mortgage 12/98 HUD 1/99 $ 2,393
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Interest - second mortgage 12/98 Crestar Bank 1/99 $ 22,275
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Interest - Baltimore County note 12/98 Baltimore County Surplus cash $ 103,030
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Interest - third mortgage 12/98 State of Maryland 1/99 $ 7,603
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Audit fee 12/98 Reznick, Fedder and 2/99 $ 3,536
Silverman
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Water and sewer 12/98 City of Baltimore 2/99 $ 6,392
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Utility reimbursement 12/98 Tenants 1/99 $ 10,821
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Payroll 12/98 Employees 1/99 $ 395
----------------------------------------------------------------------------------------------------------------
</TABLE>
LETTERS OF CREDIT
NONE
<PAGE>
LOANS AND NOTES PAYABLE (OTHER THAN MORTGAGES)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Creditor Interest Collateral Date incurred Terms Original amount Balance due
rate
----------------------------------------------------------------------- ----------------- -----------------
----------------------------------------------------------------------- ----------------- -----------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Baltimore 4.0% Unsecured 11/90 40 yrs $ 550,000 $ 550,000
County,
Maryland
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
GMAC 8.75% Truck 11/97 3 yrs $ 18,096 $ 11,905
---------------------------------------------------------------------------------------------------------------
MORTGAGES PAYABLE
---------------------------------------------------------------------------------------------------------------
Creditor Terms Original amount Balance due
------------------------------------------------------------------------ ------------------ -----------------
------------------------------------------------------------------------ ------------------ -----------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
HUD $10,564 per month $ 4,034,207 $ 3,503,927
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------- ----
--------------------------------------------------------------------------- ----
Crestar of Richmond, Virginia, Inc. $34,645 per month $ 4,000,000 $ 3,341,298
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------- ----
--------------------------------------------------------------------------- ----
Department of Housing and Community $11,373 per month $ 2,227,330 $ 2,027,711
Development of the State of
Maryland
---------------------------------------------------------------------------------------------------------------
</TABLE>
MORTGAGES PAYABLE FROM SURPLUS CASH
NONE
UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS
NONE
<PAGE>
IDENTITY OF INTEREST COMPANIES AND ACTIVITIES
<TABLE>
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Company name Services rendered Amount paid Amount payable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Rental Housing Management $ 130,164 $ 22,482
Partnership
Property management
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Rental Housing Management $ 16,368 $ -
Partnership
Accounting fees
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
LaMere Associates, Inc. $ 83,542 $ -
Insurance coverage
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Dynamic Information Equipment, software, technical $ 1,710 $ -
Services, Inc. support and training services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Moonsbeam Equipment and Laundry equipment $ 8,731 $ -
Communications, LLC
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SUPPLEMENTAL INFORMATION - CONTINUED
SUPPORTING DATA REQUIRED BY HUD AND CDA
Year ended December 31, 1998
Circle Terrace Associates Limited Partnership
HUD Project No.: 052-44056-LDP
CDA Project No.: 28.04.0010
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS
- -------------------------------------------------------------------------------
Part A - Compute Surplus Cash
---------------------
Cash (Accounts 1120, 1170 and 1191 less 2105) $ 275,130
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Tenant subsidy vouchers due for period covered by financial statements 160,117
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Other (describe in detail) -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total cash 435,247
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Accrued mortgage interest payable 32,271
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Delinquent mortgage principal payments -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Delinquent deposits to reserve for replacements -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Accounts payable (due within 30 days) 77,228
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Loans and notes payable (due within 30 days) -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Deficient tax, insurance or MIP escrow deposits 3,320
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Accrued expenses (not escrowed) 43,804
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Prepaid revenue (Account 2210) 2,791
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Tenant security deposits liability (Account 2191) 39,580
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Other current obligations (describe in detail) -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Contracted maintenance $ 208,950
- -------------------------------------------------------- ----
- ------------------------------------------------------------- ----
Required maintenance 61,410 270,360
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Less total current obligations 469,354
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Surplus cash (deficiency) $ (34,107)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Part B - Compute Distributions to Owners and Required Deposit to
Residual Receipts
Surplus cash $ NONE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Limited dividend projects
---------------------
---------------------
Annual distribution earned during fiscal period covered by the 30,340
statements
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Distribution accrued and unpaid as of the end of the prior fiscal period422,419
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Distributions and entity expenses or paid during fiscal period covered (22,000)
by the statements
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Amount remaining as distribution earned but unpaid 430,759
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Amount available for distribution during next fiscal period $ -
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Deposit due residual receipts reserve $ NONE
- -------------------------------------------------------------------------------
Facsimile form HUD-93486
<PAGE>
CHANGES IN FIXED ASSET ACCOUNTS
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Balance 12/31/97 Additions Deductions Balance 12/31/98
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Land $ 1,104,269 $ - $ - $ 1,104,269
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Buildings 15,248,985 22,272 - 15,271,257
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Building equipment - portable 18,164 13,490 - 31,654
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Furnishings 8,378 - - 8,378
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Motor vehicles 18,340 - 18,340
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Miscellaneous fixed assets - 86,167 - 86,167
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
$ 16,398,136 $ 121,929 $ - $ 16,520,065
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Accumulated depreciation $ 2,929,726 $ 571,976 $ - $ 3,501,702
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
------------------------------------ ---- ---- ----
------------------------------------ ---- ---- ----
Total net book value $ 13,018,363
------------------------------------ ---- ---- ---------------------
</TABLE>
Fixed Asset Detail
Additions to Buildings Account
--------------------------------------------------------------------
Item and quantity Amount
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Railings $ 5,304
--------------------------------------------------------------------
Lighting fixtures 9,373
--------------------------------------------------------------------
Drains 7,595
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
$ 22,272
--------------------------------------------------------------------
<PAGE>
CHANGES IN FIXED ASSET ACCOUNTS (Continued)
Fixed Asset Detail (Continued)
Additions to Building Equipment - Portable Account
--------------------------------------------------------------------
Item and quantity Amount
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Security camera equipment $ 5,750
--------------------------------------------------------------------
--------------------------------------------------------------------
Computer cabinets 7,740
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
$ 13,490
--------------------------------------------------------------------
Additions to Miscellaneous Fixed Assets Account
--------------------------------------------------------------------
Item and quantity Amount
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
Landscaping shrubs, trees $ 33,944
--------------------------------------------------------------------
--------------------------------------------------------------------
Sidewalk replacement 52,223
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
$ 86,167
--------------------------------------------------------------------
DETAIL OF ACCOUNTS - STATEMENT OF OPERATIONS
MISCELLANEOUS ADMINISTRATIVE EXPENSES (ACCOUNT NO. 6390)
-----------------------------------------------------------------------
Payroll preparation $ 1,668
-----------------------------------------------------------------------
-----------------------------------------------------------------------
License and fees 6,516
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Travel 3,129
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Resident services 19,000
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Miscellaneous 13,627
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
$ 43,940
-----------------------------------------------------------------------
<PAGE>
DETAIL OF ACCOUNTS - STATEMENT OF OPERATIONS (Continued)
OTHER OPERATING AND MAINTENANCE EXPENSES (ACCOUNT NO. 6590)
-----------------------------------------------------------------------
Extraordinary repairs $ 2,566
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Alterations and improvements 29,230
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Appliances 11,035
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Carpeting 26,017
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Additional maintenance 1,300
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
$ 70,148
-----------------------------------------------------------------------
<PAGE>
OTHER INFORMATION
---------------------------------------------------------------------------
Total mortgage principal payments required during the audit year
(12 monthly payments). Applies to all direct loans and HUD-held and
fully-insured mortgages. Any HUD-approved second mortgages are
included. $284,552
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total of 12 monthly deposits in the audit year made to the replacement
reserve account, as required by the regulatory agreement, even if payments
are temporarily suspended or reduced. $84,540
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
----------------------------------------------------------------------------
Replacement reserve and residual receipts reserve releases which are
included as expense items on the statement of operations. $ -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Project improvement reserve releases under the flexible subsidy program
which are included as expense items on the statement of operations. $ -
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Mortgage payable note detail (Section 236 only)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Interest reduction payments from subsidy $ 216,628
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Related party transactions detail:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Entity name Amount paid
---------------------------------------------------------------------------
---------------------------------------------------------------------------
----------------------
----------------------
LaMere Associates, Inc. $ 83,542
--------------------------------------
-------------------------------------
----------------------
----------------------
Dynamic Information Systems, Inc. $ 1,710
--------------------------------------
-------------------------------------
----------------------
----------------------
Rental Housing Management Partnership $ 16,368
-------------------------------------
--------------------------------------
----------------------
----------------------
Rental Housing Management Partnership $ 130,164
------------------------------------
--------------------------------------
----------------------
----------------------
Moonbeam Equipment and Communications, LLC $ 8,731
---------------------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1998, and have
issued our report thereon dated January 20, 1999. We have also audited Circle
Terrace Associates Limited Partnership's compliance with specific requirements
applicable to major HUD-assisted and DHCD-assisted programs and have issued our
report thereon dated January 20, 1999.
We conducted our audits in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General of
the United States, the "Consolidated Audit Guide for Audits of HUD Programs"
(the Guide), issued by the U.S. Department of Housing and Urban Development,
Office of the Inspector General and the Audit Guide issued by the Maryland
Department of Housing and Community Development. Those standards and the two
guides require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and about whether Circle Terrace Associates Limited Partnership
complied with laws and regulations, noncompliance with which would be material
to major HUD-assisted and DHCD-assisted programs.
The management of the partnership is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. The objectives of internal control are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, that transactions are executed in
accordance with management's authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted
accounting principles, and that HUD-assisted and DHCD-assisted programs are
managed in compliance with applicable laws and regulations. Because of inherent
limitations in internal control, errors, fraud or instances of noncompliance may
nevertheless occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that procedures may
become inadequate because of changes in conditions or that the effectiveness of
the design of controls may deteriorate.
