June 24, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Boston Financial Tax Credit Fund VIII, A Limited Partnership
Form 10-K Annual Report for the Year Ended March 31, 1999
Commission File Number 0-26522
Dear Sir/Madam:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, there is filed herewith one copy of the subject report.
Very truly yours,
/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller
TC810K.98
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
March 31, 1999 33-68088
BOSTON FINANCIAL TAX CREDIT FUND VIII, A
LIMITED PARTNERSHIP (Exact name of
registrant as specified in its charter)
Massachusetts 04-3205879
- -------------------------------------- ---------------------------
(State of organization) (I.R.S. Employer
Identification No.)
101 Arch Street, 16th Floor
Boston, Massachusetts 02110-1106
- -------------------------------------- ---------------------------
(Address of Principal (Zip Code)
executive office)
Registrant's telephone number, including area code 617/439-3911
Securities registered pursuant to Section 12(b) of the Act:
Name on each exchange on
Title of each class which registered
- -------------------------------------- ---------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
200,000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
State the aggregate sales price of partnership units held by non affiliates of
the registrant.
$28,801,000 as of March 31, 1999
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT
IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS: (2) ANY PROXY OR
INFORMATION STATEMENT: AND (3) ANY PROSPECTUS FILED PURSUANT TO RULE 424(b) OR
(c) UNDER THE SECURITIES ACT OF 1933.
Part of Report on
Form 10-K into
Which the Document
is Incorporated
Documents incorporated by reference
Report on Form 8-K dated April 8, 1994 Part I, Item 1
Report on Form 8-K dated June 14, 1994 Part I, Item 1
Acquisition Reports Part I, Item 1
Prospectus - Sections Entitled:
"Investment Objectives and Policies -
Principal Investment Objectives" Part I, Item 1
"Investment Risks" Part I, Item 1
"Estimated Use of Proceeds" Part III, Item 13
"Management Compensation and Fees" Part III, Item 13
"Profits and Losses for Tax Purposes, Tax
Credits and Cash Distributions" Part III, Item 13
<PAGE>
<TABLE>
<CAPTION>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1999
TABLE OF CONTENTS
Page No.
PART I
<S> <C> <C>
Item 1 Business K-3
Item 2 Properties K-5
Item 3 Legal Proceedings K-8
Item 4 Submission of Matters to a Vote of
Security Holders K-8
PART II
Item 5 Market for the Registrant's Units and
Related Security Holder Matters K-9
Item 6 Selected Financial Data K-10
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations K-11
Item 7A. Quantitative and Qualitative Disclosures about
Market Risk K-13
Item 8 Financial Statements and Supplementary Data K-13
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure K-13
PART III
Item 10 Directors and Executive Officers
of the Registrant K-14
Item 11 Management Remuneration K-15
Item 12 Security Ownership of Certain Beneficial
Owners and Management K-15
Item 13 Certain Relationships and Related Transactions K-16
PART IV
Item 14 Exhibits, Financial Statement Schedule and
Reports on Form 8-K K-19
SIGNATURES K-20
</TABLE>
<PAGE>
PART I
Item 1. Business
Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a
Massachusetts limited partnership formed on August 25, 1993 under the laws of
the Commonwealth of Massachusetts. The Fund's partnership agreement
("Partnership Agreement") authorizes the sale of up to 200,000 Units of limited
partnership interest at $1,000 per Unit in series. The first series offered
50,000 Units. On July 29, 1994, the Fund held its final investor closing. In
total the Fund had raised $36,497,000 ("Gross Proceeds") through the sale of
36,497 Units. Such amounts exclude a fractional unregistered Unit previously
acquired for $100 by the Initial Limited Partner. The offering of Units
terminated on March 29, 1995.
The Fund is engaged solely in the business of real estate investment. A
presentation of information about industry segments is not applicable and would
not be material to an understanding of the Fund's business taken as a whole.
The Fund has invested as a limited partner in other limited partnerships ("Local
Limited Partnerships") which own and operate residential apartment complexes
("Properties"), some of which are expected to benefit from some form of federal,
state or local assistance programs and all of which qualify for low-income
housing tax credits ("Tax Credits") added to the Internal Revenue Code (the
"Code") by the Tax Reform Act of 1986. The investment objectives of the Fund
include the following: (i) to provide investors with annual tax credits which
they may use to reduce their federal income taxes; (ii) to provide limited cash
distributions from the operations of apartment complexes; and (iii) to preserve
and protect the Fund's capital. There cannot be any assurance that the Fund will
attain any or all of these investment objectives. A more detailed discussion of
these investment objectives, along with the risks in achieving them is contained
in the sections of the Prospectus entitled "Investment Objectives and Policies -
Principal Investment Objectives" and "Investment Risks", which are herein
incorporated by this reference.
Table A on the following page lists the properties owned by the Local Limited
Partnerships in which the Fund had invested as of March 31, 1999. Item 7 of this
Report contains other significant information with respect to such Local Limited
Partnerships. The terms of the acquisition of each Local Limited Partnership
interest have been described in the Form 8-Ks and a supplement to the Prospectus
listed in Part IV of this Report on Form 10-K; such descriptions are
incorporated herein by this reference.
<PAGE>
<TABLE>
<CAPTION>
TABLE A
SELECTED LOCAL LIMITED
PARTNERSHIP DATA
Property owned by Local Date
Limited Partnerships* Interest
Location Acquired
- --------------------------- -------------------- ------------
<S> <C> <C>
Green Wood Gallatin, TN 03/02/94
Webster Court Kent, WA 05/13/94
Springwood Tallahassee, FL 12/15/94
Meadow Wood of Pella Pella, IA 06/03/94
Hemlock Ridge Livingston Manor, NY 04/29/94
Pike Place Fort Smith, AR 01/31/94
West End Place Springdale, AR 01/12/94
Oak Knoll Renaissance Gary, IN 11/01/94
Beaverdam Creek Mechanicsville, VA 11/16/94
Live Oaks Plantation West Palm Beach, FL 06/28/94
</TABLE>
* The Fund's interest in profits and losses of each Local Limited Partnership
arising from normal operations is 99%, except for Springwood which is
79.20%, Hemlock Ridge which is 77%, and Pike Place and West End Place which
are 90%. Profits and losses arising from sale or refinancing transactions
are allocated in accordance with the respective Local Limited Partnership
Agreements.
Although the Fund's investments in Local Limited Partnerships are not subject to
seasonal fluctuations, the Fund's equity in losses of Local Limited
Partnerships, to the extent it reflects the operations of individual Properties,
may vary from quarter to quarter based upon changes in occupancy and operating
expenses as a result of seasonal factors.
Each Local Limited Partnership has, as its general partners ("Local General
Partners"), one or more individuals or entities not affiliated with the Fund or
its General Partner. In accordance with the partnership agreements under which
such entities are organized ("Local Limited Partnership Agreements"), the Fund
depends on the Local General Partners for the management of each Local Limited
Partnership. As of March 31, 1999, the following Local Limited Partnerships have
a common Local General Partner or affiliated group of Local General Partners
accounting for the specified percentage of the total capital contributions in
Local Limited Partnerships: (i) Green Wood and Springwood, representing 21.71%,
have Flournoy Development Company as Local General Partner; (ii) Pike Place and
West End Place, representing 12.90%, have Lindsey Management Company as Local
General Partner. The Local General Partners of the remaining Local Limited
Partnerships are identified in the Acquisition Reports which are herein
incorporated by reference.
The Properties owned by Local Limited Partnerships in which the Fund invests
are, and will continue to be, subject to competition from existing and future
apartment complexes in the same areas. The success of the Fund will depend on
many outside factors, most of which are beyond the control of the Fund and which
cannot be predicted at this time. Such factors include general economic and real
estate market conditions, both on a national basis and in those areas where the
Properties are located, the availability and cost of borrowed funds, real estate
tax rates, operating expenses, energy costs and government regulations. In
addition, other risks inherent in real estate investment may influence the
ultimate success of the Fund, including: (i) possible reduction in rental income
due to an inability to maintain high occupancy levels or adequate rental levels;
(ii) possible adverse changes in general economic conditions and adverse local
conditions, such as competitive overbuilding, a decrease in employment or
adverse changes in real estate laws, including building codes; and (iii) the
possible future adoption of rent control legislation which would not permit
increased costs to be passed on to the tenants in the form of rent increases, or
which suppress the ability of the Local Limited Partnerships to generate
operating cash flow. Since most of the Properties benefit from some form of
governmental assistance, the Fund is subject to the risks inherent in that area
including decreased subsidies, difficulties in finding suitable tenants and
obtaining permission for rent increases. In addition, any Tax Credits allocated
to investors with respect to a Property are subject to recapture to the extent
that the Property or any portion thereof ceases to qualify for the Tax Credits.
Other future changes in federal and state income tax laws affecting real estate
ownership or limited partnerships could have a material and adverse affect on
the business of the Fund.
The Fund is managed by Arch Street VIII Limited Partnership, the sole General
Partner of the Fund. The Fund, which does not have any employees, reimburses The
Boston Financial Group Limited Partnership, an affiliate of the General Partner,
for certain expenses and overhead costs. A complete discussion of the management
of the Fund is set forth in Item 10 of this Report.
Item 2. Properties
The Fund owns limited partnership interests in ten Local Limited Partnerships
which own and operate Properties, some of which benefit from some form of
federal, state, or local assistance programs and all of which qualify for the
Tax Credits added to the Code by the Tax Reform Act of 1986. The Fund's
ownership interest in the Local Limited Partnerships is 99%, with the exception
of Springwood which is 79.20%, Hemlock Ridge which is 77%, and Pike Place and
West End Place which are 90%.
All of the Local Limited Partnerships have received an allocation of Tax Credits
from the relevant state tax credit agency. In general, the Tax Credit runs for
ten years from the date the Property is placed in service. The required holding
period (the "Compliance Period") of the Properties is fifteen years. During
these fifteen years, the Properties must satisfy rent restrictions, tenant
income limitations and other requirements, as promulgated by the Internal
Revenue Service, in order to maintain eligibility for the Tax Credit at all
times during the Compliance Period. Once a Local Limited Partnership has become
eligible for the Tax Credits, it may lose such eligibility and suffer an event
of recapture if its Property fails to remain in compliance with the
requirements. To date, none of the Local Limited Partnerships have suffered an
event of recapture of Tax Credits.
In addition, some of the Local Limited Partnerships have obtained one or a
combination of different types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the property is located at favorable terms; or iii) loans that have repayment
terms that are based on a percentage of cash flow.
The following schedule provides certain key information on the Local Limited
Partnership interests acquired by the Fund.
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions Mtge. loans Occupancy
Local Limited Partnership Number Total Committed Paid Through payable at at
Property Name of at March 31, March 31, December 31, Type of March 31,
Property Location Apt. Units 1999 1999 1998 Subsidy* 1999
- --------------------------- -------------- -------------- --------------- --------------- ------------ ---------------
Green Wood Apartments,
a Limited Partnership
Green Wood Apartments
<S> <C> <C> <C> <C> <C> <C>
Gallatin, TN 164 $3,825,916 $3,825,916 $5,179,303 None 87%
Webster Court Apartments
a Limited Partnership
Webster Court Apartments
Kent, WA 92 2,318,078 2,318,078 2,835,486 None 96%
Springwood Apartments
a Limited Partnership (1)
Springwood Apartments
Tallahassee, FL 113 2,499,202 2,499,202 3,894,649 None 90%
Meadow Wood Associates
of Pella, a Limited Partnership
Meadow Wood of Pella
Pella, IA 30 893,808 893,808 1,110,733 Section 8 96%
RMH Associates, a Limited
Partnership (1)
Hemlock Ridge
Livingston Manor, NY 100 1,697,298 1,697,298 2,105,654 Section 8 83%
Pike Place, a Limited
Partnership (1)
Pike Place
Fort Smith, AR 144 1,915,328 1,915,328 3,303,163 None 99%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Contributions Mtge. Loans Occupancy
Local Limited Partnership Number Total Committed Paid Through payable at At
Property Name of at March 31, March 31, December 31, Type of March 31,
Property Location Apt. Units 1999 1999 1998 Subsidy* 1999
- -------------------------------- ---------- ------------------- ------------- --------------- ------------ ---------------
West End Place, a Limited
Partnership (1)
West End Place
<S> <C> <C> <C> <C> <C> <C>
Springdale, AR 120 1,843,010 1,843,010 2,914,729 None 100%
Oak Knoll Renaissance, a
Limited Partnership
Oak Knoll Renaissance
Gary, IN 256 4,922,412 4,922,412 5,320,816 Section 8 98%
Beaverdam Creek Associates,
a Limited Partnership (2)
Beaverdam Creek
Mechanicsville, VA 120 3,629,140 3,629,140 3,333,911 None 98%
Schickedanz Brothers Palm
Beach Limited
Live Oaks Plantation
West Palm Beach, FL 218 5,587,953 5,587,953 7,793,227 None 67%
------ ----------- ------------ ------------
1,357 $29,132,145 $29,132,145 $37,791,671
====== =========== =========== ===========
(1) Boston Financial Tax Credits Fund VIII has a 79.20% interest in Springwood Apartments, L.P., a 77% interest in RMH
Associates, L.P., and a 90% interest in Pike Place, L.P. and West End Place, L.P. The mortgage payable balances
represent 100% of the outstanding balances.
(2) The amount paid includes funds advanced under a promissory note agreement with Boston Financial Tax Credit Fund VIII,
a Limited Partnership.
*Section 8 This subsidy, which is authorized under Section 8 of Title II of the Housing and Community Development Act of 1974,
allows qualified low-income tenants to pay 30% of their monthly income as rent with the balance paid by the federal
government.
</TABLE>
<PAGE>
Four Local Limited Partnerships invested in by the Fund each represent more than
10% of the total capital contributions to be made to Local Limited Partnerships
by the Fund. These Local Limited Partnerships are as follows: (i) Green Wood
Apartments Limited Partnership, with Flournoy Development Company as Local
General Partner; (ii) Oak Knoll Renaissance Limited Partnership, with Ronald M.
Gatton Redevelopment Services as Local General Partner; (iii) Beaverdam Creek
Associates Limited Partnership, with Castle Development Corporation as Local
General Partner; and (iv) Schickedanz Brothers Palm Beach Limited Partnership,
which owns Live Oaks Plantation and has Schickedanz Enterprise as its Local
General Partner.
Green Wood Apartments Limited Partnership, representing 13.13% of the Fund's
total investment in the Local Limited Partnerships, has obtained a $5,322,000
mortgage loan payable at 8.860% per annum with monthly payments of principal and
interest in the amount of $42,287 due through June 1, 2010.
Oak Knoll Renaissance Limited Partnership, representing 16.90% of the total
investment in the Local Limited Partnerships, has obtained a permanent mortgage
loan payable at 10.125% per annum, with monthly payments of principal and
interest in the amount of $52,205 due through June 1, 2018. The construction
loan of $5,676,337 with the City of Gary, Indiana, was repaid in 1996 when
permanent financing was obtained.
Beaverdam Creek Associates Limited Partnership ("Beaverdam Creek LP"),
representing 12.46% of the Fund's total investment in the Local Limited
Partnerships, has obtained two mortgage loans in the original principal amounts
of $2,420,000 and $1,000,000 from the Virginia Housing and Development Authority
("VHDA"). The VHDA mortgage notes bear interest at 10.62% and 5%, respectively,
per annum. The mortgage notes are unsecured and are secured by a deed of trust
on the rental property. The mortgage notes payable are due in monthly
installments of principal and interest of $22,354 and $5,368, respectively, to
the year 2025.
Schickedanz Brothers Palm Beach Limited Partnership, representing 19.18% of the
total investment in the Local Limited Partnerships, entered into two loan
agreements. The first is with Newport Mortgage Company, L.P., in the original
amount of $6,493,000. The loan bears interest at a rate of 8.94% per annum, with
monthly payments of principal and interest in the amount of $51,964 due through
July 7, 2026. As of December 31, 1998, $6,377,227 is outstanding on the
mortgage.
