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, 1999
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 (I.R.S. Employer Identification No.)
of organization)
Richman American Credit Corp.
599 West Putnam Avenue, 3rd floor
Greenwich, Connecticut 06830
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(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
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(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 in accordance with Section 42 of the Internal
Revenue Code (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 manager of the Trust. The Manager is wholly-owned by Richard Paul Richman
and is an affiliate of The Richman Group, Inc. ("Richman Group"), a Delaware
corporation founded by Richard Paul Richman in 1988.
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
and 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"). 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 investors ("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>
Item 1. Business (continued)
Tax Reform Act of 1986, Revenue Act of 1987, Technical and Miscellaneous Revenue
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Act of 1988, Omnibus Budget Reconciliation Act of 1989, Omnibus Budget
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Reconciliation Act of 1990, Tax Extension Act of 1991, Omnibus Budget
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Reconciliation Act of 1993, Uruguay Round Agreements Act and Taxpayer Relief Act
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of 1997 (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. The relevant state tax
credit agency has allocated each of Registrant's Local Partnerships an amount of
Low- income Tax Credits, which are generally available for a ten year period
from the year 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,
1998, 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. In October 1997, Congress passed the Multifamily
Assisted Housing and Reform and Affordability Act, whereby the United States
Department of Housing and Urban Development ("HUD") was given the authority to
renew certain project based Section 8 contracts expiring during HUD's fiscal
year 1998, where requested by an owner, for an additional one year term
generally at or below current rent levels, subject to certain guidelines. In
October 1998, HUD issued a directive related to project based Section 8
contracts expiring during HUD's fiscal year 1999 which defines owners'
notification responsibilities, advises owners of project based Section 8
properties of what their options are regarding the renewal of Section 8
contracts, provides guidance and procedures to owners, management agents,
contract administrators and HUD staff on renewing Section 8 contracts, provides
guidance on setting renewal rents and handling renewal rent increases and
provides the requirements and procedures for opting-out of a Section 8 project
based contract. 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. Three Local
Partnerships' Section 8 contracts are scheduled to expire in 1999.
Registrant owns a 98.9%-99% limited partnership interest ("Local Partnership
Interest") in ten Local Partnerships reflected on page 4.
<PAGE>
Item 2. Properties (continued)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Capital contribution
obligation Mortgage
Name of Local Partnership Number as of March 30, 1999 loans payable as of Subsidy
Name of apartment complex of rental -------------------------- December 31, (see
Apartment complex location units Total Paid 1998 footnotes)
---------------------------- ---------- ----------- ----------- ------------------- -----------
ACP Housing Associates, L.P.
ACP Housing Apartments
New York, New York 28 $ 737,222 $ 737,222 $ 1,503,781 (1b)
Creative Choice Homes VII, Ltd.
Coral Gardens
Homestead, Florida 91 2,382,812 2,382,812 2,122,043 (1a & 1c)
Edgewood Manor Associates, L.P.
Edgewood Manor Apartments
Philadelphia, Pennsylvania 49 1,963,799 1,963,799 1,856,702 (1b)
Ledge / McLaren Limited Partnership
Ledge / McLaren Apartments
Nashua, New Hampshire 8 343,079 343,079 458,804 (1b)
Penn Apartment Associates
Penn Apartments
Chester, Pennsylvania 15 852,180 852,180 963,000 (1b)
SB-92 Limited Partnership
Shaker Boulevard Gardens
Cleveland, Ohio 73 795,255 795,255 2,074,031 (1b)
St. Christopher's Associates, L.P. V
Lehigh Park
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 4,476,604 (1a & 1c)
Starved Rock - LaSalle Manor
Limited Partnership
LaSalle Manor
LaSalle, Illinois 48 634,327 634,327 1,786,897 (1a & 1c)
Vision Limited Dividend Housing
Association Limited Partnership
Helen Odean Butler Apartments
Detroit, Michigan 97 1,429,721 1,139,904 5,298,365 (1b)
----------- ----------- ------------
$14,761,041 $14,394,424 $ 22,720,227
=========== =========== ============
</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.
(c) The Local Partnership's Section 8 contracts are scheduled to
expire in 1999.
<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.
Accordingly, accurate information as to the market value of a Unit at any given
date is not available. The number of Beneficial Owners of Units as of May 1,
1999 was 930, holding 18,654 Units.
Merrill Lynch and PaineWebber follow internal guidelines for providing estimated
values of limited partnerships and other direct investments reported on client
account statements. Pursuant to such guidelines, estimated values for limited
partnership interests reported on Merrill Lynch and PaineWebber client account
statements (such as Registrant's Units) are separately provided to Merrill Lynch
and PaineWebber by independent valuation services. These estimated values are
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 March 31st for reporting on June month-end and subsequent
client account statements through the November month-end client account
statements of the same year. In addition, Registrant may provide an estimate of
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.
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 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 cash
distributions to its owners. There were no cash distributions to the owners
during the years ended March 30, 1999 and 1998.
Low-income Tax Credits, which are subject to various limitations, may be used by
Beneficial Owners 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, 1998 and
1997 and the cumulative Low-income Tax Credits allocated from inception through
December 31, 1998 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
First closing Second closing Third closing
November 29, 1993 January 28, 1994 May 25, 1994
----------------- ---------------- --------------
Low-income Tax Credits:
- -----------------------
Tax year ended December 31, 1998 $ 138.81 $ 138.81 $ 138.81
Tax year ended December 31, 1997 138.81 138.81 138.81
Cumulative totals $ 559.95 $ 557.77 $ 545.25
</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 $1,390 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>
<S> <C> <C> <C> <C> <C>
Years Ended March 30,
-----------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------- ----------- ------------
Interest revenue $ 135,553 $ 141,902 $ 156,201 $ 268,044 $ 250,570
============ ============ ============= =========== ============
Equity in loss of
investment in local $(1,059,127) $(1,023,224) $ (1,070,651) $ (590,457) $ (391,691)
partnerships ============ ============ ============= ============ ============
Net loss $(1,170,347) $(1,119,287) $ (1,170,580) $ (590,132) $ (387,896)
============ ============ ============= ============ ============
Net loss per unit of
beneficial ownership
interest * $ (62.11) $ (59.40) $ (62.12) $ (31.32) $ (21.52)
============ ============ ============= ============ ============
*Net loss per unit of beneficial ownership interest was based upon 18,654 Units
for the years ended March 30, 1999, 1998, 1997 and 1996 and upon a weighted
average number of Units of 17,843 for the year ended March 30, 1995.
