UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year
ended March 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the
transition period from ______ to ____________
0-24600
(Commission File Number)
American Tax Credit Trust, a Delaware statutory business trust
Series I
(Exact name of registrant as specified in its governing instruments)
Delaware 06-6385350
(State or other jurisdiction of organization)(I.R.S.Employer Identification No.)
Richman American Credit Corp.
599 West Putnam Avenue, 3rd floor
Greenwich, Connecticut 06830
- - ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
--------------
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of each Class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Units of Beneficial Ownership Interest
- - ------------------------------------------------------------------------------
(Title of Class)
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
requirement for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in a 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
Registrant has no voting stock.
Documents incorporated by reference:
Part I - pages 11 through 21 and 30 through 48 of the prospectus
dated September 7, 1993, as supplemented by Supplement No. 1, Supplement
No. 2, Supplement No. 3 and Supplement No. 4 dated September 7, 1993,
November 16, 1993, November 23, 1994 and December 28, 1994, respectively,
filed pursuant to Rule 424(b)(3) under the Securities Act of
1933.
<PAGE>
PART I
Item 1. Business
Formation
American Tax Credit Trust, a Delaware statutory business trust (the "Trust"),
was formed on February 4, 1993 to invest primarily in leveraged low-income
multifamily residential complexes (the "Property" or "Properties") which qualify
for the low-income tax credit established by Section 42 of the Tax Reform Act of
1986 (the "Low-income Tax Credit"), through the acquisition of limited
partnership equity interests in partnerships (the "Local Partnership" or "Local
Partnerships") that are the owners of the Properties. The Trust considers its
activity to constitute a single industry segment.
Richman American Credit Corp. (the "Manager"), a Delaware corporation, was
formed on April 5, 1993, under Chapter 1, Title 8 of the Delaware Code, to act
as the sole manager of the Trust. The Manager is wholly-owned by Richard Paul
Richman and is an affiliate of both The Richman Group, Inc. ("Richman Group"), a
Delaware corporation founded by Richard Paul Richman in 1988 and Wilder Richman
Corporation ("WRC"), a New York corporation co-founded by Richard Paul Richman
in 1979.
The Amendment No. 4 to the Registration Statement on Form S-11 was filed with
the Securities and Exchange Commission (the "Commission") on August 25, 1993
pursuant to the Securities Act of 1933 under Registration Statement No.
33-58032, which was declared effective on August 26, 1993. Reference is made to
the prospectus dated September 7, 1993, as supplemented by Supplement No. 1,
Supplement No. 2, Supplement No. 3 and Supplement No. 4 dated September 7, 1993,
November 16, 1993, November 23, 1994 and December 28, 1994, respectively, filed
with the Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933
(the "Prospectus"). Post-Effective Amendment No. 1 to the Registration Statement
on Form S-11 was filed with the Commission on November 26, 1993. Pursuant to
Rule 12b-23 of the Commission's General Rules and Regulations promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
description of Registrant's business set forth under the heading "Investment
Objectives and Policies" at pages 30 through 48 of the Prospectus is
incorporated herein by reference.
On September 13, 1993, the Trust commenced, through Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and PaineWebber Incorporated
("PaineWebber"), the offering of up to 150,000 units of beneficial ownership
interest ("Unit") at $1,000 per Unit to beneficial owners ("Beneficial Owners")
in from one to twenty series (each a "Series"). This filing is presented for
Series I only and as used herein, the term Registrant refers to Series I of the
Trust. On November 29, 1993, January 28, 1994 and May 25, 1994 the closings for
8,460, 4,909 and 5,285 Units, respectively, took place, amounting to aggregate
Beneficial Owners' capital contributions of $18,654,000.
Competition
Pursuant to Rule 12b-23 of the Commission's General Rules and Regulations
promulgated under the Exchange Act, the description of Registrant's competition,
general risks, tax risks and partnership risks set forth under the heading "Risk
Factors" at pages 11 through 21 of the Prospectus is incorporated herein by
reference.
Employees
Registrant employs no personnel and incurs no payroll costs. All management
activities of Registrant are conducted by the Manager. An affiliate of the
Manager employs individuals who perform the management activities of Registrant.
This entity also performs similar services for other affiliates of the Manager.
<PAGE>
Tax Reform Act of 1986, Revenue Act of 1987, Technical and Miscellaneous Revenue
Act of 1988, Omnibus Budget Reconciliation Act of 1989, Omnibus Budget
Reconciliation Act of 1990, Tax Extension Act of 1991, Omnibus Budget
Reconciliation Act of 1993 and Uruguay Round Agreements Act (collectively the
"Tax Acts")
Registrant is organized as a limited partnership and is a "pass through" tax
entity which does not, itself, pay Federal income tax. However, the owners of
Registrant who are subject to Federal income tax may be affected by the Tax
Acts. Registrant will consider the effect of certain aspects of the Tax Acts on
the owners when making decisions regarding its investments. Registrant does not
anticipate that the Tax Acts will currently have a material adverse impact on
Registrant's business operations, capital resources and plans or liquidity.
Item 2. Properties
The executive offices of Registrant and the Manager are located at 599 West
Putnam Avenue, 3rd floor, Greenwich, Connecticut 06830. Registrant does not own
or lease any properties. Registrant pays no rent; all charges for leased space
are borne by an affiliate of the Manager.
Registrant's primary objective is to provide Low-income Tax Credits to
Beneficial Owners generally over a ten year period. Each of Registrant's Local
Partnerships has been allocated by the relevant state tax credit agency an
amount of Low-income Tax Credits for ten years from the date the Property is
placed in service. The required holding period of each Property, in order to
avoid Low-income Tax Credit recapture, is fifteen years from the year in which
the Low-income Tax Credits commence on the last building of the Property (the
"Compliance Period"). In addition, certain of the Local Partnerships have
entered into agreements with the relevant state tax credit agencies whereby the
Local Partnerships must maintain the low-income nature of the Properties for a
period which exceeds the Compliance Period, regardless of any sale of the
Properties by the Local Partnerships after the Compliance Period. The Properties
must satisfy various requirements including rent restrictions and tenant income
limitations (the "Low-income Tax Credit Requirements") in order to maintain
eligibility for the recognition of the Low-income Tax Credit at all times during
the Compliance Period. Once a Local Partnership has become eligible for the
Low-income Tax Credit, it may lose such eligibility and suffer an event of
recapture if its Property fails to remain in compliance with the Low-income Tax
Credit Requirements. Through December 31, 1996, none of the Local Partnerships
have suffered an event of recapture of Low-income Tax Credits.
Certain of the Local Partnerships receive rental subsidy payments, including
payments under Section 8 of Title II of the Housing and Community Development
Act of 1974 ("Section 8") (see descriptions of subsidies on page 4). The subsidy
agreements expire at various times during and after the Compliance Periods of
the Local Partnerships. The United States Department of Housing and Urban
Development ("HUD") has issued notices which implement provisions to renew
certain project based Section 8 contracts expiring during HUD's fiscal year
1997, where requested by an owner, for an additional one year term generally at
or below current rent levels, subject to certain guidelines. HUD has an
additional program which, in general, provides for restructuring rents and/or
mortgages where rents may be adjusted to market levels and mortgage terms may be
adjusted based on the reduction in rents, although there may be instances in
which only rents, but not mortgages, are restructured. Registrant cannot
reasonably predict legislative initiatives and governmental budget negotiations,
the outcome of which could result in a reduction in funds available for the
various federal and state administered housing programs including the Section 8
program. Such changes could adversely affect the future net operating income and
debt structure of any or all Local Partnerships currently receiving such subsidy
or similar subsidies. Two Local Partnerships' Section 8 contracts, which cover
certain rental units, are scheduled to expire in 1997, one of which expired
during 1996 and was extended for one year.
Registrant owns a 98.9%-99% limited partnership interest ("Local Partnership
Interest") in ten Local Partnerships reflected on the following page.
<PAGE>
<TABLE>
<CAPTION>
Item 2. Properties (continued)
Capital contribution Mortgage &
obligation construction
Name of Local Partnership Number Total as of Paid through loans payable as of Subsidy
---------------------------------------
Name of apartment complex of rental March 30, March 30, December 31, (see
---------------------------------------
Apartment complex location units 1997 1997 1996 footnotes)
----------------------------- ----------- -------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C>
---------------------------------------
ACP Housing Associates, L.P.
ACP Housing Apartments
New York, New York 27 $ 737,222 $ 737,222 $ 1,511,174 (1b)
---------------------------------------
Creative Choice Homes VII, Ltd.
Coral Gardens Apartments
Homestead, Florida 91 2,382,812 2,382,812 2,186,893 (1a)
---------------------------------------
Edgewood Manor Associates, L.P.
Edgewood Manor Apartments
Philadelphia, Pennsylvania 49 1,963,799 1,963,799 1,861,013 (1b)
---------------------------------------
Ledge / McLaren Limited Partnership
Ledge / McLaren Apartments
Nashua, New Hampshire 8 343,079 343,079 462,678 (1b)
---------------------------------------
Penn Apartment Associates
Penn Apartments
Chester, Pennsylvania 15 852,180 852,180 963,000 (1b)
---------------------------------------
SB-92 Limited Partnership
Shaker Boulevard Apartments
Cleveland, Ohio 73 795,255 795,255 2,129,343 (1b)
---------------------------------------
St. Christopher's Associates, L.P. V
Lehigh Park Apartments
Philadelphia, Pennsylvania 29 2,075,785 1,998,985 2,180,000 (1b)
---------------------------------------
St. John Housing Associates, L.P.
St. John Homes
Gary, Indiana 144 3,546,861 3,546,861 4,646,393 (1a)
---------------------------------------
Starved Rock - LaSalle Manor
Limited Partnership
LaSalle Manor
LaSalle, Illinois 48 634,327 327,894 2,120,089 (1a)
---------------------------------------
Vision Limited Dividend Housing
Association Limited Partnership
Helen Odean Butler Apartments
Detroit, Michigan 97 1,429,721 1,139,904 5,349,915 (1b)
------------ ------------ ------------
---------------------------------------
$14,761,041 $14,087,991 $23,410,498
=========== =========== ===========
</TABLE>
(1) Description of Subsidies:
(a) Section 8 of Title II of the Housing and Community Development
Act of 1974 allows qualified low-income tenants to pay thirty
percent of their monthly income as rent with the balance paid by
the federal government.
(b) The Local Partnership's debt structure includes a principal or
interest payment subsidy.
<PAGE>
Item 3. Legal Proceedings
Registrant is not aware of any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the Beneficial Owners of Registrant
during the fourth quarter of the fiscal year covered by this report.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity
and Related Security Holder Matters
Market Information and Holders
There is no established public trading market for Registrant's Units. There are
provisions in the Fourth Amended and Restated Agreement of Trust of Registrant,
as amended which are intended to prevent the development of a public secondary
market. Accordingly, accurate information as to the market value of a Unit at
any given date is not available. Merrill Lynch and PaineWebber both provide its
clients who wish to buy or sell partnership units with a limited partnership
secondary service available through their respective Limited Partnership
Secondary Transaction Departments. The number of Beneficial Owners of Units as
of May 21, 1997 was 988, holding 18,654 Units.