The second loan agreement is a Home loan with the Florida Housing Finance
Agency, with a principal amount not to exceed $1,531,000. Interest on the unpaid
principal balance shall be due at the Applicable Federal Rate ("AFR") for long
term obligations as of the commencement date of the loan. Interest shall be
payable at 3% per annum commencing on June 30, 1995. Deferred interest is
compounded annually and is due together with the principal balance on February
28, 2025. As of December 31, 1998, total funds in the amount of $1,416,000 have
been drawn on the loan.
The duration of the leases for occupancy in the Properties described above will
be six to twelve months. The General Partners believe the Properties described
herein are adequately covered by insurance.
Additional information required under this Item, as it pertains to the Fund, is
contained in Items 1, 7 and 8 of this Report.
Item 3. Legal Proceedings
The Fund is not a party to any pending legal or administrative proceeding, and
to the best of its knowledge, no legal or administrative proceeding is
threatened or contemplated against it.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
PART II
Item 5. Market for the Registrant's Units and Related Security Holder Matters
There is no public market for the Units, and it is not expected that a public
market will develop. If a Limited Partner desires to sell Units, the buyer of
those Units will be required to comply with the minimum purchase and retention
requirements and investor suitability standards imposed by applicable federal or
state securities laws and the minimum purchase and retention requirements
imposed by the Fund. The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers, will be subject
to negotiation by the Limited Partner seeking to sell his Units. Units will not
be redeemed or repurchased by the Fund.
The Partnership Agreement does not impose on the Fund or its General Partner any
obligation to obtain periodic appraisals of assets or to provide Limited
Partners with any estimates of the current value of Units.
As of June 15, 1999, there were 1,234 record holders of Units of the Fund.
Cash distributions, when made, are paid annually. For the years ended March 31,
1999, 1998 and 1997, no cash distributions were made.
<PAGE>
Item 6. Selected Financial Data
The following table sets forth selected financial information regarding the
Fund's financial position and operating results. This information should be read
in conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations and the Financial Statements and Notes thereto, which
are included in Items 7 and 8 of this Report.
<TABLE>
<CAPTION>
March 31, March 31, March 31, March 31, March 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Revenue $ 103,830 $ 98,132 $ 100,536 $ 511,713 $ 763,502
Equity in losses of Local Limited
Partnerships (1,745,890) (2,083,625) (1,922,556) (881,551) (161,157)
Net income (loss) (2,027,965) (2,408,077) (2,247,908) (782,504) 160,473
Per Limited Partnership Unit (A) (55.01) (65.32) (60.98) (21.23) 5.52
Cash and cash equivalents 180,030 213,966 273,412 71,715 10,495,010
Marketable Securities 1,455,618 1,486,223 1,442,676 3,709,881 1,575,592
Investment in Local Limited
Partnerships 23,234,665 25,099,334 26,813,245 26,064,146 19,840,904
Total assets (B) 24,889,168 26,827,966 29,078,258 31,277,311 32,240,835
Long-term debt - - - - -
Cash Distribution - - - - -
Other data:
Passive loss (C) (2,394,493) (2,836,009) (2,936,579) (1,638,463) (511,934)
Per Limited Partnership Unit (C) (64.95) (76.93) (79.66) (44.44) (13.89)
Portfolio income (C) 124,579 151,751 161,828 764,632 628,323
Per Limited Partnership Unit (C) 3.38 4.12 4.39 20.74 17.04
Low-Income Housing Tax Credit (C) 5,234,040 5,234,045 5,234,045 3,307,725 313,289
Per Limited Partnership Unit (C) 141.98 141.98 141.98 89.72 8.50
Local Limited Partnership interests
owned at end of period 10 10 10 10 10
</TABLE>
(A) Per Limited Partnership Unit data is based upon 36,497 units for the
years ended March 31, 1999, 1998, 1997 and 1996, and a weighted average
number of units outstanding of 28,774 for the year ended March 31, 1995.
(B) Total assets include the net investment in Local Limited Partnerships.
(C) Income Tax information is as of December 31, the year end of the Fund for
income tax purposes. Per Limited Partnership Unit data is based upon the
final investor closing held on July 29, 1994 for a total of 36,497
outstanding Units.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The Fund
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements and is including this statement for
purposes of complying with these safe harbor provisions. Although the Fund
believes the forward-looking statements are based on reasonable assumptions, the
Fund can give no assurance that their expectations will be attained. Actual
results and timing of certain events could differ materially from those
projected in or contemplated by the forward-looking statements due to a number
of factors, including, without limitation, general economic and real estate
conditions, interest rates and unanticipated delays or expenses on the part of
the Fund and their suppliers in achieving year 2000 compliance.
Liquidity and Capital Resources
At March 31, 1999, the Fund had cash and cash equivalents of $180,030 as
compared to $213,966 at March 31, 1998. This decrease is attributable to
purchases of marketable securities and cash used for operations. These decreases
to cash and cash equivalents are offset partially by cash distributions received
from Local Limited Partnerships and proceeds from sales and maturities of
marketable securities.
As of March 31, 1999, approximately $1,239,000 of marketable securities has been
designated as Reserves. The Reserves are established to be used for working
capital of the Fund and contingencies related to the ownership of Local Limited
Partnership interests. Management believes that the interest income earned on
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the Fund's
ongoing operations. Reserves may be used to fund operating deficits, if the
General Partner deems funding appropriate.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of March 31, 1999, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for, except as disclosed above.
In the event a Local Limited Partnership encounters operating difficulties
requiring additional funds, the Fund might deem it in its best interests to
voluntarily provide such funds, in order to protect its investment. No such
event has occurred to date.
Cash Distributions
No cash distributions were made during the year ended March 31, 1999. It is
expected that cash available for distribution, if any, will not be significant
in fiscal year 2000. As funds from temporary investments are paid to Local
Limited Partnerships, interest earnings on those funds decrease. In addition,
some of the properties benefit from some type of federal or state subsidy and,
as a consequence, are subject to restrictions on cash distributions.
Results of Operations
1999 versus 1998
For the year ended March 31, 1999, the Fund's operations resulted in a net loss
of $2,027,965, as compared to $2,408,077 for the year ended March 31, 1998. The
decrease in net loss is primarily attributable to a decrease in equity in losses
of Local Limited Partnerships. The decrease in equity in losses of Local Limited
Partnerships for the year ended March 31, 1999 as compared to the same period in
1998, is primarily attributable to an increase in rental and other income.
<PAGE>
1998 versus 1997
For the year ended March 31, 1998, the Fund's operations resulted in a net loss
of $2,408,077, as compared to $2,247,908 for the year ended March 31, 1997. The
increase in net loss is primarily attributable to an increase in equity in
losses of Local Limited Partnerships. The increase in equity in losses of Local
Limited Partnerships for the year ended March 31, 1998, as compared to the same
period in 1997, is primarily attributable to an increase in operating expenses.
Low-Income Housing Tax Credits
The 1998, 1997 and 1996 tax credits were $141.98 per Unit. The 1995 tax credits
were $89.72 per Unit. Tax Credits are not available for a property until the
property is placed in service and its apartment units are occupied by qualified
tenants. In the first year the Tax Credit is claimed, the allowable credit
amount is determined using an averaging convention to reflect the number of
months that units comprising the qualified basis were occupied by qualified
tenants during the year. To the extent that the full amount of the annual credit
is not allocated in the first year, an additional credit in such amount is
available in the 11th taxable year.
As of December 31, 1995, all of the properties had been placed in service and
were generating Tax Credits. Some of the properties had less than a full year of
operations in the period ended December 31, 1995. They were subject to the
averaging convention mentioned above, therefore the Fund did not receive a full
allocation of Tax Credits with respect to those properties in 1995. The Tax
Credits per Limited Partnership Unit have stabilized at approximately $142 per
unit, as properties have reached completion and have become fully leased. Since
the Tax Credits have stabilized, the annual amount allocated to investors is
expected to remain the same for about seven years. In years eight through ten,
the credits are expected to decrease as properties reach the end of the ten year
credit period. However, because the compliance periods extend significantly
beyond the tax credit periods, the Partnership is expected to retain most of its
interests in the Local Limited Partnerships for the foreseeable future.
Property Discussions
The Fund is invested in ten Local Limited Partnerships which own ten properties
located in eight states. Two properties, representing 356 units, underwent
rehabilitation, and eight properties, representing 1001 units, are new
construction. All of the ten properties are complete and through initial
lease-up.
Most of the ten Local Limited Partnerships have stabilized operations. The
majority of these stabilized properties are operating at break-even or
generating positive operating cash flow.
Live Oaks Plantation, located in West Palm Beach, Florida, has experienced a
decrease in the occupancy. As of December 31, 1998, occupancy was 72%, down from
85% in September. The change in occupancy is primarily due to the majority of
first-year leases expiring and management's decision not to renew all the leases
due to tenant collection problems. Further compounding the problem is
competition from new affordable housing complexes in the area. Accordingly,
management is developing a more aggressive marketing strategy. The Managing
General Partner will be working closely with the Local General Partner and
management agent to monitor operations.
In accordance with Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
the Fund has implemented policies and practices for assessing impairment of its
real estate assets and investments in Local Limited Partnerships. Each asset is
analyzed by real estate experts to determine if an impairment indicator exists.
If so, the carrying value is compared to the undiscounted future cash flows
expected to be derived from the asset and, if there is a significant impairment
in value, a provision to write down the asset to fair value will be charged
against income.
<PAGE>
Inflation and Other Economic Factors
Inflation had no material impact on the operations or financial conditional of
the Fund for the years ended March 31, 1999, 1998, and 1997.
Since some of the properties are expected to benefit from some form of
governmental assistance, the Fund is subject to the risks inherent in that area
including decreased subsidies, difficulties in finding suitable tenants and
obtaining permission for rent increases. In addition, any Tax Credits allocated
to investors with respect to a property are subject to recapture to the extent
that the property, or any portion thereof, ceases to qualify for the Tax
Credits.
Certain of the properties in which the Fund invests may be located in areas
suffering from poor economic conditions. Such conditions could have an adverse
effect on the rent or occupancy levels at such properties. Nevertheless,
management believes that the generally high demand for below market rate housing
will tend to negate such factors. However, no assurance can be given in this
regard.
Impact of Year 2000
The Managing General Partner's plan to resolve year 2000 issues involves the
following four phases: assessment, remediation, testing and implementation. To
date, the Managing General Partner has fully completed an assessment of all
information systems that may not be operative subsequent to 1999 and has begun
the remediation, testing and implementation phase on both hardware and software
systems. Because the hardware and software systems of both the Fund and Local
Limited Partnerships are generally the responsibility of obligated third
parties, the plan primarily involves ongoing discussions with and obtaining
written assurances from these third parties that pertinent systems will be 2000
compliant. In addition, neither the Fund nor the Local Limited Partnerships are
incurring significant additional costs since such expenses are principally
covered under the service contracts with vendors. As of June 1999, the General
Partner is in the final stages of its Year 2000 remediation plan and believes
all major systems are compliant; any systems still being updated are not
considered significant to the Fund's operations. However, despite the
likelihood that all significant year 2000 issues are expected to be resolved in
a timely manner, the Managing General Partner has no means of ensuring that all
systems of outside vendors or other entities that impact operations will be 2000
compliant. The Managing General Partner does not believe that the inability of
third parties to address their year 2000 issues in a timely manner will have a
material impact on the Fund. However, the effect of non-compliance by third
parties is not readily determinable.
Management has also evaluated a worst case scenario projection with respect to
the year 2000 and expects any resulting disruption of either the Managing
General Partner's activities or any Local Limited Partnership's operations to be
short-term inconveniences. Such problems, however, are not likely to fully
impede the ability to carry out necessary duties of the Fund. Moreover, because
expected problems under a worst case scenario are not extensively detrimental,
and because the likelihood that all systems affecting the Fund will be compliant
before 2000, the Managing General Partner has determined that a formal
contingency plan that responds to material system failures is not necessary.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Fund has invested in marketable securities with a fair value of $1,455,618
at March 31, 1999; these securities, with rates ranging from 4.91% to 6.03%, do
not subject the Fund to significant market risk because of their short term
maturities and high liquidity. The Fund has no other exposure to market risk
associated with activities in derivative financial instruments, derivative
commodity instruments, or other financial instruments.
Item 8. Financial Statements and Supplementary Data
Information required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partner of the Fund is Arch Street VIII Limited Partnership, a
Massachusetts limited partnership (the "General Partner"), an affiliate of The
Boston Financial Group Limited Partnership ("Boston Financial"), a Massachusetts
limited partnership. George Fantini, Jr., a Vice President of the General
Partner, resigned his position effective June 30, 1995. Donna Gibson, a Vice
President of the General Partner, resigned from her position on September 13,
1996. Georgia Murray resigned as Managing Director, Treasurer and Chief
Financial Officer of the General Partner on May 25, 1997. Fred N. Pratt, Jr.
resigned as Managing Director of the General Partner on May 28, 1997. William E.
Haynsworth resigned as a Managing Director and Chief Operating Officer of the
General Partner on March 23, 1998. Peter G. Fallon resigned as a Vice President
of the General Partner on June 1, 1999.
The General Partner was formed in August 1993. Randloph G. Hawthorne is the
Chief Operating Officer of the General Partner and has the primary
responsibility for evaluating, selecting and negotiating investments for the
Fund. The Investment Committee of the General Partner approves all investments.
The names and positions of the principal officers and the directors of the
General Partner are set forth below.
Name Position
Jenny Netzer Managing Director and President
Michael H. Gladstone Managing Director, Vice President and Clerk
Randolph G. Hawthorne Managing Director, Vice President and
Chief Operating Officer
James D. Hart Chief Financial Officer and Treasurer
Paul F. Coughlan Vice President
William E. Haynsworth Vice President
The General Partner provides day-to-day management of the Fund. Compensation
is discussed in Item 11 of this report. Such day-to-day management does not
include the management of the properties.
The business experience of each of the persons listed above is described below.
There is no family relationship between any of the persons listed in this
section.
Jenny Netzer, age 43, graduated from Harvard University (B.A., 1976) and
received a Master's in Public Policy from Harvard's Kennedy School of Government
in 1982. Ms. Netzer joined Boston Financial in 1987 and is a Senior Vice
President leading the Institutional Tax Credit Team. She is also a member of the
Senior Leadership Team, the firm's Executive Committee. Previously, Ms. Netzer
led Boston Financial's new business initiatives and managed the firm's Asset
Management division, which is responsible for the performance of 750 properties
and providing service to 35,000 investors. Before joining Boston Financial, she
was Deputy Budget Director for the Commonwealth of Massachusetts, where she was
responsible for the Commonwealth's health care and public pension programs'
budgets. Ms. Netzer was also Assistant Controller at Yale University and has
been a member of the Watertown Zoning Board of Appeals.
Michael H. Gladstone, age 42, graduated from Emory University (B.A., 1978)
and Cornell University (J.D., M.B.A., 1982). Mr. Gladstone joined Boston
Financial in 1985 and is Vice President and General Counsel. He is also a
member of the Senior Leadership Team. Prior to joining Boston Financial, Mr.
Gladstone was associated with the Boston law firm of Herrick & Smith. Mr.
Gladstone is on the Advisory Board of the Housing and Development Reporter. He
is also a member of the Investment Program Association, The National Realty
Committee, Cornell Real Estate Council, National Housing Conference and the
Massachusetts Bar.
Randolph G. Hawthorne, age 49, is a graduate of Massachusetts Institute of
Technology (S.B., 1971) and Harvard Graduate School of Business (M.B.A., 1973).
Mr. Hawthorne joined Boston Financial in 1973 and is currently a Vice President
responsible for structuring and acquiring real estate investments. Previously,
Mr. Hawthorne served as Treasurer of Boston Financial. Mr. Hawthorne is Past
Chairman of the Board of the National Multi Housing Council, having served on
the board since 1989. He is a past president of the National Housing and
Rehabilitation Association, a member of the Residential Development Council of
the Urban Land Institute, as well as a member of the Advisory Board of the
Berkeley Real Estate Center at the University of California. In addition to
speaking at industry conferences, he is on the Editorial Advisory Boards of the
Tax Credit Advisor and Multi-Housing News.