As of March 30,
------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -------------
Total assets $12,715,649 $14,089,314 $15,071,351 $17,438,812 $ 19,721,810
=========== =========== =========== =========== =============
</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 connection with Series I.
Capital Resources and Liquidity
Registrant admitted beneficial owners (the "Beneficial Owners") in three
closings with aggregate Beneficial Owners' capital contributions of $18,654,000.
In connection with the offering of the sale of units of beneficial ownership,
Registrant incurred organization and offering costs of approximately $2,331,000
and established a working capital reserve of approximately $1,287,000. The
remaining net proceeds of approximately $15,036,000 (the "Net Proceeds") were
available to be applied to the acquisition of limited partnership interests in
local partnerships (the "Local Partnerships") which own low-income multifamily
residential complexes (the "Property" or "Properties") which qualify for the
low-income tax credit in accordance with Section 42 of the Internal Revenue Code
(the "Low-income Tax Credit"). Registrant has utilized the Net Proceeds in
acquiring an interest in ten Local Partnerships. Restricted cash in the balance
sheet as of March 30, 1999 represents outstanding capital contributions payable
to Local Partnerships and accrued interest on an outstanding capital
contribution, which are payable in installments upon certain Local Partnerships'
satisfaction of specified conditions related to operations.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
As of March 30, 1999, Registrant has unrestricted cash and cash equivalents and
investments in bonds totaling $1,935,527, which is available for operating
expenses of Registrant and circumstances which may arise in connection with the
Local Partnerships. As of March 30, 1999, Registrant's investments in bonds
represent corporate bonds of $998,384 with various maturity dates ranging from
2003 to 2016. Registrant acquired such investments in bonds with the intention
of utilizing proceeds generated by such investments to meet its annual
obligations. Future sources of Registrant funds are expected primarily from
interest earned on working capital and limited cash distributions from Local
Partnerships.
During the year ended March 30, 1999, Registrant received cash from interest
revenue and distributions from Local Partnerships and utilized cash for
operating expenses and a capital contribution to a Local Partnership. Cash and
cash equivalents and investments in bonds available-for-sale increased, in the
aggregate, by approximately $99,000 during the year ended March 30, 1999 (which
includes a net unrealized gain on investments in bonds of approximately $2,000
and the amortization of net premium on investments in bonds of approximately
$4,000) and restricted cash decreased by approximately $301,000 primarily as a
result of a capital contribution paid to a Local Partnership. Notwithstanding
circumstances that may arise in connection with the Properties, Registrant does
not expect to realize significant gains or losses on its investments in bonds,
if any.
During the year ended March 30, 1999, 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, 1998 of $1,059,127 and cash distributions
received from Local Partnerships of $102,497. Payable to manager in the
accompanying balance sheet as of March 30, 1999 represents accrued management
fees.
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. Accordingly, the investment
is carried at cost which includes capital contributions payable, and is adjusted
for Registrant's share of each Local Partnership's results of operations and by
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. Equity in loss in excess of
Registrant's investment balance in a Local Partnership is allocated to other
partners' capital in any such Local Partnership. As a result, the reported
equity in loss of investment in Local Partnerships is expected to decrease as
Registrant's investment balances in the respective Local Partnerships become
zero. As of March 30, 1999, no investment in any Local Partnership has reached a
zero balance.
Registrant's operations for the years ended March 30, 1999, 1998 and 1997
resulted in net losses of $1,170,347, $1,119,287 and $1,170,580, respectively.
The operations of Registrant and the Local Partnerships were consistent between
1998 and 1999 and 1997 and 1998.
The Local Partnerships' net loss of approximately $1,068,000 for the year ended
December 31, 1998 includes depreciation and amortization expense of
approximately $1,396,000 and interest on non-mandatory debt of approximately
$300,000, and does not include principal payments on permanent mortgages of
approximately $349,000. The Local Partnerships' net loss of approximately
$1,032,000 for the year ended December 31, 1997 includes depreciation and
amortization expense of approximately $1,439,000 and interest on non-mandatory
debt of approximately $309,000, and does not include principal payments on
permanent mortgages of approximately $330,000. The Local Partnerships' net loss
of approximately $1,082,000 for the year ended December 31, 1996 includes
depreciation and amortization expense of approximately $1,337,000 and interest
on non-mandatory debt of approximately $266,000, and does not include principal
payments on permanent mortgages and construction loans of approximately
$786,000. The results of operations of the Local Partnerships for the year ended
December 31, 1998 are not necessarily indicative of the results that may be
expected in future periods.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Local Partnership Matters
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
pursuant to subsidy agreements ("HAP Contracts"), are subject to specific laws,
regulations and agreements with federal and state agencies. Three Local
Partnerships' HAP Contracts are scheduled to expire in 1999. In addition, the
Local Partnerships have various financing structures which include (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, Mandatory Debt Service requirements and other charges, certain general
partners of the Local Partnerships (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, 1998, revenue from operations
of the Local Partnerships have generally been sufficient to cover operating
expenses and Mandatory Debt Service. All of the Local Partnerships have achieved
full operational status and substantially all are effectively operating at or
near break even levels, although certain Local Partnerships' operating
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 an operating deficit after taking into account its
mortgage and financing structure and any required deferral of property
management fees.
The terms of the partnership agreement of ACP Housing Associates, L.P. ("ACP
Housing") require the Local General Partners to advance funds to cover operating
deficits through October 2003 and to cause the management agent to defer
property management fees in order to avoid a default under the mortgage. ACP
Housing incurred an operating deficit of approximately $27,000 for the year
ended December 31, 1998, which includes property management fees of
approximately $9,000. As of December 31, 1998, the Local General Partners have
advanced approximately $14,000 under their Deficit Guarantee obligation and
payments on the mortgage and real estate taxes are current. Of Registrant's
total annual Low-income Tax Credits, approximately 5% is allocated from ACP
Housing.
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.
Adoption of Accounting Standards
Registrant has adopted Statement of Financial Accounting Standard ("SFAS") No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. Other comprehensive income (loss) in the accompanying statements of
operations resulted from net unrealized gains (losses) on investments in bonds
available-for-sale. Accumulated other comprehensive income in the accompanying
balance sheets reflects the net unrealized gain on investments in bonds
available-for-sale. The statements of operations for the years ended March 30,
1998 and 1997 include certain reclassifications to reflect the adoption of SFAS
No. 130.
Registrant has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes standards for reporting
information about operating segments and related disclosures about products and
services, geographic areas and major customers. Registrant is in one business
segment and follows the requirements of SFAS No. 131.