Beginning with the December 1994 client account statements, Merrill Lynch and
PaineWebber implemented new guidelines for providing estimated values of limited
partnerships and other direct investments reported on client account statements.
Pursuant to the guidelines, estimated values for limited partnership interests
originally sold by Merrill Lynch and PaineWebber (such as Registrant's Units)
will be provided two times per year to Merrill Lynch and PaineWebber by
independent valuation services. These estimated values will be based on
financial and other information available to the independent services (1) on the
prior August 15th for reporting on December year-end and subsequent client
account statements through the following May's month-end client account
statements and (2) on the prior March 31st for reporting on June through
November month-end client account statements of the same year. Merrill Lynch and
PaineWebber clients may contact their respective financial consultants or
telephone the number provided to them on their account statements to obtain a
general description of the methodology used by the independent valuation
services to determine their estimates of value. In addition, Registrant may
provide an estimate of limited partnership value to Unit holders from time to
time in Registrant's reports to Beneficial Owners. The estimated values provided
by the independent services and Registrant, which may differ, are not market
values and Unit holders may not be able to sell their Units or realize either
amount upon a sale of their Units. In addition, Unit holders may not realize
such estimated values upon the liquidation of Registrant's assets over its
remaining life.
Distributions
Registrant owns a limited partnership interest in Local Partnerships that are
the owners of Properties which are leveraged and receive government assistance
in various forms of rental and debt service subsidies. The distribution of any
cash flow generated by the Local Partnerships may be restricted, as determined
by each Local Partnership's financing and subsidy agreements. Accordingly,
Registrant does not anticipate that it will provide significant annual cash
distributions to its owners. There were no cash distributions to the owners
during the years ended March 30, 1997 and 1996.
Low-income Tax Credits, which are subject to various limitations, may be used by
investors to offset federal income tax liabilities. The Low-income Tax Credits
per Unit for each of the three closings, generated by Registrant and allocated
to the Beneficial Owners for the tax years ended December 31, 1996 and 1995 and
the cumulative Low-income Tax Credits allocated from inception through December
31, 1996 are as follows:
<TABLE>
<CAPTION>
First closing Second closing Third closing
November 29, 1993 January 28, 1994 May 25, 1994
----------------- ---------------- ------------
<S> <C> <C> <C>
Low-income Tax Credits:
Tax year ended December 31, 1996 $ 134.10 $ 134.10 $ 134.10
Tax year ended December 31, 1995 98.63 98.63 98.63
Cumulative totals $ 282.33 $ 280.15 $ 267.63
</TABLE>
Notwithstanding future circumstances which may give rise to recapture or loss of
future benefits (see Part I, Item 2 - Properties, herein), Registrant expects to
generate total Low-income Tax Credits from investments in Local Partnerships of
approximately $1,410 per Unit through December 31, 2006.
<PAGE>
Item 6. Selected Financial Data
The information set forth below presents selected financial data of Registrant.
Additional detailed financial information is set forth in the audited financial
statements included under Part II, Item 8 herein.
<TABLE>
<CAPTION>
November 29, 1993
(Commencement of
Years Ended March 30, Operations) to
1997 1996 1995 March 30, 1994
------------------ ------------------ ------------------ --------------
<S> <C> <C> <C> <C>
Interest revenue $ 156,201 $ 268,044 $ 250,570 $ 5,148
================ =============== =============== ===================
Equity in loss of investment in
local partnerships $ (1,070,651) $ (590,457) $ (391,691) $ (42,427)
============== ============== ============== =================
Net loss $ (1,170,580) $ (590,132) $ (387,896) $ (161,847)
============== ============== ============== ================
Net loss per unit of beneficial ownership interest based upon weighted average
number of units (18,654, 18,654, 17,843, and 10,935 units of beneficial
ownership interest) $ (62.12) $ (31.32) $ (21.52) $ (14.66)
================= ================ ================ ==================
As of March 30,
1997 1996 1995 1994
------------------ ----------------- ----------------- -----------
Total assets $ 15,071,351 $ 17,438,812 $ 19,721,810 $ 5,427,860
============== ============ ============= ================
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
As used herein, the term Registrant refers to Series I of American Tax Credit
Trust, a Delaware statutory business trust, (the "Trust"). References to any
right, obligation, action, asset or liability of Series I means such right,
obligation, action, asset or liability of the Trust in respect or on behalf of
Series I.
Capital Resources and Liquidity
Registrant, together with Series II through Series XX (each of which and
Registrant, a "Series") collectively, of the Trust, registered 150,000 units of
beneficial ownership interest ("Units") at $1,000 per Unit to investors (the
"Beneficial Owners") with the Securities and Exchange Commission (the
"Commission") and on August 26, 1993, the Commission declared effective
Amendment No. 4 to the Registration Statement on Form S-11. Registrant admitted
Beneficial Owners between November 29, 1993 and May 25, 1994 in three closings
with aggregate Beneficial Owners' capital contributions amounting to
$18,654,000.
Registrant acquired ten limited partnership interests (the "Local Partnership
Interests") in partnerships (the "Local Partnership" or "Local Partnerships")
representing capital contributions in the amount of $14,761,041. The Local
Partnerships own low-income multifamily residential complexes (the "Property" or
"Properties") which qualify for the low-income tax credit established by Section
42 of the Tax Reform Act of 1986 (the "Low-income Tax Credit"). The required
holding period of each Property, in order to avoid Low-income Tax Credit
recapture, is fifteen years from the year in which the Low-income Tax Credits
commence on the last building of the Property (the "Compliance Period"). The
investments in Local Partnerships are highly illiquid. As of March 30, 1997,
Registrant has paid capital contributions
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
of $14,087,991 to the Local Partnerships and $673,050 are outstanding.
Restricted cash in the balance sheet as of March 30, 1997 represents such
outstanding capital contributions and accrued interest of $32,888 on an
outstanding capital contribution. The outstanding capital contributions are
payable in installments upon each Local Partnership's satisfaction of specified
conditions related to construction and/or operations. In accordance with the
limited partnership agreements of the Local Partnerships, the final
determination of the capital contribution obligations to be paid by Registrant
to the Local Partnerships may be adjusted if the actual Low-income Tax Credit of
a Local Partnership is greater than or less than the expected Low-income Tax
Credit of such Local Partnership, among other things, at the time of
acquisition.
From the closing of Units, Registrant established a working capital reserve.
Registrant is not expected to have access to any source of financing.
Accordingly, if unforeseen contingencies arise that cause a Local Partnership to
require additional capital, in addition to that contributed by Registrant, the
source of such capital needs may be obtained from (i) limited working capital
reserves of Registrant (which may include distributions received from Local
Partnerships), (ii) debt financing at the Local Partnership level (which may not
be available) or (iii) additional equity contributions of the general partner of
a Local Partnership (the "Local General Partner"). In addition, the Local
Partnerships are generally expected to maintain escrow reserves over time in
addition to the reserves maintained by Registrant. There can be no assurance
that any of these sources would be readily available to provide for possible
additional capital requirements or be sufficient to remedy any such unforeseen
contingencies.
As of March 30, 1997, Registrant's working capital is comprised of cash and cash
equivalents of $830,290 and investments in corporate bonds of $834,697.
Registrant acquired such investments in bonds with the intention of utilizing
proceeds generated by such investments in bonds to meet its annual obligations.
Future sources of Registrant's funds are expected primarily from interest earned
on investments of working capital reserves, retired investments in bonds,
interest earned on temporary investments of future capital contribution
obligations due to Local Partnerships ("Temporary Investments") and limited cash
distributions from Local Partnerships.
During the year ended March 30, 1997, Registrant received cash from interest
earnings and utilized cash for operating expenses and for capital contributions
to Local Partnerships. Cash and cash equivalents and investments in bonds
available-for-sale increased, in the aggregate, by approximately $237,000 during
the year ended March 30, 1997, which increase includes a net unrealized loss
recorded on investments in bonds of approximately $21,000, amortization of net
premium on investments in bonds of approximately $4,000 and a transfer from
restricted cash of approximately $224,000 resulting from a decrease in capital
contributions payable to two Local Partnerships pursuant to their respective
partnership agreements. Restricted cash decreased by approximately $1,294,000 as
a result of payments of capital contributions made to the Local Partnerships of
approximately $1,076,000 and the reduction of capital contributions payable to
two Local Partnerships discussed above, partially offset by an increase in
interest payable of approximately $6,000. During the year ended March 30, 1997,
the investment in Local Partnerships decreased as a result of Registrant's
equity in the Local Partnerships' net loss for the year ended December 31, 1996
of $1,070,651 and the reduction of capital contributions payable to certain
Local Partnerships.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States. The
rents of the Properties, certain of which receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8"), are subject to specific laws, regulations
and agreements with federal and state agencies. The subsidy agreements expire at
various times during and after the Compliance Periods of the Local Partnerships.
The United States Department of Housing and Urban Development ("HUD") has issued
notices which implement provisions to renew certain project based Section 8
contracts expiring during HUD's fiscal year 1997, where requested by an owner,
for an additional one year term generally at or below current rent levels,
subject to certain guidelines. HUD has an additional program which, in general,
provides for restructuring rents and/or mortgages where rents may be adjusted to
market levels and mortgage terms may be adjusted based on the reduction in
rents, although there may be instances in which only rents, but not mortgages,
are restructured. Registrant cannot reasonably predict legislative initiatives
and governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of any or all Local
Partnerships currently receiving such subsidy or similar subsidies. Two Local
Partnerships' Section 8 contracts, which cover certain rental units, are
scheduled to expire in 1997, one of which expired during 1996 and was extended
for one year. In addition, the Local Partnerships have various financing
structures which include
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
(i) required debt service payments ("Mandatory Debt Service") and (ii) debt
service payments which are payable only from available cash flow subject to the
terms and conditions of the notes, which may be subject to specific laws,
regulations and agreements with appropriate federal and state agencies
("Non-Mandatory Debt Service or Interest"). In the event rents are not
sufficient to cover operating expenses and Mandatory Debt Service requirements
and other charges, the Local General Partners are obligated to provide advances
to cover deficits for a certain period of time up to certain amounts (the
"Deficit Guarantee"). A Local General Partner's funding of such Deficit
Guarantee is dependent on its liquidity or ability to borrow the required funds.
During the year ended December 31, 1996, revenue from operations, Local General
Partner advances and reserves of the Local Partnerships have generally been
sufficient to cover the operating expenses and Mandatory Debt Service. As of
December 31, 1996, all of the Local Partnerships have achieved full operational
status and substantially all of the Local Partnerships are effectively operating
at or near breakeven levels, although certain Local Partnerships' accounting
information reflects operating deficits that do not represent cash deficits due
to their mortgage and financing structure and the required deferral of property
management fees. However, as discussed below, one Local Partnership's operating
information indicates below break even operations after taking into account its
mortgage and financing structure.