<PAGE>
James D. Hart, age 41, graduated from Trinity College (B.A.) and Amos Tuck
School at Dartmouth College (M.B.A.). Mr. Hart joined Boston Financial in 1998
and serves as Chief Financial Officer and is a member of the Senior Leadership
Team. Prior to joining Boston Financial, Mr. Hart was engaged in venture
capital management on behalf of institutional investors, including the
negotiation and structuring of private equity and mezzanine transactions, as a
Vice President of Interfid Ltd. and later in the operational management of a
venture-backed software company as Managing Director and Chief Financial
Officer of Bitstream Inc. Mr. Hart has also served on the Board of Directors of
several companies, including those that went on to complete initial public
offerings.
Paul F. Coughlan, age 55, is a graduate of Brown University (A.B., 1965). Mr.
Coughlan joined Boston Financial in 1975 and is currently a Senior Vice
President and a member of the Investment Management division with responsibility
for marketing institutional investments. Previously, he was national sales
manager for Boston Financial's retail tax credit funds. Prior to joining Boston
Financial, Mr. Coughlan was an investment broker with Bache & Company and
Reynolds Securities, Inc.
William E. Haynsworth, age 59, is a graduate of Dartmouth College (A.B., 1961)
and Harvard Law School (L.L.B., 1964; L.L.M., 1969). Mr. Haynsworth joined
Boston Financial in 1977 and is a Senior Vice President responsible for the
structuring of real estate investments and the acquisition of property
interests. Prior to joining Boston Financial, Mr. Haynsworth was Acting
Executive Director and General Counsel of the Massachusetts Housing Finance
Agency. He was also the Director of Non-Residential Development of the Boston
Redevelopment Authority and an associate of the law firm of Goodwin, Procter
& Hoar. Mr. Haynsworth is a member of the Executive Committee and the Board
of Directors of the Affordable Housing Tax Credit Coalition. He is a member
of the Senior Leadership Team and the Board of Directors of Boston Financial.
Mr. Haynsworth has over 25 years of real estate experience.
Item 11. Management Remuneration
Neither the partners of Arch Street VIII Limited Partnership nor any other
individual with significant involvement in the business of the Fund receives any
current or proposed remuneration from the Fund.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 31, 1999, the following entities are the only entities known to the
Fund to be the beneficial owners of more than 5% of the Units outstanding:
Amount
Title of Class Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
- --------------- ------------------------------- ------------ -------------
Limited Oldham Institutional Tax Credits LLC 2,476 Units 6.78%
Partner 101 Arch Street
Boston, MA
<PAGE>
<TABLE>
<CAPTION>
Amount
Title of Class Name and Address of Beneficially Percent of
Beneficial Owner Owned Class
- --------------- ------------------------------- -------------- -------------
<S> <C> <C> <C>
Limited Oldham Institutional Tax Credits 5,220 Units 14.30%
Partner VI LLC
101 Arch Street
Boston, MA
Limited Liberty Corporation 2,079 Units 5.70%
Partner PO Box 789
Greenville, SC
</TABLE>
Oldham Institutional Tax Credits LLC and Oldham Institutional Tax Credits VI LLC
are affiliates of Arch Street VIII Limited Partnership, the General Partner.
The equity securities registered by the Fund under Section 12(g) of the Act
consist of 200,000 Units, 36,497 of which have been sold to the public as of
March 31, 1999. Holders of Units are permitted to vote on matters affecting the
Fund only in certain unusual circumstances and do not generally have the right
to vote on the operation or management of the Fund.
As of March 31, 1999, Arch Street VIII, Inc. owns a fractional (unregistered)
Unit not included in the Units sold to the public.
Except as described in the preceding paragraphs, neither Arch Street VIII, Inc.,
Arch Street VIII Limited Partnership, Boston Financial nor any of their
executive officers, directors, partners or affiliates is the beneficial owner of
any Units. None of the foregoing persons possesses a right to acquire beneficial
ownership of Units.
The General Partner does not know of any existing arrangement that might at a
later date result in a change in control of the Fund.
Item 13. Certain Relationships and Related Transactions
The Fund is required to pay certain fees to and reimburse certain expenses of
the General Partner or its affiliates (including Boston Financial) in connection
with the organization of the Fund and the offering of Units. The Fund is also
required to pay certain fees to and reimburse certain expenses of the General
Partner or its affiliates (including Boston Financial) in connection with the
administration of the Fund and its acquisition and disposition of investments in
Local Limited Partnerships. In addition, the General Partner is entitled to
certain Fund distributions under the terms of the Partnership Agreement. Also,
an affiliate of the General Partner will receive up to $10,000 from the sale or
refinancing proceeds of each Local Limited Partnership, if it is still a limited
partner at the time of such transaction. All such fees, expenses and
distributions paid in the years ended March 31, 1999, 1998 and 1997 are
described below and in the sections of the Prospectus entitled "Estimated Use of
Proceeds", "Management Compensation and Fees" and "Profits and Losses for Tax
Purposes, Tax Credits and Cash Distributions". Such sections are incorporated
herein by reference.
The Fund is permitted to enter into transactions involving affiliates of the
General Partner, subject to certain limitations established in the Partnership
Agreement.
Information required under this Item is contained in Note 5 to the Financial
Statements presented as a separate section of this Report. The affiliates of the
Managing Partner which have received or will receive fee payments and expense
reimbursements from the Fund are as follows:
<PAGE>
Organizational fees and expenses and selling expenses
In accordance with the Partnership Agreement, the Fund is required to pay
certain fees to and reimburse expenses of the General Partner and others in
connection with the organization of the Fund and the offering of its Limited
Partnership Units. Selling commissions, fees and accountable expenses related to
the sale of the Units totaling $4,664,369 have been charged directly to Limited
Partners' equity. In connection therewith, $2,828,918 of selling expenses and
$1,835,451 of offering expenses incurred on behalf of the Fund have been paid to
an affiliate of the General Partner. The Fund may be required to pay a
non-accountable expense allowance for marketing expense equal to a maximum of 1%
of Gross Proceeds. The Fund has capitalized an additional $50,000 which was
reimbursed to an affiliate of the General Partner. Total organization and
offering expenses exclusive of selling commissions and underwriting advisory
fees did not exceed 5.5% of the Gross Proceeds and organizational and offering
expenses, inclusive of selling commissions and underwriting advisory fees, did
not exceed 15.0% of the Gross Proceeds.
Acquisition fees and expenses
In accordance with the Partnership Agreement, the Fund is required to pay
acquisition fees to and reimburse acquisition expenses of the General Partner or
its affiliates for selecting, evaluating, structuring, negotiating and closing
the Partnership's investments in Local Limited Partnerships. Acquisition fees
total 6% of the gross offering proceeds. Acquisition expenses, which include
such expenses as legal fees and expenses, travel and communications expenses,
costs of appraisals, accounting fees and expenses, are expected to total 1.5% of
the gross offering proceeds. Acquisition fees totaling $2,189,820 for the
closing of the Fund's Local Limited Partnership Investments were paid to an
affiliate of the General Partner. Acquisition expenses totaling $335,196 were
reimbursed to an affiliate of the General Partner. Payments made and expenses
reimbursed in the years ended March 31, 1999, 1998 and 1997 are as follows:
1999 1998 1997
------------ ----------- --------
Acquisition fees and expenses $ - $ - $ 888
Asset Management Fees
An affiliate of the General Partner receives a base amount of 0.565% (as
adjusted by the CPI factor) of Gross Proceeds annually as an Asset Management
Fee for administering the affairs of the Fund. Asset Management Fees incurred in
the years ended March 31, 1999, 1998 and 1997 are as follows:
1999 1998 1997
------------ ----------- ---------
Asset Management Fees $ 206,220 $ 199,592 $ 193,635
Salaries and benefits expense reimbursement
An affiliate of the General Partner is reimbursed for the cost of certain
salaries and benefits expenses which are incurred by an affiliate of the General
Partner on behalf of the Fund. The reimbursements are based upon the size and
complexity of the Fund's operations. Reimbursements made in the years ended
March 31, 1999, 1998 amd 1997, are as follows:
1999 1998 1997
------------ ----------- -----------
Salaries and benefits
expense reimbursement $ 77,890 $ 93,551 $ 108,120
<PAGE>
Property Management Fees
BFPM, an affiliate of the Managing General Partner, currently manages Beaverdam
Creek, a property in which the Fund has invested. The property management fee
charged is equal to 4% of cash receipts. Fees earned by BFPM which have been
included in operating expenses in the summarized income statements in Note 3 to
the Financial Statements in Part II, Item 8 for the three years ended December
31, 1998, 1997 and 1996, are as follows:
1998 1997 1996
------------ ----------- ------------
Property Management Fees $ 34,183 $ 29,440 $ 27,556
Cash distributions paid to the General Partners
In accordance with the Partnership Agreement, the General Partner of the Fund,
Arch Street VIII Limited Partnership, receives 1% of cash distributions made to
partners. As of March 31, 1999, the Fund has not paid any cash distributions to
partners.
Additional information concerning cash distributions and other fees paid or
payable to the Managing General Partner and its affiliates and the reimbursement
of expenses paid or payable to Boston Financial and its affiliates during each
of the three years ended March 31, 1999 is presented in Note 5 to the Financial
Statements.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a)(1) and (2) Documents filed as a part of this Report
In response to this portion of Item 14, the financial statements, financial
statement schedule and the auditors' report relating thereto are submitted as a
separate section of this Report. See Index on page F-1 hereof.
The reports of auditors of the Local Limited Partnerships relating to the audits
of the financial statements of such Local Limited Partnerships appear in Exhibit
(28)(1) of this Report.
All other financial statement schedules and exhibits for which provision is made
in the applicable accounting regulations of the Securities and Exchange
Commission are not required under related instructions or are inapplicable, and
therefore have been omitted.
(a)(3) See Exhibit Index contained herein.
(a)(3)(b) Reports on Form 8-K:
No reports on Form 8-K were filed year the year ended March 31, 1999.
(a)(3)(c) Exhibits
Number and Description in Accordance
with Item 601 of Regulation S-K
27. Financial Data Schedule
28. Additional Exhibits
(a) 28.1 Reports of Other Independent Auditors
(b) Audited financial statements of Local Limited Partnerships
Live Oaks
(a)(3)(d) None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
By: Arch Street VIII, Limited Partnership
its General Partner
By: /s/ Randolph G. Hawthorne Date: June 24, 1999
------------------------------ --------------------
Randolph G. Hawthorne,
Managing Director and
Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the General Partner of the
Fund and in the capacities and on the dates indicated:
By: /s/ Randolph G. Hawthorne Date: June 24, 1999
------------------------------ ----------------------
Randolph G. Hawthorne,
Managing Director and
Chief Operating Officer
By: /s/Michael H. Gladstone Date: June 24, 1999
------------------------------ ---------------------
Michael H. Gladstone,
A Managing Director
<PAGE>
Item 8. Financial Statements and Supplementary Data
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1999
INDEX
Page No.
Report of Independent Accountants
For the years ended March 31, 1999, 1998 and 1997 F-2
Financial Statements
Balance Sheets - March 31, 1999 and 1998 F-3
Statements of Operations - Years Ended
March 31, 1999, 1998 and 1997 F-4
Statements of Changes in Partners' Equity (Deficiency) -
Years Ended March 31, 1999, 1998 and 1997 F-5
Statements of Cash Flows - Years Ended
March 31, 1999, 1998 and 1997 F-6
Notes to Financial Statements F-7
Financial Statement Schedule
Schedule III - Real Estate and Accumulated
Depreciation F-16
See also Index to Exhibits on Page K-19 for the financial statements of
the Investor Local Limited Partnership included as a separate exhibit in
this Annual Report of Form 10-K.
Other schedules have been omitted as they are either not required or the
information required to be presented therein is available elsewhere in the
financial statements and the accompanying notes and schedules.
<PAGE>
F-22
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Boston Financial Tax Credit Fund VIII, A Limited Partnership:
In our opinion, based on our audits and the reports of other auditors, the
combined financial statements listed in the accompanying index present fairly,
in all material respects, the financial position Boston Financial Tax Credit
Fund VIII, A Limited Partnership (the "Fund") at March 31, 1999 and 1998, and
the results of its operations and its cash flows for each of the three years in
the period ended March 31, 1999, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related combined financial statements. These financial statements and financial
statement schedule are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We did not audit the financial
statements of certain local limited partnerships for which total assets of
$24,889,168 and $26,827,966, are included in these financial statements as of
March 31, 1999 and 1998, respectively, and for which net losses of $1,745,890,
2,083,625, and $1,922,566 are included in the accompanying financial statements
as of March 31, 1999, 1998, 1997, respectively. Those statements were audited by
other auditors whose reports thereon have been furnished to us, and our opinion
expressed herein, insofar as it relates to the amounts included for the Local
Limited Partnerships, is based solely on the reports of the other auditors. We
conducted our audits of these statements in accordance with generally accepted
auditing standard, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examing, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for the
opinions expressed above.