<PAGE>
Item 7 Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a two
digit year is commonly referred to as the year 2000 compliance ("Y2K") issue. As
the year 2000 approaches, such systems may be unable to accurately process
certain data-based information. Many businesses may need to upgrade existing
systems or purchase new ones to correct the Y2K issue. Registrant has performed
an assessment of its computer software and hardware and believes it has made the
necessary upgrades in an effort to ensure compliance. However, there can be no
assurance that the systems of other entities on which Registrant relies,
including the Local Partnerships which report to Registrant on a periodic basis
for the purpose of Registrant's reporting to its investors, will be timely
converted. Registrant has corresponded with the Local Partnerships to ensure
their awareness of the Y2K issue and has requested details regarding their
efforts to ensure compliance. The total cost associated with Y2K implementation
is not expected to materially impact Registrant's financial position or results
of operations in any given year. However, there can be no assurance that a
failure to convert by Registrant or another entity would not have a material
adverse impact on Registrant.
Item 7a. Quantitative and Qualitative Disclosure About Market Risk
The market value of Registrant's investments in bonds is subject to fluctuation
based upon changes in interest rates relative to each investment's maturity
date. Since Registrant's investments in bonds have various maturity dates
through 2016, the value of such investments may be adversely impacted in an
environment of rising interest rates in the event Registrant decides to
liquidate any such investment prior to its maturity. Because Registrant
presently intends to hold such investments to their respective maturities,
Registrant does not anticipate any material adverse impact in connection with
such investments.
The Properties are generally located where there is a demand for low-income
housing. Accordingly, there is a significant likelihood that new properties
could be built in the general vicinity of the respective Properties. As a
result, the respective Properties' ability to operate at high occupancy levels
is subject to competition from newly built low-income housing.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
Item 8. Financial Statements and Supplementary Data
Table of Contents Page
Auditors' Report..............................................................12
Balance Sheets................................................................13
Statements of Operations......................................................14
Statements of Changes in Owners' Equity (Deficit).............................15
Statements of Cash Flows......................................................16
Notes to Financial Statements.................................................18
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, 1999 and
1998, 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, 1999. 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, 1999 and
1998, and the results of its operations and its cash flows for each of the three
years in the period ended March 30, 1999, in conformity with generally accepted
accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
May 13, 1999
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
BALANCE SHEETS
MARCH 30, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Notes 1999 1998
------- ----------- -----------
ASSETS
Cash and cash equivalents 3,9 $ 937,143 $ 837,174
Restricted cash 3,5,9 410,767 711,505
Investments in bonds available-for-sale 4,9 998,384 999,656
Investment in local partnerships 5,8 10,353,629 11,515,253
Interest receivable 9 15,726 15,726
Organization costs (less accumulated amortization of
$75,000 and $65,000) 2 10,000
----------- -----------
$12,715,649 $14,089,314
=========== ===========
LIABILITIES AND OWNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 25,380 $ 22,500
Payable to manager 6,8 473,920 381,682
Capital contributions payable 5,9 366,617 673,050
Interest payable 5,9 44,150 38,455
----------- -----------
910,067 1,115,687
----------- -----------
Commitments and contingencies 5,8
Owners' equity (deficit) 2,4
Manager (45,900) (34,197)
Beneficial owners (18,654 units of beneficial ownership interest
outstanding) 11,844,092 13,002,736
Accumulated other comprehensive income, net 7,390 5,088
----------- -----------
11,805,582 12,973,627
----------- -----------
$12,715,649 $14,089,314
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Notes 1999 1998 1997
------- ----------- ----------- ----------
REVENUE
Interest $ 135,553 $ 141,902 $ 156,201
----------- ----------- -----------
TOTAL REVENUE 135,553 141,902 156,201
----------- ----------- -----------
EXPENSES
Management fee 6,8 192,238 193,819 194,348
Professional fees 30,454 16,477 30,566
Printing, postage and other 14,081 12,669 16,216
Amortization 10,000 15,000 15,000
----------- ----------- -----------
TOTAL EXPENSES 246,773 237,965 256,130
----------- ----------- -----------
Loss from operations (111,220) (96,063) (99,929)
Equity in loss of investment in local
partnerships 5 (1,059,127) (1,023,224) (1,070,651)
----------- ----------- -----------
NET LOSS (1,170,347) (1,119,287) (1,170,580)
Other comprehensive income (loss) 4 2,302 70,325 (20,824)
----------- ----------- -----------
COMPREHENSIVE LOSS $(1,168,045) $(1,048,962) $(1,191,404)
=========== =========== ===========
2
NET LOSS ATTRIBUTABLE TO
Manager $ (11,703) $ (11,193) $ (11,706)
Beneficial owners 1,158,644) (1,108,094) (1,158,874)
----------- ----------- -----------
$ 1,170,347) $(1,119,287) $(1,170,580)
=========== =========== ===========
NET LOSS per unit of beneficial ownership
interest (18,654 units of beneficial
ownership interest) $ (62.11) $ (59.40) $ (62.12)
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CHANGES IN OWNERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Accumulated
Other
Comprehensive
Beneficial Income (Loss),
Manager Owners Net Total
------------ ----------- ------------- -----------
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)
Other comprehensive loss, net (20,824) (20,824)
------------ ----------- ------------ -----------
Owners' equity (deficit), March 30, 1997 (23,004) 14,110,830 (65,237) 14,022,589
Net loss (11,193) (1,108,094) (1,119,287)
Other comprehensive income, net 70,325 70,325
------------ ----------- ------------ -----------
Owners' equity (deficit), March 30, 1998 (34,197) 13,002,736 5,088 12,973,627
Net loss (11,703) (1,158,644) (1,170,347)
Other comprehensive income, net 2,302 2,302
------------ ----------- ------------ -----------
Owners' equity (deficit), March 30, 1999 $ (45,900) $11,844,092 $ 7,390 $11,805,582
============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 144,822 $ 148,210 $ 165,368
Cash paid for
management fee (100,000) (125,000) (75,000)
professional fees (29,574) (23,777) (30,016)
printing, postage and other expenses (12,081) (12,830) (17,853)
------------ ------------ ------------
Net cash provided by (used in) operating activities 3,167 (13,397) 42,499
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 102,497 124,338
Transfer from (to) restricted cash 300,738 (5,567) 1,294,318
Investment in local partnerships (306,433) (1,075,535)
Investments in bonds (includes $282 of accrued interest) (98,490)
------------ ------------ ------------
Net cash provided by investing activities 96,802 20,281 218,783
------------ ------------ ------------
Net increase in cash and cash equivalents 99,969 6,884 261,282
Cash and cash equivalents at beginning of year 837,174 830,290 569,008
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 937,143 $ 837,174 $ 830,290
============ ============ ============
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds
available-for-sale, net $ 2,302 $ 70,325 $ (20,824)
============ ============ ============
Decrease in capital contributions payable, net $ (224,298)
============
See reconciliation of net loss to net cash provided by (used in) operating
activities on page 17.