<PAGE>
In planning and performing our audits of the partnership for the year
ended December 31, 1998, we obtained an understanding of the design of the
relevant controls and determined whether they have been placed in operation, and
we assessed control risk in order to determine our auditing procedures for the
purpose of expressing our opinions on the partnership's financial statements and
on its compliance with specific requirements applicable to major HUD-assisted
and DHCD-assisted programs and to report on internal control in accordance with
the provisions of the Guide and not to provide any assurance on internal
control.
We performed tests of controls, as required by the Guide, to evaluate
the effectiveness of the design and operation of controls that we considered
relevant to preventing or detecting material noncompliance with specific
requirements that are applicable to the partnership's HUD-assisted and
DHCD-assisted programs. Our procedures were less in scope than would be
necessary to render an opinion on internal control. Accordingly, we do not
express such an opinion.
Our consideration of internal control would not necessarily disclose
all matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public Accountants.
A material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that errors or fraud in amounts that would be material in
relation to the financial statements or that noncompliance with laws and
regulations that would be material to a HUD-assisted or DHCD-assisted program
may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. We noted no matters involving
internal control and its operation that we consider to be material weaknesses as
defined above.
This report is intended solely for the information and use of the audit
committee, management, others within the organization, the Department of Housing
and Urban Development and the Maryland Department of Housing and Community
Development and is not intended to be and should not be used by anyone other
than these specified parties.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 20, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
COMPLIANCE WITH SPECIFIC REQUIREMENTS
APPLICABLE TO MAJOR HUD AND DHCD-ASSISTED PROGRAMS
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1998, and have
issued our report thereon dated January 20, 1999.
We have also audited Circle Terrace Associates Limited Partnership's
compliance with specific program requirements governing federal financial
reports; mortgage status; replacement reserve; residual receipts; security
deposits; cash receipts and disbursements; distributions to owners; tenant
application, eligibility, and recertification; and management functions that are
applicable to its major HUD-assisted and DHCD-assisted programs for the year
ended December 31, 1998. The management of Circle Terrace Associates Limited
Partnership is responsible for compliance with those requirements. Our
responsibility is to express an opinion on compliance with those requirements
based on our audit.
We conducted our audit of compliance with specific program requirements
in accordance with generally accepted auditing standards, Government Auditing
Standards, issued by the Comptroller General of the United States, the
"Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the
U.S. Department of Housing and Urban Development, Office of the Inspector
General and the Audit Guide issued by the Maryland Department of Housing and
Community Development. Those standards and the two guides require that we plan
and perform the audit to obtain reasonable assurance about whether material
noncompliance with the requirements referred to above occurred. An audit
includes examining, on a test basis, evidence about Circle Terrace Associates
Limited Partnership's compliance with those requirements. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, Circle Terrace Associates Limited Partnership complied,
in all material respects, with the specific program requirements that are
applicable to its major HUD-assisted and DHCD-assisted programs for the year
ended December 31, 1998.
<PAGE>
This report is intended solely for the information and use of the audit
committee, management, others within the organization, the Department of Housing
and Urban Development and the Maryland Department of Housing and Community
Development and is not intended to be and should not be used by anyone other
than these specified parties.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 20, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH SPECIFIC REQUIREMENTS APPLICABLE TO
FAIR HOUSING AND NON-DISCRIMINATION
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1998, and have
issued our report thereon dated January 20, 1999.
We have applied procedures to test Circle Terrace Associates Limited
Partnership's compliance with the Fair Housing and Non-Discrimination
requirements applicable to its HUD-assisted and DHCD-assisted programs for the
year ended December 31, 1998.
Our procedures were limited to the applicable procedures described in
the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by
the U.S. Department of Housing and Urban Development, Office of the Inspector
General. Our procedures were substantially less in scope than an audit, the
objective of which is the expression of an opinion on Circle Terrace Associates
Limited Partnership's compliance with the Fair Housing and Non-Discrimination
requirements. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that
are required to be reported herein under the Guide.
This report is intended solely for the information and use of the audit
committee, management, others within the organization, the Department of Housing
and Urban Development and the Maryland Department of Housing and Community
Development and is not intended to be and should not be used by anyone other
than these specified parties.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 20, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH LAWS AND REGULATIONS APPLICABLE
TO THE FINANCIAL STATEMENTS
To the Partners
Circle Terrace Associates Limited Partnership
We have audited the financial statements of Circle Terrace Associates
Limited Partnership as of and for the year ended December 31, 1998, and have
issued our report thereon dated January 20, 1999.
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.
Compliance with laws, regulations, contracts, and grants applicable to
Circle Terrace Associates Limited Partnership is the responsibility of Circle
Terrace Associates Limited Partnership's management. As part of obtaining
reasonable assurance about whether the financial statements are free of material
misstatement, we performed tests of Circle Terrace Associates Limited
Partnership's compliance with certain provisions of laws, regulations,
contracts, and grants. However, the objective of our audit of the financial
statements was not to provide an opinion on overall compliance with such
provisions. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that
are required to be reported herein under Government Auditing Standards.
This report is intended solely for the information and use of the audit
committee, management, others within the organization, the Department of Housing
and Urban Development and the Maryland Department of Housing and Community
Development and is not intended to be and should not be used by anyone other
than these specified parties.
/s/Reznick Fedder & Silverman
Bethesda, Maryland
January 20, 1999
<PAGE>
CLIENT NAME Circle Terrace Associates Limited Partnership
PROJECT NUMBER 28.04.0010 ANNUAL AUDIT
QUESTIONNAIRE
FISCAL YEAR END December 31, 1998 CDA PROJECTS
-------------------------------------------------------
Answers to these questions should be based upon a review of procedures
and/or an actual test of transactions. Answers indicative of an adverse
condition must be described in the audit report unless the mortgagor has written
permission from DHCD to deviate from the requirements of law, regulation,
contract or grant.
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Examination Status Yes, No or N/A Working
(Not Applicable) Paper
Reference
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1. Mortgage Status
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Are payments on all mortgages current? Yes AA-1
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 1 Yes AA-2
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 2 Yes AA-4
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 3
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 4
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Position 5
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Has the mortgagor complied with the terms and conditions of the Yes
Regulatory Agreement and/or workout agreements?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
2. Books and Records
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Are a complete set of books and records maintained in a Yes CF
satisfactory manner?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Does the mortgagor make frequent postings (at least monthly) to the Yes CF
ledger accounts?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
3. Cash Activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Are the cash receipts deposited in the name of the project in a Yes A-1
bank whose deposits are federally-insured?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Are security deposits kept separate and apart from all other funds Yes A-10
of the project in an insured institution?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
c. Does the mortgagor keep sufficient funds in the security deposit Yes DD-1
account to equal or exceed the aggregate of all outstanding
obligations to the tenants?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
d. Does the owner or his/her management agent have a fidelity bond in Yes CF
an amount at least equal to the requirements of the Regulatory
Agreement which provides coverage for all employees handling assets of
the project?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
e. Did cash disbursements exclude payments for items listed below:
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1) Legal expenses incurred in the sale of partnership interest? Yes
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
2) The fee for the preparation of a partner's, shareholder's or Yes
individual's federal, state or local income tax returns?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
3) Advice to an owner on tax consequences of foreclosure? Yes
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
4) Reimbursement to the owners or affiliates while the mortgage Yes
is in default, or under workout arrangements for prior
advances, capital expenditures and/or project acquisition
costs?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
5) Letter of credit fees? Yes
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
f. Were distributions made to, or on behalf of, the owners limited to
those authorized by the Regulatory Agreement or the distributions in
accordance with prior written approval of CDA while the project was in
a "surplus cash" position?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
NOTE
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1) Distribution to nonprofit mortgagor entities or principals may not
be permitted by the Regulatory Agreement.
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
2) The use of rental proceeds to pay for costs included in the N/A
mortgagor's costs certification are unauthorized distributions
of project income.
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
g. Was surplus cash available for payment on cash flow debt per the N/A
Deed of Trust and Note?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
h. Were residual receipts deposited with the mortgagee within 90 days N/A
after the close of the mortgagor's fiscal year?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
i. Were excess rental collections in Section 236 projects remitted to N/A
HUD each month?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
j. Does the mortgagor have a formal collection policy? Yes HUD-Q
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
k. Is the collection policy enforced? Yes HUD-Q
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
l. Do tenant accounts receivable consist exclusively of amounts due Yes B-1
from tenants?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
m. Have "write-offs" of tenants' accounts been less than 1% of the Yes 11
gross rents?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
n. Are accounts receivable other than tenants' receivables composed No B-3
exclusively of amounts due from unrelated persons or firms?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
o. Were there indications that payments for services, supplies or Yes
materials were consistent with amounts normally paid for such services?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
p. If applicable, were utility allowance payments to residents paid on Yes Lease test
a monthly basis?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
4. Management Compensation
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Was compensation to the management agent limited to the amounts Yes 20
prescribed in the management agreement as written or amended?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
5. Rents and Occupancy
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Is the gross potential income from apartments equal to or less than Yes 10
that approved by DHCD?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. In subsidized projects, are dwelling unit contract rental rates and Yes
Fair Market rental rates in Section 236 projects the same as those
approved by DHCD?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
6. DHCD/HUD Subsidy Payments (Section 8/RAP Projects Only)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
a. Were the amounts requested from DHCD/HUD adequately supported by Yes
the accounting records?