The terms of the partnership agreement of Edgewood Manor Associates, L.P. (the
"Edgewood Manor Local Partnership") require the Local General Partners of the
Edgewood Manor Local Partnership to advance funds to cover operating deficits up
to $300,000 through November 1996. During 1996, the Edgewood Manor Local
Partnership changed management agents from an affiliate of the Local General
Partner to a non-affiliate. The prior management agent was required to defer its
property management fees in order to avoid a default under the mortgage. The
Edgewood Manor Local Partnership incurred an operating deficit of approximately
$16,000 for the year ended December 31, 1996, inclusive of all property
management fees. As of December 31, 1996, the Local General Partners of the
Edgewood Manor Local Partnership have advanced approximately $16,000 under their
Deficit Guarantee obligation. Of Registrant's total annual Low-income Tax
Credits, approximately 14% is allocated from the Edgewood Manor Local
Partnership.
Results of Operations
Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting. Registrant accounts for its investment in Local Partnerships
in accordance with the equity method of accounting, under which the investment
is carried at cost which includes capital contributions payable, and is adjusted
for Registrant's share of the Local Partnership's results of operations and by
any cash distributions received. Equity in loss of each investment in Local
Partnership allocated to Registrant is recognized to the extent of Registrant's
investment balance in each Local Partnership. Any equity in loss in excess of
Registrant's investment balance in a Local Partnership is allocated to other
partners' capital in each such Local Partnership. As a result, the equity in
loss of investment in Local Partnerships is expected to decrease as Registrant's
investment balances in the respective Local Partnerships become zero. However,
the combined statements of operations of the Local Partnerships reflected in
Note 5 to Registrant's financial statements include the operating results of all
Local Partnerships, regardless of Registrant's investment balances.
Year Ended March 30, 1997
For the year ended March 30, 1997, Registrant had a net loss of approximately
$1,171,000, which included an equity in loss of investment in Local Partnerships
of approximately $1,071,000 for the year ended December 31, 1996. Registrant's
loss from operations for the year ended March 30, 1997 of approximately $100,000
was attributable to interest revenue of approximately $156,000, exceeded by
operating expenses of approximately $241,000 and amortization of organization
costs of $15,000. Interest revenue for future periods is expected to decline as
Temporary Investments are utilized to make payments of capital contributions to
Local Partnerships.
The Local Partnerships' net loss of approximately $1,082,000 for the year ended
December 31, 1996 was attributable to rental and other revenue of approximately
$3,605,000, exceeded by operating and interest expenses of approximately
$3,350,000 and approximately $1,337,000 of depreciation and amortization
expenses. As a result of ongoing development and construction, one Local
Partnership completed construction and initial rent-up during June 1996. The
Local Partnerships' net loss for the year ended December 31, 1996 includes
accrued Non-Mandatory Interest charges of approximately $266,000 and does not
include principal amortization on mortgage and construction loans payable of
approximately $786,000.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Year Ended March 30, 1996
For the year ended March 30, 1996, Registrant had a net loss of approximately
$590,000, which included an equity in loss of investment in Local Partnerships
of approximately $590,000 for the year ended December 31, 1995. Registrant's
income from operations for the year ended March 30, 1996 of approximately $300
was attributable to interest revenue of approximately $268,000, offset by
operating expenses of approximately $253,000 and amortization of organization
costs of $15,000.
The Local Partnerships' net loss of approximately $657,000 for the year ended
December 31, 1995 was attributable to rental and other revenue of approximately
$2,586,000, exceeded by operating and interest expenses of approximately
$2,333,000 and approximately $910,000 of depreciation and amortization expenses.
As a result of ongoing development, construction and initial rent-up, certain
Local Partnerships did not experience full operations during 1995. The Local
Partnerships' net loss for the year ended December 31, 1995 includes accrued
Non-Mandatory Interest charges of approximately $105,000 and does not include
principal amortization on mortgage and construction loans payable of
approximately $90,000.
Year Ended March 30, 1995
For the year ended March 30, 1995, Registrant had a net loss of approximately
$388,000, which included an equity in loss of investment in Local Partnerships
of approximately $392,000 for the year ended December 31, 1994. Registrant's
income from operations for the year ended March 30, 1995 of approximately $4,000
was attributable to interest revenue of approximately $251,000, offset by
operating expenses of approximately $232,000 and amortization of organization
costs of $15,000.
The Local Partnerships' net loss of approximately $396,000 for the year ended
December 31, 1994 was attributable to rental and other revenue of approximately
$1,509,000, exceeded by operating and interest expenses of approximately
$1,454,000 and approximately $451,000 of depreciation and amortization expenses.
As a result of ongoing development, construction and initial rent-up, certain
Local Partnerships did not experience full operations during 1994. In addition,
Registrant had not utilized all of its net proceeds for acquiring Local
Partnership Interests as of December 31, 1994. The Local Partnerships' net loss
for the year ended December 31, 1994 includes accrued Non-Mandatory Interest
charges of approximately $93,000 and does not include principal amortization on
mortgage and construction loans payable of approximately $64,000.
Year Ended March 30, 1997 v. 1996
Registrant's operations for the year ended March 30, 1997 resulted in a net loss
of approximately $1,171,000 as compared to a net loss of approximately $590,000
for the year ended March 30, 1996. The increase in net loss is primarily
attributable to an increase in equity in loss of investment in Local
Partnerships of approximately $480,000 and a decrease in interest revenue of
approximately $112,000. The increase in equity in loss of investment in Local
Partnerships is primarily a result of more Local Partnerships achieving full
operations. Interest revenue declined primarily as a result of Registrant's
utilization of Temporary Investments to pay capital contributions to Local
Partnerships.
Year Ended March 30, 1996 v. 1995
Registrant's operations for the year ended March 30, 1996 resulted in a net loss
of approximately $590,000 as compared to a net loss of approximately $388,000
for the year ended March 30, 1995. The increase in net loss is primarily
attributable to an increase in equity in loss of investment in Local
Partnerships of approximately $199,000, which is primarily a result of more
Local Partnerships achieving full operations during 1995 and the acquisition of
two additional Local Partnership Interests.
Inflation
Inflation is not expected to have a material adverse impact on Registrant's
operations during its period of ownership of the Local Partnership Interests.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Recent Accounting Statements Not Yet Adopted
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" and
SFAS No. 129, "Disclosure of Information about Capital Structure." SFAS
No. 128 provides accounting and reporting standards for the amount of
earnings per share. SFAS No. 129 requires the disclosure in summary form
within the financial statements of pertinent rights and privileges of the
various securities outstanding. SFAS No. 128 and SFAS No. 129 are effective
for fiscal years ending after December 15, 1997 and earlier application is not
permitted.
The implementation of SFAS No. 128 and SFAS No. 129 is not expected to
materially impact Registrant's financial statements because Registrant's
earnings per share would not be significantly affected and the disclosures
regarding the capital structure in the financial statements would not be
significantly changed.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 8. Financial Statements and Supplementary Data
Table of Contents
Independent Auditors' Report
Balance Sheets as of March 30, 1997 and 1996
Statements of Operations for the years ended March 30, 1997, 1996 and 1995
Statements of Changes in Owners' Equity (Deficit) for the years ended March 30,
1997, 1996 and 1995
Statements of Cash Flows for the years ended March 30, 1997, 1996 and 1995
Notes to Financial Statements as of March 30, 1997, 1996 and 1995
No financial statement schedules are included because of the absence of the
conditions under which they are required or because the information is included
in the financial statements or the notes thereto.
<PAGE>
Independent Auditors' Report
To the Manager and Beneficial Owners
American Tax Credit Trust,
a Delaware statutory business trust, Series I
We have audited the accompanying balance sheets of American Tax Credit
Trust, a Delaware statutory business trust, Series I as of March 30, 1997 and
1996, and the related statements of operations, changes in owners' equity
(deficit) and cash flows for each of the three years in the period ended March
30, 1997. These financial statements are the responsibility of the trust'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 American Tax Credit
Trust, a Delaware statutory business trust, Series I as of March 30, 1997 and
1996, and the results of its operations and its cash flows for each of the three
years in the period ended March 30, 1997, in conformity with generally accepted
accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
May 8, 1997
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
BALANCE SHEETS
MARCH 30, 1997 AND 1996
Notes 1997 1996
----- ----------------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents 3,9 $ 830,290 $ 569,008
Restricted cash 3,5,9 705,938 2,000,256
Investments in bonds available-for-sale 4,9 834,697 859,032
Investment in local partnerships 5 12,662,815 13,957,764
Interest receivable 9 12,611 12,752
Organization costs (less accumulated amortization of $50,000 and $35,000)
2 25,000 40,000
---------------- ----------------
$ 15,071,351 $ 17,438,812
============ ============
LIABILITIES AND OWNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses 9 $ 29,961 $ 31,048
Payable to manager 6,8,9 312,863 193,515
Capital contributions payable 5,9 673,050 1,972,883
Interest payable 9
32,888 27,373
1,048,762 2,224,819
------------- -------------
Commitments and contingencies 5,8
Owners' equity (deficit) 2,4,6
Manager (23,004) (11,298)
Beneficial owners, $1,000 stated value per unit (18,654 units of
beneficial ownership interest outstanding) 14,110,830 15,269,704
Unrealized loss on investments in bonds available-for-sale, net (65,237) (44,413)
-------------- ---------------
14,022,589 15,213,993
------------ -------------
$ 15,071,351 $ 17,438,812
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
Notes 1997 1996 1995
----- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
REVENUE
Interest $ 156,201 $ 268,044 $ 250,570
-------------- ------------- -------------
TOTAL REVENUE 156,201 268,044 250,570
--------------- -------------- --------------
EXPENSES
Management fee 6,8 194,348 195,490 175,645
Professional fees 30,566 30,907 24,483
Printing, postage and other 16,216 26,322 28,900
Amortization 15,000 15,000 15,000
Interest 2,747
-------------------- ------------------- ---------------
TOTAL EXPENSES 256,130 267,719 246,775
-------------- ------------- -------------
Income (loss) from operations (99,929) 325 3,795
Equity in loss of investment in local
partnerships 5 (1,070,651) (590,457) (391,691)
------------- ------------ ------------
NET LOSS $ (1,170,580) $ (590,132) $ (387,896)
============ =========== ===========
NET LOSS ATTRIBUTABLE TO 2
Manager $ (11,706) $ (5,901) $ (3,879)
Beneficial owners (1,158,874) (584,231) (384,017)
------------- ------------ ------------
$ (1,170,580) $ (590,132) $ (387,896)
============ =========== ===========
NET LOSS per unit of beneficial ownership interest
(18,654, 18,654 and 17,843) weighted average units
of beneficial ownership interest) $ (62.12) $ (31.32) $ (21.52)
=============== ============= =============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CHANGES IN OWNERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
Unrealized Gain
(Loss) on
Investments in
Beneficial Bonds
Manager Owners Available- For-Sale, Total
Net
<S> <C> <C> <C> <C>
Owners' equity (deficit), March 30, 1994 $ (1,518) $ 4,928,814 $ $ 4,927,296
Capital contributions 11,969,500 11,969,500
Syndication costs (660,362) (660,362)
Net loss (3,879) (384,017) (387,896)
Unrealized gain on investments in bonds
available-for-sale, net 403 403
------------------ -------------------- ------------------ ----------------
Owners' equity (deficit), March 30, 1995 (5,397) 15,853,935 403 15,848,941
Net loss (5,901) (584,231) (590,132)
Change in unrealized loss on investments
in bonds available-for-sale, net (44,816) (44,816)
------------------ -------------------- ---------------- --------------
Owners' equity (deficit), March 30, 1996 (11,298) 15,269,704 (44,413) 15,213,993
Net loss (11,706) (1,158,874) (1,170,580)
Change in unrealized loss on investments
in bonds available-for-sale, net (20,824) (20,824)
------------------ -------------------- ---------------- --------------
Owners' equity (deficit), March 30, 1997 $ (23,004) $ 14,110,830 $ (65,237) $ 14,022,589
============= ============ ================ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
1997 1996 1995
---------------- ---------------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 165,368 $ 270,380 $ 231,777
Cash paid for
management fee (75,000) (100,000) (121,153)
professional fees (30,016) (22,158) (24,483)
printing, postage and other expenses (17,853) (24,023) (31,400)
interest (3,272)
------------------- -------------------- ----------------
Net cash provided by operating activities 42,499 124,199 51,469
-------------- -------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in and acquisition of local partnership interests (1,075,535) (3,165,219) (4,458,173)
Transfer from (to) restricted cash 1,294,318 3,188,564 (5,177,597)
Maturity/redemption of bonds 1,131,000
Investments in bonds (903,445) (1,099,922)
Cash distribution from a local partnership 3,000 ___________
-------------------- ---------------
Net cash provided by (used in) investing activities 218,783 253,900 (10,735,692)
-------------- -------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of units of beneficial ownership interest 11,969,500
Repayment of note payable (230,494)
Repayment of operating advance from manager (7,002)
Payment of syndication costs (856,872)
--------------------- --------------------- --------------
Net cash provided by financing activities 10,875,132
--------------------- --------------------- -------------
Net increase in cash and cash equivalents 261,282 378,099 190,909
Cash and cash equivalents at beginning of year 569,008 190,909
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 830,290 $ 569,008 $ 190,909
============== ============== ==============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds
available-for-sale, net $ (20,824) $ (44,816) $ 403
============== ============== =================
Increase (decrease) in capital contributions payable $ (224,298) $ 539,027 $ 3,754,844
============= ============== =============
- - ---------------------------------------------------------------- --------------------- -------------------- ---------------------
See reconciliation of net loss to net cash provided by operating activities on
page 18.