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
STATEMENTS OF CASH FLOWS - (Continued)
YEARS ENDED MARCH 30, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
----------- ----------- -----------
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net loss $(1,170,347) $(1,119,287) $(1,170,580)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities
Equity in loss of investment in local partnerships 1,059,127 1,023,224 1,070,651
Amortization of organization costs 10,000 15,000 15,000
Amortization of net premium on investments in bonds 3,574 3,574 3,511
Decrease (increase) in interest receivable (2,833) 141
Increase (decrease) in accounts payable and accrued expenses 2,880 (7,461) (1,087)
Increase in payable to manager 92,238 68,819 119,348
Increase in interest payable 5,695 5,567 5,515
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
$ 3,167 $ (13,397) $ 42,499
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 1999, 1998 AND 1997
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 investors ("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 in accordance with
Section 42 of the Internal Revenue Code (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 manager of the Trust.
On September 13, 1993, the Trust commenced the offering for sale of units of
beneficial ownership ("Units") to 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, under which the investment is carried at cost
which includes capital contributions payable, and is adjusted for the Trust's
share of each Local Partnership's results of operations and by 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. Equity in loss in excess of the Trust's
investment balance in a Local Partnership is allocated to other partners'
capital in any 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 investment in a Local
Partnership are recorded as other income from local partnerships.
The Partnership regularly assesses the carrying value of its investment in Local
Partnerships. If the carrying value is considered to exceed the value derived by
management (which contemplates remaining Low-income Tax Credits and residual
value, among other things), the Partnership reduces its investment in any such
Local Partnership and includes such reduction in equity in loss of investment in
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 as of 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 Standards
The Trust has adopted Statement of Financial Accounting Standard ("SFAS") No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements. Other comprehensive income (loss) in the accompanying statements of
operations resulted from net unrealized gains (losses) on investments in bonds
available-for-sale. Accumulated other comprehensive income in the accompanying
balance sheets reflects the net unrealized gain on investments in bonds
available-for-sale. The statements of
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
1. Organization, Purpose and Summary of Significant Accounting Policies
(continued)
operations for the years ended March 30, 1998 and 1997 include certain
reclassifications to reflect the adoption of SFAS No. 130.
The Trust has adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which establishes standards for reporting information
about operating segments and related disclosures about products and services,
geographic areas and major customers. The Trust is in one business segment and
follows the requirements of SFAS No. 131.
Cash and Cash Equivalents
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 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 included as items of
comprehensive income (loss) and are reported as a separate component of owners'
equity (deficit).
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. 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 were amortized on a straight-line basis over five (5) years;
such costs became fully amortized during the year ended March 30, 1999.
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 disclosures related to differences in the book and
tax bases of accounting.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
1. Organization, Purpose and Summary of Significant Accounting Policies
(continued)
Acquisition Fees
Acquisition fees are recorded as investments in Local Partnerships and capital
contributions payable when incurred.
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
organization and offering 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, 1999, the Trust has cash and cash equivalents and restricted
cash in the aggregate of $1,347,910 which are deposited in interest-bearing
accounts with an institution which is not insured by the Federal Deposit
Insurance Corporation.
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 circumstances 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.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
4. Investments in Bonds Available-For-Sale (continued)
As of March 30, 1999, certain information concerning investments in bonds
available-for-sale is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
- ------------------------ ----------- ----------- ---------- -----------
Corporate debt securities
After one year through five years $ 98,806 $ 3,105 $ -- $ 101,911
After five years through ten years 690,081 9,317 (2,681) 696,717
After ten years 202,107 158 (2,509) 199,756
----------- ----------- ---------- -----------
$ 990,994 $ 12,580 $ (5,190) $ 998,384
=========== =========== ========== ===========
As of March 30, 1998, 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
- ------------------------ ----------- ----------- ---------- -----------
Corporate debt securities
After five years through ten years $ 619,702 $ 6,564 $ (1,639) $ 624,627
After ten years 374,866 1,446 (1,283) 375,029
----------- ----------- ---------- -----------
$ 994,568 $ 8,010 $ (2,922) $ 999,656
=========== =========== ========== ===========
</TABLE>
5. Investment in Local Partnerships
As of March 30, 1999, 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.
* Affiliates of the Manager provide services to the Local Partnership.
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
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
5. Investment in Local Partnerships (continued)
applicable laws and regulations. Under the terms of each of the 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 $14,394,424 and $366,617 are payable as of March 30, 1999. Restricted
cash in the accompanying balance sheet as of March 30, 1999 represents such
outstanding capital contributions along with accrued interest of $44,150 on an
outstanding capital contribution. The outstanding capital contributions are
payable in installments upon certain Local Partnerships' satisfaction of
specified conditions related to operations. As of December 31, 1998, the Local
Partnerships have outstanding mortgage loans payable totaling approximately
$22,720,000 and accrued interest payable on such loans totaling approximately
$980,000, which are secured by security interests and liens common to mortgage
loans on the Local Partnerships' real property and other assets.
The combined balance sheets of the Local Partnerships as of December 31, 1998
and 1997 and the combined statements of operations of the Local Partnerships for
the years ended December 31, 1998, 1997 and 1996 are reflected on pages 23 and
24, respectively.