/s/PricewaterhouseCoopers LLP
June 18, 1999
Boston, Massachusetts
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
F-23
BALANCE SHEETS
March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------- --------------
Assets
<S> <C> <C>
Cash and cash equivalents $ 180,030 $ 213,966
Investments in Local Limited Partnerships (Note 3) 23,234,665 25,099,334
Marketable securities, at fair value (Note 4) 1,455,618 1,486,224
Organization costs, net of accumulated amortization
of $50,000 in 1999 and $40,833 in 1998 - 9,167
Other assets 18,855 19,275
------------- --------------
Total Assets $ 24,889,168 $ 26,827,966
============= ==============
Liabilities and Partners' Equity
Accounts payable to affiliate (Note 5) $ 342,233 $ 268,817
Accrued expenses 54,346 39,747
------------- --------------
Total Liabilities 396,579 308,564
------------- --------------
General, Initial and Investor Limited Partners' Equity 24,491,536 26,519,501
Net unrealized gains (losses) on marketable securities 1,053 (99)
------------- --------------
Total Partners' Equity 24,492,589 26,519,402
------------- --------------
Total Liabilities and Partners' Equity $ 24,889,168 $ 26,827,966
============= ==============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Years Ended March 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-------------- ------------- -------------
Revenue:
<S> <C> <C> <C>
Investment $ 96,265 $ 92,781 $ 81,930
Other 7,565 5,351 18,606
------------- ------------- -------------
Total Revenue 103,830 98,132 100,536
------------- ------------- -------------
Expenses:
Asset management fees, related party (Note 5) 206,220 199,592 193,635
General and administrative (includes
reimbursements to an affiliate in the
amounts of $77,890, $93,551 and $108,120
in 1999, 1998 and 1997, respectively) (Note 5) 140,575 183,048 195,069
Amortization 39,110 39,944 37,184
------------- ------------- -------------
Total Expenses 385,905 422,584 425,888
------------- ------------- -------------
Loss before equity in losses of
Local Limited Partnerships (282,075) (324,452) (325,352)
Equity in losses of Local Limited
Partnerships (Note 3) (1,745,890) (2,083,625) (1,922,556)
------------- ------------- -------------
Net Loss $ (2,027,965) $ (2,408,077) $ (2,247,908)
============= ============= =============
Net Loss allocated to:
General Partner $ (20,280) $ (24,081) $ (22,479)
Limited Partners (2,007,685) (2,383,996) (2,225,429)
------------- ------------- -------------
$ (2,027,965) $ (2,408,077) $ (2,247,908)
============= ============= =============
Net Loss per Limited Partnership Unit
(36,497 Units) $ (55.01) $ (65.32) $ (60.98)
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
For the Years Ended March 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Net
Initial Investor Unrealized
General Limited Limited Gains
Partner Partner Partners (Losses) Total
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 $ (4,592) $ 100 $ 31,179,978 $ (534) $ 31,174,952
-------- -------- ------------- ----------- -------------
Comprehensive Loss:
Net change in net unrealized losses
on marketable securities
available for sale - - - (16,306) (16,306)
Net Loss (22,479) - (2,225,429) - (2,247,908)
-------- -------- ------------- ----------- -------------
Comprehensive Loss (22,479) - (2,225,429) (16,306) (2,264,214)
-------- -------- ------------- ----------- -------------
Balance at March 31, 1997 (27,071) 100 28,954,549 (16,840) 28,910,738
-------- -------- ------------- ----------- -------------
Comprehensive Income (Loss):
Net change in net unrealized losses
on marketable securities
available for sale - - - 16,741 16,741
Net Loss (24,081) - (2,383,996) - (2,408,077)
-------- -------- ------------- ----------- -------------
Comprehensive Income (Loss) (24,081) - (2,383,996) 16,741 (2,391,336)
-------- -------- ------------- ----------- -------------
Balance at March 31, 1998 (51,152) 100 26,570,553 (99) 26,519,402
-------- -------- ------------- ----------- -------------
Comprehensive Income (Loss):
Net change in net unrealized losses
on marketable securities
available for sale - - - 1,152 1,152
Net Loss (20,280) - (2,007,685) - (2,027,965)
-------- --------- ------------- ----------- -------------
Comprehensive Income (Loss) (20,280) - (2,007,685) 1,152 (2,026,813)
-------- --------- -------------- ----------- --------------
Balance at March 31, 1999 $ (71,432) $ 100 $ 24,562,868 $ 1,053 $ 24,492,589
========= ========= ============= =========== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- ------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net Loss $ (2,027,965) $ (2,408,077) $ (2,247,908)
Adjustments to reconcile net loss to net
cash used for operating activities:
Equity in losses of Local Limited Partnerships 1,745,890 2,083,625 1,922,556
Amortization 39,110 39,944 37,184
(Gain) loss on sales and maturities of
marketable securities (3,424) 9,053 1,618
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Other assets 420 7,452 6,311
Accounts payable to affiliate 73,416 189,923 (2,607)
Accrued expenses 14,599 (48,879) 67,768
------------- ------------- ------------
Net cash used for operating activities (157,954) (126,959) (215,078)
------------- ------------- ------------
Cash flows from investing activities:
Investment in Local Limited Partnerships - (451,360) (2,716,626)
Restricted cash - 503,031 866,333
Purchases of marketable securities (1,174,765) (1,347,016) (4,152,845)
Proceeds from sales and maturities of
marketable securities 1,209,947 1,311,156 6,402,126
Payment of acquisition expenses - - (888)
Cash distributions received from Local
Limited Partnerships 88,836 51,702 18,675
------------- ------------- ------------
Net cash provided by investing activities 124,018 67,513 416,775
------------- ------------- ------------
Net increase (decrease) in cash and cash equivalents (33,936) (59,446) 201,697
Cash and cash equivalents, beginning of period 213,966 273,412 71,715
------------- ------------- ------------
Cash and cash equivalents, end of period $ 180,030 $ 213,966 $ 273,412
============= ============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. Organization
Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a
Massachusetts limited partnership organized to invest in other limited
partnerships ("Local Limited Partnerships") which own and operate apartment
complexes which are eligible for low income housing tax credits which may be
applied against the federal income tax liability of an investor.
Arch Street VIII Limited Partnership ("Arch Street L.P."), a Massachusetts
limited partnership consisting of Arch Street VIII, Inc., a Massachusetts
corporation ("Arch Street, Inc.") as the sole general partner and the Boston
Financial Group Limited Partnership, a Massachusetts limited partnership as sole
limited partner, is the sole General Partner of the Fund. Arch Street L.P. and
Arch Street, Inc. are affiliates of The Boston Financial Group Limited
Partnership, a Massachusetts limited partnership ("Boston Financial"). An
affiliate of Arch Street, L.P. ("SLP Affiliate") is a special limited partner in
each Local Limited Partnership in which the Fund invests, with the right to
become a general partner under certain circumstances. The fiscal year of the
Fund ends on March 31.
The Partnership Agreement authorizes the sale of up to 200,000 Units of limited
partnership interests ("Units") at $1,000 per Unit in series. The first series
offered 50,000 Units. Boston Financial Securities, Inc., an affiliate of the
General Partner, has received selling commissions and underwriting advisory fees
in the amount of 6.5% and 1.25%, respectively, of Gross Proceeds for Units sold
by the entity as a soliciting dealer. On July 29, 1994, the Fund held its final
investor closing. In total, the Fund received $36,497,000 of capital
contributions from investors admitted as Limited Partners for 36,497 Units.
The Partnership Agreement provides that all cash available for distribution will
be distributed 99% to the Limited Partners and 1% to the General Partner. Sale
or refinancing proceeds generally will be distributed first to the Limited
Partners in an amount equal to their adjusted capital contributions; second, to
the General Partner in an amount equal to its capital contributions; third, to
the General Partner (after payment of the 6% return as set forth in Section
4.2.3 of the Partnership Agreement and, of any accrued but unpaid Subordinated
Disposition Fee, a fee equal to 1% of the sales price of a property owned by a
Local Limited Partnership) in such amount as is necessary to cause the General
Partner to have received 5% of all distributions to the Partners; and lastly,
95% to the Limited Partners and 5% to the General Partner.
Profits and losses for tax purposes arising from general operations and tax
credits generally will be allocated 99% to the Limited Partners and 1% to the
General Partner. However, as set forth in the Partnership Agreement, profits and
losses for tax purposes arising from a sale or refinancing generally will be
allocated among the Partners in such manner as is necessary to cause their
respective capital accounts to reflect the amount that would be distributable to
them in accordance with the priorities set forth in the preceding paragraph, if
all of the Fund's assets were sold for their federal adjusted basis and the Fund
were then liquidated.
Under the terms of the Partnership Agreement, the Fund initially designated 5%
of the Gross Proceeds from the sale of Units as a reserve for working capital of
the Fund and contingencies related to ownership of Local Limited Partnership
interests. The General Partner may increase or decrease such amounts from time
to time, as it deems appropriate. At March 31, 1999, the General Partner has
designated approximately $1,239,000 of marketable securities as such Reserve.
2. Significant Accounting Policies
Basis of Presentation
The Fund accounts for its investments in Local Limited Partnerships using the
equity method of accounting, because the Fund does not have a majority control
over the major operating and financial policies of the Local Limited
Partnerships in which it invests. Under the equity method, the investment is
carried at cost, adjusted for the Fund's share of income or loss of the Local
Limited Partnerships, additional investments and cash distributions from the
Local Limited Partnerships. Equity in income or loss of the Local Limited
Partnerships is included currently in the Fund's operations. The Fund has no
obligation to fund liabilities of the Local Limited Partnerships beyond its
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Basis of Presentation (continued)
investment, therefore, a Local Limited Partnership's investment will not be
carried below zero. To the extent that equity losses are incurred or
distributions received when a Local Limited Partnership's respective investment
balance has been reduced to zero, the losses will be suspended to be used
against future income.
Excess investment costs over the underlying net assets acquired have arisen from
acquisition fees paid and expenses reimbursed to an affiliate of the Fund. These
fees and expenses are included in Investments in Local Limited Partnerships and
are being amortized on a straight-line basis over 35 years.
The Fund recognizes a decline in the carrying value of its investments in Local
Limited Partnerships when there is evidence of a non-temporary decline in the
recoverable amount of the investment. There is a possibility that the estimates
relating to reserves for non-temporary declines in carrying value of investments
in Local Limited Partnerships may be subject to material near term adjustments.
The Fund, as a limited partner in the Local Limited Partnerships, is subject to
risks inherent in the ownership of property which are beyond its control, such
as fluctuations in occupancy rates and operating expenses, variations in rental
schedules, proper maintenance and continued eligibility of tax credits. If the
cost of operating a property exceeds the rental income earned thereon, the Fund
may deem it in its best interest to voluntarily provide funds in order to
protect its investment.
The General Partners have decided to report results of the Local Limited
Partnerships on a 90-day lag basis because the Local Limited Partnerships report
their results on a calendar year basis. Accordingly, the financial information
about the Local Limited Partnerships that is included in the accompanying
financial statements is as of December 31, 1998, 1997 and 1996.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash Equivalents
Cash and cash equivalents consists of short-term money market instruments with
maturities of 90 days or less at acquisition and approximate fair value.
Marketable Securities
The Fund's investments in securities are classified as "Available for Sale"
securities and reported at fair value as reported by the brokerage firm at which
the securities are held. Realized gains and losses from the sales of securities
are based on the specific identification method. Unrealized gains and losses are
excluded from earnings and reported as a separate component of partners' equity.
Deferred Fees
Costs incurred in connection with the organization of the Fund, amounting to
$50,000, have been deferred and are completely amortized as of March 31, 1999.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Income Taxes
No provision for income taxes has been made as the liability for such taxes is
an obligation of the partners of the Fund.
Effect of recently issued Accounting Standard
The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income. The standard
requires that changes in comprehensive income be shown in a financial statement
that is displayed with the same prominence as other financial statements. The
standard is effective for fiscal years beginning after December 15, 1997. The
Fund adopted the new standard effective April 1, 1998 and its adoption did not
have a significant effect on the Fund's financial position or results of
operations. The only component of the Fund's other accumulated comprehensive
income is net unrealized gains and losses on marketable securities.
In accordance with Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
the Fund has implemented policies and practices for assessing impairment of its
real estate assets and investments in Local Limited Partnerships. Each asset is
analyzed by real estate experts to determine if an impairment indicator exists.
If so, the carrying value is compared to the undiscounted future cash flows
expected to be derived from the asset and, if there is a significant impairment
in value, a provision to write down the asset to fair value will be charged
against income.
3. Investments in Local Limited Partnerships
The Fund has acquired an interest in ten Local Limited Partnerships which own
and operate multi-family housing complexes. The Fund, as Investor Limited
Partner, pursuant to the Local Limited Partnership Agreements, has acquired a
99% interest in the profits, losses, tax credits and cash flows from operations
of the Local Limited Partnerships, with the exception of Springwood, Hemlock
Ridge, Pike Place and West End Place which are 79.20%, 77%, 90% and 90%,
respectively. Another partnership sponsored by an affiliate of the General
Partner owns the remaining 19.80% Limited Partnership interest in Springwood.
Upon dissolution, proceeds will be distributed according to the partnership
agreements.
The following is a summary of Investments in Local Limited Partnerships at March
31:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------ ------------
Capital Contributions paid to Local
<S> <C> <C> <C>
Limited Partnerships $ 29,264,859 $ 29,264,859 $ 28,813,499
Cumulative equity in losses of Local
Limited Partnerships (6,794,779) (5,048,889) (2,965,264)
Cumulative cash distributions received
from Local Limited Partnerships (172,536) (83,700) (31,998)
------------- ------------- ------------
Investments in Local Limited Partnerships
before adjustments 22,297,544 24,132,270 25,816,237
Excess of investment cost over the underlying net assets acquired:
Acquisition fees and expenses 1,048,010 1,048,010 1,048,010
Accumulated amortization of acquisition
fees and expenses (110,889) (80,946) (51,002)
------------- ------------ ------------
Investments in Local Limited Partnerships $ 23,234,665 $ 25,099,334 $ 26,813,245
============= ============ ============
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
3. Investments in Local Limited Partnerships (continued)
Summarized financial information as of December 31, 1998, 1997 and 1996 (due to
the Fund's policy of reporting the financial information of its Local Limited
Partnership interests on a 90 day lag basis) of the ten Local Limited
Partnerships in which the Fund was invested in as of the that date is as
follows:
<TABLE>
<CAPTION>
Summarized Balance Sheets - as of December 31,
1998 1997 1996
------------- ------------- -------------
Assets:
<S> <C> <C> <C>
Investment property, net $ 64,711,442 $ 67,138,525 $ 69,714,031
Current assets 880,542 809,218 975,295
Other assets 2,478,753 2,641,507 2,397,633
------------- ------------- -------------
Total Assets $ 68,070,737 $ 70,589,250 $ 73,086,959
============= ============= =============
Liabilities and Partners' Equity:
Long-term debt $ 37,318,536 $ 37,840,199 $ 38,197,782
Current liabilities 1,956,075 1,933,699 1,768,369
Other liabilities 5,517,363 5,449,430 5,853,703
------------- ------------- -------------
Total Liabilities 44,791,974 45,223,328 45,819,854
Fund's Equity 22,537,757 24,115,216 25,784,519
Other Partners' Equity 741,006 1,250,706 1,482,586
------------- ------------- -------------
Total Liabilities and Partners' Equity $ 68,070,737 $ 70,589,250 $ 73,086,959
============= ============= =============
Summarized Income Statements - for
the year ended December 31,
Rental and other income $ 7,809,919 $ 7,474,866 $ 7,594,918
------------- ------------- -------------
Expenses:
Operating 3,805,421 3,805,760 3,691,624
Depreciation and amortization 2,667,667 2,786,344 2,841,824
Interest 3,260,386 3,133,964 3,169,226
------------- ------------- -------------
Total Expenses 9,733,474 9,726,068 9,702,674
------------- ------------- -------------
Net Loss $ (1,923,555) $ (2,251,202) $ (2,107,756)
============= ============= =============
Fund's share of Net Loss $ (1,745,890) $ (2,083,625) $ (1,922,556)
============= ============= =============
Other partners' share of Net Loss $ (177,665) $ (167,577) $ (185,200)
============= ============= =============
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
3. Investments in Local Limited Partnerships (continued)
The Fund's equity as reflected by the Local Limited Partnerships of $22,537,757
differs from the Fund's Investments in Local Limited Partnerships before
adjustments of $22,297,544 principally because of differences in miscellaneous
items.
4. Marketable Securities
A summary of marketable securities is as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
Debt securities issued by the
US Treasury and other US
government corporations
<S> <C> <C> <C> <C>
and agencies $ 1,149,468 $ 4,588 $ (3,318) $ 1,150,738
Mortgage backed securities 305,097 1,059 (1,276) 304,880
------------ ----------- ----------- -----------
Marketable securities
at March 31, 1999 $ 1,454,565 $ 5,647 $ (4,594) $ 1,455,618
=========== =========== =========== ===========
Debt securities issued by the
US Treasury and other US
government corporations
and agencies $1,303,088$ $ 1,575 $ (2,224) $ 1,302,439
Mortgage backed securities 183,235 550 - 183,785
----------- ----------- ----------- -----------
Marketable securities
at March 31, 1998 $ 1,486,323 $ 2,125 $ (2,224) $ 1,486,224
=========== =========== ============ ===========
</TABLE>
The contractual maturities at March 31, 1999 are as follows:
Fair
Cost Value
Due in less than one year $ 324,875 $ 326,055
Due in one to five years 824,593 824,683
Mortgage backed securities 305,097 304,880
----------- ----------
$ 1,454,565 $1,455,618
=========== ==========
Actual maturities may differ from contractual maturities because some borrowers
have the right to call or prepay obligations. Proceeds from the sales of
marketable securities were approximately $176,000, $802,000 and $594,000 during
the fiscal years ended March 31, 1999, 1998 and 1997, respectively. Proceeds
from the maturities of marketable securities were approximately $1,034,000,
$509,000 and $5,808,000 during the fiscal years ended March 31, 1999, 1998 and
1997, respectively. Included in investment income are gross gains of $4,411,
$2,329 and $257 and gross losses of $987, $11,382 and $1,875 which were realized
on the sales during the fiscal years ended March 31, 1999, 1998 and 1997,
respectively.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
5. Transactions with Affiliates
In accordance with the Partnership Agreement, the Fund is required to pay
certain fees to and reimburse expenses of the General Partner and others in
connection with the organization of the Fund and the offering of its Limited
Partnership Units. Selling commissions, fees and accountable expenses related to
the sale of the Units totaling $4,664,369 have been charged directly to Limited
Partners' equity. In connection therewith, $2,828,918 of selling expenses and
$1,835,451 of offering expenses incurred on behalf of the Fund have been paid to
an affiliate of the General Partner. The Fund may be required to pay a
non-accountable expense allowance for marketing expense equal to a maximum of 1%
of Gross Proceeds. The Fund has capitalized an additional $50,000 which was
reimbursed to an affiliate of the General Partner. Total organization and
offering expenses, exclusive of selling commissions and underwriting advisory
fees, did not exceed 5.5% of the Gross Proceeds and organizational and offering
expenses, inclusive of selling commissions and underwriting advisory fees, did
not exceed 15.0% of the Gross Proceeds.