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS - (Continued)
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
1997 1996 1995
---------------- ---------------- ----------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net loss $ (1,170,580) $ (590,132) $ (387,896)
Adjustments to reconcile net loss to net cash provided by
operating activities
Equity in loss of investment in local partnerships 1,070,651 590,457 391,691
Amortization of organization costs 15,000 15,000 15,000
Amortization of net premium on investments in bonds 3,511
Accretion of zero coupon bonds (12,285) (18,793)
Increase (decrease) in accounts payable and accrued
expenses (1,087) 11,048 (3,025)
Decrease (increase) in interest receivable 141 (12,752)
Increase in payable to manager 119,348 95,490 54,492
Increase in interest payable 5,515 27,373
-------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 42,499 $ 124,199 $ 51,469
============= ============ =============
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 1997, 1996 AND 1995
1. Organization, Purpose and Summary of Significant Accounting Policies
American Tax Credit Trust, a Delaware statutory business trust (the
"Trust") was formed on February 4, 1993 under Chapter 38 of Title 12 of the
Delaware Code. There was no operating activity until admission of the
beneficial owners on November 29, 1993. The Trust was formed to invest
primarily in leveraged low-income multifamily residential complexes (the
"Property" or "Properties") which qualify for the low-income tax credit
established by Section 42 of the Tax Reform Act of 1986 (the "Low-income
Tax Credit"), through the acquisition of limited partnership equity
interests (the "Local Partnership Interests") in partnerships (the "Local
Partnership" or "Local Partnerships") that are the owners of the
Properties. Richman American Credit Corp. (the "Manager"), was formed on
April 5, 1993 to act as the sole manager of the Trust.
On September 13, 1993, the Trust commenced the offering for sale of units
of beneficial ownership ("Units") to investors ("Beneficial Owners") in one
to twenty series ("Series I through Series XX"; each a "Series"). These
notes and the accompanying financial statements are presented for Series I
only.
Basis of Accounting and Fiscal Year
The Trust's records are maintained on the accrual basis of accounting for
both financial reporting and tax purposes. For financial reporting
purposes, the Trust's fiscal year ends March 30 and its quarterly periods
end June 29, September 29 and December 30. The Local Partnerships have a
calendar year for financial reporting purposes. The Trust and the Local
Partnerships each have a calendar year for income tax purposes.
The Trust accounts for its investment in Local Partnerships in accordance
with the equity method of accounting (see Note 5), under which the
investment is carried at cost which includes capital contributions payable,
and is adjusted for the Trust's share of the Local Partnership's results of
operations and by any cash distributions received. Equity in loss of each
investment in Local Partnership allocated to the Trust is recognized to the
extent of the Trust's investment balance in each Local Partnership. Any
equity in loss in excess of the Trust's investment balance in a Local
Partnership is allocated to other partners' capital in each such Local
Partnership. Previously unrecognized equity in loss of any Local
Partnership is recognized in the fiscal year in which equity in income is
earned by such Local Partnership. Distributions received subsequent to the
elimination of an investment balance for any such Local Partnership are
recorded as other income from Local Partnerships.
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.
Adoption of Accounting Standard
On March 31, 1996, the Trust adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 has not materially affected the
Partnership's reported earnings, financial condition or cash flows.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
1. Organization, Purpose and Summary of Significant Accounting
Policies (continued)
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Trust considers all
highly liquid investments purchased with an original maturity of three
months or less at the date of acquisition to be cash equivalents. Cash and
cash equivalents are stated at cost which approximates market value.
Restricted Cash
Restricted cash is set aside to make the Trust's required capital
contributions to Local Partnerships (see Notes 3 and 5).
Investments in Bonds Available-For-Sale
Investments in bonds classified as available-for-sale represent investments
in bonds that the Trust intends to hold for an indefinite period of time
but not necessarily to maturity. Any decision to sell an investment
classified as available-for-sale would be based on various factors,
including significant movements in interest rates and liquidity needs.
Investments in bonds available-for-sale are carried at estimated fair value
and unrealized gains or losses are reported as a separate component of
owners' equity (deficit).
Premium/Discount on Investments
Premiums and discounts on investments in bonds available-for-sale are
amortized (accreted) using the straight-line method over the life of the
investment. Amortized premiums offset interest revenue, while the accretion
of discounts and zero coupon bonds are included in interest revenue.
Unamortized premiums and unaccreted discounts of investments redeemed prior
to maturity are offset against, or included in, interest revenue.
Gain (Loss) on Redemption or Sale of Investments
Realized gain (loss) on redemption or sale of investments in bonds
available-for-sale are included in, or offset against, interest revenue on
the basis of the adjusted cost of each specific investment redeemed or
sold.
Interest on Capital Contributions Payable to Local Partnerships
Pursuant to agreements with certain Local Partnerships, interest is accrued
on certain installments of capital contributions. Such amounts are recorded
as a liability and an offset to interest revenue.
Organization Costs
Organization costs are amortized on a straight-line basis over five (5)
years.
Syndication Costs
Syndication costs aggregating $2,255,819 were charged against Beneficial
Owners' equity in accordance with prevalent industry practice.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
1. Organization, Purpose and Summary of Significant Accounting
Policies (continued)
Income Taxes
No provision for income taxes has been made because all income, losses and
tax credits are allocated to the owners for inclusion in their respective
tax returns. In accordance with SFAS No. 109, "Accounting for Income
Taxes," the Trust has included in Note 7 certain disclosures related to
differences in the book and tax bases of accounting.
Acquisition Fees
Acquisition fees are recorded as investments in Local Partnerships and
capital contributions payable when incurred.
Net Loss per Unit of Beneficial Ownership Interest
Net loss per Unit is calculated based upon the weighted average number of
Units outstanding, which is 18,654, 18,654 and 17,843 for the years ended
March 30, 1997, 1996 and 1995, respectively.
Reclassifications
Certain reclassifications of amounts have been made to conform to the
current year presentation.
2. Capital Contributions
On September 13, 1993, the Trust commenced the offering of Units through
Merrill Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber
Incorporated (the "Selling Agents"). On November 29, 1983, January 28, 1994
and May 25, 1994, under the terms of the Fourth Amended and Restated
Agreement of Trust of the Trust (the "Trust Agreement"), the Manager
admitted Beneficial Owners to the Trust in three closings. At these
closings, subscriptions for a total of 18,654 Units representing
$18,654,000 in Beneficial Owners' capital contributions were accepted. In
connection with the offering of Units, the Trust incurred registration
costs of $2,330,819, of which $75,000 was capitalized as organization costs
and $2,255,819 was charged to the Beneficial Owners' equity as syndication
costs. The Trust received a capital contribution of $100 from the Manager.
Net loss is allocated 99% to the Beneficial Owners and 1% to the Manager in
accordance with the Trust Agreement.
3. Cash and Cash Equivalents and Restricted Cash
As of March 30, 1997, the Trust has $1,536,228 in cash and cash equivalents
and restricted cash which are deposited in interest-bearing accounts with
an institution which is not insured by the Federal Deposit Insurance
Corporation.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
4. Investments in Bonds Available-For-Sale
The Trust carries its investments in bonds as available-for-sale because
such investments are used to facilitate and provide flexibility for the
Trust's obligations, including resolving unforeseen contingencies which may
arise in connection with the Local Partnerships. Investments in bonds
available-for-sale are reflected in the accompanying balance sheets at
estimated fair value.
As of March 30, 1997, certain information concerning investments in bonds
available-for-sale is as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
<S> <C> <C> <C> <C>
Corporate debt securities
After five years through ten years $ 357,402 $ -- $ (23,507) $ 333,895
After ten years 542,532 -- (41,730) 500,802
---------- ------------------ ------------ ----------
$ 899,934 $ -- $ (65,237) $ 834,697
========== ================= ============= ==========
As of March 30, 1996, certain information concerning investments in bonds
available-for-sale is as follows:
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
<S> <C> <C> <C> <C>
Corporate debt securities
After five years through ten years $ 198,994 $ -- $ (9,720) $ 189,274
After ten years 704,451 -- (34,693) 669,758
----------- ------------------ ------------ ----------
$ 903,445 $ -- $ (44,413) $ 859,032
========== ================= =========== ==========
</TABLE>
5. Investment in Local Partnerships
As of March 30, 1997, the Trust owns a 98.9%-99% limited partnership
interest in the following Local Partnerships:
1. ACP Housing Associates, L.P.;
2. Creative Choice Homes VII, Ltd.;
3. Edgewood Manor Associates, L.P.;
4. Ledge / McLaren Limited Partnership;
5. Penn Apartment Associates;
6. SB-92 Limited Partnership;
7. St. Christopher's Associates, L.P. V;
8. St. John Housing Associates, L.P.;
9. Starved Rock - LaSalle Manor Limited Partnership; and
10. Vision Limited Dividend Housing Association Limited Partnership.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
The Properties are principally comprised of subsidized and leveraged
low-income multifamily residential complexes located throughout the United
States. The required holding period of each Property, in order to avoid
Low-income Tax Credit recapture, is fifteen years from the year in which
the Low-income Tax Credits commence on the last building of the Property
(the "Compliance Period"). The rents of the Properties are controlled by
federal and state agencies pursuant to applicable laws and regulations (see
Note 8). Under the terms of each of the ten Local Partnership's partnership
agreements, the Trust has committed to make capital contribution payments
in the aggregate amount of $14,761,041, of which the Trust has paid
$14,087,991 and $673,050 are outstanding. Restricted cash in the
accompanying balance sheet as of March 30, 1997 represents such outstanding
capital contributions along with accrued interest of $32,888 on an
outstanding capital contribution. The outstanding capital contributions are
payable in installments upon each Local Partnership's satisfaction of
specified conditions related to construction and/or operations. As of
December 31, 1996, the Local Partnerships have outstanding mortgage and
construction loans payable totaling approximately $23,410,000 and accrued
interest payable on such loans totaling approximately $557,000, which are
secured by security interests and liens common to mortgage and construction
loans on the Local Partnerships' real property and other assets.