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
5. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of December 31, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
------------ ------------
ASSETS
Cash and cash equivalents $ 487,409 $ 431,906
Rents receivable 35,870 58,175
Capital contributions receivable 366,617 673,050
Escrow deposits and reserves 1,538,075 1,527,756
Land 1,267,153 1,267,153
Buildings and improvements (net of accumulated depreciation of
$5,525,125and $4,163,615) 31,464,189 32,771,397
Intangible assets (net of accumulated amortization of
$140,093 and $106,629) 353,547 388,011
Other 257,139 232,920
------------ ------------
$ 35,769,999 $ 37,350,368
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 311,095 $ 377,440
Due to related parties 1,078,506 1,135,319
Mortgage loans 22,720,227 23,356,717
Notes payable 100,000 100,000
Accrued interest 979,948 761,838
Other 147,844 138,975
------------ ------------
25,337,620 25,870,289
------------ ------------
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions (includes receivable of
$366,617 and $673,050) 14,534,206 14,638,203
Cumulative loss (4,177,577) (3,118,450)
------------ ------------
10,356,629 11,519,753
------------ ------------
General partners and other limited partners
Capital contributions, net of distributions 341,718 217,360
Cumulative loss (265,968) (257,034)
------------ ------------
75,750 (39,674)
10,432,379 11,480,079
------------ ------------
$ 35,769,999 $ 37,350,368
============ ============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
5. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the years
ended December 31, 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
----------- ----------- -----------
REVENUE
Rental $ 3,737,970 $ 3,730,675 $ 3,500,347
Interest and other 160,274 142,800 104,402
----------- ----------- -----------
TOTAL REVENUE 3,898,244 3,873,475 3,604,749
----------- ----------- -----------
EXPENSES
Administrative 721,849 695,834 677,879
Utilities 480,467 477,870 427,767
Operating, maintenance and other 934,059 814,082 800,537
Taxes and insurance 453,325 472,030 499,944
Financial (including amortization of $34,464, $35,478
and $38,194) 1,015,095 1,041,730 981,169
Depreciation 1,361,510 1,403,541 1,299,076
----------- ----------- -----------
TOTAL EXPENSES 4,966,305 4,905,087 4,686,372
----------- ----------- -----------
NET LOSS $(1,068,061) $(1,031,612) $(1,081,623)
=========== =========== ===========
NET LOSS ATTRIBUTABLE TO
American Tax Credit Trust, Series I $(1,059,127) $(1,023,224) $(1,070,651)
General partners and other limited partners, which
includes specially allocated items of revenue to
certain general partners of $1,883 in 1998 and
$2,094 in 1997 (8,934) (8,388) (10,972)
----------- ----------- -----------
$(1,068,061) $(1,031,612) $(1,081,623)
=========== =========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1999 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Investment Cash Investment
in Local Trust's distributions in Local Capital
Partnership equity in loss for received during Partnership contributions
balance as the year ended the year ended balance as payable as
of March 30, December 31, March 30, of March 30, of March 30,
Name of Local Partnership 1998 1998 1999 1999 1999
- ------------------------- ----------- ------------------ --------------- ------------ -------------
ACP Housing Associates, L.P. $ 552,217 $ (98,435) $ -- $ 453,782 $ --
Creative Choice Homes VII, Ltd. 2,053,801 (251,202) -- 1,802,599 --
Edgewood Manor Associates, L.P. 1,353,728 (135,597) -- 1,218,131 --
Ledge / McLaren Limited Partnership 304,052 (8,331) -- 295,721 --
Penn Apartment Associates 449,492 (91,706) -- 357,786 --
SB-92 Limited Partnership 573,532 (83,763) (3,000) 486,769 --
St. Christopher's Associates, L.P. V 1,552,057 (138,789) -- 1,413,268 76,800
St. John Housing Associates, L.P. 3,077,839 (106,200) (99,497) 2,872,142 --
Starved Rock - LaSalle Manor
Limited Partnership 498,033 (30,680) -- 467,353 --
Vision Limited Dividend Housing
Association Limited Partnership 1,100,502 (114,424) -- 986,078 289,817
----------- ----------- ------------ ------------ -----------
$11,515,253 $(1,059,127) $ (102,497) $ 10,353,629 $ 366,617
=========== =========== ============ ============ ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1998 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Investment Cash Investment
in Local Trust's distributions in Local Capital
Partnership equity in loss for received during Partnership contributions
balance as the year ended the year ended balance as payable as
of March 30, December 31, March 30, of March 30, of March 30,
Name of Local Partnership 1997 1997 1998 1998 1998
- ------------------------- ----------- ------------------ --------------- ------------ -------------
ACP Housing Associates, L.P. $ 630,080 $ (77,863) $ -- $ 552,217 $ --
Creative Choice Homes VII, Ltd. 2,184,706 (130,905) -- 2,053,801 --
Edgewood Manor Associates, L.P. 1,496,535 (142,807) -- 1,353,728 --
Ledge / McLaren Limited Partnership
308,966 (3,414) (1,500) 304,052 --
Penn Apartment Associates 548,314 (98,822) -- 449,492 --
SB-92 Limited Partnership 618,735 (39,203) (6,000) 573,532 --
St. Christopher's Associates, L.P. V 1,682,225 (130,168) -- 1,552,057 76,800
St. John Housing Associates, L.P. 3,361,953 (167,276) (116,838) 3,077,839 --
Starved Rock - LaSalle Manor
Limited Partnership 548,805 (50,772) -- 498,033 306,433
Vision Limited Dividend Housing
Association Limited Partnership 1,282,496 (181,994) -- 1,100,502 289,817
----------- ----------- ------------ ----------- -----------
$12,662,815 $(1,023,224) $ (124,338) $11,515,253 $ 673,050
=========== =========== ============ =========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 1998 is
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Mortgage Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
---------------------------- --------------- -------------- -------------- ----------------
ACP Housing Associates, L.P. $ 1,503,781 $ 14,000 $ 2,505,364 $ (236,145)
Creative Choice Homes VII, Ltd. 2,122,043 500,000 4,091,851 (422,382)
Edgewood Manor Associates, L.P. 1,856,702 53,850 3,641,770 (696,553)
Ledge / McLaren Limited
Partnership 458,804 123,673 677,680 (74,053)
Penn Apartment Associates 963,000 13,357 1,783,668 (244,010)
SB-92 Limited Partnership 2,074,031 73,000 2,989,358 (560,859)
St. Christopher's
Associates, L.P. V 2,180,000 31,829 3,783,012 (636,188)
St. John Housing
Associates, L.P. 4,476,604 74,800 8,271,928 (1,419,336)
Starved Rock - LaSalle Manor
Limited Partnership 1,786,897 202,845 2,476,872 (325,979)
Vision Limited Dividend Housing
Association Limited Partnership 5,298,365 179,799 6,767,811 (909,620)
-------------- -------------- -------------- --------------
$ 22,720,227 $ 1,267,153 $ 36,989,314 $ (5,525,125)
============== ============== ============== ==============
Property information for each Local Partnership as of December 31, 1997 is as follows:
Mortgage Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
--------------------------- --------------- --------------- --------------- ---------------
ACP Housing Associates, L.P. $ 1,507,629 $ 14,000 $ 2,505,364 $ (168,739)
Creative Choice Homes VII, Ltd. 2,155,841 500,000 4,091,851 (298,999)
Edgewood Manor Associates, L.P. 1,858,934 53,850 3,625,205 (563,695)
Ledge / McLaren Limited
Partnership 460,811 123,673 677,680 (52,379)
Penn Apartment Associates 963,000 13,357 1,783,668 (196,290)
SB-92 Limited Partnership 2,102,720 73,000 2,983,158 (446,908)
