Filed Pursuant to Rule 424(B)3
Registration No. 333-38189
Y
FEBRUARY 12, 1999
SUPPLEMENT NO. 4 TO PROSPECTUS FOR
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
DATED
AUGUST 1, 1998
SUPPLEMENT OFFERING BCTC IV SERIES 35 AND
IDENTIFYING ANTICIPATED INVESTMENTS
Series 35's Purpose--
o to invest in other limited partnerships that will each develop, own and
operate an apartment complex used as low and moderate income housing.
Terms of Offering--
o Series 35 is offering at least 250,000 and up to 3,500,000 Beneficial
Assignee Certificates that are the equivalent of limited partnership
interests in Series 35;
o the price of the certificates is $10 a piece with a minimum investment of
$5,000;
o this offering will end no later than December 31, 1999; and
o your money will be held in escrow until at least 250,000 certificates are
sold.
Series 35's Investors Will Receive--
o federal housing tax credits;
o tax losses that can offset passive income from any other investments; and
o profits, if any, from the sale of the apartment complexes.
These Securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Commission
or any state securities commission passed upon the accuracy or adequacy of the
Prospectus. Any representation to the contrary is a criminal offense.
Risk Factors as to Series 35, which begin on page 18 of the Supplement and page
24 of the Prospectus--
o tax credit rules can be complicated and the failure of apartment complexes to
comply with them can result in the loss of tax credits;
o the use of tax credits is limited so the investor may not be able to use them
all;
o tax credits may be the only material benefit from the investment;
o when the apartment complexes are eventually sold, there may not be enough
money to return the original investment;
o there are limits on the transferability of the certificates; and
o it is unlikely that there will be a market for the certificates.
<TABLE>
<CAPTION>
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The Offering Per Certificate
- ------------ ---------------
<S> <C>
Public Price..................................................... $10.00
Selling Commissions and Fees........................................ .90
Proceeds to Series 35.............................................. 9.10
Apartment Complexes........................................... 7.20-7.30
Working Capital Reserves............................................ .40
Fees and Expenses of General Partner
and Affiliates............................................... 1.40-1.50
- ------------------------------------------------------------------------
</TABLE>
<PAGE>
SUMMARY
This Summary outlines the main points of the offering, but does not replace a
full and careful reading of the Prospectus, and is qualified by the Prospectus.
All prospective investors should read the Prospectus in its entirety.
Boston Capital Tax Credit Fund IV L.P. is organized as a limited partnership
because that structure allows the pass through of tax benefits. Each series of
certificates issued by Boston Capital Tax Credit Fund IV L.P. assigns
beneficial interests in the limited partner interests allocated to that series
to the purchaser of those certificates. Certificates of beneficial interests
are being issued instead of direct limited partner interests because dealing
with the transfer of the certificates is less cumbersome than dealing with the
transfer of direct limited partner interests. Each series of certificates
issued by Boston Capital Tax Credit Fund IV L.P. is separate from the other
series. This offering allows investors to acquire an interest in Series 35
only.
The structure of the investment in Series 35 involves two tiers. In the bottom
tier is the operating partnership which will be the owner of an apartment
complex. Any tax credits, profits, losses or net cash produced by the
operations of, or sale or refinancing transactions with regard to, an apartment
complex for the Operating Partnership will be shared between Series 35 and the
general partners of the Operating Partnership in percentages to be negotiated
between Series 35 and each Operating Partnership. Series 35 expects that it
will usually receive 99% of the tax credits, profits and losses available from
the Operating Partnership. Series 35 will allocate 99% of the profits, losses,
tax credits it receives and 99% of the net cash flow it has available from
operations to the owners of the Series 35 certificates and 1% of those items
will go to the general partner, Boston Capital Associates IV L.P. ("Boston
Associates"). Net proceeds from sale or refinancing transactions will be split
95% to Series 35 investors and 5% to Boston Associates; however, if Series 35
investors have not received a return from cash distributions and tax credits
equal to 11% per year on a cumulative basis from the quarter in which they
invested, Boston Associates's 5% share will be subordinated until Series 35
investors have received enough to meet the priority return.
2
<PAGE>
The following organization chart shows the basic structure of the investment
and the identity of the parties:
<TABLE>
<S> <C> <C> <C> <C> <C>
------------------
| INVESTORS |
------------------
/ \ 100% |
| |
tax | |
benefits | capital
| contributions
| |
| |
CERTIFICATES |
| |
capital capital | |
contributions contributions | \ /
- -------------- ---------- --------------------
| General |-----------------}| |{-----------------| Assignor |
| Partner | | SERIES | | Limited Partner |
| Boston |{-----------------| 35 |-----------------}| BCTC IV Assignor |
| Associates | tax | | tax --------------------
- -------------- benefits ---------- benefits
1% of tax credits, / \ | 99% of tax credits,
profits, losses, net | | capital contributions profits, losses, net
cash flow; 5% of | | cash flow; 95% of
net proceeds from | | net proceeds from
sale or refinancing | | sale or refinancing
transactions after | | transactions after
the priority return limited partner receiving the priority
| | return
tax | |
benefits (1) | \ /
- -------------------- --------------
| Operating |{----------| Operating |
| General Partners |----------}| Partnership |
- -------------------- --------------
capital contributions / \ |
| |
| |
| |
| |
| |
tax | |
benefits | |
| | cost of apartment complex
| \ /
---------------------
| Apartment Complex |
---------------------
</TABLE>
(1) percentages to be negotiated;
See details on page 30
of this Supplement.