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
b. Were subsidy payments received recorded in the proper accounts? Yes
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------- ----
- --------------------------------------------------------------------------------- ----
7. Ownership Interest
- --------------------------------------------------------------------------------- ----
- --------------------------------------------------------------------------------- ----
- --------------------------------------------------------------------------------- ----
- --------------------------------------------------------------------------------- ----
a. Were any changes of stockholders or investors during the current N/A
fiscal year approved by DHCD? (provide a schedule of significant
changes)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------- ----
- --------------------------------------------------------------------------------- ----
b. Were any dividends paid or other distribution made to owners or No
stockholders including distribution, purchase or redemption of stock
that is not reflected in the equity statement? (provide a schedule of
payments or distributions)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STRATHERN PARK
DECEMBER 31, 1996
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Strathern Park
Los Angeles, California
We have audited the accompanying balance sheet of Strathern Park (a California
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 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 Strathern Park 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 additional information on Schedules I, II and
III 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 statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/Nanas, Sterns, Biers, Neinstein and Co. LLP
NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP
January 14, 1997
<PAGE>
STRATHERN PARK
BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Cash (Note 5) $215,615
Receivables 38,582
Reserve for replacements (Note 5) 96,652
Tenant security deposits (Note 5) 122,015
Rental property - at cost (Note 2)
Land 5,889,320
Buildings 19,042,548
Equipment and furnishings 944,597
--------------
25,876,465
Less: accumulated depreciation (4,438,048)
--------------
21,438,417
Other assets
Syndication fee (Net of accumulated
amortization
of $94,252) 624,415
--------------
TOTAL ASSETS $22,535,696
==============
LIABILITIES
Accounts payable and accrued expenses $85,799
Security deposits 107,497
Accrued interest payable (Note 2) 3,316,184
Long term debt (Notes 2 and 5) 17,552,451
--------------
TOTAL LIABILITIES 21,061,931
DEFERRED INCOME 20,238
PARTNERS' EQUITY (NOTE 3) 1,453,527
--------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $22,535,696
==============
</TABLE>
See accompanying auditors' report. The notes are an integral part of these
financial statements.
<PAGE>
STRATHERN PARK
STATEMENT OF PARTNERS' EQUITY
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Profit Balance Net Distri- Balance
and Loss January Loss butions December
Percentage 1, 1996 for the year Paid 31, 1996
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GENERAL PARTNER
Safran Associates Investment
Partnership II, A California
Limited Partnership 1% $(44,808) $(12,443) $(788) $(58,039)
CLASS A LIMITED PARTNER
Safran Associates Investment
Partnership II, A California
Limited Partnership 4% (181,046) (49,771) (3,140) (233,957)
INVESTOR LIMITED PARTNER
Boston Financial Qualified
Housing Tax Credits L.P.V., A
Massachusetts Limited
Partnership 95% 3,002,218 (1,182,070) (74,625) 1,745,523
SPECIAL LIMITED PARTNER
S L P 90, Inc. --- --- --- --- ---
------------------------------------------------------------
$2,776,364 $(1,244,284) $(78,553) $1,453,527
============================================================
</TABLE>
See accompanying auditors' report. The notes are an integral part of these
financial statements.
<PAGE>
STRATHERN PARK
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
INCOME
Gross possible rents $1,524,672
(Vacancies) (7,097)
Interest 11,370
Miscellaneous 34,321
---------------
TOTAL INCOME $1,563,266
EXPENSES (Note 4)
Administrative expense 128,724
Management fees 118,048
Utilities 114,579
Operating and maintenance expense 227,504
Taxes and insurance 167,311
Interest expense - Mortgage note payable 569,657
Interest expense - Notes payable 684,796
Depreciation and amortization 796,931
---------------
2,807,550
---------------
NET LOSS $(1,244,284)
===============
</TABLE>
See accompanying auditors' report. The notes are an integral part of financial
statements.
<PAGE>
STRATHERN PARK
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(1,244,284)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization $796,931
Increases in -
Miscellaneous receivables (4,079)
Rent receivable (28,375)
Accrued interest payable 684,796
Accounts payable and accrued expenses 4,781
Deferred income 20,238
Decreases in -
Tenant security deposits 3,445
Security deposits (5,643)
Total Adjustments 1,472,094
-----------------
Net Cash Provided by Operating Activities 227,810
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in reserve for replacements (24,336)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage (52,868)
Interest payments on notes payable from residual receipts (52,368)
Distributions paid (78,553)
------------
Net Cash Used in Financing Activities (183,789)
-----------------
Net Increase in Cash and Cash Equivalents 19,685
Cash and cash equivalents at Janaury 1, 1996 195,930
-----------------
Cash and cash equivalents at December 31, 1996 $215,615
=================
SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION:
Cash paid during the year for interest $622,453
============
Cash paid during the year for taxes $800
============
</TABLE>
See accompanying auditors' report. The notes are an integral part of these
financial statements.
<PAGE>
STRATHERN PARK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Organization
Strathern Park (the partnership) was organized pursuant to a limited partnership
agreement dated March 28, 1989 as amended. Effective June 1, 1990, the
partnership agreement was amended with the admission of a new limited partner
who purchased a 95% limited partnership interest for a total capital
contribution of $5,963,067. On January 1, 1994 Lorne Park was merged into
Strathern Park. The combined partnerships constructed a 241 unit apartment
project (Lorne Park 72 unites, Strathern Park 169 units) located in Sun Valley,
California for tenants whose income is very low to moderate. The project is
regulated under the terms of certain of its loan agreements. Such agreements
contain certain restrictions concerning rental charges, the number of units
rented to tenants in the very low, low and moderate income levels and other
matters.
Use of Estimates in the Preparation of Financial Statements 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.
Significant Accounting Policies -
Method of Accounting - The partnership books are maintained and its financial
statements and tax returns are prepared on the accrual basis.
Cash Equivalents - For purposes of the statement of cash flows, the partnership
considers all highly liquid debt instruments purchased with a maturity date of
three months or less to be cash equivalents.
Rental Property - The partnership records property, equipment and improvements
at the cost of acquisition or construction. The cost of maintenance and repairs
is charged to operations as incurred; significant renewals and betterments are
capitalized. Depreciation is computed using the straight line method for
financial statement purposes and accelerated methods for tax purposes. Estimated
useful lives for financial statement purposes are as follows:
<TABLE>
<CAPTION>
<S> <C>
Classification Life
- ---------------
Buildings 27.5 Years
Equipment and furnishings 7 Years
</TABLE>
Amortization - amortization of syndication costs is computed using the
straight line method over a period of 40 years.
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Cont.)
Income Taxes - The project receives low-income tax credits provided under
Section 42 of the Internal Revenue Code. Also, no provision for income taxes has
been included since the income or loss of the partnership as well as the tax
credits are required to be reported by the respective partners on their separate
income tax returns.
Note 2 LONG TERM DEBT
<TABLE>
<CAPTION>
<S> <C>
Mortgage note payable, secured by First Deed of Trust, requiring monthly
payments of $51,913, including interest at 9.41% per annum, maturing February,
2022. $5,928,171
Note payable secured by Second Deed of Trust, payable to the Community
Redevelopment Agency of the City of Los Angeles with interest at 7% per annum.
Interest accrues from the date of issuance of the first certificate of occupancy
which is December 26, 1991. Unpaid principal together with all accrued and
unpaid interest are due and payable in full upon the maturity of the primary
permanent loan, but not later than 40 years from date of issuance. Principal and
interest payments may be made in annual installments from the residual receipts
of the project, as the term residual receipts is defined in the loan agreement.
The note was funded by a Housing Development Grant from the United States
Department of Housing and Urban Development. The terms of the Grant agreement
impose certain restrictions on the use of the Grant proceeds and operating
policies of the partnership. Accrued interest on this note at
December 31, 1996 amounted to $1,774,998. 5,179,105
Note payable secured by Third Deed of Trust, payable to the Community
Redevelopment Agency of the City of Los Angeles, with interest at 5% per annum.
Interest accrues from the date of issuance of the first certificate of occupancy
which is December 26, 1991. Unpaid principal together with all accrued and
unpaid interest are due and payable in full upon the maturity of the primary
permanent loan, but not later than 40 years from date of issuance. Principal and
interest payments may be made in annual installments from the residual receipts
of the project, as the term residual receipts is defined in the loan agreement.
Accrued interest on
this note at December 31, 1996 amounted to $1,556,241. 6,445,175
-----------------
$17,552,451
=================
</TABLE>
Note 2 LONG TERM DEBT (Contd.)
Maturities of long term debt as of December 31, 1996 for the succeeding five
years are as follows:
<TABLE>
<CAPTION>
Years ended December 31,
<S> <C>
1997 $59,816
1998 65,779
1999 72,337
2000 77,942
2001 87,318
Thereafter 17,189,259
-----------------
$17,552,451
=================
</TABLE>
Note 3 DISTRIBUTION TO PARTNERS
Pursuant to the terms of the partnership agreement, as amended, and the loan
agreement with the Community Redevelopment Agency of the City of Los Angeles,
distributions are payable only from residual receipts, as defined in the
agreements.
Distributions are apportioned as follows:
1) 40% to the Community Redevelopment Agency of the City of
Los Angeles (CRA)
2) The remaining 60% is allocated as follows:
a) The Investor Limited Partner (Boston) is to receive any cumulative
return ($60,000 annually) in arrears;
b) The next $63,158 is distributed 95% to Boston, 4% to the Class A
Limited Partner (SAIP II) and 1% to the General Partner (SAIP II);
c) Any additional cash is used to repay any partner advances to the
partnership;
d) The next $63,158 is distributed 5% to Boston, 94% to SAIP II
(Limited Partner) and 1% to SAIP II (General Partner);
e) Thereafter, cash is distributed 50% to Boston, 49% to SAIP II
(Limited Partner) and 1% to SAIP II (General Partner).
Note 4 RELATED PARTY TRANSACTIONS
There were no direct compensation payments to the partners during the year.
However, there were related party transactions which occurred which are set
forth below:
<TABLE>
<CAPTION>
(Income) Receivable
Expense (Payable)
Account for the At December
Name Description No. Year 31, 1996
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas Safran and
Associates, Inc. Management fee 6320 118,048 (73)
===========================
</TABLE>
In addition, the project reimbursed the management company for allocated common
costs such as office supplies and health insurance. The aggregate total of such
reimbursements
was $17,341 for the year.