In accordance with the limited partnership agreements of the Local
Partnerships, the final determination of the capital contribution
obligations to be paid by the Trust to the Local Partnerships may be
adjusted if the actual Low-income Tax Credit of a Local Partnership is
greater than or less than the expected Low-income Tax Credit of such Local
Partnership, among other things, at the time of acquisition.
The combined balance sheets of the Local Partnerships as of December 31,
1996 and 1995 and the combined statements of operations of the Local
Partnerships for the years ended December 31, 1996, 1995 and 1994 are
reflected on pages 24 and 25, respectively.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of December 31,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
----------------- -----------
<S> <C> <C>
ASSETS
Cash and other investments $ 515,352 $ 421,620
Rental receivable 47,816 35,109
Capital contributions receivable 1,073,050 3,682,589
Escrow deposits and reserves 1,151,896 741,861
Land 1,267,153 1,205,354
Buildings and improvements (net of accumulated depreciation of $2,760,074
and $1,460,998) 34,109,040 28,478,299
Construction in progress 4,480,748
Intangible assets (net of accumulated amortization of $71,151 and $32,957) 412,240 287,682
Other 243,968 157,584
--------------- ---------------
$ 38,820,515 $ 39,490,846
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 372,568 $ 264,732
Due to related parties 1,343,366 2,197,386
Mortgage and construction loans 23,410,498 22,030,931
Notes payable 100,000 100,000
Accrued interest 556,684 365,850
Other 338,544 527,271
--------------- ---------------
26,121,660 25,486,170
------------- -------------
Partners' equity
American Tax Credit Trust, Series I
Capital contributions, net of distributions (includes receivable of
$1,073,050 and $3,486,015) 14,758,041 14,982,339
Cumulative loss (2,095,226) (1,024,575)
------------- -------------
12,662,815 13,957,764
------------- -------------
General partners and other limited partners
Capital contributions, net of distributions (includes receivable of
$196,574 as of December 31, 1995) 284,686 284,586
Cumulative loss (248,646) (237,674)
-------------- --------------
36,040 46,912
---------------- ----------------
12,698,855 14,004,676
------------- -------------
$ 38,820,515 $ 39,490,846
============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
years ended December 31, 1996, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------------- ---------------- ----------
<S> <C> <C> <C>
REVENUE
Rental $ 3,500,347 $ 2,442,752 $ 1,460,249
Interest and other 104,402 142,948 49,342
-------------- ------------- --------------
TOTAL REVENUE 3,604,749 2,585,700 1,509,591
------------- ------------ ------------
EXPENSES
Administrative 677,879 473,763 350,974
Utilities 427,767 286,883 233,438
Operating, maintenance and other 800,537 449,429 327,974
Taxes and insurance 499,944 364,767 267,719
Interest (including amortization of $38,194, $20,194
and $9,354) 981,169 777,920 283,727
Depreciation 1,299,076 889,849 441,545
------------- ------------ ------------
TOTAL EXPENSES 4,686,372 3,242,611 1,905,377
------------- ----------- -----------
NET LOSS $ (1,081,623) $ (656,911) $ (395,786)
============ =========== ===========
NET LOSS ATTRIBUTABLE TO
American Tax Credit Trust, Series I, which includes specially allocated
items of expense to certain general partners of $60,294 for the year
ended
December 31, 1995 $ (1,070,651) $ (590,457) $ (391,691)
General partners and other limited partners (10,972) (66,454) (4,095)
-------------- ------------- --------------
$ (1,081,623) $ (656,911) $ (395,786)
============= =========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1997 is as follows:
<TABLE>
<CAPTION>
Investment Trust's Investment in
in Local Adjustments equity in loss Local Capital
Partnership during the for the year Partnership contributions
balance as year ended ended balance as of payable as
of March 30, March 30, December 31, March 30, of March
Name of Local Partnership 1996 1997 1996 1997 30, 1997
------------------------- -------------- --------------- --------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ 729,176 $ (14,115) $ (84,981) $ 630,080 $ --
Creative Choice Homes VII, Ltd. 2,321,934 -- (137,228) 2,184,706 --
Edgewood Manor Associates, L.P. 1,650,217 -- (153,682) 1,496,535 --
Ledge / McLaren Limited
Partnership 328,304 -- (19,338) 308,966 --
Penn Apartment Associates 642,439 -- (94,125) 548,314 --
SB-92 Limited Partnership 692,527 -- (73,792) 618,735 --
St. Christopher's Associates,
L.P. V 1,821,364 -- (139,139) 1,682,225 76,800
St. John Housing Associates, L.P. 3,525,033 -- (163,080) 3,361,953 --
Starved Rock - LaSalle Manor
Limited Partnership 604,901 -- (56,096) 548,805 306,433
Vision Limited Dividend Housing
Association Limited Partnership 1,641,869 (210,183) (149,190) 1,282,496 289,817
-------------- ----------- -------------- -------------- ------------
$ 13,957,764 $ (224,298) $ (1,070,651) $ 12,662,815 $ 673,050
============ =========== ============ ============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1996 is as follows:
<TABLE>
<CAPTION>
Cash
Investment Investments Trust's distributions Investment in
in Local (adjustments) equity in received Local Capital
Partnership during the income (loss) during the Partnership contributions
balance as year ended for the year year ended balance as of payable as of
of March 30, March 30, ended March 30, March 30, March 30,
Name of Local Partnership 1995 1996 December 31, 1996 1996 1996
1995
------------------------- --------------- --------------- ------------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ -- $ 751,337 $ (22,161) $ -- $ 729,176 $ 235,000
Creative Choice Homes VII, Ltd. 2,382,812 -- (60,878) -- 2,321,934 454,650
Edgewood Manor Associates, L.P. 1,817,078 -- (166,861) -- 1,650,217 --
Ledge / McLaren Limited
Partnership 345,485 (2,406) (14,775) -- 328,304 --
Penn Apartment Associates 738,329 -- (95,890) -- 642,439 --
SB-92 Limited Partnership 786,657 -- (91,130) (3,000) 692,527 --
St. Christopher's Associates,
L.P. V 1,970,335 -- (148,971) -- 1,821,364 76,800
St. John Housing Associates, L.P. 3,487,363 -- 37,670 -- 3,525,033 --
Starved Rock - LaSalle Manor
Limited Partnership -- 634,327 (29,426) -- 604,901 306,433
Vision Limited Dividend Housing
Association Limited Partnership 1,639,904 -- 1,965 -- 1,641,869 900,000
-------------- ----------------- ------------ ----------- ------------ -------
$ 13,167,963 $ 1,383,258 $ (590,457) $ (3,000) $ 13,957,764 $1,972,883
============ =========== =========== ============ ============ =========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1995 is as follows:
<TABLE>
<CAPTION>
Trust's equity
Investment in Capital in income Investment in
Local contributions Capital (loss) for Local
Partnership paid during contributions the year Partnership
balance as of the year ended payable as of ended balance as of
March 30, March 30, March 30, December 31, March 30,
Name of Local Partnership 1994 1995 1995 1994 1995
------------------------- ----------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Creative Choice Homes VII, Ltd. $ -- $ 1,246,187 $ 1,136,625 $ -- $ 2,382,812
Edgewood Manor Associates, L.P. 1,293,839 658,993 -- (135,754) 1,817,078
Ledge / McLaren Limited Partnership -- 163,016 182,469 -- 345,485
Penn Apartment Associates 751,438 82,047 -- (95,156) 738,329
SB-92 Limited Partnership 351,060 431,430 -- 4,167 786,657
St. Christopher's Associates, L.P. V -- 1,675,785 400,000 (105,450) 1,970,335
St. John Housing Associates, L.P. 2,109,250 301,861 1,135,750 (59,498) 3,487,363
Vision Limited Dividend Housing
Association Limited Partnership -- 739,904 900,000 -- 1,639,904
----------- ----------- ----------- ------------ ------------
$ 4,505,587 $ 5,299,223 $ 3,754,844 $ (391,691) $ 13,167,963
=========== =========== =========== =========== ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 1996 is
as follows:
<TABLE>
<CAPTION>
Mortgage and
construction Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
<S> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ 1,511,174 $ 14,000 $ 2,505,364 $ (98,403)
Creative Choice Homes VII, Ltd. 2,186,893 500,000 4,091,851 (173,917)
Edgewood Manor Associates, L.P. 1,861,013 53,850 3,614,581 (431,502)
Ledge / McLaren Limited
Partnership 462,678 123,673 677,680 (30,705)
Penn Apartment Associates 963,000 13,357 1,783,188 (148,623)
SB-92 Limited Partnership 2,129,343 73,000 2,968,572 (333,519)
St. Christopher's
Associates, L.P. V 2,180,000 31,829 3,783,012 (361,088)
St. John Housing
Associates, L.P. 4,646,393 74,800 8,271,928 (758,539)
Starved Rock - LaSalle Manor
Limited Partnership 2,120,089 202,845 2,406,986 (196,586)
Vision Limited Dividend Housing
Association Limited Partnership 5,349,915 179,799 6,765,952 (227,192)
-------------- ------------ -------------- -------------
$ 23,410,498 $ 1,267,153 $ 36,869,114 $ (2,760,074)
============ =========== ============ ============
</TABLE>
Property information for each Local Partnership as of December 31, 1995 is
as follows:
<TABLE>
<CAPTION>
Mortgage and
construction Buildings and Accumulated Construction
Name of Local Partnership loans payable Land improvements depreciation in progress
------------------------- ------------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
ACP Housing Associates, L.P. $ 1,379,765 $ 14,000 $ 2,494,765 $ (26,258) $ --
Creative Choice Homes VII, Ltd. 2,082,424 500,000 4,091,851 (43,479) --
Edgewood Manor Associates, L.P. 1,862,950 53,850 3,610,951 (300,116) --
Ledge / McLaren Limited
Partnership 572,250 123,673 677,680 (9,031) --
Penn Apartment Associates 963,000 13,357 1,783,188 (100,998) --
SB-92 Limited Partnership 2,154,047 73,000 2,968,572 (219,660) --
St. Christopher's
Associates, L.P. V 2,180,000 31,829 3,783,012 (223,538) --
St. John Housing
Associates, L.P. 4,722,590 74,800 8,151,514 (404,234) --
Starved Rock - LaSalle Manor
Limited Partnership 2,540,378 202,845 2,377,764 (133,684) --
Vision Limited Dividend Housing
Association Limited Partnership 3,573,527 118,000 -- -- 4,480,748
-------------- ------------ ------------ ------------- -----------
$ 22,030,931 $ 1,205,354 $ 29,939,297 $ (1,460,998) $ 4,480,748
============ =========== ============ ============ ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
The summary of property activity during the year ended December 31, 1996 is
as follows:
<TABLE>
<CAPTION>
Net change during the
Balance as of year ended Balance as of
December 31, December 31, December 31,
1995 1996 1996
------------------ ------------------- -----------
<S> <C> <C> <C>
Land $ 1,205,354 $ 61,799 $ 1,267,153
Buildings and improvements 29,939,297 6,929,817 36,869,114
Construction in progress 4,480,748 (4,480,748) --
-------------- ------------- ---------------
35,625,399 2,510,868 38,136,267
Accumulated depreciation (1,460,998) (1,299,076) (2,760,074)
-------------- ------------- -------------
$ 34,164,401 $ 1,211,792 $ 35,376,193
============= ============= ============
</TABLE>
6. Transactions with Manager and Affiliates
For the years ended March 30, 1997, 1996 and 1995, the Trust paid and/or
incurred the following amounts to the Manager and/or affiliates in
connection with services provided to the Trust.