3
<PAGE>
Risk Factors
Investors should be aware that an investment in Series 35 entails risk. The
"Risk Factors" section of the Prospectus contains a detailed discussion of the
material risks.
General risks associated with Series 35's investments include:
o The only benefit of this investment may be federal housing tax credits.
Investors may not get their capital back from the sale or refinancing of the
apartment complexes. In such instance, a material portion of the tax credits
will represent a return of the money originally invested in Series 35.
o Series 35 will depend upon the ability, integrity and expertise of Boston
Capital Associates IV L.P. ("Boston Associates"), as general partner, in
selecting the appropriate mix of properties.
o There is no trading market for certificates and there are no assurances that
any market will develop. Accordingly, investors may not be able to sell
their certificates promptly and should therefore consider certificates to be
a long-term investment.
o Investors will not have the benefit of an independent underwriter's
investigation of Series 35 because the lead underwriter is an affiliate of
Boston Associates.
Real Estate Risks:
o If a lender forecloses on an apartment complex that has not timely paid its
mortgage, a significant portion of tax credits previously received will be
taken back.
Tax Risks:
o The use of tax credits can be limited because of the complicated nature of
the tax credit rules in the Internal Revenue Code. Failure to comply with
any of these complicated rules by an apartment complex could cause the loss
of some of the tax credits.
o Tax credits are generated over a ten-year period, but Series 35 intends to
hold the apartment complexes for at least fifteen years. Although investors
are not required to hold their certificates for any particular period of
time, there is no assurance a market will develop and there are restrictions
on their transfer in the agreement of limited partnership.
4
<PAGE>
o There are significant continuing occupancy requirements that each apartment
complex must comply with for a fifteen-year period after the federal housing
tax credits are first taken. Failure to comply with these requirements could
result in the loss of some tax credits.
o Tax credits cannot be used to offset alternative minimum tax.
The Offering
Series 35 is offering up to 3,500,000 certificates, with a minimum required
investment by each investor of five hundred certificates at $10 per certificate
($5,000), on the terms and conditions set forth in the Prospectus. No Series 35
certificates will be issued unless at least 250,000 certificates are sold. If
only the minimum number of Series 35 certificates is sold, Series 35 will not
invest in many of the apartment complexes identified below. In addition, Series
35 will use approximately $.72 to $.73 of each dollar raised for investments in
apartment complexes. About one-half of the balance will be used to pay fees and
expenses to Boston Associates or its affiliates. See "Estimated Use of
Proceeds," and "Compensation and Fees" in the Prospectus. The offering of
Series 35 certificates will not exceed twelve months.
Series 35 will place the initial monies raised in an escrow account until the
$2,500,000 minimum for Series 35 is achieved. During this time, which may take
several months, interest will be earned at the business money market rate.
Series 35 will pay the interest to the investor even if the minimum is not
reached. After $2,500,000 is raised, Series 35 will hold closings approximately
twice every month until the conclusion of the offering.
Boston Capital Tax Credit Fund IV L.P. has already issued other series of
certificates in other offerings--Series 20 to Series 34. The purchase of Series
35 certificates will not entitle the investor to any interest in any other
series of Boston Capital Tax Credit Fund IV L.P. or any interest in Boston
Capital Tax Credit Fund Limited Partnership, Boston Capital Tax Credit Fund II
Limited Partnership or Boston Capital Tax Credit Fund III L.P.
5
<PAGE>
Suitability of an Investment in Certificates
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
Considerations for Individual Investors Considerations for Corporate Investors
- ---------------------------------------------------------------------------------------------
o individuals should only invest in tax credits o tax credits cannot be used against the
if they expect to have income taxes which corporate alternative minimum tax;
the tax credits can offset.
o tax credits cannot be used against the o the general limitations on business tax
alternative minimum tax; credits apply;
o tax credits cannot be used in IRA, Keogh o corporations generally have no limits on
or other retirement plans; the amount of tax credits and passive
losses they may use each year; and
o non-resident aliens cannot use tax credits; o closely-held, personal service and S
and corporations are specially limited in their
use of tax credits.
o married persons filing separately and living
together in any year may not use tax
credits against taxes owed in that year on
income derived from wages, salaries,
dividends or interest income.
- ---------------------------------------------------------------------------------------------
</TABLE>
See "Suitability of an Investment in Certificates" for a detailed explanation
of these limitations for each category of investor and a description of the
minimum net worth and income requirements that various states impose on
investors.