St. Christopher's
Associates, L.P. V 2,180,000 31,829 3,783,012 (498,638)
St. John Housing
Associates, L.P. 4,564,538 74,800 8,271,928 (1,095,083)
Starved Rock - LaSalle Manor
Limited Partnership 2,098,314 202,845 2,447,194 (260,078)
Vision Limited Dividend Housing
Association Limited Partnership 5,464,930 179,799 6,765,952 (582,806)
-------------- -------------- -------------- --------------
$ 23,356,717 $ 1,267,153 $ 36,935,012 $ (4,163,615)
============== ============== ============== ==============
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
5. Investment in Local Partnerships (continued)
The summary of property activity during the year ended December 31, 1998 is
as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net change during the
Balance as of year ended Balance as of
December 31, December 31, December 31,
1997 1998 1998
-------------------- ------------------------ ----------------
Land $ 1,267,153 $ -- $ 1,267,153
Buildings and improvements 36,935,012 54,302 36,989,314
------------- ------------- -------------
38,202,165 54,302 38,256,467
Accumulated depreciation (4,163,615) (1,361,510) (5,525,125)
------------- ------------- -------------
$ 34,038,550 $ (1,307,208) $ 32,731,342
============= ============= =============
</TABLE>
6. Transactions with Manager and Affiliates
For the years ended March 30, 1999, 1998 and 1997, 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>
<S> <C> <C> <C>
1999 1998 1997
------------------------ ---------------------- ----------------------
Paid Incurred Paid Incurred Paid Incurred
---------- ---------- --------- --------- --------- ----------
Management fee (see Note 8) $ 100,000 $ 192,238 $ 125,000 $ 193,819 $ 75,000 $ 194,348
For the years ended December 31, 1998, 1997 and 1996, 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:
1999 1998 1997
------------------------ ---------------------- ----------------------
Paid Incurred Paid Incurred Paid Incurred
---------- ---------- --------- --------- --------- ----------
Property management fees $ 12,160 $ 12,920 $ 12,180 $ 12,180 $ 13,920 $ 13,920
Insurance and other services 10,642 13,096 4,213 13,855 9,234 29,065
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
7. Taxable Loss
A reconciliation of the financial statement net loss of the Trust for the
years ended March 30, 1999, 1998 and 1997 to the tax return net loss for
the years ended December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
--------------- --------------- ---------------
Financial statement net loss for the years ended March 30,
1999, 1998 and 1997 $ (1,170,347) $ (1,119,287) $ (1,170,580)
Add (less) net transactions occurring between
January 1, 1996 and March 30, 1996 -- -- (16,987)
January 1, 1997 and March 30, 1997 -- (35,681) 35,681
January 1, 1998 and March 30, 1998 (15,851) 15,851 --
January 1, 1999 and March 30, 1999 26,666 -- --
--------------- --------------- ---------------
Adjusted financial statement net loss for the years ended
December 31, 1998, 1997 and 1996 (1,159,532) (1,139,117) (1,151,886)
Adjustment to management fee pursuant to Internal Revenue
Code Section 267 93,819 94,348 94,348
Differences arising from equity in loss of investment in
Local Partnerships (137,771) (159,124) (204,896)
Other differences (220) (15) (1,212)
--------------- --------------- ---------------
Tax return net loss for the years ended December 31, 1998,
1997 and 1996 $ (1,203,704) $ (1,203,908) $ (1,263,646)
=============== =============== ===============
The differences between the investment in Local Partnerships for tax and
financial reporting purposes as of December 31, 1998 and 1997 are as
follows:
1998 1997
--------------- ---------------
Investment in Local Partnerships - financial reporting $ 10,356,629 $ 11,519,753
Investment in Local Partnerships - tax * 9,404,951 10,399,413
--------------- ---------------
$ 951,678 $ 1,120,340
=============== ===============
* Capital contributions payable to Local Partnerships are not included
in the investment balance for tax purposes.
Payable to manager in the accompanying balance sheets represents accrued
management fees not deductible for tax purposes pursuant to Internal
Revenue Code Section 267.
</TABLE>
<PAGE>
AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust
Series I
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1999, 1998 AND 1997
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 $192,238, $193,819 and $194,348 for the
years ended March 30, 1999, 1998 and 1997, respectively. Unpaid Management Fees
in the amount of $473,920 and $381,682 are recorded as payable to manager in the
accompanying balance sheets as of March 30, 1999 and 1998, respectively.
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.
In October 1997, Congress passed the Multifamily Assisted Housing and Reform and
Affordability Act, whereby the United States Department of Housing and Urban
Development ("HUD") was given the authority to renew certain project based
Section 8 contracts expiring during HUD's fiscal year 1998, where requested by
an owner, for an additional one year term generally at or below current rent
levels, subject to certain guidelines. In October 1998, HUD issued a directive
related to project based Section 8 contracts expiring during HUD's fiscal year
1999 which defines owners' notification responsibilities, advises owners of
project based Section 8 properties of what their options are regarding the
renewal of Section 8 contracts, provides guidance and procedures to owners,
management agents, contract administrators and HUD staff on renewing Section 8
contracts, provides guidance on setting renewal rents and handling renewal rent
increases and provides the requirements and procedures for opting-out of a
Section 8 project based contract. 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. Three Local Partnerships' Section 8 contracts are scheduled
to expire in 1999.
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 amounts approximate fair value.
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.
The estimated fair value of the Trust's financial instruments as of March 30,
1999 and 1998 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:
<TABLE>
<CAPTION>
<S> <C> <C>
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
- ----------------------------------------------------------------------------------------------------------
</TABLE>
1 Director holds office until his successor is elected and qualified. All
officers serve at the pleasure of the Director.
Richard Paul Richman, age 51, is the sole Director and President of the Manager.
Mr. Richman is the President and principal stockholder of Richman Group. 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 55, is the Executive Vice President of the Manager. Mr.
Smith is responsible for 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 38, is a Vice President and the Secretary of the Manager
and a minority stockholder of Richman Group. 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 47, is a Vice President of the Manager. Mr.
Richelson, formerly President of Wilder Richman Management Corporation, a
property management company affiliated with the Manager, is a Vice President of
Richman Asset Management, Inc. ("RAM"), an affiliate of the Manager. Mr.
Richelson's responsibilities in connection with RAM include advisory services
provided to a small business investment company.
Neal Ludeke, age 41, is a Vice President and the Treasurer of the Manager. Mr.