The general partner has a direct ownership interest in the management company
listed above.
Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and Short Term Investments -
The carrying amount approximates fair value because of the short maturity of
those investments.
Long Term Debt (First Deed of Trust) -
The project does not have the right to prepay this debt during the first ten
years of the term of this note. Accordingly, the carrying amount approximates
its fair value.
Long Term Debt (Second & Third Deed of Trust) -
The carrying amount approximates fair value because there is no ready market for
such debt, repayment/refinancing is severely restricted by the CRA and HUD.
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------------
Carrying Fair
Amount Value
<S> <C> <C>
Cash and Short Term Investments $434,282 $434,282
Long Term Debt (First Deed of Trust) (5,928,171) (5,928,171)
Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280)
</TABLE>
<PAGE>
STRATHERN PARK SCHEDULE I
BOSTON FINANCIAL QUALIFIED HOUSING Page 1 of 2
BALANCE SHEET FORMAT
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C> <C>
Petty cash 500
Cash in bank 215,115
Rent receivables 35,940
Miscellaneous receivables 2,642
Tenant security deposits 122,015
----------------
Total Current Assets 376,212
RESERVES AND DEPOSITS
Reserve for replacements 96,652
FIXED ASSETS
Land 5,889,320
Buildings 19,042,548
Equipment and furnishings 944,597
----------------
25,876,465
Less: accumulated depreciation (4,438,048)
----------------
Total Fixed Assets 21,438,417
OTHER ASSETS
Syndication fee (Net of accumulated amortization
of $94,252) 624,415
----------------
TOTAL ASSETS 22,535,696
================
</TABLE>
<PAGE>
STRATHERN PARK SCHEDULE I
BOSTON FINANCIAL QUALIFIED HOUSING Page 2 of 2
BALANCE SHEET FORMAT
DECEMBER 31, 1996
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable 37,750
Accrued interest payable - 1st mortgage 48,049
Tenant security deposit liability 107,497
----------------
Total Current Liabilities 193,296
MORTGAGE NOTE PAYABLE CURRENT PORTION
1st mortgage note payable current portion 59,816
LONG TERM LIABILITIES
Accrued interest payable - notes
2nd mortgage note payable 1,818,646
3rd mortgage note payable 1,497,538
Mortgage notes payable
1st mortgage note payable 5,868,355
2nd mortgage note payable 5,179,105
3rd mortgage note payable 6,445,175
Deferred income 20,238
----------------
Total Long Term Liabilities 20,829,057
OWNERS' EQUITY
Limited partners' equity 1,511,566
General partners' equity (58,039)
----------------
Total Owners' Equity 1,453,527
----------------
TOTAL LIABILITIES AND PARTNERS' EQUITY 22,535,696
================
</TABLE>
<PAGE>
STRATHERN PARK SCHEDULE II
BOSTON FINANCIAL QUALIFIED HOUSING - Page 1 of 4
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
REVENUE
<S> <C> <C>
Rent revenue
Apartments 1,465,438
Tenant assistance payments 46,529
Furniture and equipment ---
Stores and commercial 12,705
Garage and parking spaces ---
Flexible subsidy income ---
Miscellaneous ---
-------------
Total rent revenue 1,524,672
Vacancies
Apartments (7,097)
Stores and commercial ---
Garage and parking spaces ---
Miscellaneous ---
-------------
Total Vacancies (7,097)
---------------
Net Rental Revenue 1,517,575
Financial Revenue
Interest Income - operations 2,973
Interest Income - residual receipts ---
Interest income - reserve for replacements 3,835
Interest income - miscellaneous 4,562
-------------
Total Financial Revenue 11,370
Other Revenue
Laundry and vending 21,534
NSF and late charges 2,848
Damages and cleaning fees 2,168
Forfeited tenant security deposits 2,486
Other revenue 5,285
Non-cash revenue ---
-------------
Total Other Revenue 34,321
---------------
NET REVENUE 1,563,266
===============
</TABLE>
<PAGE>
STRATHERN PARK SCHEDULE II
BOSTON FINANCIAL QUALIFIED HOUSING - Page 2 of 4
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
EXPENSES
<S> <C> <C>
Administrative Expenses
Advertising 469
Other renting expense ---
Office salaries 6,815
Office supplies 48,699
Management fee 118,048
Manager or superintendent salary 47,125
Manager's rent free unit ---
Legal expenses (project) 3,183
Auditing expenses (project) 9,500
Bookkeeping fees/accounting services ---
Telephone and answering services 6,159
Bad debts 6,774
Miscellaneous administrative expenses ---
-------------
Total Administrative Expenses 246,772
Utilities Expenses
Fuel oil/coal ---
Electricity 37,754
Water 43,777
Gas 5,686
Sewer 27,362
-------------
Total Utilities Expenses 114,579
Operating & Maintenance
Janitor and cleaning payroll ---
Janitor and cleaning supplies 8,164
Janitor and cleaning contract ---
Exterminating payroll/contract 1,484
Exterminating supplies ---
Garbage and trash removal 12,035
Security payroll/contract 4,295
</TABLE>
<PAGE>
STRATHERN PARK SCHEDULE II
BOSTON FINANCIAL QUALIFIED HOUSING - Page 3 of 4
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
EXPENSES (Cont.)
<S> <C> <C>
Operating & Maintenance (Cont.)
Grounds payroll ---
Grounds supplies 3,481
Grounds contract 27,060
Repairs payroll 59,020
Repairs material 23,635
Repairs contract 73,340
Elevator maintenance/contract ---
Heating/cooling repairs and maintenance 403
Swimming pool maintenance/contract ---
Snow removal ---
Decorating payroll/contract 2,804
Decorating supplies 11,783
Other, gasoline ---
Miscellaneous operating and maintenance ---
-------------
Total Operating and Maintenance 227,504
Taxes and Insurance
Real estate taxes 116,658
Payroll taxes (FICA) 11,306
Miscellaneous taxes, licenses 765
Property and liability insurance 22,635
Fidelity bond insurance 149
Workmen's compensation 5,698
Health insurance and other benefits 10,100
Other insurance ---
Miscellaneous taxes and insurance ---
-------------
Total Taxes and Insurance 167,311
Interest on Mortgage Notes
Interest on 1st mortgage 569,657
</TABLE>
<PAGE>
STRATHERN PARK SCHEDULE II
BOSTON FINANCIAL QUALIFIED HOUSING - Page 4 of 4
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
EXPENSES (Cont.)
<S> <C> <C>
Other Financial Expenses
Amortization 17,967
Interest on notes payable (long term) 684,796
Mortgage insurance premium ---
Miscellaneous financial expenses ---
Non-cash expense ---
-------------
Total Financial Expenses 702,763
---------------
TOTAL EXPENSES BEFORE DEPRECIATION 2,028,586
---------------
PROFIT (LOSS) BEFORE DEPRECIATION (465,320)
Depreciation 778,964
---------------
OPERATING PROFIT (LOSS) (1,244,284)
Other Expenses Prior Period (Entity) ---
---------------
NET PROFIT (LOSS) (1,244,284)
===============
1st mortgage principal payment 52,868
2nd mortgage principal payment ---
3rd mortgage principal payment ---
---------------
Total mortgage principal payments 52,868
===============
Actual replacement reserve deposits 75,836
Replacement or painting reserve releases (51,500)
Cash subsidies ---
Capital improvements not expensed ---
Capital contribution or disbursement 78,553
</TABLE>
<PAGE>
STRATHERN PARK SCHEDULE III
COMPUTATION OF RESIDUAL RECEIPTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Net income (loss) as of December 31, 1996 (1,244,284)
ADD:
Depreciation 778,964
Amortization 17,967
Community Redevelopment Agency loan interest 322,259
Housing Development Grant loan interest 362,537
Releases from reserve for replacements 51,500 1,533,227
---------------- ----------------
288,943
LESS:
Principal payments on mortgage (52,868)
Deposits to reserve for replacements (75,836)
Payments for capital expenditures --- (128,704)
---------------- ----------------
RESIDUAL RECEIPTS, as defined in the partnership agreement
160,239
================
</TABLE>
<PAGE>
STRATHERN PARK
DECEMBER 31, 1997
<PAGE>
Nanas, Stern, Biers, Neinstein & Co. LLP
Certified Public Accountants
9454 Wilshire Boulevard
Beverly Hills, California 90212-2901
Tel (310) 273-2501
Fax (310) 859-0374
INDEPENDENT AUDITORS' REPORT
The Partners
Strathern Park
Los Angeles, California
We have audited the accompanying balance sheet of Strathern Park (a California
limited partnership), as of December 31, 1997 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 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 Strathern Park as of December
31, 1997, 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 additional information on Schedules I, II and
III 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 statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s?Nanas, Stern, Biers, Neinstein and Co. LLP
January 28, 1998
<PAGE>
STRATHERN PARK
BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Cash and cash equivalents (Note 5) $ 75,050
Receivables 28,003
Reserve for replacements (Note 5) 138,827
Tenant security deposits (Note 5) 120,342
Rental property - at cost (Note 2)
Land $ 5,889,320
Buildings 19,042,548
Equipment and furnishings 949,223
--------------
25,881,091
Less: accumulated depreciation (5,213,507) 20,667,584
--------------
Other assets
Syndication fee (Net of accumulated amortization
of $112,219) 606,448
------------------
TOTAL ASSETS $ 21,636,254
==================
LIABILITIES
Accounts payable and accrued expenses $ 72,821
Security deposits 106,609
Accrued interest payable (Note 2) 3,940,215
Long term debt (Notes 2 and 5) 17,482,959
------------------
TOTAL LIABILITIES 21,602,604
DEFERRED INCOME 20,604
PARTNERS' EQUITY (Note 3) 13,046
------------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 21,636,254
==================
</TABLE>
See accompanying auditors'
report. The notes are an integral part of
these financial statements.