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------------------------------------------
Paid Incurred Paid Incurred Paid Incurred
<S> <C> <C> <C> <C> <C> <C>
Reimbursement of organization
and offering costs, includes
capitalized organization
costs of $75,000 (see Note 2) $ -- $ -- $ -- $ -- $ 403,682 $ 207,172
Management fee (see Note 8) 75,000 194,348 100,000 195,490 121,153 175,645
Operating advance to the Trust -- -- -- -- 7,002 --
Acquisition fees (see Note 1) -- -- 63,236 63,236 -- --
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
6. Transactions with Manager and Affiliates (continued)
For the years ended December 31, 1996, 1995 and 1994, the Local
Partnerships paid and/or incurred the following amounts to the Manager
and/or affiliates in connection with services provided to the Local
Partnerships:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------------------------------------------------------------
Paid Incurred Paid Incurred Paid Incurred
<S> <C> <C> <C> <C> <C> <C>
Acquisition fees and
non-accountable
acquisition expense
allowances $ -- $ -- $ -- $ -- $ 1,036,061 $ 239,311
Property management
fees 13,920 13,920 13,920 13,920 10,585 11,600
Insurance 9,234 29,065 51,856 36,505 16,616 16,616
</TABLE>
The acquisition fees and non-accountable acquisition expense allowances
were capitalized by the Local Partnerships.
7. Taxable Loss
A reconciliation of the financial statement net loss of the Trust for the
years ended March 30, 1997, 1996 and 1995 to the tax return net loss for
the years ended December 31, 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ---------
Financial statement net loss for the years ended March 30,
1997, 1996 and 1995 $ (1,170,580) $ (590,132) $ (387,896)
<S> <C> <C> <C>
Add (less) net transactions occurring between:
January 1, 1994 and March 30, 1994 -- -- (68,539)
January 1, 1995 and March 30, 1995 -- (13,144) 13,144
January 1, 1996 and March 30, 1996 (16,987) 16,987 --
January 1, 1997 and March 30, 1997 35,681 -- --
-------------- ----------------- --------------
Adjusted financial statement net loss for the years ended
December 31, 1996, 1995 and 1994 (1,151,886) (586,289) (443,291)
Adjustment to management fee pursuant to Internal Revenue
Code Section 267 94,348 131,367 9,561
Differences arising from equity in loss of investment in
Local Partnerships (204,896) (61,564) (26,921)
Self-charged interest revenue recorded for tax purposes -- -- 344,880
Other differences (1,212) (168) 4,002
--------------- -------------- ---------------
Tax return net loss for the years ended December 31, 1996,
1995 and 1994 $ (1,263,646) $ (516,654) $ (111,769)
============ =========== ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
7. Taxable Loss (continued)
The differences between the equity in the investment in Local Partnerships
for tax return and financial reporting purposes as of December 31, 1996 and
1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
-------------- ---------
<S> <C> <C>
Investment in Local Partnerships - financial reporting $12,662,815 $13,957,764
Investment in Local Partnerships - tax 11,301,599 10,388,479
------------ ------------
$ 1,361,216 $ 3,569,285
============ ============
</TABLE>
8. Commitments and Contingencies
Pursuant to the Trust Agreement, the Trust is required to pay to the
Manager an annual management fee ("Management Fee") for its services in
connection with the management of the affairs of the Trust, subject to
certain provisions of the Trust Agreement. The annual Management Fee is
equal to 0.5% of all proceeds as of December 31 of any year, invested or
committed for investment in Local Partnerships plus all debts of the Local
Partnerships related to the Properties. The Trust incurred a Management Fee
of $194,348, $195,490 and $175,645 for the years ended March 30, 1997, 1996
and 1995, respectively. Unpaid Management Fees in the amount of $312,863
and $193,515 are recorded as payable to manager in accompanying balance
sheets as of March 30, 1997 and 1996, respectively.
The rents of the Properties, several of which receive rental subsidy
payments, including payments under Section 8 of Title II of the Housing and
Community Development Act of 1974 ("Section 8"), are subject to specific
laws, regulations and agreements with federal and state agencies. The
subsidy agreements expire at various times during and after the Compliance
Periods of the Local Partnerships. The United States Department of Housing
and Urban Development ("HUD") has issued notices which implement provisions
to renew certain project based Section 8 contracts expiring during HUD's
fiscal year 1997, where requested by an owner, for an additional one year
term generally at or below current rent levels, subject to certain
guidelines. HUD has an additional program which, in general, provides for
restructuring rents and/or mortgages where rents may be adjusted to market
levels and mortgage terms may be adjusted based on the reduction in rents,
although there may be instances in which only rents, but not mortgages, are
restructured. The Trust cannot reasonably predict legislative initiatives
and governmental budget negotiations, the outcome of which could result in
a reduction in funds available for the various federal and state
administered housing programs including the Section 8 program. Such changes
could adversely affect the future net operating income and debt structure
of any or all Local Partnerships currently receiving such subsidy or
similar subsidies. Two Local Partnerships' Section 8 contracts, which cover
certain rental units, are scheduled to expire in 1997, one of which expired
during 1996 and was extended for one year.
9. Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated fair
value amounts have been determined using available market information,
assumptions, estimates and valuation methodologies.
Cash and Cash Equivalents and Restricted Cash
The carrying amount approximates fair value.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
9. Fair Value of Financial Instruments (continued)
Investments in Bonds Available-For-Sale
Fair value is estimated based on market quotes provided by an independent
service as of the balance sheet dates.
Interest Receivable
The carrying amount approximates fair value due to the terms of the
underlying investments.
Capital Contributions Payable and Interest Payable
The carrying amounts approximate fair value in accordance with the Local
Partnerships' partnership agreements.
Accounts Payable and Accrued Expenses and Payable to Manager
The carrying amounts approximate fair value due to the payment terms in
connection with the obligations.
The estimated fair values of the Trust's financial instruments as of
March 30, 1997 and 1996 are disclosed elsewhere in the financial
statements.
<PAGE>
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Registrant has no officers or directors. The Manager manages Registrant's
affairs and has general responsibility and authority in all matters affecting
its business. The executive officers and directors of the Manager are:
Served in present
Name capacity since 1 Position held
Richard Paul Richman May 10, 1993 President and Director
Stephen B. Smith May 10, 1993 Executive Vice President
David A. Salzman May 10, 1993 Vice President and Secretary
Eric P. Richelson May 10, 1993 Vice President
Neal Ludeke May 10, 1993 Vice President and Treasurer
- - ------------------------------------------------------------------------------
1 Director holds office until his successor is elected and qualified. All
officers serve at the pleasure of the Director.
Richard Paul Richman, age 49, is the sole Director and President of the
Manager. Mr. Richman is the President and sole stockholder of Richman Group.
Mr. Richman is the Director, President and principal shareholder of WRC. Mr.
Richman is involved in the syndication and management of residential property.
Mr. Richman is also a director of Wilder Richman Resources Corp., an affiliate
of the Manager and the general partner of Secured Income L.P., a director of
Wilder Richman Historic Corporation, an affiliate of the Manager and the
general partner of Wilder Richman Historic Properties II, L.P., a director
of Richman Tax Credit Properties Inc., an affiliate of the Manager and the
general partner of the general partner of American Tax Credit Properties L.P.,
a director of Richman Tax Credits Inc., an affiliate of the Manager and the
general partner of the general partner of American Tax Credit Properties
II L.P. and a director of Richman Housing Credits Inc., an affiliate of
the Manager and the general partner of the general partner of American Tax
Credit Properties III L.P.
Stephen B. Smith, age 53, is the Executive Vice President of the Manager. Mr.
Smith is responsible for all marketing and investment program development for
Richman Group. From 1989 until joining Richman Group in 1993, Mr. Smith was an
independent advisor to developers, lenders and institutional investors on
matters related to real estate investments.
David A. Salzman, age 36, is a Vice President and Secretary of the Manager.
Mr. Salzman is responsible for the acquisition and development of residential
real estate for syndication as a Vice President of acquisitions of Richman
Group.
Eric P. Richelson, age 45, is a Vice President of the Manager. Mr.
Richelson is President of Wilder Richman Management Corporation ("WRMC")
with responsibility for all of WRMC's operating activities. In addition,
Mr. Richelson is a Vice President of R.G. Housing Advisors Inc. ("RGHA"),
an affiliate of Richman Group. Mr. Richelson's responsibilities in
connection with RGHA include advisory services provided to a small business
investment company.
Neal Ludeke, age 39, is a Vice President and the Treasurer of the Manager. Mr.
Ludeke, a Vice President and Treasurer of Richman Group, is engaged primarily
in the syndication, asset management and finance operations of Richman Group.
In addition, Mr. Ludeke is a Vice President and Treasurer of RGHA. Mr. Ludeke's
responsibilities in connection with RGHA include advisory services provided
to a small business investment company and various partnership management
functions.
<PAGE>
Item 11. Executive Compensation
Registrant has no officers or directors. Registrant does not pay the officers or
director of the Manager any remuneration. During the year ended March 30, 1997,
the Manager did not pay any remuneration to any of its officers or director.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of May 21, 1997, no person or entity was known by Registrant to be the
Beneficial Owner of more than five percent of the Units. The Manager is
wholly-owned by Richard Paul Richman.
Item 13. Certain Relationships and Related Transactions
The Manager and certain of its affiliates are entitled to receive certain
compensation, fees, and reimbursement of expenses and have received/earned fees
for services provided to Registrant as described in Notes 6 and 8 to the audited
financial statements included in Item 8 - "Financial Statements and
Supplementary Data" herein.
Transactions with Manager and Affiliates
The tax losses and Low-income Tax Credits generated by Registrant during the
year ended December 31, 1996 allocated to the Manager were $12,636 and $25,268,
respectively.
Indebtedness of Management
No officer or director of the Manager or any affiliate of the foregoing was
indebted to Registrant at any time during the year ended March 30, 1997.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
(1) Financial Statements
See Item 8 - "Financial Statements and Supplementary Data."