Ludeke, a Vice President and the 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 the Treasurer of RAM. Mr.
Ludeke's responsibilities in connection with RAM 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, 1999,
the Manager did not pay any remuneration to any of its officers or its director.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of May 1, 1999, 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 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 net tax losses and Low-income Tax Credits generated by Registrant during the
year ended December 31, 1998 allocated to the Manager were $12,037 and $26,155,
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, 1999.
<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>
<S> <C> <C>
Incorporated by
Exhibit Reference to
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>
<S> <C>
Incorporated by
Exhibit Reference to
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 Exhibit 99.6 to Form 10-K Report
St. John Housing Associates, L.P. pursuant to dated March 30, 1997
Title 17, Code of Federal Regulations (File No. 0-24600)
99.7 December 31, 1997 financial statements of Exhibit 99.7 to Form 10-K Report
St. John Housing Associates, L.P. pursuant to dated March 30, 1998
Title 17, Code of Federal Regulations (File No. 0-24600)
99.8 December 31, 1998 financial statements of
St. John Housing Associates, L.P. pursuant to
Title 17, Code of Federal Regulations
</TABLE>
<PAGE>
(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 25 , 1999 /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>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ Richard Paul Richman
- ------------------------ President, Chief Executive Officer
(Richard Paul Richman) and Director of the Manager June 25, 1999
/s/ Neal Ludeke
- ------------------------ Vice President and Treasurer of
(Neal Ludeke) the Manager (Principal Financial
and Accounting Officer of the Trust) June 25, 1999
</TABLE>
<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 25, 1999
-----------------------------------
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>
<S> <C> <C>
Signature Title Date
President, Chief Executive Officer June 25, 1999
- ---------------------------------------- -------------
(Richard Paul Richman) and Director of the Manager
Vice President and Treasurer of June 25, 1999
- ---------------------------------------- -------------
(Neal Ludeke) the Manager (Principal Financial
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, 1999 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> US Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-30-1999
<PERIOD-START> MAR-30-1998
<PERIOD-END> MAR-30-1999
<EXCHANGE-RATE> 1.00
<CASH> 937
<SECURITIES> 998
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,716
<CURRENT-LIABILITIES> 910
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,716
<SALES> 0
<TOTAL-REVENUES> 136
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 247
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,170)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,170)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,170)
<EPS-BASIC> (62.11)
<EPS-DILUTED> 0
</TABLE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
ST. JOHN HOUSING ASSOCIATES
LIMITED PARTNERSHIP
DECEMBER 31, 1998, 1997 AND 1996
<PAGE>
TABLE OF CONTENTS
St. John Housing Associates Limited Partnership
PAGE
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
<PAGE>
INDEPENDENT AUDITORS' 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, 1998 and 1997, and the related
statements of profit and loss, partners' equity and cash flows for the years
ended December 31, 1998, 1997 and 1996. 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, 1998 and 1997, and the results
of its operations, changes in partners' equity and cash flows for the years
ended December 31, 1998, 1997 and 1996, in conformity with generally accepted
accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
January 10, 1999
<PAGE>
St. John Housing Associates Limited Partnership
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
1998 1997
------------ ------------
CURRENT ASSETS
Cash - operations $ 125,174 $ 13,199
Cash - entity 8,495 5,697
Short-term investments - operations 97,275 227,032
Tenant accounts receivable 1,524 1,280
Miscellaneous prepaid expenses 17,014 17,108
Account receivable - interest subsidy - 9,122
------------ ------------
Total current assets 249,482 273,438
------------ ------------
DEPOSITS HELD IN TRUST - FUNDED
Tenant deposits 18,039 15,246
------------ ------------
RESTRICTED DEPOSITS AND FUNDED RESERVES
Escrow deposits 52,850 39,627
Reserve for replacements 233,689 217,769
------------ ------------
286,539 257,396
------------ ------------
RENTAL PROPERTY
Land 59,800 59,800
Land improvements 15,000 15,000
Buildings and improvements 8,018,620 8,018,620
Furniture and equipment 243,279 243,279
Motor vehicles 10,029 10,029
------------ ------------
8,346,728 8,346,728
Less accumulated depreciation 1,419,336 1,095,083
------------ ------------
6,927,392 7,251,645
------------ ------------
OTHER ASSET
Intangible assets, net of accumulated
amortization of $26,792 and $21,381,
respectively. 85,089 90,500
------------ ------------
$ 7,566,541 $ 7,888,225
============ ============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 12,969 $ 18,805
Prepaid rents 665 375
Accrued payroll taxes payable 1,548 -
Accrued interest payable 18,509 18,702
Accrued property taxes payable 85,000 98,000
Due to management company 4,861 4,791
Accounts payable - entity 82,867 94,002
Mortgages payable - current maturities 94,185 87,673
------------ ------------
Total current liabilities 300,604 322,348
------------ ------------
DEPOSITS LIABILITY
Tenant deposits held in trust (contra) 17,203 14,922
------------ ------------
LONG-TERM LIABILITIES
Mortgages payable 4,476,604 4,564,538
Less current maturities 94,185 87,673
------------ ------------
4,382,419 4,476,865
------------ ------------
CONTINGENCY - -
PARTNERS' EQUITY 2,866,315 3,074,090
------------ ------------
$ 7,566,541 $ 7,888,225
============ ============
See notes to financial statements
</TABLE>
<PAGE>
St. John Housing Associates Limited Partnership
STATEMENTS OF PROFIT AND LOSS
Year ended December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
------------ ------------ ------------
Revenue
Rental $ 1,014,920 $ 1,016,548 $ 1,016,001
Interest and other 21,926 17,645 23,638
------------ ------------ -----------
1,036,846 1,034,193 1,039,639
------------ ------------ -----------
Expenses
Administrative 122,933 123,961 118,157
Utilities 66,844 61,802 54,676
Operating and maintenance 197,844 196,929 171,031
Taxes and insurance 113,072 148,556 157,793
Interest 221,193 226,741 232,146
Depreciation and amortization 329,664 341,955 359,716
------------ ------------ -----------
1,051,550 1,099,944 1,093,519
------------ ------------ -----------
Other entity expenses (income) 92,569 103,217 110,847
NET LOSS $ (107,273) $ (168,968) $ (164,727)
============ ============ ===========
See notes to financial statements
</TABLE>
<PAGE>
St. John Housing Associates Limited Partnership
STATEMENTS OF PARTNERS' EQUITY
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
General Limited
Total partners partners
------------- ----------- -------------
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
Partner distributions (118,018) (1,180) (116,838)
Net loss - 1997 (168,968) (1,690) (167,278)
------------- ----------- -------------
Partners' equity (deficit), December 31, 1997 3,074,090 (3,747) 3,077,837