<PAGE>
STRATHERN PARK
STATEMENT OF PARTNERS' EQUITY
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Profit Balance Net Distri- Balance
and Loss January Loss butions December
Percentage 1, 1997 for the year Paid 31, 1997
-------------- -------------- -------------- -------------- --------------
GENERAL PARTNER
<S> <C> <C> <C> <C> <C>
Safran Associates Investment
Partnership II, A California
Limited Partnership 1% $ (58,039) $ (13,443) $ (702) $ (72,184)
CLASS A LIMITED PARTNER
Safran Associates Investment
Partnership II, A California
Limited Partnership 4% (233,957) (53,774) (9,110) (296,841)
INVESTOR LIMITED PARTNER
Boston Financial Qualified
Housing Tax Credits L.P.V., A
Massachusetts Limited
Partnership 95% 1,745,523 (1,277,121) (86,331) 382,071
SPECIAL LIMITED PARTNER
S L P 90, Inc. --- --- --- --- ---
-------------- -------------- -------------- --------------
$ 1,453,527 $ (1,344,338) $ (96,143) $ 13,046
============== ============== ============== ==============
</TABLE>
See accompanying auditors'
report. The notes are an integral part of
these financial statements.
<PAGE>
STRATHERN PARK
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INCOME
<S> <C> <C>
Gross potential - rents $ 1,547,419
(Vacancies) (12,686)
Interest 13,651
Miscellaneous 41,426
--------------
TOTAL INCOME $ 1,589,810
EXPENSES (Note 4)
Administrative expense 143,310
Management fees 123,995
Utilities 134,201
Operating and maintenance expense 321,412
Taxes and insurance 180,032
Interest expense - Mortgage note payable 552,976
Interest expense - Notes payable 684,796
Depreciation and amortization 793,426
--------------
2,934,148
---------------
NET LOSS $ (1,344,338)
===============
</TABLE>
See accompanying auditors'
report. The notes are an integral part of
these financial statements.
<PAGE>
STRATHERN PARK
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Loss $ (1,344,338)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization $ 793,426
(Increase)/Decrease in -
Receivables 10,579
Tenant security deposits 1,673
(Decrease)/Increase in -
Accounts payable and accrued expenses (12,978)
Accrued interest payable 624,031
Security deposits (888)
Deferred income 366
------------
Total Adjustments 1,416,209
--------------
Net Cash Provided by Operating Activities 71,871
CASH FLOWS FROM INVESTING ACTIVITIES
Deposits to reserve for replacements (82,055)
Releases from reserve for replacements 39,880
Purchase of equipment (4,626)
------------
Net Cash Used in Investing Activities (46,801)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage (69,492)
Distributions paid (96,143)
------------
Net Cash Used in Financing Activities (165,635)
--------------
Net Decrease in Cash and Cash Equivalents (140,565)
Cash and cash equivalents at January 1, 1997 215,615
--------------
Cash and cash equivalents at December 31, 1997 $ 75,050
==============
SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION:
Cash paid during the year for interest $ 617,557
============
</TABLE>
See accompanying auditors'
report. The notes are an integral part of
these financial statements.
<PAGE>
STRATHERN PARK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
Organization -
Strathern Park (the partnership) was organized pursuant to a
limited partnership agreement dated March 28, 1989 as amended.
Effective June 1, 1990, the partnership agreement was amended
with the admission of a new limited partner who purchased a
95% limited partnership interest for a total capital
contribution of $5,963,067. On January 1, 1994 Lorne Park was
merged into Strathern Park. The combined partnerships
constructed a 241 unit apartment project (Lorne Park 72 units,
Strathern Park 169 units) located in Sun Valley, California
for tenants whose income is very low to moderate. The project
is regulated under the terms of certain of its loan
agreements. Such agreements contain certain restrictions
concerning rental charges, the number of units rented to
tenants in the very low, low and moderate income levels and
other matters. Those restrictions of rent and income shall
remain in effect for a minimum of 30 years.
Use of Estimates in the Preparation of Financial Statements -
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.
Significant Accounting Policies -
Method of Accounting - The partnership books are maintained
and its financial statements and tax returns are prepared on
the accrual basis.
Cash Equivalents - For purposes of the statement of cash
flows, the partnership considers all highly liquid debt
instruments purchased with a maturity date of three months or
less to be cash equivalents.
Rental Property - The partnership records property, equipment
and improvements at the cost of acquisition or construction.
The cost of maintenance and repairs is charged to operations
as incurred; significant renewals and betterments are
capitalized. Depreciation is computed using the straight line
method for financial statement purposes and accelerated
methods for tax purposes. Estimated useful lives for financial
statement purposes are as follows:
Classification Life
--------------------- ---------------
Buildings 27.5 Years
Equipment and furnishings 5-7 Years
Amortization - amortization of syndication costs is computed
using the straight line method over a period of 40 years.
STRATHERN PARK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Cont.)
Income Taxes - The project receives low-income tax credits provided
under Section 42 of the Internal Revenue Code. Also, no provision
for income taxes has been included since the income or loss of the
partnership as well as the tax credits are required to be reported
by the respective partners on their separate income tax returns.
<TABLE>
<CAPTION>
Note 2 LONG TERM DEBT
<S> <C>
Mortgage note payable, secured by First Deed of Trust,
requiring monthly payments of $51,913, including interest
at 9.41% per annum, maturing February, 2022. $ 5,858,679
Note payable secured by Second Deed of Trust, payable to the
Community Redevelopment Agency of the City of Los Angeles with
interest at 7% per annum. Interest accrues from the date of
issuance of the first certificate of occupancy which is
December 26, 1991. Unpaid principal together with all accrued
and unpaid interest are due and payable in full upon the
maturity of the primary permanent loan, but not later than 40
years from date of issuance. Principal and interest payments
may be made in annual installments from the residual receipts
of the project, as the term residual receipts is defined in
the loan agreement. The note was funded by a Housing
Development Grant from the United States Department of Housing
and Urban Development. The terms of the Grant agreement impose
certain restrictions on the use of the Grant proceeds and
operating policies of the partnership. Accrued interest on
this note at
December 31, 1997 amounted to $2,128,864. 5,179,105
Note payable secured by Third Deed of Trust, payable to the
Community Redevelopment Agency of the City of Los Angeles,
with interest at 5% per annum. Interest accrues from the date
of issuance of the first certificate of occupancy which is
December 26, 1991. Unpaid principal together with all accrued
and unpaid interest are due and payable in full upon the
maturity of the primary permanent loan, but not later than 40
years from date of issuance. Principal and interest payments
may be made in annual installments from the residual receipts
of the project, as the term residual receipts is defined in
the loan agreement. Accrued interest on
this note at December 31, 1997 amounted to $1,811,351. 6,445,175
-----------------
$ 17,482,959
=================
</TABLE>
<PAGE>
STRATHERN PARK
NOTES TO FINANCIAL STATEMENTS
DECEMBR 31, 1997
Note 2 LONG TERM DEBT (Contd.)
Maturities of long term debt as of December 31, 1997 for the
succeeding five years are as follows:
Years ended December 31,
1998 65,779
1999 72,337
2000 77,942
2001 87,318
2002 96,023
Thereafter 17,083,560
---------------
$ 17,482,959
===============
Note 3 DISTRIBUTION TO PARTNERS
Pursuant to the terms of the partnership agreement, as amended, and
the loan agreement with the Community Redevelopment Agency of the
City of Los Angeles, distributions are payable only from residual
receipts, as defined in the agreements.
Distributions are apportioned as follows:
1) 40% to the Community Redevelopment Agency of the City of
Los Angeles (CRA)
2) The remaining 60% is allocated as follows:
a) The Investor Limited Partner (Boston) is
to receive any cumulative return
($60,000 annually) in arrears;
b) The next $63,158 is distributed 95% to
Boston, 4% to the Class A Limited Partner
(SAIP II) and 1% to the General Partner
(SAIP II);
c) Any additional cash is used to repay
any partner advances to the partnership;
d) The next $63,158 is distributed 5% to
Boston, 94% to SAIP II (Limited Partner)
and 1% to SAIP II (General Partner);
e) Thereafter, cash is distributed 50% to
Boston, 49% to SAIP II (Limited Partner)
and 1% to SAIP II (General Partner).
<PAGE>
STRATHERN PARK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 4 RELATED PARTY TRANSACTIONS
There were no direct compensation payments to the partners during
the year. However, there were related party transactions which
occurred which are set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(Income) Receivable
Expense (Payable)
Account for the At December
Name Description No. Year 31, 1997
---------------------------------- --------------------- --------------- --------------- -----------------
Thomas Safran and
Associates, Inc.(TS&A, Inc.) Management fee 6320 $ 111,491 $ ---
=============== =================
</TABLE>
In addition, the project reimbursed TS&A, Inc. for allocated common
costs such as office supplies, salaries, payroll taxes, and
insurance. The aggregate total of such reimbursements was $92,671
for the year.
The general partner has a direct ownership interest in the
management company listed above.
Thomas Safran & Associates, Inc. (TS&A, Inc.) has subcontracted
certain accounting and supervisory functions to Insignia Residential
Group of California, Inc. (IRG) for a period of two years commencing
August 1, 1997. TS&A, Inc. will continue to be the managing agent
and IRG will report to them on a monthly basis. The agreement among
TS&A, Inc., IRG and the Project provides a portion of the approved
management fees to be paid to IRG for their services.
Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and Short Term Investments -
The carrying amount approximates fair value because of the
short maturity of those investments.
Long Term Debt (First Deed of Trust) -
The project does not have the right to prepay this debt during
the first ten years of the term of this note. Accordingly, the
carrying amount approximates its fair value.