In accordance with the Partnership Agreement, the Fund is required to pay
acquisition fees to and reimburse acquisition expenses of the General Partner or
its affiliates for selecting, evaluating, structuring, negotiating and closing
the Fund's investments in Local Limited Partnerships. Acquisition fees total
6.0% of Gross Proceeds. Acquisition expenses, which include such expenses as
legal fees and expenses, travel and communications expenses, costs of
appraisals, accounting fees and expenses, were expected to total 1.5% of Gross
Proceeds. Acquisition fees totaling $2,189,820 have been paid to an affiliate of
the General Partner for the closing of the Fund's Local Limited Partnership
Investments. Approximately $1,477,000 of these fees are classified as capital
contributions to Local Limited Partnerships in Note 3 to the Financial
Statements. Acquisition expenses totaling $335,196 at March 31, 1999 have been
reimbursed to an affiliate of the General Partner.
An affiliate of the General Partner receives the base amount of 0.565% (as
adjusted by the CPI factor) of Gross Proceeds annually as an Asset Management
Fee for administering the affairs of the Fund. Asset Management Fees of
$206,220, $199,592 and $193,635 for the years ended March 31, 1999, 1998 and
1997, respectively, have been included in expenses. Included in accounts payable
to affiliates at March 31, 1999 and 1998 is $327,111 and $255,527 of Asset
Management Fees due to an affiliate of the General Partner.
An affiliate of the General Partner is reimbursed for the actual cost of the
Fund's operating expenses. Included in general and administrative expenses for
the years ended March 31, 1999, 1998 and 1997, is $77,890, $93,551 and $108,120,
respectively, that the Fund has paid as reimbursement for salaries and benefits.
As of March 31, 1999 and 1998, $15,122 and $13,290, respectively, is payable to
an affiliate of the General Partner for salaries and benefits.
BFPM, an affiliate of the Managing General Partner, currently manages Beaverdam
Creek, a property in which the Fund has invested. The property management fee
charged is equal to 4% of cash receipts. Included in operating expenses in the
summarized income statements in Note 3 to the Financial Statements is $34,183
and $29,440 of fees earned by BFPM for the years ended December 31, 1998 and
1997, respectively.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
6. Federal Income Taxes
A reconciliation of the loss reported in the Statements of Operations for
the fiscal years ended March 31, 1999, 1998 and 1997 to the loss reported for
federal income tax purposes for the years ended December 31, 1998, 1997 and 1996
is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Net Loss per Statement of Operations $ (2,027,965) $ (2,408,077) $ (2,247,908)
Adjustment for equity in losses of Local Limited
Partnerships for financial reporting purposes
under equity in losses for tax purposes (415,055) (782,833) (557,984)
Adjustment to reflect March 31, fiscal year-end
to December 31, tax year-end (21,788) 33,895 (7,036)
Related party expenses not paid at December 31,
not deductible for tax purposes 407,821 204,761 95,955
Related party expenses paid in current year but expensed
for financial reporting purposes in prior year (204,761) (95,955) (46,853)
Adjustment for amortization for financial reporting
Purposes under amortization for tax purposes (8,166) (8,165) (10,925)
------------- ------------- --------------
Net Loss for federal income tax purposes $ (2,269,914) $ (3,056,374) $ (2,774,751)
============= ============= ==============
</TABLE>
The differences in the assets and liabilities of the Fund for financial
reporting purposes and tax reporting purposes for the year ended March 31, 1999
are as follows:
<TABLE>
<CAPTION>
Financial Tax
Reporting Reporting
Purposes Purposes Differences
<S> <C> <C> <C>
Investments in Local Limited Partnerships $ 23,234,665 $ 21,103,905 $ 2,130,760
============= ============== =============
Other assets $ 1,654,503 $ 6,584,853 $ (4,930,350)
============= ============= =============
Liabilities $ 396,579 $ 48,139 $ 348,440
============= ============= =============
</TABLE>
The differences in assets and liabilities of the Fund for financial reporting
purposes are primarily attributable to: (i) the cumulative equity in losses from
Local Limited Partnerships for tax reporting purposes is approximately
$1,979,000 greater than for financial reporting purposes; (ii) the amortization
of acquisition fees for tax return purposes exceeds financial reporting purposes
by approximately $21,000; (iii) organizational and offering costs of
approximately $4,664,000 that have been capitalized for tax reporting purposes
are charged to Limited Partners' equity for financial reporting purposes; and
(iv) related party expenses which are deductible for financial reporting
purposes of approximately $327,000 but are not deductible for tax reporting
purposes.
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
6. Federal Income Taxes (continued)
The differences in the assets and liabilities of the Fund for financial
reporting purposes and tax purposes for the year ended March 31, 1998 are as
follows:
<TABLE>
<CAPTION>
Financial Tax
Reporting Reporting
Purposes Purposes Differences
<S> <C> <C> <C>
Investments in Local Limited Partnerships $ 25,099,334 $ 23,389,613 $ 1,709,721
============= ============= =============
Other assets $ 1,728,632 $ 6,557,459 $ (4,828,827)
============= ============= =============
Liabilities $ 308,564 $ 36,539 $ 272,025
============= ============= =============
</TABLE>
The differences in assets and liabilities of the Fund for financial reporting
purposes are primarily attributable to: (i) the cumulative equity in losses from
Local Limited Partnerships for tax reporting purposes is approximately
$1,564,000 greater than for financial reporting purposes; (ii) the amortization
of acquisition fees for tax return purposes exceeds financial reporting purposes
by approximately $13,000; (iii) organizational and offering costs of
approximately $4,664,000 that have been capitalized for tax reporting purposes
are charged to Limited Partners' equity for financial reporting purposes; and
(iv) related party expenses which are deductible for financial reporting
purposes of approximately $205,000 but are not deductible for tax reporting
purposes.
<PAGE>
Boston Financial Tax Credit Fund VIII, A Limited Partnership
Schedule III - Real Estate and Accumulated Depreciation
of Property owned by Local Limited Partnerships
In which Registrant has Invested at March 31, 1999
<TABLE>
GROSS AMOUNT AT
WHICH CARRIED
AT DECEMBER 31,
1998
COST OF INTEREST AT ACQUISITION DATE
----------------------------------------------------------------
NET IMPROVEMENTS
NUMBER TOTAL BUILDINGS / CAPITALIZED
OF ENCUM- IMPROVEMENTS SUBSEQUENT TO
DESCRIPTION UNITS BRANCES * LAND & EQUIPMENT ACQUISITION LAND
- ----------- ----- --------- ---- ----------- ----------- ----
<S> <C> <C> <C> <C> <C> <C>
Low and Moderate
Income Apartment Complexes
Green Wood Apartments 164 $5,179,303 $412,500 $7,774,612 $735,923 $412,500
Gallatin, TN
Webster Court Apartments 92 2,835,486 296,423 5,003,633 10,461 296,423
Kent, WA
Springwood Apartments (2) 113 3,894,649 296,280 2,937,028 4,257,987 296,280
Tallahassee, FL
Meadowwood of Pella 30 1,110,733 101,910 1,135,077 790,234 88,909
Pella, IA
Hemlock Ridge 100 2,105,654 42,368 6,327,906 1,762,698 42,368
Livingston Manor, NY
Pike Place Apartments 144 3,303,163 312,000 5,336,336 8,164 312,000
Fort Smith, AR
West End Place 120 2,914,729 250,000 4,681,280 0 250,000
Springdale, AR
Oak Knoll Renaissance 256 5,320,816 1 1,346,557 9,263,385 222,591
Gary, IN
Beaverdam Creek 120 3,333,911 360,000 499,907 6,680,217 1,256,840
Mechanicsville, VA
Live Oak Plantation 218 7,793,227 1,767,000 1,998,509 10,200,852 1,792,680
West Palm Beach, FL
==========================================================================================
$37,791,671 $3,838,482 $37,040,845 $33,709,921 $4,970,591
1,357
==========================================================================================
</TABLE>
(1) Total aggregate cost for Federal Income Tax purposes is approximately
$74,765,000.
(2) Boston Financial Tax Credit Fund VIII has an 80% ownership interest in
Springwood Apartments, A Limited Partnership
* Mortgage notes payable generally represent
non-recourse financing of low-income housing
projects payable with terms of up to 40 years
with interest payable at rates ranging from 1.0%
to 10.62%. The Partnership has not guaranteed any
of these mortgage notes payable.
<PAGE>
Boston Financial Tax Credit Fund VIII, A Limited Partnership
Schedule III - Real Estate and Accumulated Depreciation
of Property owned by Local Limited Partnerships
In which Registrant has Invested at March 31, 1999
GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31,
1998
-------------------------------------------------
<TABLE>
LIFE ON
WHICH
BUILDINGS DEPRECIATION
AND ACCUMULATED DATE IS COMPUTED DATE
DESCRIPTION IMPROVEMENTS TOTAL DEPRECIATION BUILT (YEARS) ACQUIRED
- ----------- ------------ ----- ------------ ----- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Low and Moderate
Income Apartment Complexes
Green Wood Apartments $8,510,535 $8,923,035 $1,280,714 2/95 10 & 30 years 3/02/94
Gallatin, TN
Webster Court Apartments 5,014,094 $5,310,517 554,610 8/94 40 & 12 years 5/13/94
Kent, WA
Springwood Apartments (2) 7,195,015 $7,491,295 1,575,413 9/95 10 & 30 years 12/15/94
Tallahassee, FL
Meadowwood of Pella 1,938,312 $2,027,221 196,464 8/95 Useful Lives 6/03/94
Pella, IA
Hemlock Ridge 8,090,604 $8,132,972 1,263,109 5/95 Useful Lives 4/29/94
Livingston Manor, NY
Pike Place Apartments 5,344,500 $5,656,500 839,428 12/94 7 & 27.5 years 1/31/94
Fort Smith, AR
West End Place 4,681,280 $4,931,280 723,967 12/94 7 & 27.5 years 1/12/94
Springdale, AR
Oak Knoll Renaissance 10,387,352 $10,609,943 1,389,623 11/95 Useful Lives 11/01/94
Gary, IN
Beaverdam Creek 6,283,284 $7,540,124 806,651 9/95 Useful Lives 11/16/94
Mechanicsville, VA
Live Oak Plantation 12,173,681 $13,966,361 1,247,827 11/95 Useful Lives 6/28/94
West Palm Beach, FL
=================================================
$69,618,657 $74,589,248 $9,877,806
=================================================
</TABLE>
<PAGE>
<TABLE>
Summary of property owned and accumulated depreciation:
<S> <C> <C> <C>
Real Estate Investments 1998 1997 1996
- ------------------------------- ---------------- -------------------- ------------------
Balance at beginning of period $ $ $
74,470,985 74,361,818 74,142,268
Additions during period 118,263 109,167 219,550
Less retirements during period 0 0 0
------------------
================ ====================
Balance at close of period $ $ $
74,589,248 74,470,985 74,361,818
================ ==================== ==================
Accumulated Depreciation 1998 1997 1996
- ------------------------------- ---------------- -------------------- ------------------
Balance at beginning of period $ $ $
7,332,460 4,647,787 1,959,465
Depreciation 2,545,346 2,684,673 2,688,322
Less retirements 0 0 0
================ ==================== ==================
Balance at close of period $ $ $
9,877,806 7,332,460 4,647,787
================ ==================== ==================
</TABLE>
<PAGE>
BOSTON FINANCIAL TAX CREDIT FUND VIII
(A Limited Partnership)
Annual Report on form 10-K
For The Year Ended March 31, 1999
Reports of Independent Auditors
<PAGE>
Beaverdam
[Letterhead]
[LOGO]
L.P. Martin & Company
A Professional Corporation
Independent Auditor's Report
To the Partners of Virginia Housing Development Authority
Beaverdam Creek Associates, L.P. Richmond, VA
We have audited the accompanying balance sheet of Beaverdam Creek Associates,
L.P., a Virginia Limited Partnership (the "Partnership") as of December 31, 1998
and the related statements of profit and loss, changes in
partners' capital and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Beaverdam Creek Associates,
L.P. as of December 31, 1998, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
In accordance with Government Auditing Standards, we have also issued our report
dated January 31, 1999 on our consideration of Beaverdam Creek Associates'
internal control over financial reporting, and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The additional information required by the Virginia
Housing Authority included herein is presented for the purpose of additional
analysis and is not a required part of the financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ L.P. Martin & Company, P.C.
L.P. Martin & Company, P.C.
January 31, 1999
Lead Auditor Name: W. Barclay Bradshaw
<PAGE>
[Letterhead]
[LOGO]
Keiter, Stevens, Hurst, Gary & Shreaves
A Professional Corporation
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Beaverdam Creek Associates, L.P.
We have audited the accompanying statement of assets, liabilities and partners'
capital of Beaverdam Creek Associates, L.P., a Virginia Limited Partnership (the
"Partnership") as of December 31, 1997 and the related statements of changes in
partners' capital accounts, profit and loss, and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets, liabilities and partners' capital of
Beaverdam Creek Associates, L.P. as of December 31, 1997, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report
dated January 27, 1998 on our consideration of Beaverdam Creek Associates'
internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grants.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data required by the Virginia
Housing Authority included herein is presented for the purposes of additional
analysis and is not a required part of the financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Keiter, Stevens, Hurst, Gary & Shreaves
Keiter, Stevens, Hurst, Gary & Shreaves
Richmond, Virginia
January 27, 1998
<PAGE>
[Letterhead]
[LOGO]
Keiter, Stevens, Hurst, Gary & Shreaves
A Professional Corporation
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Beaverdam Creek Associates, L.P.
We have audited the accompanying statement of assets, liabilities and partners'
capital of Beaverdam Creek Associates, L.P., a Virginia Limited Partnership (the
"Partnership") as of December 31, 1996 and the related statements of changes in
partners' capital accounts, profit and loss, and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets, liabilities and partners' capital of
Beaverdam Creek Associates, L.P. as of December 31, 1996, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data required by the Virginia
Housing Authority included herein is presented for the purposes of additional
analysis and is not a required part of the financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Keiter, Stevens, Hurst, Gary & Shreaves
Keiter, Stevens, Hurst, Gary & Shreaves
Richmond, Virginia
January 29, 1997
<PAGE>
Green Wood
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP
Independent Auditors' Report
The Partners
Green Wood Apartments,
A Limited Partnership:
We have audited the accompanying balance sheets of Green Wood Apartments, A
Limited Partnership as of December 31, 1998 and 1997, and the related statements
of loss, partners' capital (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial 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 Green Wood Apartments, A
Limited Partnership as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Atlanta, GA
February 26, 1999
<PAGE>
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP
Independent Auditors' Report
The Partners
Green Wood Apartments,
A Limited Partnership:
We have audited the balance sheets of Green Wood Apartments, A Limited
Partnership as of December 31, 1997 and 1996, and the related statements of
loss, partners' capital (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
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 Green Wood Apartments, A
Limited Partnership as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Atlanta, GA
February 16, 1998
<PAGE>
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP
Independent Auditors' Report
The Partners
Green Wood Apartments,
A Limited Partnership:
We have audited the balance sheets of Green Wood Apartments, A Limited
Partnership as of December 31, 1996 and 1995, and the related statements of
loss, partners' capital (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial 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 Green Wood Apartments, A Limited
Partnership as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Atlanta, GA
February 7, 1997
<PAGE>
Webster
[Letterhead]
[LOGO]
HASSON LAIBLE & CO., P.S.