(2) Financial Statement Schedules
No financial statement schedules are included because of the absence
of the conditions under which they are required or because the
information is included in the financial statements or notes
thereto.
(3) Exhibits
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to
<S> <C> <C>
10.1 Credit Agreement dated as of December 27, 1993 Exhibit 10.1 to Form 10-Q Report
between Trust and Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.2 Security and Pledge Agreement dated as of Exhibit 10.2 to Form 10-Q Report
December 27, 1993 between Trust and Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.3 Cash Collateral Agreement dated as of December Exhibit 10.3 to Form 10-Q Report
27, 1993 between Trust and Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.4 Promissory Note dated December 27, 1993 from Exhibit 10.4 to Form 10-Q Report
Trust to Citibank N.A. dated December 30, 1993
(File No. 33-58032)
10.5 Tri-Party Agreement dated as of December 27, Exhibit 10.5 to Form 10-Q Report
1993 between Trust, Citibank N.A. and United dated December 30, 1993
States Trust Company of New York (File No. 33-58032)
10.6 ACP Housing Associates, L.P. Amended and Exhibit 10.1 to Form 10-Q Report
Restated Agreement of Limited Partnership dated September 29, 1995
(File No. 0-24600)
10.7 Creative Choice Homes VII, Ltd. Amended and Exhibit 10.1 to Form 10-Q Report
Restated Agreement of Limited Partnership dated December 30, 1994
(File No. 0-24600)
10.8 Edgewood Manor Associates, L.P. Amended and Exhibit 10.6 to Form 10-K Report
Restated Agreement of Limited Partnership dated March 30, 1994
(File No. 33-58032)
10.9 Ledge / McLaren Limited Partnership Amended and Exhibit 10.2 to Form 10-Q Report
Restated Agreement of Limited Partnership dated December 30, 1994
(File No. 0-24600)
10.10 Penn Apartment Associates Amended and Restated Exhibit 10.7 to Form 10-K Report
Agreement of Limited Partnership dated March 30, 1994
(File No. 33-58032)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to
<S> <C> <C>
10.11 First Amendment to Penn Apartment Associates Exhibit 10.8 to Form 10-K Report
Amended and Restated Agreement of Limited dated March 30, 1994
Partnership (File No. 33-58032)
10.12 Second Amendment to Penn Apartment Associates Exhibit 10.9 to Form 10-K Report
Amended and Restated Agreement of Limited dated March 30, 1994
Partnership (File No. 33-58032)
10.13 SB-92 Limited Partnership Amended and Restated Exhibit 10.6 to Form 10-Q Report
Agreement of Limited Partnership dated December 30, 1993
(File No. 33-58032)
10.14 St. Christopher's Associates, L.P. V Amended and Exhibit 10.1 to Form 10-Q Report
Restated Agreement of Limited Partnership dated June 29, 1994
(File No. 33-58032)
10.15 St. John Housing Associates, L.P. Amended and Exhibit 10.7 to Form 10-Q Report
Restated Agreement of Limited Partnership dated December 30, 1993
(File No. 33-58032)
10.16 Starved Rock - LaSalle Manor Limited Partnership Exhibit 10.2 to Form 10-Q Report
Amended and Restated Agreement of Limited dated September 29, 1995
Partnership (File No. 0-24600)
10.17 Vision Limited Dividend Housing Association Exhibit 10.3 to Form 10-Q Report
Limited Partnership Amended and Restated dated December 30, 1994
Agreement of Limited Partnership (File No. 0-24600)
27 Financial Data Schedule
99.1 Pages 11 through 21, 26 through 48 and 63 Exhibit 99.1 to Form
10-K Report through 65 of Prospectus of Registrant dated dated
March 30, 1994 September 7, 1993 filed pursuant to Rule 424
(File No. 33-58032) (b)(3) under the Securities Act of 1933
99.2 Supplement No. 2 dated November 16, 1993 to Exhibit 28.1 to Form 10-Q Report
Prospectus dated December 30, 1993
(File No. 33-58032)
99.3 Supplement No. 3 dated November 23, 1994 to Exhibit 99.3 to Form 10-K Report
Prospectus dated March 30, 1995
(File No. 0-24600)
99.4 Supplement No. 4 dated December 28, 1994 to Exhibit 99.4 to Form 10-K Report
Prospectus dated March 30, 1995
(File No. 0-24600)
99.5 December 31, 1995 financial statements of Exhibit 99.5 to Form 10-K Report
St. John Housing Associates, L.P. pursuant to dated March 30, 1996
Title 17, Code of Federal Regulations, (File No. 0-24600)
Section 210.3-9
99.6 December 31, 1996 financial statements of
St. John Housing Associates, L.P. pursuant to
Title 17, Code of Federal Regulations
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Registrant during the last quarter of
the period covered by this report.
(c) Exhibits
See (a)(3) above.
(d) Financial Statement Schedules
See (a)(2) above.
<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.
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
By: Richman American Credit Corp.,
The Manager
Dated: June 27, 1997 /s/ Richard Paul Richman
------------- ------------------------
by: Richard Paul Richman
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Richard Paul Richman President, Chief Executive Officer June 27, 1997
------------------------ -------------
and Director of the Manager
/s/ Neal Ludeke Vice President and Treasurer of
the Manager (Principal Financial June 27, 1997
and Accounting Officer of the Trust)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the year ended March 30, 1997 Form 10K Balance Sheets and Statements of
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000897315
<NAME> American Tax Credit Trust
<MULTIPLIER> 1,000
<CURRENCY> 0
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-30-1997
<EXCHANGE-RATE> 1.00
<CASH> 830
<SECURITIES> 835
<RECEIVABLES> 13
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,071
<CURRENT-LIABILITIES> 1,049
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,071
<SALES> 0
<TOTAL-REVENUES> 156
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 256
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,171)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,171)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,171)
<EPS-PRIMARY> (62.12)
<EPS-DILUTED> 0
</TABLE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
ST. JOHN HOUSING ASSOCIATES
LIMITED PARTNERSHIP
DECEMBER 31, 1996, 1995 AND 1994
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEETS 4
STATEMENTS OF PROFIT AND LOSS 6
STATEMENTS OF PARTNERS' EQUITY 7
STATEMENTS OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners
St. John Housing Associates Limited Partnership
We have audited the accompanying balance sheets of St. John Housing
Associates Limited Partnership as of December 31, 1996 and 1995, and the related
statements of profit and loss, partners' equity and cash flows for the years
ended December 31, 1996, 1995 and 1994. 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 our 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. John Housing
Associates Limited Partnership as of December 31, 1996 and 1995, and the results
of its operations, changes in partners' equity and cash flows for the years
ended December 31, 1996, 1995 and 1994, in conformity with generally accepted
accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
February 6, 1997
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
BALANCE SHEETS
December 31,
ASSETS
1996 1995
------------ --------
<S> <C> <C>
CURRENT ASSETS
Petty cash $ 100 $ 100
Cash in bank 6,315 312,129
U.S. Treasury Bills 242,677 -
Partnership cash 24,412 13,418
Tenant accounts receivable 1,202 104
Accounts receivable - other project 9,246 -
Prepaid insurance 3,127 2,955
Prepaid mortgage insurance 13,972 8,286
------------ -------------
Total current assets 301,051 336,992
----------- -----------
DEPOSITS HELD IN TRUST - FUNDED
Tenant security deposits 14,407 11,917
------------ ------------
RESTRICTED DEPOSITS AND FUNDED RESERVES
Mortgage escrow deposits 81,467 86,574
Reserve for replacements 185,671 154,378
267,138 240,952
----------- -----------
RENTAL PROPERTY
Land 59,800 59,800
Land improvements 15,000 15,000
Buildings and improvements 8,018,620 7,898,206
Furniture and equipment 243,279 243,279
Automobile 10,029 10,029
------------ ------------
8,346,728 8,226,314
Less accumulated depreciation 758,539 404,234
----------- -----------
7,588,189 7,822,080
OTHER ASSETS
Mortgage costs, net of accumulated amortization of $9,934 and
$6,541, respectively 91,857 95,250
Organization costs, net of accumulated amortization of $6,036 and
$4,018, respectively $ 4,054 6,072
$ 8,266,696 $ 8,513,263
========== ==========
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
BALANCE SHEETS
December 31,
<S> <C>
LIABILITIES AND PARTNERS' EQUITY
1996 1995
------------ --------
CURRENT LIABILITIES
Accounts payable $ 17,172 $ 15,432
Accounts payable - development - 9,462
Prepaid rents 121 89
Accrued interest payable 19,152 19,586
Accrued real estate taxes 95,000 65,000
Due to management company 4,880 4,749
Due to general partner and affiliates - 137,980
Accrued partnership administrative fee 108,517 -
Mortgages payable - current maturities 81,612 75,971
------------ ------------
Total current liabilities 326,454 328,269
---------- ----------
DEPOSITS LIABILITY
Tenant security deposits (contra) 14,385 12,572
------------ ------------
LONG-TERM LIABILITIES
Mortgages payable 4,646,393 4,722,590
Less current maturities 81,612 75,971
4,564,781 4,646,619
CONTINGENCY - -
PARTNERS' EQUITY 3,361,076 3,525,803
$ 8,266,696 $ 8,513,263
========== ==========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
STATEMENTS OF PROFIT AND LOSS
Year ended December 31,
<S> <C> <C> <C>
1996 1995 1994
---- ---- ----
Revenue
Rental $ 1,016,001 $ 962,765 $ 537,251
Interest and other 23,638 37,720 11,573
----------- ----------- -----------
1,039,639 1,000,485 548,824
--------- --------- ----------
Expenses
Administrative 118,157 121,444 111,677
Utilities 54,676 67,571 53,252
Operating and maintenance 152,751 125,714 176,374
Taxes and insurance 157,793 98,369 144,360
Interest 250,426 227,226 30,832
Depreciation and amortization 359,716 322,365 92,428
---------- ---------- -----------
1,093,519 962,689 608,923
--------- ---------- ----------
Other entity expenses (income) 110,847 (255) -
---------- ---------- ----------
NET PROFIT (LOSS) $ (164,727) $ 38,051 $ (60,099)
========= ======== ========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
STATEMENTS OF PARTNERS' EQUITY
Years ended December 31, 1996, 1995 and 1994,
<S> <C> <C> <C>
General partner Limited partner
Total
Partners' equity, December 31, 1993 $ 2,110,240 $ 990 $ 2,109,250
Partner contribution 301,861 - 301,861
Net loss - 1994 (60,099) (601) (59,498)
---------- ---------- ----------
Partners' equity, December 31, 1994 2,352,002 389 2,351,613
Partners' contributions 1,135,750 - 1,135,750
Net profit - 1995 38,051 381 37,670
----------- ---------- -----------
Partners' equity, December 31, 1995 3,525,803 770 3,525,033
Net loss - 1996 (164,727) (1,647) (163,080)
---------- --------- ----------
Partners' equity (deficit), December 31, 1996 $ 3,361,076 $ (877) $ 3,361,953
========== =========- ==========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
St. John Housing Associates Limited Partnership
STATEMENTS OF CASH FLOWS
Year ended December 31,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities
Net profit (loss) $ (164,727) $ 38,051 $ (60,099)
Adjustments to reconcile net profit (loss) to net cash
provided by operating activities
Depreciation 354,305 316,954 87,280
Amortization 5,411 5,411 5,148
Increase (decrease) in tenant accounts receivable (1,098) 1,164 (1,268)
Decrease in accounts receivable - other - - 596
(Increase) decrease in prepaid expenses (5,858) 26,345 (2,504)
(Increase) decrease in escrow deposits 5,107 23,737 (23,123)
Increase (decrease) in accounts payable 1,740 (27,962) 29,938
Increase (decrease) in accrued interest payable (434) 17,839 1,747
Increase (decrease) in accrued real estate tax 30,000 (35,000) 80,000
(Increase) decrease in tenant security deposits - net (677) (426) 108
Increase in prepaid rents 32 59 -
Increase (decrease) in due to management company 131 (2,443) -
Increase in accrued partnership administrative fee 108,517 - -
Due from other project - deposit error (9,246) - -
-------------- ------------------------------
Net cash provided by operating activities 323,203 363,729 117,823
------------- ----------- -----------
Cash flows from investing activities
Deposits in reserve for replacement (46,987) (32,895) (19,779)
Investment in rental property (120,414) (1,048,229) (3,818,702)
Withdrawals from renovation escrow - - 1,158,604
Withdrawals from replacement reserve 15,694 - -
Decrease in accounts payable - development (9,462) (682,390) -
Purchase of U.S. Treasury Bills (242,677) - -
Decrease in due to general partner and affiliates (137,980) - -
----------- --------------- ----------
Net cash used in investing activities (541,826) (1,763,514) (2,679,877)
----------- ---------- ----------
Cash flows from financing activities
Mortgage principal payments (76,197) (60,339) (41,913)
Mortgage loans proceeds - 964,896 1,943,404
Loans from general partner - 8,000 254,565
Repayment to general partner - (356,959) -
Capital contributions received - 1,135,750 301,861
----------------- ---------- -----------
Net cash provided by (used in) financing activities (76,197) 1,691,348 2,457,917
----------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (294,820) 291,563 (104,137)
Cash, beginning 325,647 34,084 138,221
----------- ------------- -----------
Cash, end $ 30,827 $ 325,647 $ 34,084
============= ============ ===========
Supplemental disclosure of cash flow information
Cash paid for interest during the year $ 250,860 $ 209,387 $ 29,085
============ ============ ===========
</TABLE>
See notes to financial statements
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994,
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The partnership was formed as a limited partnership under the laws of the State
of Illinois on June 1, 1992, for the purpose of acquiring, rehabilitating and
operating a rental housing project under Sections 236 and 241 of the National
Housing Act. The project which was acquired December 29, 1993 consists of 144
units located in Gary, Indiana and is currently operating under the name of St.