Long Term Debt (Second & Third Deed of Trust) -
The carrying amount approximates fair value because there is
no ready market for such debt, repayment/refinancing is
severely restricted by the CRA and HUD.
<TABLE>
<CAPTION>
December 31, 1997
----------------------------------
Carrying Fair
Amount Value
<S> <C> <C>
Cash and Short Term Investments $ 334,219 $ 334,219
Long Term Debt (First Deed of Trust) (5,858,679) (5,858,679)
Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280)
</TABLE>
<PAGE>
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING
BALANCE SHEET FORMAT
DECEMBER 31, 1997
<PAGE>
SCHEDULE I
Page 1 of 2
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING
BALANCE SHEET FORMAT
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
CURRENT ASSETS
1110 Petty cash $ 500
1120 Cash in bank 74,550
1130 Rent receivables 25,655
1140 Miscellaneous receivables 2,348
1191 Tenant security deposits 120,342
--------------
Total Current Assets $ 223,395
RESERVES AND DEPOSITS
1320 Reserve for replacements 138,827
FIXED ASSETS
1410 Land 5,889,320
1420 Buildings 19,042,548
1450 Equipment and furnishings 949,223
--------------
25,881,091
4100 Less: accumulated depreciation (5,213,507)
--------------
Total Fixed Assets 20,667,584
OTHER ASSETS
1820 Syndication fee (Net of accumulated amortization
of $112,219) 606,448
---------------
TOTAL ASSETS $ 21,636,254
===============
</TABLE>
<PAGE>
SCHEDULE I
Page 2 of 2
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING
BALANCE SHEET FORMAT
DECEMBER 31, 1997
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT LIABILITIES
2110 Accounts payable $ 25,256
Accrued interest payable - 1st mortgage 47,565
2191 Tenant security deposit liability 106,609
--------------
Total Current Liabilities $ 179,430
MORTGAGE NOTE PAYABLE CURRENT PORTION
1st mortgage note payable current portion 65,779
LONG TERM LIABILITIES
Accrued interest payable - notes
2nd mortgage note payable 2,128,864
3rd mortgage note payable 1,811,351
Mortgage notes payable
2321 1st mortgage note payable 5,792,900
2322 2nd mortgage note payable 5,179,105
2323 3rd mortgage note payable 6,445,175
2210 Deferred income 20,604
--------------
Total Long Term Liabilities 21,377,999
PARTNERS' EQUITY
3130 Limited partners' equity 85,230
3131 General partners' equity (72,184)
--------------
Total Owners' Equity 13,046
---------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 21,636,254
===============
</TABLE>
<PAGE>
SCHEDULE II
Page 1 of 4
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
REVENUE
<S> <C> <C>
Rent revenue
5120 Apartments $ 1,482,095
5121 Tenant assistance payments 52,472
5130 Furniture and equipment ---
5140 Stores and commercial 12,852
5170 Garage and parking spaces ---
5180 Flexible subsidy income ---
5190 Miscellaneous ---
--------------
Total rent revenue $ 1,547,419
Vacancies
5220 Apartments (12,686)
5240 Stores and commercial ---
5270 Garage and parking spaces ---
5290 Miscellaneous ---
--------------
Total Vacancies (12,686)
--------------
Net Rental Revenue 1,534,733
Financial Revenue
5410 Interest Income - operations 3,254
5430 Interest Income - residual receipts ---
5440 Interest income - reserve for replacements 4,692
5490 Interest income - miscellaneous 5,705
--------------
Total Financial Revenue 13,651
Other Revenue
5910 Laundry and vending 26,400
5920 NSF and late charges 6,725
5930 Damages and cleaning fees 2,782
5940 Forfeited tenant security deposits 2,129
5990 Other revenue 3,390
5991 Non-cash revenue ---
--------------
Total Other Revenue 41,426
--------------
NET REVENUE $ 1,589,810
==============
</TABLE>
<PAGE>
SCHEDULE II
Page 2 of 4
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
EXPENSES
<S> <C> <C>
Administrative Expenses
6210 Advertising $ 1,482
6250 Other renting expense ---
6310 Office salaries 15,299
6311 Office supplies 46,028
6320 Management fee 123,995
6330 Manager or superintendent salary 44,382
6331 Manager's rent free unit ---
6340 Legal expenses (project) 2,581
6350 Auditing expenses (project) 9,500
6351 Bookkeeping fees/accounting services ---
6360 Telephone and answering services 10,282
6370 Bad debts 13,756
6390 Miscellaneous administrative expenses ---
--------------
Total Administrative Expenses $ 267,305
Utilities Expenses
6420 Fuel oil/coal ---
6450 Electricity 38,537
6451 Water 56,476
6452 Gas 7,061
6453 Sewer 32,127
--------------
Total Utilities Expenses 134,201
Operating & Maintenance
6510 Janitor and cleaning payroll ---
6515 Janitor and cleaning supplies 5,449
6517 Janitor and cleaning contract ---
6519 Exterminating payroll/contract 1,527
6520 Exterminating supplies ---
6525 Garbage and trash removal 13,379
6530 Security payroll/contract 18,611
<PAGE>
SCHEDULE II
Page 3 of 4
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
EXPENSES (Cont.)
Operating & Maintenance (Cont.)
6535 Grounds payroll $ ---
6536 Grounds supplies 10,648
6537 Grounds contract 27,910
6540 Repairs payroll 71,622
6541 Repairs material 40,743
6542 Repairs contract 81,225
6545 Elevator maintenance/contract ---
6546 Heating/cooling repairs and maintenance 2,518
6547 Swimming pool maintenance/contract ---
6548 Snow removal ---
6560 Decorating payroll/contract 27,775
6561 Decorating supplies 20,005
6570 Other, gasoline ---
6590 Miscellaneous operating and maintenance ---
--------------
Total Operating and Maintenance $ 321,412
Taxes and Insurance
6710 Real estate taxes 124,522
6711 Payroll taxes (FICA) 13,155
6719 Miscellaneous taxes, licenses ---
6720 Property and liability insurance 21,402
6721 Fidelity bond insurance ---
6722 Workmen's compensation 8,563
6723 Health insurance and other benefits 8,281
6729 Other insurance ---
6790 Miscellaneous taxes and insurance ---
--------------
Total Taxes and Insurance 175,923
Interest on Mortgage Notes
6821 Interest on 1st mortgage 552,976
<PAGE>
SCHEDULE II
Page 4 of 4
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
EXPENSES (Cont.)
Other Financial Expenses
6690 Amortization $ 17,967
6830 Interest on notes payable (long term) 684,796
6850 Mortgage insurance premium ---
6890 Miscellaneous financial expenses 4,109
6895 Non-cash expense ---
--------------
Total Financial Expenses $ 706,872
--------------
TOTAL EXPENSES BEFORE DEPRECIATION 2,158,689
--------------
PROFIT (LOSS) BEFORE DEPRECIATION (568,879)
6600 Depreciation 775,459
--------------
OPERATING PROFIT (LOSS) (1,344,338)
Other Expenses Prior Period (Entity) ---
--------------
NET PROFIT (LOSS) $ (1,344,338)
==============
1st mortgage principal payment $ 69,492
2nd mortgage principal payment ---
3rd mortgage principal payment ---
--------------
Total mortgage principal payments $ 69,492
==============
Actual replacement reserve deposits $ 82,055
Replacement or painting reserve releases $ (39,880)
Cash subsidies ---
Capital improvements not expensed ---
Capital contribution or disbursement $ 96,143
</TABLE>
<PAGE>
SCHEDULE III
STRATHERN PARK
COMPUTATION OF RESIDUAL RECEIPTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
Net income (loss) as of December 31, 1997 $ (1,344,338)
ADD: Depreciation $ 775,459
Amortization 17,967
Community Redevelopment Agency loan interest 322,259
Housing Development Grant loan interest 362,537
Approved releases from reserve for replacements 38,067
Releases from reserve for replacements 39,880 1,556,169
-------------- ---------------
211,831
LESS: Principal payments on mortgage (69,492)
Deposits to reserve for replacements (82,055)
Payments for capital expenditures (4,626) (156,173)
-------------- ---------------
RESIDUAL RECEIPTS, as defined in the partnership agreement
at December 31, 1997 $ 55,658
===============
</TABLE>
<PAGE>
STRATHERN PARK
DECEMBER 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Strathern Park
Los Angeles, California
We have audited the accompanying balance sheet of Strathern Park (a California
limited partnership), as of December 31, 1998 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 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 Strathern Park as of December
31, 1998, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information on Schedules I, II and
III 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 statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP
NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP
February 3, 1999
<PAGE>
STRATHERN PARK
BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Cash and cash equivalents (Note 5) $ 89,129
Receivables 24,068
Reserve for replacements (Note 5) 187,249
Tenant security deposits (Note 5) 113,365
Rental property - at cost (Note 2)
Land $ 5,889,320
Buildings 19,042,548
Equipment and furnishings 949,223
-------------------
25,881,091
Less: accumulated depreciation (5,972,453) 19,908,638
-------------------
Other assets
Syndication fee (Net of accumulated amortization
of $130,186) 588,481
-------------------
TOTAL ASSETS $ 20,910,930
===================
Accounts payable and accrued expenses $ 66,386
Tenant security deposits 112,707
Accrued interest payable (Note 2) 4,609,113
Long term debt (Notes 2 and 5) 17,428,457
-------------------
TOTAL LIABILITIES 22,216,663
15,419
(1,321,152)
-------------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 20,910,930
===================
See Accompanying auditors' report.
The notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STRATHERN PARK
STATEMENT OF PARTNERS' EQUITY
YEAR ENDED DECEMBER 31, 1998
Profit Balance Net Distri- Balance
and Loss January Loss butions December
Percentage 1, 1998 for the year Paid 31, 1998
-------------- -------------- -------------- -------------- --------------
GENERAL PARTNER
Safran Associates Investment
Partnership II, A California
<S> <C> <C> <C> <C> <C>
Limited Partnership 1% $ (72,184) $ (13,008) $ (334) $ (85,526)
CLASS A LIMITED PARTNER
Safran Associates Investment
Partnership II, A California
Limited Partnership 4% (296,841) (52,032) (1,336) (350,209)
INVESTOR LIMITED PARTNER
Boston Financial Qualified
Housing Tax Credits L.P.V., A
Massachusetts Limited
Partnership 95% 382,071 (1,235,763) (31,725) (885,417)
SPECIAL LIMITED PARTNER
S L P 90, Inc. --- --- --- --- ---
-------------- -------------- -------------- --------------
$ 13,046 $ (1,300,803) $ (33,395) $ (1,321,152)
============== ============== ============== ==============
</TABLE>
See Accompanying auditors' report.
The notes are an integral part of these financial statements.
<PAGE>
STRATHERN PARK
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
INCOME
<S> <C> <C> <C>
Gross potential - rents $ 1,574,908
(Vacancies) (28,013)
Interest 8,845
Miscellaneous 45,666
--------------
TOTAL INCOME $ 1,601,406
EXPENSES (Note 4)
Administrative expense 187,108
Management fees 124,605
Utilities 154,049
Operating and maintenance expense 223,717
Taxes and insurance 183,784
Interest expense - Mortgage note payable 567,918
Interest expense - Notes payable 684,115
Depreciation and amortization 776,913
--------------
TOTAL EXPENSES 2,902,209
--------------
NET LOSS $ (1,300,803)
==============
</TABLE>
See Accompanying auditors' report.
The notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
STRATHERN PARK
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (1,300,803)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization $ 776,913
(Increase)/Decrease in -
Receivables 3,935
Tenant security deposits 6,977
(Decrease)/Increase in -
Accounts payable and accrued expenses (6,435)
Accrued interest payable 668,898
Security deposits 6,098
Deferred income (5,185)
----------------
Total Adjustments 1,451,201
----------------
Net Cash Provided by Operating Activities 150,398
CASH FLOWS FROM INVESTING ACTIVITIES
Deposits to reserve for replacements (86,489)
Releases from reserve for replacements 38,067
----------------
Net Cash Used in Investing Activities (48,422)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on mortgage (54,502)
Distributions paid (33,395)
----------------
Net Cash Used in Financing Activities (87,897)
----------------
Net Increase in Cash and Cash Equivalents 14,079
Cash and cash equivalents at January 1, 1998 75,050
----------------
Cash and cash equivalents at December 31, 1998 $ 89,129
================
SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION:
Cash paid during the year for interest $ 590,181
================
See Accompanying auditors' report.
The notes are an integral part of these financial statements.
</TABLE>
<PAGE>
STRATHERN PARK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -
Strathern Park (the partnership) was organized pursuant to a
limited partnership agreement dated March 28, 1989 as amended.
Effective June 1, 1990, the partnership agreement was amended
with the admission of a new limited partner who purchased a
95% limited partnership interest for a total capital
contribution of $5,963,067. On January 1, 1994 Lorne Park was
merged into Strathern Park. The combined partnerships
constructed a 241 unit apartment project (Lorne Park 72 units,
Strathern Park 169 units) located in Sun Valley, California
for tenants whose income is very low to moderate. The project
is regulated under the terms of certain of its loan
agreements. Such agreements contain certain restrictions
concerning rental charges, the number of units rented to
tenants in the very low, low and moderate income levels and
other matters. Those restrictions of rent and income shall
remain in effect for a minimum of 30 years.
Use of Estimates in the Preparation of Financial Statements -
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.
Significant Accounting Policies -
Method of Accounting - The partnership books are maintained
and its financial statements and tax returns are prepared on
the accrual basis.
Cash Equivalents - For purposes of the statement of cash
flows, the partnership considers all highly liquid debt
instruments purchased with a maturity date of three months or
less to be cash equivalents.
Rental Property - The partnership records property, equipment
and improvements at the cost of acquisition or construction.
The cost of maintenance and repairs is charged to operations
as incurred; significant renewals and betterments are
capitalized. Depreciation is computed using the straight line
method for financial statement purposes and accelerated
methods for tax purposes. Estimated useful lives for financial
statement purposes are as follows:
Classification Life
--------------------- ---------------
Buildings 27.5 Years
Equipment and furnishings 5-7 Years
Amortization - amortization of syndication costs is computed
using the straight line method over a period of 10 years.
<PAGE>
Strathern Park
Notes to Financial Statements
December 31, 1998
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Income Taxes - The project receives low-income tax credits provided
under Section 42 of the Internal Revenue Code. Also, no provision
for income taxes has been included since the income or loss of the
partnership as well as the tax credits are required to be reported
by the respective partners on their separate income tax returns.
Note 2 LONG TERM DEBT
Mortgage note payable, secured by First Deed of Trust,
requiring monthly payments of $51,913, including interest at
9.41% per annum, maturing
<TABLE>
<CAPTION>
<S> <C>
February, 2022. $ 5,804,177
Note payable secured by Second Deed of Trust, payable to the
Community Redevelopment Agency of the City of Los Angeles with
interest at 7% per annum. Interest accrues from the date of
issuance of the first certificate of occupancy which is
December 26, 1991. Unpaid principal together with all accrued
and unpaid interest are due and payable in full upon the
maturity of the primary permanent loan, but not later than 40
years from date of issuance. Principal and interest payments
may be made in annual installments from the residual receipts
of the project, as the term residual receipts is defined in
the loan agreement. The note was funded by a Housing
Development Grant from the United States Department of Housing
and Urban Development. The terms of the Grant agreement impose
certain restrictions on the use of the Grant proceeds and
operating policies of the partnership. Accrued interest on
this note at December 31, 1998 amounted
to $2,456,728. 5,179,105
Note payable secured by Third Deed of Trust, payable to the
Community Redevelopment Agency of the City of Los Angeles,
with interest at 5% per annum. Interest accrues from the date
of issuance of the first certificate of occupancy which is
December 26, 1991. Unpaid principal together with all accrued
and unpaid interest are due and payable in full upon the
maturity of the primary permanent loan, but not later than 40
years from date of issuance. Principal and interest payments
may be made in annual installments from the residual receipts
of the project, as the term residual receipts is defined in
the loan agreement. Accrued interest on this note at
December 31, 1998 amounted to $2,152,385. 6,445,175
---------------
$ 17,428,457
===============
</TABLE>
<PAGE>
Strathern Park
Notes to Financial Statements
December 31, 1998
Note 2 LONG TERM DEBT (Cont.)
Maturities of long term debt as of December 31, 1998 for the
succeeding five years are as follows:
Years ended December 31,
1999 72,337
2000 77,942
2001 87,318
2002 96,023
2003 105,596
Thereafter 16,989,241
---------------
$ 17,428,457
===============
Note 3 DISTRIBUTION TO PARTNERS
Pursuant to the terms of the partnership agreement, as amended, and
the loan agreement with the Community Redevelopment Agency of the
City of Los Angeles, distributions are payable only from residual
receipts, as defined in the agreements.
Distributions are apportioned as follows:
1) 40% to the Community Redevelopment Agency of the City of Los Angeles(CRA)
2) The remaining 60% is allocated as follows:
a) The Investor Limited Partner (Boston) is to
receive any cumulative return ($60,000
annually) in arrears;
b) The next $63,158 is distributed 95% to
Boston, 4% to the Class A Limited Partner
(SAIP II) and 1% to the General Partner
(SAIP II);
c) Any additional cash is used to repay any partner
advances to the partnership; d) The next $63,158 is
distributed 5% to Boston, 94% to SAIP II (Limited
Partner)
and 1% to SAIP II (General Partner);
e) Thereafter, cash is distributed 50% to
Boston, 49% to SAIP II (Limited Partner)
and 1% to SAIP II (General Partner).
<PAGE>
Strathern Park
Notes to Financial Statements
December 31, 1998
Note 4 RELATED PARTY TRANSACTIONS
There were no direct compensation payments to the partners during
the year. However, there were related party transactions which
occurred which are set forth below:
<TABLE>
<CAPTION>
(Income) Receivable
Expense (Payable)
Account for the At December
Name Description No. Year 31, 1998
--------------------------------- -------------------- --------------- --------------- ---------------
Thomas Safran and
<S> <C> <C> <C> <C>
Associates, Inc.(TS&A) Management fee 6320 $ 95,685 $ (1,648)
Apartment Investment and
Managemet Company
(AIMCO)/Insignia Residential
Group, Inc. (IRG) Management fee 6320 28,920 ---
--------------- ---------------
$ 124,605 $ (1,648)
=============== ===============
</TABLE>
The general partner has a direct ownership interest in TS&A listed above.
Thomas Safran & Associates, Inc. (TS&A) has subcontracted certain
accounting and supervisory functions to Insignia Residential Group
(IRG) for a period of two years commencing August 1, 1997. On
October 1, 1998, IRG merged with Apartment Investment and Management
Company (AIMCO) which took over IRG's management function. TS&A will
continue to be the managing agent and AIMCO will report to them on a
monthly basis. The agreement among TS&A, AIMCO and the Project
provides a portion of the approved management fees to be paid to
AIMCO for their services.
Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and Short Term Investments -
The carrying amount approximates fair value because of the
short maturity of those investments.
Long Term Debt (First Deed of Trust) -
The project does not have the right to prepay this debt during
the first ten years of the term of this note. Accordingly, the
carrying amount approximates its fair value.
Long Term Debt (Second & Third Deed of Trust) -
The carrying amount approximates fair value because there is
no ready market for such debt, repayment/refinancing is
severely restricted by the CRA and HUD.
<PAGE>
Strathern Park
Notes to Financial Statements
December 31, 1998
Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont.)