INDEPENDENT AUDITOR'S REPORT
To the General Partners of
Webster Court Apartments Limited Partnership:
We have audited the accompanying balance sheet of Webster Court Apartments,
Limited Partnership, a Washington Limited Partnership, as of December 31, 1998,
and the related statements of income and partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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 Webster Court Apartments,
Limited Partnership as of December 31, 1998 and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Hasson Laible & Co.
Seattle, Washington
February 26, 1999
<PAGE>
[Letterhead]
[LOGO]
HASSON LAIBLE & CO., P.S.
INDEPENDENT AUDITOR'S REPORT
To the General Partners of
Webster Court Apartments Limited Partnership:
We have audited the accompanying balance sheet of Webster Court Apartments,
Limited Partnership, a Washington Limited Partnership, as of December 31, 1997,
and the related statements of income and partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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 Webster Court Apartments,
Limited Partnership as of December 31, 1997 and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Hasson Laible & Co.
Seattle, Washington
February 9, 1998
<PAGE>
[Letterhead]
[LOGO]
HASSON LAIBLE & CO., P.S.
INDEPENDENT AUDITOR'S REPORT
To the General Partners of
Webster Court Apartments Limited Partnership:
We have audited the accompanying balance sheet of Webster Court Apartments,
Limited Partnership, a Washington Limited Partnership, as of December 31, 1996,
and the related statements of income and partners' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated 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 Webster Court Apartments,
Limited Partnership as of December 31, 1996, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Hasson Laible & Co.
Seattle, Washington
March 31, 1997
<PAGE>
Springwood
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP
Independent Auditors' Report
The Partners
Springwood Apartments, A Limited Partnership:
We have audited the accompanying balance sheets of Springwood Apartments, A
Limited Partnership as of December 31, 1998 and 1997 and the related statements
of loss, partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan 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 Springwood Apartments, A
Limited Partnership as of December 31, 1998 and 1997 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Atlanta, GA
February 26, 1999
<PAGE>
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP
Independent Auditors' Report
The Partners
Springwood Apartments, A Limited Partnership:
We have audited the accompanying balance sheets of Springwood Apartments, A
Limited Partnership as of December 31, 1997 and 1996 and the related statements
of loss, partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan 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 Springwood Apartments, A
Limited Partnership as of December 31, 1997 and 1996 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Atlanta, GA
February 16, 1998
<PAGE>
[Letterhead]
[LOGO]
KPMG Peat Marwick LLP
Independent Auditors' Report
The Partners
Springwood Apartments, A Limited Partnership:
We have audited the accompanying balance sheets of Springwood Apartments, A
Limited Partnership as of December 31, 1996 and 1995, and the related statements
of loss, partners' capital, and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan 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 Springwood Apartments, A
Limited Partnership as of December 31, 1996 and 1995 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Atlanta, GA
February 7, 1997
<PAGE>
RMH
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners RMH Associates, L.P.
We have audited the accompanying balance sheets of RMH Associates, L.P. as of
December 31, 1998 and 1997, and the related statements of income and expense
analysis of income sufficiency, partner's equity (deficit) and cash flows in the
form prescribed by New York State Division of Housing and Community Renewal
(DHCR) for the year ended December 31, 1998. These financial statements are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RMH Associates, L.P. as of
December 31, 1998 and 1997, and the results of its operations, changes in
partner's equity (deficit) and its cash flows for the year ended December 31,
1998, in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information on pages 26 through 39
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for the information
marked "unaudited", on which we express no opinion, has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated February 5,
1999 on our consideration of RMH Associates, L.P. internal control structure and
on its compliance with specific requirements applicable to non major HUD
programs and fair housing and non-discrimination..
/s/Reznick Fedder & Silverman
Bethesda, Maryland Federal Employer
February 5, 1999 Identification Number:
52-1088612
Audit Principal: Lester A. Kanis
<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners RMH Associates, L.P.
We have audited the accompanying balance sheets of RMH Associates, L.P. as of
December 31, 1997 and 1996, and the related statements of income and expense and
cash flows in the form prescribed by New York State Division of Housing and
Community Renewal (DHCR) for the year ended December 31, 1997. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RMH Associates, L.P. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information on pages 27 through 40
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for the information
marked "unaudited", on which we express no opinion, has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated January 24,
1998 on our consideration of RMH Associates, L.P. internal control structure and
on its compliance with specific requirements applicable to non major HUD
programs, affirmative fair housing, and laws and regulations applicable to the
financial statements.
/s/Reznick Fedder & Silverman
Bethesda, Maryland Federal Employer
January 24, 1998 Identification Number:
52-1088612
Audit Principal: Lester A. Kanis
<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners RMH Associates, L.P.
We have audited the accompanying balance sheets of RMH Associates, L.P. as of
December 31, 1996 and 1995, and the related statements of income and expense and
cash flows in the form prescribed by New York State Division of Housing and
Community Renewal (DHCR) for the year ended December 31, 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
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RMH Associates, L.P. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental information on pages 27 through 40
is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information, except for the information
marked "unaudited", on which we express no opinion, has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
<PAGE>
In accordance with Government Auditing Standards and the "Consolidated Audit
Guide for Audits of HUD Programs," we have also issued reports dated February 4,
1997 on our consideration of RMH Associates, L.P. internal control structure and
on its compliance with specific requirements applicable to non major HUD
programs, affirmative fair housing, and laws and regulations applicable to the
financial statements.
/s/Reznick Fedder & Silverman
Bethesda, Maryland Federal Employer
February 4, 1997 Identification Number:
52-1088612
Audit Principal: Lester A. Kanis
<PAGE>
meadow wood
[Letterhead]
[LOGO]
VMcHC & S Vroman, McGowen, Hurst, Clark & Smith, P.C.
INDEPENDENT AUDITOR'S REPORT
To the Partners
Meadow Wood Associates of Pella, L.P.
Des Moines, Iowa
We have audited the accompanying balance sheets of Meadow Wood Associates of
Pella, L.P. (a limited partnership), as of December 31, 1998 and 1997, and the
related statements of operations, partners' capital, and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Meadow Wood Associates of
Pella, L.P., as of December 31, 1998 and 1997, and the results of its
operations, changes in its partners' capital, and its cash flows for the years
then ended, in conformity with generally accepted accounting principles.
/s/ Vroman, McGowen, Hurst, Clark & Smith, P.C.
Des Moines, Iowa
January 30, 1999
<PAGE>
[Letterhead]
[LOGO]
VMcHC & S Vroman, McGowen, Hurst, Clark & Smith P.C.
INDEPENDENT AUDITOR'S REPORT
To the Partners
Meadow Wood Associates of Pella, L.P.
Des Moines, Iowa
We have audited the accompanying balance sheets of Meadow Wood Associates of
Pella, L.P. (a limited partnership), as of December 31, 1997 and 1996, and the
related statements of operations, partners' capital, and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Meadow Wood Associates of
Pella, L.P., as of December 31, 1997 and 1996, and the results of its
operations, changes in its partners' capital, and its cash flows for the years
then ended, in conformity with generally accepted accounting principles.
/s/ Vroman, McGowen, Hurst, Clark & Smith P.C.
Des Moines, Iowa
January 31, 1998
<PAGE>
[Letterhead]
[LOGO]
VMcHC & S Vroman, McGowen, Hurst, Clark & Smith P.C.
INDEPENDENT AUDITOR'S REPORT
To the Partners
Meadow Wood Associates of Pella, L.P.
Des Moines, Iowa
We have audited the accompanying balance sheets of Meadow Wood Associates of
Pella, L.P. (a limited partnership), as of December 31, 1996 and 1995, and the
related statements of operations, partners' capital, and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Meadow Wood Associates of
Pella, L.P., as of December 31, 1996 and 1995, and the results of its
operations, changes in its partners' capital, and its cash flows for the years
then ended, in conformity with generally accepted accounting principles.
/s/ Vroman, McGowen, Hurst, Clark & Smith P.C.
Des Moines, Iowa
January 31, 1997
<PAGE>
PIKE PLACE
[Letterhead]
[LOGO]
Rick J. Tanneberger
Certified Public Accountant
Independent Auditor's Report
The Partners
Pike Place, A Limited Partnership
We have audited the accompanying balance sheets of Pike Place, A Limited
Partnership, as of December 31, 1998 and 1997, and the related statements of
income, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pike Place, A Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information presented
on page 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/Rick J. Tanneberger
Rick J. Tanneberger
Certified Public Accountant
Fayetteville, AR
February 8, 1999
<PAGE>
[Letterhead]
[LOGO]
Rick J. Tanneberger
Certified Public Accountant
Independent Auditor's Report
The Partners
Pike Place, A Limited Partnership
We have audited the accompanying balance sheets of Pike Place, A Limited
Partnership, as of December 31, 1997 and 1996, and the related statements of
income, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 Pike Place, A Limited
Partnership as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information presented
on page 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/Rick J. Tanneberger
Rick J. Tanneberger
Certified Public Accountant
Fayetteville, AR
January 31, 1998
<PAGE>
[Letterhead]
[LOGO]
Rick J. Tanneberger
Certified Public Accountant
Independent Auditor's Report
The Partners
Pike Place, A Limited Partnership
We have audited the accompanying balance sheets of Pike Place, A Limited
Partnership, as of December 31, 1996 and 1995, and the related statements of
income, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 Pike Place, A Limited
Partnership as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information presented
on page 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/Rick J. Tanneberger
Rick J. Tanneberger
Certified Public Accountant
Fayetteville, AR
February 13, 1997
<PAGE>
WEST END
[LOGO]
Rick J. Tanneberger
Certified Public Accountant
Independent Auditor's Report
The Partners
West End Place, A Limited Partnership
We have audited the accompanying balance sheets of West End Place, A Limited
Partnership, as of December 31, 1998 and 1997, and the related statements of
income, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West End Place, A Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information presented
on page 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/Rick J. Tanneberger
Rick J. Tanneberger
Certified Public Accountant
Fayetteville, AR
February 10, 1999
<PAGE>
[LOGO]
Rick J. Tanneberger
Certified Public Accountant
Independent Auditor's Report
The Partners
West End Place, A Limited Partnership
We have audited the accompanying balance sheets of West End Place, A Limited
Partnership, as of December 31, 1997 and 1996, and the related statements of
income, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 West End Place, A Limited
Partnership as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information presented
on page 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/Rick J. Tanneberger
Rick J. Tanneberger
Certified Public Accountant
Fayetteville, AR
January 31, 1998
<PAGE>
[Letterhead]
[LOGO]
Rick J. Tanneberger
Certified Public Accountant
Independent Auditor's Report
The Partners
West End Place, A Limited Partnership
We have audited the accompanying balance sheets of West End Place, A Limited
Partnership, as of December 31, 1996 and 1995, and the related statements of
income, partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
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 West End Place, A Limited
Partnership as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information presented
on page 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/Rick J. Tanneberger
Rick J. Tanneberger
Certified Public Accountant
Fayetteville, AR
February 12, 1997
<PAGE>
OAK KNOLL
[Letterhead]
[LOGO]
Haran & Associates Ltd
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
To the Partners HUD Field Office Director
OAK KNOLL RENAISSANCE LIMITED PARTNERSHIP Indianapolis, Indiana
Gary, Indiana
We have audited the accompanying balance sheet of OAK KNOLL RENAISSANCE LIMITED
PARTNERSHIP (a Limited Partnership) as of December 31, 1998, and the related
statements of profit and loss, changes in partners' equity and statement of cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of OAK KNOLL RENAISSANCE LIMITED
PARTNERSHIP as of December 31, 1998, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying supplementary information shown on Page 13 through 17 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Haran & Associates Ltd
Haran & Associates Ltd
Certified Public Accountants
Wilmette, Illinois
Illinois Certificate No. 060-002892
Employer Identification No. 36-3097692
Audit Partner: W. Garrett Heinl (847) 853-2576
January 15, 1999
<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
To the Partners
OAK KNOLL RENAISSANCE LIMITED PARTNERSHIP
Gary, Indiana
We have audited the accompanying balance sheet of OAK KNOLL RENAISSANCE LIMITED
PARTNERSHIP (a Limited Partnership) as of December 31, 1997, and the related
statements of profit and loss, changes in partners' equity and statement of cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of OAK KNOLL RENAISSANCE LIMITED
PARTNERSHIP as of December 31, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying supplementary information shown on Page 15 through 18 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Haran & Associates Ltd
Haran & Associates Ltd
Certified Public Accountant
Wilmette, Illinois
Illinois Certificate No. 060-002892
Employer Identification No. 36-3097692
January 16, 1998
<PAGE>
[Letterhead]
[LOGO]
Haran & Associates Ltd
Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT
To the Partners
OAK KNOLL RENAISSANCE LIMITED PARTNERSHIP
Gary, Indiana
We have audited the accompanying balance sheet of OAK KNOLL RENAISSANCE LIMITED
PARTNERSHIP (a Limited Partnership) as of December 31, 1996, and the related
statements of profit and loss, changes in partners' equity and statement of cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of OAK KNOLL RENAISSANCE LIMITED
PARTNERSHIP as of December 31, 1996, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
The accompanying supplementary information shown on Page 16 through 20 is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Haran & Associates Ltd
Haran & Associates Ltd
Certified Public Accountant
Wilmette, Illinois
Illinois Certificate No. 060-002892
Employer Identification No. 36-3097692
January 18, 1997
<PAGE>
<PAGE>
PALM BEACH
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Schickendanz Bros. - Palm Beach Ltd.
We have audited the accompanying balance sheet of Schickendanz Bros. - Palm
Beach Ltd. as of December 31, 1998, and the related statements of operations,
partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Schickendanz Bros. - Palm Beach
Ltd., as of December 31, 1998, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 22, 1999
<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Schickendanz Bros. - Palm Beach Ltd.
We have audited the accompanying balance sheet of Schickendanz Bros. - Palm
Beach Ltd. as of December 31, 1997, and the related statements of operations,
partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Schickendanz Bros. - Palm Beach
Ltd., as of December 31, 1997, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 21, 1998
<PAGE>
[Letterhead]
[LOGO]
Reznick Fedder & Silverman
INDEPENDENT AUDITORS' REPORT
To the Partners
Schickendanz Bros. - Palm Beach Ltd.
We have audited the accompanying balance sheet of Schickendanz Bros. - Palm
Beach Ltd. as of December 31, 1996, and the related statements of operations,
partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Schickendanz Bros. - Palm Beach
Ltd., as of December 31, 1996, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 21, 1997
<PAGE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
SCHICKEDANZ BROS. -
PALM BEACH LTD.
DECEMBER 31, 1996
<PAGE>
Schickedanz Bros. - Palm Beach Ltd.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEET 4
STATEMENT OF OPERATIONS 6
STATEMENT OF PARTNERS' EQUITY 7
STATEMENT OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Schickedanz Bros. - Palm Beach Ltd.
We have audited the accompanying balance sheet of Schickedanz Bros. -
Palm Beach Ltd., as of December 31, 1996, and the related statements of
operations, partners' equity and cash flows for the year then ended. These
financial statements are the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Schickedanz Bros. -
Palm Beach Ltd., as of December 31, 1996, and the results of its operations, and
its cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 21, 1997
<PAGE>
Schickedanz Bros. - Palm Beach Ltd.