John Homes. The project is managed by an affiliate of one of the stockholders of
the general partner under an agreement approved by HUD which provides for a
management fee of 5.14% of monthly rental collections.
Cash distributions are limited by agreements between the partnership and HUD to
$121,682 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 fifteen consecutive years, the compliance
period, in order to remain qualified to receive the credits. In addition, on
March 14, 1996, St. John Housing Associates Limited Partnership executed a
Declaration of Extended Low-Income Housing Commitment which will require the
utilization of the project pursuant to Section 42 for a minimum of 30 years,
even if disposition of the project by the partnership occurs.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Rental Property
Rental property is carried at cost. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives by use of the straight-line method for financial
reporting purposes. For income tax purposes, accelerated lives and methods are
used.
Amortization
Mortgage costs are amortized over the term of the mortgage loan using the
straight-line method.
Organization costs are amortized over 60 months using the straight-line method.
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.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994,
Rental Income
Rental income is recognized as rentals become due. Rental payments received in
advance are deferred until earned. All leases between the partnership and the
tenants of the property are operating leases.
U.S. Treasury Bills
The U.S. Treasury Bills are carried at amortized cost, which approximates fair
value, and are classified as held-to-maturity. These Bills bear interest ranging
from 4.805% to 5.193% and mature through March 20, 1997.
NOTE B - MORTGAGES PAYABLE
The mortgage note is insured by the Federal Housing Administration (FHA) and is
collateralized by a deed of trust on the rental property. The note is payable in
monthly principal and interest installments of $5,394, net of an interest
reduction subsidy through maturity on November 1, 2014. The note bears interest
at the rate of 7% per annum; however, HUD, through the interest reduction
subsidy, reduces the interest rate to an effective annual rate of approximately
1% over the term of the mortgage. The annual interest subsidy of $109,989 for
1996, and $110,240 for 1995 and 1994, is reflected as a reduction of interest
expense. As of December 31, 1996 and 1995, principal balances of $1,781,493 and
$1,829,685 were outstanding and accrued interest was $1,247 and $1,505,
respectively.
The second mortgage in the original amount of $2,908,300 is insured by the
Federal Housing Administration (FHA) and collateralized by a second deed of
trust on the rental property. The note bears interest at the rate of 7.5% per
annum. Principal and interest are payable by the partnership in monthly
installments of $20,335 through maturity on May 1, 2025. As of December 31, 1996
and 1995, principal balances of $2,864,900 and $2,892,905 were outstanding and
accrued interest was $17,905 and $18,081, respectively.
Under agreements with the mortgage lenders 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 notes is limited to the
underlying value of the real estate collateral plus other amounts deposited with
the lenders.
Aggregate maturities of the mortgages payable over each of the next five years
are as follows:
<TABLE>
<CAPTION>
First Mortgage Second Mortgage Total
<S> <C> <C> <C> <C>
December 31, 1997 $ 51,433 $ 30,179 $ 81,612
1998 55,151 32,522 87,673
1999 59,138 35,047 94,185
2000 63,413 37,767 101,180
2001 67,997 40,699 108,696
</TABLE>
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994,
NOTE C - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENTS
The Federal Housing Administration (FHA) has contracted with the partnership
effective December 1989 under Section 8 of The National Housing Act of 1937, to
make housing assistance payments to the partnership on behalf of qualified
tenants. The terms of the agreements are:
Number of units covered Expiration date
110 September 30, 1997
34 June 30, 1999
The United States Department of Housing and Urban Development ("HUD") has issued
Notice 96-74 implementing Section 405(a) of the Continuing Resolution of January
26, 1996 ("CR") which grants the Secretary discretion to provide Section 8
assistance upon certain terms and conditions and Notice 96-89 implementing the
provisions of The Departments of Veterans Affairs and Housing and Urban
Development, and the Independent Agencies Appropriations Act, 1997 (PL
104-204,110STAT.2874, approved 9/26/96), ("The Act"), concerning HUD's policy on
Section 8 Housing Assistance Payments contracts, exclusive of the Section 8
Moderate Rehabilitation Program, expiring during HUD's fiscal year 1997. Section
211 of the Act and notice generally provides that the Secretary will renew, when
requested by the owner of a multifamily housing project, a project-based Section
8 contract expiring in HUD's FY 1997 for a period of not more than one year at
rent levels that are equal to those under the expiring contract as of the date
on which the contract expires. The rent levels of most such renewals are limited
to 120 percent of the fair market rent for the market area in which the project
is located, however for certain types of projects, the fair market value rent
(FMR) limitation does not apply. Section 212 of the Act repeals the Portfolio
Reengineering Demonstration of 1996 and replaces it with an expanded
demonstration program for HUD's FY 1997 which in general provides for
restructuring involving reducing rents to market levels and adjusting mortgages
to accommodate reduced cash flow and rehabilitation needs, although the statute
permits instances in which only rents but not mortgages are restructured.
Section 212 of the Act also provides that owners of FHA insured multifamily
projects whose Section 8 project-based assistance contracts exceed 120 percent
of the applicable FMR , may elect to participate in the multifamily
demonstration program.
NOTE D - RELATED PARTY TRANSACTIONS
Management Fee
The property is managed by L-B Residential Management Company, an affiliate of
one of the stockholders of the general partner, pursuant to a management
agreement approved by HUD that expires February 28, 1997. The management
agreement provided for a management fee of 5.14% of monthly rental collections.
Additionally, the partnership pays L-B Residential Management Company a monthly
computer accounting/bookkeeping fee of $3.50 per unit. During the years ended
December 31, 1996, 1995 and 1994, management fees of $52,453, $52,103, and
$40,820, and computer and accounting fees of $6,048, $11,592 and $9,700 were
charged to operations, respectively. At December 31, 1996 and 1995, the
partnership owed the management agent $4,880 and $4,749, respectively, which
consisted of unpaid management fees of $4,376 and $4,245 and computer
accounting/bookkeeping fees of $504 and $504, respectively.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994,
Maintenance Services
An affiliate of one of the stockholders of the general partner provides certain
maintenance and repair services. During the years ended December 31, 1996, 1995
and 1994, $1,560, $6,180 and $4,760 were charged to operations, respectively.
Repurchase Guaranty
Under the terms of the partnership agreement, the general partner is obligated
to purchase the partnership interest of the investor limited partner upon the
occurrence of a repurchase event as described in the partnership agreement.
Partnership Administration Fee
The partnership has entered into a partnership administration services agreement
with the general partner for its services in managing the partnership throughout
the term of the partnership. Under the terms of this agreement, commencing
January 1, 1996, the partnership is obligated to pay to the general partner an
annual fee in the amount of the lesser of 50% of the project's net cash flow as
defined in the partnership agreement or 3% of the replacement cost of the rental
property as of the date of substantial completion. In the event that in any year
50% of net cash flow exceeds 3% of the replacement cost of the rental property
as of the date of substantial completion, such excess amount shall be paid to
the general partner to the extent that the partnership administration fee paid
in any prior years was less than 3% of the replacement cost. For the year ended
December 31, 1996, a partnership administrative fee of $108,517 was incurred,
all of which was payable as of December 31, 1996.
Fees Payable
The partnership has entered into agreements which provide for the payment of
various fees to the general partner and its affiliates in consideration for
various guarantees. Fees are payable to the general partner and affiliates from
capital contributions or available surplus cash. As of December 31, 1996 all
fees have been paid.
In addition, during the years ended December 31, 1996 and 1995, the general
partner was paid $120,414 and $982,500 for fees which have
been capitalized in the cost of rental property.
Consulting Fees
The general partner received compensation of $15,984 from L-B Residential
Management Company, the management agent, for consulting services rendered in
1996.
NOTE E - CONTINGENCY
The project's low-income housing credits are contingent on its ability to
maintain compliance with applicable sections of Section 42. Failure to maintain
compliance with occupant eligibility, and/or unit gross rent, or to correct
compliance within a specified time period could result in recapture of
previously taken tax credits plus interest. In addition, such potential
noncompliance may require an adjustment to the contributed capital by the
limited partner.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994,
NOTE F - MORTGAGOR ENTITY EXPENSES (INCOME)
Mortgagor entity expenses (income) consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Interest income $ (857) $ (814) $ -
Miscellaneous administrative 1,444 559
Interest expense 1,743 - -
Partnership administrative fee 108,517 - -
--------- --------- --------
- -
$ 110,847 $ (255) $ -
========= ========= =======
</TABLE>