<TABLE>
<CAPTION>
December 31, 1998
-----------------------------------
Carrying Fair
Amount Value
<S> <C> <C>
Cash and Short Term Investments $ 389,743 $ 389,743
Long Term Debt (First Deed of Trust) (5,804,177) (5,804,177)
Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280)
</TABLE>
Note 6 YEAR 2000 ISSUE
The General Partner has assessed the Partnership's exposure to date
sensitive computer software programs that may not be operative
subsequent to 1999 and has implemented a requisite course of action
to minimize Year 2000 risk and ensure that neither significant costs
nor disruption of normal business operations are encountered.
However, because there is no guarantee that all systems of outside
vendors or other entities affecting the partnership's operations
will be 2000 compliant, the Partnership remains susceptible to
consequences of the Year 2000 issue.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
STRATHERN PARK
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
BOSTON FINANCIAL QUALIFIED HOUSING
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET FORMAT
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1110 Petty cash $ 800
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1120 Cash in bank 88,329
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1130 Tenant accounts receivable 23,200
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1140 Other accounts receivable 868
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1191 Tenant security deposits 113,365
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Current Assets $ 226,562
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
RESERVES AND DEPOSITS
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1320 Reserve for replacements 187,249
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
FIXED ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1410 Land 5,889,320
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1420 Buildings 19,042,548
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1450 Furniture 949,223
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
25,881,091
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
4100 Less: accumulated depreciation (5,972,453)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Fixed Assets 19,908,638
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1820 Syndication fee (Net of accumulated amortization
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
of $130,186) 588,481
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 20,910,930
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying auditors' report.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
STRATHERN PARK
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
BOSTON FINANCIAL QUALIFIED HOUSING
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET FORMAT
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2110 Accounts payable $ 19,354
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1st mortgage accrued interest payable 47,032
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
2191 Tenant security deposits 112,707 $ 179,093
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
MORTGAGE NOTE PAYABLE CURRENT PORTION
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1st mortgage note payable current portion 72,337
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 251,430
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
LONG TERM LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Accrued interest payable - notes
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
2nd mortgage note payable 2,456,728
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
3rd mortgage note payable 2,152,385
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Mortgage notes payable
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
2321 1st mortgage note payable 5,731,840
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
2322 2nd mortgage note payable 5,179,105
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
2323 3rd mortgage note payable 6,445,175 17,356,120
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
OTHER LONG TERM LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
2210 Deferred income 15,419
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Long Term Liabilities 21,980,652
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
3130 Limited partners' equity (1,235,626)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
3131 General partners' equity (85,526)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Partners' Equity (1,321,152)
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 20,910,930
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying auditors' report.
<PAGE>
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
REVENUE
Rent revenue
<S> <C> <C> <C> <C>
5120 Apartments $ 1,500,682
5121 Tenant assistance payments 61,056
5130 Furniture and equipment -
5140 Stores and commercial 13,170
5170 Garage and parking -
5180 Flexible subsidy income -
5190 Miscellaneous -
----------------
Total rent revenue $ 1,574,908
Vacancies
5220 Apartments (28,013)
5240 Stores and commercial -
5270 Garage and parking -
5290 Miscellaneous -
----------------
Total Vacancies (28,013)
----------------
Net Rental Revenue 1,546,895
Financial Revenue
5410 Interest Income - operations 2,589
5430 Interest Income - residual receipts -
5440 Interest income - replacement reserve 4,403
5490 Interest income - miscellaneous 1,853
----------------
Total Financial Revenue 8,845
Other Revenue
5910 Laundry and vending 31,897
5920 NSF and late charges 7,667
5930 Damages and cleaning fees 3,522
5940 Forfeited tenant security deposit 406
5990 Other revenue 2,174
5991 Non-cash revenue -
----------------
Total Other Revenue 45,666
----------------
NET REVENUE $ 1,601,406
================
</TABLE>
See Accompanying auditors' report.
<PAGE>
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
EXPENSES
Administrative Expenses
<S> <C> <C> <C>
6210 Advertising $ 4,739
6250 Other renting expense 6,368
6310 Office salaries 20,650
6311 Office supplies 47,953
6320 Management fee 124,605
6330 Manager or superintendent salary 55,737
6331 Manager's rent free unit -
6340 Legal expenses (project) 9,498
6350 Auditing expenses (project) 9,500
6351 Bookkeeping fees/accounting services -
6360 Telephone and answering service 11,496
6370 Bad debts 21,167
6390 Miscellaneous administrative expenses -
----------------
Total Administrative Expenses $ 311,713
Utilities Expenses
6420 Fuel oil/coal -
6450 Electricity 44,769
6451 Water 69,736
6452 Gas 7,411
6453 Sewer 32,133
----------------
Total Utilities Expenses 154,049
Operating & Maintenance
6510 Janitor and cleaning payroll -
6515 Janitor and cleaning supplies 7,998
6517 Janitor and cleaning contract -
6519 Exterminating payroll/contract 1,106
6520 Exterminating supplies -
6525 Garbage and trash removal 16,500
6530 Security payroll/contract 19,673
</TABLE>
See Accompanying auditors' report.
<PAGE>
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
EXPENSES (Cont.)
Operating & Maintenance (Cont.)
<S> <C> <C> <C>
6535 Grounds payroll $ -
6536 Grounds supplies 5,015
6537 Grounds contract 30,839
6540 Repairs payroll 66,955
6541 Repairs material 23,209
6542 Repairs contract 23,117
6545 Elevator maintenance/contract -
6546 Heating/cooling repairs and maintenance 3,321
6547 Swimming pool maintenance/contract -
6548 Snow removal -
6560 Decorating payroll/contract 18,677
6561 Decorating supplies 7,307
6570 Other, gasoline -
6590 Miscellaneous operating and maintenance -
----------------
Total Operating and Maintenance $ 223,717
Taxes and Insurance
6710 Real estate taxes 122,658
6711 Payroll taxes (FICA) 11,399
6719 Miscellaneous taxes, licenses 3,872
6720 Property and liability insurance 27,431
6721 Fidelity bond insurance -
6722 Workmen's compensation 5,686
6723 Health insurance and other benefits 12,238
6729 Other insurance -
6790 Miscellaneous taxes and insurance -
----------------
Total Taxes and Insurance 183,284
Interest on Mortgage Notes
6821 Interest on 1st mortgage 567,918
</TABLE>
See Accompanying auditors' report.
<PAGE>
STRATHERN PARK
BOSTON FINANCIAL QUALIFIED HOUSING -
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
EXPENSES (Cont.)
Other Financial Expenses
<S> <C> <C> <C>
6690 Amortization $ 17,967
6830 Interest on notes payable (long term) 684,115
6850 Mortgage insurance premium -
6890 Miscellaneous financial expenses 500
6895 Non-cash expense -
----------------
Total Financial Expenses $ 702,582
---------------
TOTAL EXPENSES BEFORE DEPRECIATION 2,143,263
---------------
PROFIT (LOSS) BEFORE DEPRECIATION (541,857)
6600 Depreciation 758,946
---------------
OPERATING PROFIT (LOSS) (1,300,803)
Other Expenses Prior Period (Entity) ---
---------------
NET PROFIT (LOSS) $ (1,300,803)
===============
1st mortgage principal payment $ 54,502
2nd mortgage principal payment ---
3rd mortgage principal payment ---
---------------
Total mortgage principal payments $ 54,502
===============
Actual replacement reserve deposits $ 86,489
Replacement or painting reserve releases $ (38,067)
Cash subsidies ---
Capital improvements not expensed ---
Capital contribution or disbursement $ 33,395
See Accompanying auditors' report.
</TABLE>
<PAGE>
STRATHERN PARK
COMPUTATION OF RESIDUAL RECEIPTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Net income (loss) as of December 31, 1998 $ (1,300,803)
ADD: Depreciation $ 758,946
Amortization 17,967
Community Redevelopment Agency loan interest 322,258
Housing Development Grant loan interest 361,857
Approved releases from reserve for replacements ---
Releases from reserve for replacements 38,067 1,499,095
-------------- ---------------
198,292
LESS: Principal payments on mortgage (54,502)
Deposits to reserve for replacements (86,489)
Payments for capital expenditures --- (140,991)
-------------- ---------------
RESIDUAL RECEIPTS, as defined in the partnership agreement
at December 31, 1998 $ 57,301
===============
</TABLE>
See Accompanying auditors' report.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 450,450
<SECURITIES> 2,666,281
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 25,653,434<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 24,401,673
<TOTAL-LIABILITY-AND-EQUITY> 25,653,434<F2>
<SALES> 000
<TOTAL-REVENUES> 400,484<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 788,343<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 73,899
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (3,383,033)<F5>
<EPS-BASIC> (48.59)
<EPS-DILUTED> 000
<FN>
<F1>Included in Total assets is Accounts receivable from affiliates of $173,739,
Tenant security deposit escrow of $3,758, Investments in Local Limited
Partnerships of $21,538,791, Rental property of $778,843, Replacement reserve
escrow of $7,425, Other assets of $32,658 and Prepaid assets of $1,489.
<F2>Included in Total liabilities and equity is Deferred revenue of $146,818,
Accounts payable to affiliates of $143,443, Accounts payable and accrued
expenses of $133,838, Mortgage note payable of $706,873, Tenant security
deposits payable of $3,803 and minority interest in Local Limited Partnership of
$116,986. <F3>Total revenue includes Investment of $159,094, Rental of $117,971
and Other revenue of $123,419. <F4>Included in Other expenses are General and
administrative of $453,057, Asset management fees of $243,169, Rental operations
of $73,899, Depreciation of $27,043 and Amortization of $24,813. <F5>Net Loss
includes Minority interest in losses of Local Limited Partnership of $(17) and
Equity in losses of Local Limited Partnerships of $(2,944,720).
</FN>
</TABLE>