BALANCE SHEET
December 31, 1996
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Current Assets
Cash $ 59,637
Tenants accounts receivable 40,978
Prepaid insurance 17,646
Prepaid expenses - other 520
-----------------
-----------------
Total Current Assets 118,781
Reserves and Deposits
Reserve for replacements 53,757
Tax and insurance escrow 65,895
Total Reserves and Deposits 119,652
Fixed Assets
Land 1,792,680
Building 11,711,351
Furniture and equipment 460,689
Total Fixed Assets 13,964,720
Less accumulated depreciation (497,671)
13,467,049
Other Assets
Organization costs, net of accumulated amortization of $3,919 13,712
Compliance monitoring fees, net of accumulated amortization of $919 17,471
Letter of credit fees, net of accumulated amortization of $1,665 1,665
Loan fees, net of accumulated amortization of $10,217 224,446
Total Other Assets 257,294
$ 13,962,776
</TABLE>
(Continued)
<PAGE>
See notes to financial statements
BALANCE SHEET (Continued)
December 31, 1996
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
<S> <C>
Current Liabilities
Accounts payable $ 25,306
Tenant security deposits 73,402
Accrued interest payable 123,556
Accrued management fees 12,986
Total Current Liabilities 235,250
Long-Term Debt
Note payable - Newport Mortgage 6,471,047
Note payable - HOME 1,416,000
Developer fee payable 939,704
Total Long-Term Liabilities 8,826,751
Partners' Equity 4,900,775
Total Liabilities and Partners' Equity $ 13,962,776
<PAGE>
STATEMENT OF OPERATIONS
Year ended December 31, 1996
Revenue
Rental income $ 1,429,450
Other income 34,241
1,463,691
Expenses
Administrative expenses
Advertising 5,049
Office salaries 33,156
Management fees 74,074
Professional fees 32,566
Commissions 950
Office expenses 14,604
Tenant bad debts 55,043
General administrative 2,263
Tenant credit reports 497
Total administrative expenses 218,202
Operating and maintenance
Repairs and maintenance 84,647
Utilities 89,689
Janitorial and cleaning 48,036
Trash removal 28,469
Exterminating 3,869
Total operating and maintenance 254,710
Taxes and insurance
Real estate taxes 137,695
Payroll taxes 8,025
Property and liability insurance 60,843
Worker's compensation 4,458
Health insurance and other benefits 9,049
Other taxes and insurance 4,501
Total taxes and insurance 224,571
Interest on mortgage notes 750,959
Income from operations before depreciation and amortization 15,249
Depreciation expense 375,083
Amortization expense 84,159
Net loss $ (443,993)
</TABLE>
<PAGE>
STATEMENT OF PARTNERS' EQUITY
Year ended December 31, 1996
<TABLE>
<CAPTION>
General Partner Limited Partners
Total
<S> <C> <C> <C>
Balance, December 31, 1995 $ (2,270) $ 3,762,210 $ 3,759,940
Capital contributions - 1,587,953 1,587,953
Distributions - (3,125) (3,125)
Net loss (4,440) (439,553) (443,993)
Balance, December 31, 1996 $ (6,710) $ 4,907,485 $ 4,900,775
Partnership percentage 1% 99% 100%
</TABLE>
<PAGE>
STATEMENT OF CASH FLOWS
Year ended December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities
Net loss $ (443,993)
Adjustments to reconcile net loss to net cash provided by
operating activities
Depreciation 375,083
Amortization 84,159
Decrease (increase) in assets
Tenants accounts receivable 15,815
Prepaid insurance 10,509
Prepaid expenses - other (520)
Tax and insurance escrow (65,895)
Increase (decrease) in liabilities
Accounts payable (965)
Accrued management fees 12,986
Tenant security deposits 880
Real estate tax payable (14,871)
Accrued interest payable 86,006
Net cash provided by operating activities 59,194
Cash flows from investing activities
Compliance monitoring fees (18,390)
Deposits to reserve for replacements (53,757)
Net cash used in financing activities (72,147)
Cash flows from financing activities
Capital contributions received 1,587,953
Distributions paid (3,125)
Payments of amounts due to affiliates (1,767,295)
Developer fee paid (460,296)
Decrease in accounts payable - development (105,784)
Proceeds from note payable - Newport Mortgage 6,471,047
Increase in loan costs (174,926)
Letter of credit fees (3,330)
Proceeds from note payable - HOME 29,560
Payoff of note payable - First Housing (5,501,399)
Net cash provided by financing activities 72,405
NET INCREASE IN CASH 59,452
Cash, beginning 185
Cash, end $ 59,637
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 664,953
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The partnership was formed as a limited partnership on June 22, 1994
under the laws of the State of Florida, for the purpose of acquiring,
constructing, developing and operating a low-income residential housing
project. The project consists of 218 rental units located in West Palm
Beach, Florida, and is currently operating under the name Live Oak
Plantation Apartments.
The project consists of 6 buildings which have each qualified for and
been allocated low-income housing credits pursuant to Internal Revenue
Code Section 42, ("Section 42"), which regulates the use of the project
as to occupant eligibility and unit gross rent, among other
requirements. Each building of the project must meet the provisions of
these regulations during each of 15 consecutive years in order to
remain qualified to receive the credits. In addition, Schickedanz Bros.
- Palm Beach Ltd., has executed a Land Use Restriction Agreement which
requires the utilization of the project pursuant to Section 42 for a
minimum of 35 years, even after disposition of the project by the
partnership.
A summary of significant accounting policies follows.
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 revenues
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 of
operations over seven to forty years by use of the straight-line method
for financial reporting purposes.
Amortization
Organization costs are amortized over 60 months using the straight-line
method.
Compliance monitoring fees are amortized over the 15 year compliance
period.
Letter of credit fees are amortized over the term of the letter of
credit.
<PAGE>
Schickedanz Bros. - Palm Beach Ltd.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loan fees are amortized over the term of the mortgage loan using the
straight-line method.
Rental Income
Rental income is recognized as rentals become due. Rental payments
received in advance are deferred until earned. All leases between the
partnership and tenants of the property are operating leases.
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.
NOTE B - PARTNERSHIP CONTRIBUTIONS
The partnership has one general partner, Schickedanz Enterprises, Inc.,
which has a 1 percent partnership interest, and two investor limited
partners, Boston Financial Tax Credit Fund VIII and SLP, Inc., which
collectively have an aggregate 99 percent partnership interest.
The partnership agreement requires Boston Financial Tax Credit Fund
VIII to make five capital contribution installments totaling $5,615,000
subject to any low-income housing tax credit adjustments Due to the
deferral of the start of the credit period until 1996, the final
capital contribution was reduced by $27,047. Capital contributions
totaling $1,587,953 were received during the year. As of December 31,
1996, all required limited partner capital contributions after credit
adjustment have been received.
NOTE C - LONG-TERM DEBT
The partnership entered into a construction loan agreement on June 28,
1994, with the principal amount not to exceed $6,150,000 with First
Housing Development Corporation of Florida. This loan was refinanced on
June 28, 1996. The new loan is with Newport Mortgage company, L.P., in
the original amount of $6,493,000. The loan bears interest at 8.94
percent and is payable in monthly interest and principal installments
of $51,964 until maturity on July 7, 2026. As of December 31, 1996,
$6,471,047 is outstanding on the mortgage.
NOTE C - LONG-TERM DEBT
The partnership has a second mortgage note in an amount not to exceed
$1,531,000 with the Florida Housing Finance Agency. The note bears
interest at the Applicable Federal Rate for long-term obligations in
effect under Internal Revenue Code Section 1274 (d)(1). Interest is
payable at the rate of 3 percent on June 30th of each year commencing
in 1995. Deferred interest is compounded annually and is due together
with the principal balance on February 28, 2025. As of December 31,
1996, $1,416,000 is outstanding under the loan.
The liability of the partnership under the above loans are limited to
the underlying value of the real estate collateral, improvements,
easements or other interests, assignment of rents, assignment of
leases, and personal property.
Aggregate annual maturities of the mortgage payable over each of the
next five years are as follows:
December 31, 1997 $ 42,875
1998 50,944
1999 55,690
2000 60,878
2001 66,549
NOTE D - RELATED PARTY TRANSACTIONS
Management Agreement
The partnership has entered into a management agreement and an
incentive management agreement under which the general partner has
agreed to provide management, operational, supervisory, maintenance,
consultive, bookkeeping, financial, and reporting services to the
partnership.
Under the agreement, the partnership is required to pay the general
partner management fees equal to 5 percent of gross collections as
defined. During 1996, management fees of $74,074 were charged to
operations, of which $12,986 are payable at December 31, 1996.
<PAGE>
NOTE D - RELATED PARTY TRANSACTIONS (Continued)
During the investor pay-in period, the managing general partner is
entitled to receive an annual, noncumulative incentive management fee
equal to 6 percent of gross revenues, as defined. The incentive
management fee is payable only to the extent of cash flow available for
distribution as defined in the partnership agreement. This fee will not
be earned or paid until any outstanding Project expense loans have been
repaid and until any outstanding recapture amount has been paid to the
investor limited partner under the terms of the partnership agreement.
No incentive management fees were paid during 1996.
Development Fees
On September 26, 1994, the partnership entered into a development
agreement with Thirteen Development Corporation, an affiliate of the
general partner, for services in connection with the development of the
project. During 1996, an amendment to the development agreement was
executed replacing the former developer, Thirteen Development
corporation with the successor developer, Schickedanz Bros. - Pheasant
Run Ltd., an affiliate of the general partner. This amendment
discharged the former developer of all rights and responsibilities and
bestowed these rights and responsibilities on the successor developer.
The development agreement provides for a fee of up to $1,400,000. As of
December 31, 1996, the partnership's liability under this agreement was
$939,704.
Operating Deficit Guaranty
Pursuant to the partnership agreement, the general partner and its two
of affiliates, Thirteen Development Corporation and Schickedanz Bros.,
Inc. are required to loan the partnership amounts to cover operating
deficits of the project until repayment of the $1,531,000 Florida HOME
loan.
NOTE E - COMMITMENTS AND CONTINGENCIES
The project's low-income housing credits are contingent on its ability
to maintain compliance with applicable sections of Section 42. Failure
to maintain compliance with occupant eligibility, and/or unit gross
rent, or to correct noncompliance within a specified time period could
result in recapture of previously taken tax credits plus interest.
<PAGE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
SCHICKEDANZ BROS. -
PALM BEACH, LTD.
DECEMBER 31, 1997
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEET 4
STATEMENT OF OPERATIONS 6
STATEMENT OF PARTNERS' EQUITY 7
STATEMENT OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9
<PAGE>
- 3 -
INDEPENDENT AUDITORS' REPORT
To the Partners
Schickedanz Bros. - Palm Beach, Ltd.
We have audited the accompanying balance sheet of Schickedanz Bros. -
Palm Beach, Ltd., as of December 31, 1997, and the related statements of
operations, partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Schickedanz Bros.
Palm Beach, Ltd., as of December 31, 1997, and the results of its operations,
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 21, 1998
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
See notes to financial statements
- 4 -
<TABLE>
<CAPTION>
BALANCE SHEET
December 31, 1997
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Current Assets
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash $ 43,421
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tenants accounts receivable 29,816
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Prepaid insurance 15,506
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
-----------------
-----------------
Total Current Assets 88,743
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Reserves and Deposits
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Reserve for replacements 75,441
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tax and insurance escrow 243,950
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total Reserves and Deposits 319,391
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Fixed Assets
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Land 1,792,680
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Building 11,711,351
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Furniture and equipment 460,689
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Total Fixed Assets 13,964,720
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Less accumulated depreciation (872,749)
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
13,091,971
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Other Assets
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Organization costs, net of accumulated amortization of $9,798 9,798
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Compliance monitoring fees, net of accumulated amortization of $2,145 16,245
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Letter of credit fees, net of accumulated amortization of $4,671 1,341
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Loan fees, net of accumulated amortization of $25,400 208,830
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Total Other Assets 236,214
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
$ 13,736,319
- --------------------------------------------------------------------------------------------------------------------
<PAGE>
See notes to financial statements
- 8 -
BALANCE SHEET (Continued)
December 31, 1997
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
Current Liabilities
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Accounts payable $ 35,008
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Tenant security deposits 69,129
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Prepaid rents 5,422
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Due to affiliate 18,978
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Accrued management fees 11,394
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Accrued interest payable 241,546
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Accrued real estate taxes 173,734
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Total Current Liabilities 555,211
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Long-Term Debt
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Note payable - Newport Mortgage 6,428,231
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Note payable - HOME 1,416,000
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Developer fee payable 939,704
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Total Long-Term Liabilities 8,783,935
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Commitments and Contingencies -
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Partners' Equity 4,397,173
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
$ 13,736,319
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year ended December 31, 1997
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
Revenue
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Rental income $ 1,390,102
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Other income 28,200
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1,418,302
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Operating Expenses
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Administrative expenses
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Advertising 2,162
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Office salaries 38,916
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Management fees 70,914
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Professional fees 12,751
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Office expenses 11,932
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tenant bad debts 85,468
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
General administrative 2,071
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tenant credit reports 895
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total administrative expenses 225,109
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Repairs and maintenance
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Repairs and maintenance 196,142
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Utilities 102,970
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Janitorial and cleaning 52,941
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Trash removal 28,311
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Exterminating 2,508
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Total repairs and maintenance 382,872
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Taxes and insurance
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Real estate taxes 151,615
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Payroll taxes 8,152
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Property and liability insurance 49,536
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Workers' compensation 4,641
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Health insurance and other benefits 11,480
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Other taxes and insurance 623
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total taxes and insurance 226,047
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Interest on mortgage notes 689,032
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total operating expenses 1,523,060
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Loss from operations before depreciation and amortization (104,758)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Depreciation expense 375,078
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amortization expense 23,766
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net loss $ (503,602)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF PARTNERS' EQUITY
Year ended December 31, 1997
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
General Partner Limited Partners
Total
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $ (6,710) $ 4,907,485 $ 4,900,775
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
Net loss (5,036) (498,566) (503,602)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 $ (11,746) $ 4,408,919 $ 4,397,173
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Partnership percentage 1% 99% 100%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STATEMENT OF CASH FLOWS
Year ended December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net loss $ (503,602)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash provided by 375,078
operating activities
Depreciation
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Amortization 23,766
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Decrease (increase) in assets
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Tenants accounts receivable 11,162
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Prepaid insurance 2,140
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Prepaid expenses - other 520
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Tax and insurance escrow (178,055)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in liabilities
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Accounts payable 40,074
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Accrued management fees (12,986)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tenant security deposits (4,273)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Real estate tax payable 173,734
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Accrued interest payable 117,990
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Prepaid rents 5,422
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 50,970
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Deposits to reserve for replacements (29,975)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Withdrawals from reserve for replacement 8,291
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (21,684)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Loan repayments (42,816)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Letter of credit fees (2,686)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (45,502)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH (16,216)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash, beginning 59,637
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Cash, ending $ 43,421
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information 571,042
Cash paid during the year for interest $
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schickedanz Bros. - Palm Beach, Ltd., (the "Partnership") was
formed as a limited partnership on June 22, 1994 under the laws of
the state of Florida, for the purpose of acquiring, constructing,
developing, and operating a low-income residential housing project
Live Oak Plantation Apartments (the "Project") consists of 218 rental
units located in West Palm Beach, Florida.
The Project consists of 6 buildings which have each qualified for and
been allocated low-income housing tax credits pursuant to Internal
Revenue Code Section 42 ("Section 42"), which regulates the use of the
Project as to occupant eligibility and unit gross rent, among other
requirements. Each building of the Project must meet the provisions of
these regulations during each of 15 consecutive years in order to
remain qualified to receive the credits. In addition, Schickedanz Bros.
- Palm Beach, Ltd., has executed a Land Use Restriction Agreement which
requires the utilization of the Project pursuant to Section 42 for a
minimum of 35 years, even after disposition of the Project by the
Partnership.
A summary of significant accounting policies follows.
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 revenues
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 of
operations over seven to forty years by use of the straight-line method
for financial reporting purposes.
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1997
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Amortization
Organization costs are amortized over 60 months using the straight-line
method.
Compliance monitoring fees are amortized over the 15 year compliance
period.
Letter of credit fees are amortized over the term of the letter of
credit.
Loan fees are amortized over the term of the mortgage loan using the
straight-line method.
Rental Income
Rental income is recognized as rentals become due. Rental payments
received in advance are deferred until earned. All leases between the
Partnership and tenants of the property are operating leases.
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.