Partners' distributions (100,502) (1,005) (99,497)
Net loss - 1998 (107,273) (1,073) (106,200)
------------- ----------- -------------
Partners' equity (deficit), December 31, 1998 $ 2,866,315 $ (5,825) $ 2,872,140
============= =========== =============
</TABLE>
<PAGE>
St. John Housing Associates Limited Partnership
STATEMENTS OF CASH FLOWS
Year ended December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1998 1997 1996
----------- ----------- -----------
Cash flows from operating activities
Net loss $ (107,273) $ (168,968) $ (164,727)
Adjustments to reconcile net loss to net cash provided
by operating activities
Depreciation 324,253 336,544 354,305
Amortization 5,411 5,411 5,411
Interest income on U.S. Treasury Bills - (7,323) -
Decrease in tenant accounts receivable (244) (78) (1,098)
(Increase) decrease in accounts receivable - 9,122 (9,122) -
interest subsidy
(Increase) decrease in prepaid expenses 94 (9) (5,858)
(Increase) decrease in escrow deposits (13,223) 41,840 5,107
Increase (decrease) in accounts payable (4,288) 1,633 1,740
Decrease in accrued interest payable (193) (450) (434)
Increase (decrease) in accrued real estate tax (13,000) 3,000 30,000
Increase in tenant security deposits - net (512) (302) (677)
Increase in prepaid rents 290 254 32
Increase (decrease) in due to management company 70 (89) 131
Increase (decrease) in accounts payable - entity (11,135) (14,515) 108,517
Due from other project - deposit error - 9,246 (9,246)
----------- ----------- -----------
Net cash provided by operating activities 189,372 197,072 323,203
----------- ----------- -----------
Cash flows from investing activities
Net deposits to reserve for replacement (15,920) (32,098) (31,293)
Investment in rental property - - (129,876)
Proceeds from redemption of U.S. Treasury Bills 129,757 250,000 -
Purchase of U.S. Treasury Bills - (227,032) (242,677)
----------- ----------- -----------
Net cash provided by (used in) investing activities 113,837 (9130) (403,846)
----------- ----------- -----------
Mortgage principal payments (87,934) (81,855) (76,197)
Decrease in due to general partner and affiliates - - (137,980)
Distributions (100,502) (118,018) -
----------- ----------- -----------
Net cash used in financing activities (188,436) (199,873) (214,177)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 114,773 (11,931) (294,820)
Cash, beginning 18,896 30,827 325,647
----------- ----------- -----------
Cash, end $ 133,669 $ 18,896 $ 30,827
=========== =========== ===========
Supplemental disclosure of cash flow information
Cash paid for interest during the year $ 221,386 $ 227,191 $ 250,860
=========== =========== ===========
</TABLE>
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
NOTE A - ORGANIZATION
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.
Cash distributions are limited by agreements between the partnership and the
Department of Housing and Urban Development (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 15 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.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
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.
Intangible Assets and 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.
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.
Investments
Investments in 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 5.041% to 5.152% and mature through February 25,
1999. One of these bills is included in security deposit cash.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998, 1997 and 1996
NOTE C - 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 $109,433 for
1998, $109,721 for 1997 and $109,989 for 1996, is reflected as a reduction of
interest expense. As of December 31, 1998 and 1997, principal balances of
$1,674,405 and $1,729,819 were outstanding and accrued interest was $995 and
$969, respectively.
The second mortgage in the original amount of $2,908,300 is insured by the 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, 1998 and 1997, principal balances of $2,802,199 and
$2,834,721 were outstanding and accrued interest was $17,514 and $17,733,
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
and thereafter are as follows:
First Mortgage Second Mortgage Total
December 31, 1999 $ 59,138 $ 35,047 $ 94,185
2000 63,413 37,767 101,180
2001 67,997 40,699 108,696
2002 72,913 43,859 116,772
2003 78,184 47,264 125,448
Thereafter 1,332,760 2,597,563 3,930,323
------------ ------------ ------------
$ 1,674,405 $ 2,802,199 $ 4,476,604
============ ============ ============
NOTE D - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENTS
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, 1999
34 June 30, 1999
Under the Multifamily Assisted Housing and Reform and Affordability Act (MAHRAA)
of 1997, Congress set forth the legislation for a permanent "mark-to-market"
program and provided for permanent authority for the renewal of Section 8
contracts. On September 11, 1998, HUD issued an interim rule to provide
clarification of the implementation of the mark-to-market program. Owners with
Section 8 contracts expiring after September 30, 1998 are subject to the
provisions of MAHRAA. As such, the partnership may choose to either opt out of
the Section 8 program, request mortgage restructuring and renewal of the Section
8 contract, or request renewal of the Section 8 contract without mortgage
restructuring. Each option contains a specific set of rules and procedures that
must be followed in order to comply with the requirements of MAHRAA. As of the
date of the report, the partnership intends to request renewal of the Section 8
contracts without mortgage restructuring.
<PAGE>
St. John Housing Associates Limited Partnership
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998, 1997 and 1996
NOTE E - 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 expired February 28, 1997, and which is presently
on a month-to-month basis. 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, 1998, 1997 and 1996,
management fees of $52,833, $52,724 and $52,453, and computer and accounting
fees of $6,048, $6,048 and $6,048 were charged to operations, respectively. At
December 31, 1998 and 1997, the partnership owed the management agent $4,861 and
$4,791, respectively, which consisted of unpaid management fees of $4,357 and
$4,287 and computer accounting/bookkeeping fees of $504 and $504, respectively.
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, 1998, 1997
and 1996, $3,060, $1,080 and $1,560 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 years ended
December 31, 1998, 1997 and 1996, a partnership administrative fee of $92,367,
$103,502 and $108,517, respectively, was incurred, of which $82,867 and $94,002,
respectively, were payable as of December 31, 1998 and 1997.
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 year ended December 31, 1996, the general partner was
paid $120,414 for fees, which have been capitalized in the cost of rental
property.
Consulting Fees
The general partner received compensation from L-B Residential Management
Company, the management agent, for consulting services rendered in 1998, 1997
and 1996.
NOTE F - 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.
NOTE G - CONCENTRATION OF CREDIT RISK
The partnership maintains its cash balances in two banks. The balances are
insured by the Federal Deposit Insurance Corporation up to $100,000 by each
bank. As of December 31, 1998 and 1997, the uninsured portion of the cash
balances held at one of the banks was $25,074 and $0, respectively.