NOTE B - LONG-TERM DEBT
The Partnership has a first mortgage in the original amount of
$6,493,000 with Newport Mortgage Company, L.P. The loan bears interest
at 8.94 percent and is payable in monthly interest and principal
installments of $51,964 until maturity on July 7, 2026. As of December
31, 1997, $6,428,231 is outstanding on the mortgage.
The Partnership has a second mortgage note in an amount not to exceed
$1,531,000 with the Florida Housing Finance Agency under the HOME
Investment Partnership Program. The note bears interest at the
Applicable Federal Rate for long-term obligations in effect under
Internal Revenue Code Section 1274 (d)(1). Interest is payable at the
rate of 3 percent on June 30th of each year commencing in 1995.
Deferred interest is compounded annually and is due together with the
principal balance on February 28, 2025. As of December 31, 1997,
$1,416,000 is outstanding under the loan.
<PAGE>
NOTE B - LONG-TERM DEBT (Continued)
The liability of the Partnership under the above loans is limited to
the underlying value of the real estate collateral, improvements,
easements or other interests, assignment of rents, assignment of
leases, and personal property.
Aggregate annual maturities of the mortgage payable over each of the
next five years are as follows:
- --------------------------------------------------------------------------------
HOME Loan Newport Mortgage Total
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
December 31, 1998 $ - $ 50,944 $ 50,944
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1999 - 55,690 55,690
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2000 - 60,878 60,878
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2001 - 66,549 66,549
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2002 - 72,748 72,748
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thereafter 1,416,000 6,121,422 7,537,422
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$ 1,416,000 $ 6,428,231 $ 7,844,231
- --------------------------------------------------------------------------------
NOTE C - RELATED PARTY TRANSACTIONS
Management Agreement
The Partnership has entered into a management agreement and an
incentive management agreement under which the general partner has
agreed to provide management, operational, supervisory, maintenance,
consultive, bookkeeping, financial, and reporting services to the
Partnership.
Under the agreement, the Partnership is required to pay the general
partner management fees equal to 5 percent of gross collections as
defined. During 1997, management fees of $70,914 were charged to
operations.
<PAGE>
NOTE C - RELATED PARTY TRANSACTIONS (Continued)
The managing general partner is entitled to receive an annual,
noncumulative incentive management fee equal to 6 percent of gross
revenues, as defined. The incentive management fee is payable only to
the extent of cash flow available for distribution as defined in the
partnership agreement. This fee will not be earned or paid until any
outstanding project expense loans have been repaid and until any
outstanding recapture amount has been paid to the investor limited
partner under the terms of the partnership agreement. No incentive
management fees were paid during 1997.
Development Fees
On September 26, 1994, the Partnership entered into a development
agreement with Thirteen Development Corporation, an affiliate of the
general partner, for services in connection with the development of the
Project. During 1996, an amendment to the development agreement was
executed replacing the former developer, Thirteen Development
Corporation with the successor developer, Schickedanz Bros. - Pheasant
Run Ltd., an affiliate of the general partner. This amendment
discharged the former developer of all rights and responsibilities and
bestowed these rights and responsibilities on the successor developer.
As of December 31, 1997, the maximum developer fee has been incurred
and the partnership's liability under this agreement was $939,704. This
liability is expected to be repaid from future cash flow as set forth
in the partnership agreement.
NOTE D - COMMITMENTS AND CONTINGENCIES
The Project's low-income housing tax credits are contingent on its
ability to maintain compliance with applicable sections of Section 42.
Failure to maintain compliance with occupant eligibility, and/or unit
gross rent, or to correct noncompliance within a specified time period
could result in recapture of previously taken tax credits plus
interest.
Pursuant to its mortgage agreement, the Partnership is required to
deposit $2,725 monthly, or $32,700 annually to a reserve for
replacements. All required deposits have been made.
<PAGE>
- 13 -
NOTE D - COMMITMENTS AND CONTINGENCIES (Continued)
Pursuant to the HOME loan, the Partnership is required to rent at
least 32 units to tenants whose income does not exceed 50 percent of
Palm Beach County median annual income. This requirement must be met
for a period of 35 years.
Pursuant to the partnership agreement, the general partner is required
to loan the Partnership amounts to cover operating deficits of the
Project. The liability is limited to $550,000 for the first four years
after the development obligation date and then it is limited to
$100,000 until dissolution of the Partnership. Operating deficit loans
are non-interest bearing and are repayable in accordance with the terms
of the partnership agreement.
<PAGE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
SCHICKEDANZ BROS. -
PALM BEACH, LTD.
DECEMBER 31, 1998
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEET 4
STATEMENT OF OPERATIONS 6
STATEMENT OF PARTNERS' EQUITY 7
STATEMENT OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Schickedanz Bros. - Palm Beach, Ltd.
We have audited the accompanying balance sheet of Schickedanz Bros. -
Palm Beach, Ltd., as of December 31, 1998, and the related statements of
operations, partners' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Schickedanz Bros. -
Palm Beach, Ltd., as of December 31, 1998, and the results of its operations,
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/Reznick Fedder & Silverman
Atlanta, Georgia
January 22, 1999
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
See notes to financial statements
BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Current Assets
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash $ 3,693
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tenants accounts receivable 15,963
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Prepaid insurance 16,638
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
-----------------
-----------------
Total Current Assets 36,294
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Reserves and Deposits
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Reserve for replacements 54,976
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tax and insurance escrow 70,146
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total Reserves and Deposits 125,122
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Fixed Assets
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Land 1,792,680
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Building 11,711,351
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Furniture and equipment 462,330
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Total Fixed Assets 13,966,361
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Less accumulated depreciation (1,247,827)
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
12,718,534
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Other Assets
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Utility deposits 2,160
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Organization costs, net of accumulated amortization of $13,717 5,874
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Compliance monitoring fees, net of accumulated amortization of $3,371 15,019
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Letter of credit fees, net of accumulated amortization of $6,011 1,250
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Loan fees, net of accumulated amortization of $41,015 193,230
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Total Other Assets 217,533
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
$ 13,097,483
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
See notes to financial statements
<TABLE>
<CAPTION>
Schickedanz Bros. - Palm Beach, Ltd.
BALANCE SHEET (Continued)
December 31, 1998
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
Current Liabilities
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Accounts payable $ 73,275
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Tenant security deposits 54,582
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Accrued management fees 5,634
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Accrued interest payable 310,945
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Total Current Liabilities 444,436
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------ -----------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Long-Term Debt
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Note payable - Newport Mortgage 6,377,227
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Note payable - HOME 1,416,000
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Developer fee payable 939,704
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Total Long-Term Liabilities 8,732,931
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Commitments and Contingencies -
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Partners' Equity 3,920,116
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
$ 13,097,483
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schickedanz Bros. - Palm Beach, Ltd.
STATEMENT OF OPERATIONS
<S> <C>
Year ended December 31, 1998
- --------------------------------------------------------------------------------------------------------------------
Revenue
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Rental income $ 1,399,167
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Other income 40,936
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
1,440,103
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Operating Expenses
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Administrative expenses
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Advertising 6,978
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Office salaries 41,876
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Management fees 72,098
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Professional fees 3,659
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Office expenses 6,578
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tenant bad debts 117,095
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
General administrative 750
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Tenant credit reports 926
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Security 30,991
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total administrative expenses 280,951
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Repairs and maintenance
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Repairs and maintenance 122,017
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Utilities 118,965
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Janitorial and cleaning 53,457
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Trash removal 26,239
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Exterminating 1,971
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Total repairs and maintenance 322,649
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Taxes and insurance
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Real estate taxes 153,163
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Payroll taxes 8,836
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Property and liability insurance 48,783
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Workers' compensation 5,036
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Health insurance and other benefits 14,293
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Other taxes and insurance 586
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total taxes and insurance 230,697
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Interest on mortgage notes 684,444
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Total operating expenses 1,518,741
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Loss from operations before depreciation and amortization (78,638)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Depreciation expense 375,078
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Amortization expense 23,341
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net loss $ (477,057)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schickedanz Bros. - Palm Beach, Ltd.
STATEMENT OF PARTNERS' EQUITY
Year ended December 31, 1998
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
General Partner Limited Partners Total
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 $ (11,746) $ 4,408,919 $ 4,397,173
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
Net loss (4,771) (472,286) (477,057)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 $ (16,517) $ 3,936,633 $ 3,920,116
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Partnership percentage 1% 99% 100%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schickedanz Bros. - Palm Beach, Ltd.
STATEMENT OF CASH FLOWS
Year ended December 31, 1998
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net loss $ (477,057)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash provided by 375,078
operating activities
Depreciation
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Amortization 23,341
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Decrease (increase) in assets
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Tenants accounts receivable 13,853
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Prepaid insurance (1,132)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Utility deposits (2,160)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Tax and insurance escrow 173,804
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in liabilities
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Accounts payable 38,267
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Accrued management fees (5,760)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Tenant security deposits (14,547)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Real estate tax payable (173,734)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Accrued interest payable 69,399
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Prepaid rents (5,422)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 13,930
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Purchases of equipment (1,641)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Deposits to reserve for replacements (32,700)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Withdrawals from reserve for replacements 53,165
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 18,824
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Loan repayments (51,004)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Letter of credit fees (2,500)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Payments to affiliates (18,978)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (72,482)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH (39,728)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cash, beginning 43,421
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Cash, ending $ 3,693
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Schickedanz Bros.-Palm Beach,Ltd., (the "Partnership") was formed as a
limited partnership on June 22, 1994 under the laws of the state of
Florida, for the purpose of acquiring, constructing, developing, and
operating a low-income residential housing project. Live Oak
Plantation Apartments (the "Project") consists of 218 rental units
located in West Palm Beach, Florida.
The Project consists of 6 buildings which have each qualified for and
been allocated low-income housing tax credits pursuant to Internal
Revenue Code Section 42 ("Section 42"), which regulates the use of the
Project as to occupant eligibility and unit gross rent, among other
requirements. Each building of the Project must meet the provisions of
these regulations during each of 15 consecutive years in order to
remain qualified to receive the credits. In addition, Schickedanz Bros.
- Palm Beach, Ltd., has executed a Land Use Restriction Agreement which
requires the utilization of the Project pursuant to Section 42 for a
minimum of 35 years, even after disposition of the Project by the
Partnership.
A summary of significant accounting policies follows.
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 revenues
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 of
operations over seven to forty years by use of the straight-line method
for financial reporting purposes.
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Amortization
Organization costs are amortized over 60 months using the straight-line
method.
Compliance monitoring fees are amortized over the 15 year compliance
period using the straight-line method.
Letter of credit fees are amortized over the term of the letter of
credit using the straight-line method.
Loan fees are amortized over the term of the mortgage loan using the
straight-line method.
Rental Income
Rental income is recognized as rentals become due. Rental payments
received in advance are deferred until earned. All leases between the
Partnership and tenants of the property are operating leases.
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.
NOTE B - LONG-TERM DEBT
The Partnership has a first mortgage in the original amount of
$6,493,000 with Newport Mortgage Company, L.P. The loan bears interest
at 8.94 percent and is payable in monthly interest and principal
installments of $51,964 until maturity on July 7, 2026.
The Partnership has a second mortgage note in an amount not to exceed
$1,531,000 with the Florida Housing Finance Agency under the HOME
Investment Partnership Program. The note bears interest at the
Applicable Federal Rate for long-term obligations in effect under
Internal Revenue Code Section 1274 (d)(1). Interest is payable at the
rate of 3 percent on June 30th of each year commencing in 1995.
Deferred interest is compounded annually and is due together with the
principal balance on February 28, 2025. As of December 31, 1998,
$1,416,000 is outstanding under the loan.
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE B - LONG-TERM DEBT (Continued)
The liability of the Partnership under the above loans is limited to
the underlying value of the real estate collateral, improvements,
easements or other interests, assignment of rents, assignment of
leases, and personal property.
Aggregate annual maturities of the mortgage payable over each of the
next five years are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Newport Mortgage HOME Loan Total
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
December 31, 1999 $ 55,690 $ - $ 55,690
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
2000 60,878 - 60,878
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
2001 66,549 - 66,549
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
2002 72,748 - 72,748
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
2003 79,525 - 79,525
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Thereafter 6,041,837 1,416,000 7,457,837
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
$ 6,377,227 $ 1,416,000 $ 7,793,227
- ------------------------------------------------------------------------------------------------
</TABLE>
NOTE C - RELATED PARTY TRANSACTIONS
Management Agreement
The Partnership has entered into a management agreement and an
incentive management agreement under which the general partner has
agreed to provide management, operational, supervisory, maintenance,
consultive, bookkeeping, financial, and reporting services to the
Partnership. Under the agreement, the Partnership is required to pay
the general partner management fees equal to 5 percent of gross
collections as defined.
The managing general partner is entitled to receive an annual,
noncumulative incentive management fee equal to 6 percent of gross
revenues, as defined. The incentive management fee is payable only to
the extent of cash flow available for distribution as defined in the
partnership agreement. This fee will not be earned or paid until any
outstanding project expense loans have been repaid and until any
outstanding recapture amount has been paid to the investor limited
partner under the terms of the partnership agreement. No incentive
management fees were paid during 1998.
<PAGE>
Schickedanz Bros. - Palm Beach, Ltd.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
NOTE C - RELATED PARTY TRANSACTIONS (Continued)
Development Fees
On September 26, 1994, the Partnership entered into a development
agreement with Thirteen Development Corporation, an affiliate of the
general partner, for services in connection with the development of the
Project. During 1996, an amendment to the development agreement was
executed replacing the former developer, Thirteen Development
Corporation with the successor developer, Schickedanz Bros. - Pheasant
Run Ltd., an affiliate of the general partner. This amendment
discharged the former developer of all rights and responsibilities and
bestowed these rights and responsibilities on the successor developer.
The remaining liability is to be repaid from future cash flow as set
forth in the partnership agreement.
NOTE D - COMMITMENTS AND CONTINGENCIES
The Project's low-income housing tax credits are contingent on its
ability to maintain compliance with applicable sections of Section 42.
Failure to maintain compliance with occupant eligibility, and/or unit
gross rent, or to correct noncompliance within a specified time period
could result in recapture of previously taken tax credits plus
interest.
Pursuant to its mortgage agreement, the Partnership is required to
deposit $2,725 monthly, or $32,700 annually to a reserve for
replacements. All required deposits have been made. Pursuant to the
HOME loan, the Partnership is required to rent at least 32 units to
tenants whose income does not exceed 50 percent of Palm Beach County
median annual income. This requirement must be met for a period of 35
years.
Pursuant to the partnership agreement, the general partner is required
to loan the Partnership amounts to cover operating deficits of the
Project. The liability is limited to $550,000 for the first four years
after the development obligation date and then it is limited to
$100,000 until dissolution of the Partnership. Operating deficit loans
are non-interest bearing and are repayable in accordance with the terms
of the partnership agreement.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 180,030
<SECURITIES> 1,455,618
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 000
<DEPRECIATION> 000
<TOTAL-ASSETS> 24,889,168<F1>
<CURRENT-LIABILITIES> 000
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 24,492,589
<TOTAL-LIABILITY-AND-EQUITY> 24,889,168<F2>
<SALES> 000
<TOTAL-REVENUES> 103,830<F3>
<CGS> 000
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 385,905<F4>
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 000
<INCOME-TAX> 000
<INCOME-CONTINUING> 000
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> (2,027,965)<F5>
<EPS-BASIC> (55.01)
<EPS-DILUTED> 000
<FN>
<F1>Total assets includes: Investments in Local Limited Partnerships of $23,234,665, and Other assets of $18,855.
<F2>Total liabilities and equity include: Accounts payable to affiliate of $342,233 and Accrued expenses of $54,346.
<F3>Total revenue includes: Investment of $96,265 and Other of $7,565.
<F4>Other expenses include: Asset management fees of $206,220, General and administrative of $140,575, and Amortization of $39,110.
<F5>Net loss includes: Equity in losses of Local Limited Partnerships of $1,745,890.
</FN>
</TABLE>