Estimated Use of Proceeds
We will use the proceeds in the following way:
o invest approximately $.72 to $.73 of each dollar we raise directly in
constructing or rehabilitating the apartment complexes;
o hold $.04 of each dollar in working capital reserves; and
o use the rest to pay fees and expenses to Boston Associates and others. See
"Estimated Use of Proceeds" for a detailed breakdown of Series 35's estimate
of the use of the capital it raises.
Fiduciary Responsibility of Boston Associates
Boston Associates will act as a fiduciary to Series 35. Series 35 will
partially indemnify Boston Associates, and therefore may be required to pay
some of Boston Associates's business costs in
6
<PAGE>
connection with its operation of Series 35 that Series 35 would not otherwise
be required to pay. As described under "Conflicts of Interest," Boston
Associates will be permitted to engage in some activities that potentially may
involve a conflict of interest, such as sponsoring other programs investing in
apartment complexes that generate tax credits without providing the benefits of
those activities to Series 35 investors.
Conflicts of Interest
The interests of investors may conflict with the interests of Boston
Associates. Its affiliates are committed to the management of many other
limited partnerships that have investments similar to those made by Series 35.
Boston Associates and its affiliates, including the Dealer-Manager, will
receive substantial fees, commissions, compensation and other income from
transactions with and by Series 35 regardless of the success of your
investment.
Compensation and Fees
Boston Associates will manage the business of Series 35, including the
investment and management of its assets, and will receive substantial
compensation and fees from Series 35 and/or the apartment complexes in
connection with this offering. The section of the Prospectus entitled
"Compensation and Fees" specifies the compensation payable to Boston Associates
and its affiliates. The most significant items of compensation are as follows:
7
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Who Receives the
Compensation Category Compensation What the Compensation Equals
- -------------------------------------------------------------------------------------
<S> <C> <C>
Reimbursement for Boston Associates o equal to all accountable expenses
Accountable Expenses or its affiliates paid to third parties
- -------------------------------------------------------------------------------------
Dealer-Manager Fee Boston Capital o equal to $0.20 per certificate sold
Services, Inc. o also may receive selling commissions
of up to $0.70 per certificate sold
o also may receive accountable and
non-accountable due diligence
expense reimbursements of up to
$0.15 per certificate sold
- -------------------------------------------------------------------------------------
Asset Acquisition Fee Boston Capital o equal to $0.85 per certificate sold
Partners, Inc.
- -------------------------------------------------------------------------------------
Annual Fund Management Boston Associates o annually equal to 0.5% of the
and Reporting Fees or its affiliates aggregate cost of the apartment
complexes, which is the sum of
equity invested by Series 35 in the
apartment complex plus the amount
of mortgage debt on the apartment
complex
o could be about $36,000 per year if
$2,500,000 is raised and $504,000 if
$35,000,000 is raised
- -------------------------------------------------------------------------------------
Share of Series 35 Boston Associates o 1% of tax credits;
Distributions o 1% of any cash distributions; and
o 5% of net proceeds of the sale of the
apartment complexes
- -------------------------------------------------------------------------------------
</TABLE>
Investment Objectives and Acquisition Policies
Series 35's principal business is to invest, as a limited partner, in other
limited partnerships (the "Operating Partnerships"), each of which will
develop, own and operate an apartment complex which is expected to qualify for
federal housing tax credits in order to:
(1) Generate tax credits, which can be used by investors to offset federal
income taxes from all sources. These tax credits include federal housing tax
credits, and a small number of historic tax credits in limited instances.
Occupancy requirements must be met for each apartment complex during the
initial fifteen-year period.
(2) Preserve and protect Series 35's capital. Series 35 requires the general
partners of the Operating Partnerships to:
8
<PAGE>
o guarantee completion of the apartment complex;
o fund any construction cost overruns;
o pay operating shortfalls for a limited period; and
o guarantee a specific amount of tax credits.
(3) Provide tax benefits in the form of passive losses. Individual investors
generally may deduct tax losses only to the extent of their income other than
wages, salaries, dividends and interest.
(4) Distribute net cash, if any, from the sale or refinancing of apartment
complexes. Investors can get money back from the sale or refinancing of an
apartment complex only if the net sales price is large enough to pay all costs
of the sale plus fees and expenses paid in this offering, which is estimated to
be 27% of your initial investment.
To achieve these investment objectives, Series 35 will invest in apartment
complexes with a goal of generating tax credits, upon completion and occupancy
of all the apartment complexes, averaging approximately $1.00 to $1.10 per
certificate annually--10%-11% annual tax credit as a percentage of capital
invested--for the ten-year credit period. If this annual tax credit goal is
met, it should result in a tax-free internal rate of return of 2.5%-5% even
assuming none of the apartment complexes invested in has any value in excess of
indebtedness plus sale expenses at the end of the fifteen-year federal housing
tax credit compliance period, and investors use for tax purposes the assumed
loss of the investor's entire capital contributions. There is no assurance that
any particular tax-free internal rate of return will be achieved.
The internal rate of return is the rate at which the present value of your
future tax benefits will be equal to the cost of your investment. In essence,
it illustrates your future tax credit benefit as return of principal and
interest in today's dollars. The tax-free internal rate of return can exceed
2.5%-5% if the value of the apartment complexes exceeds indebtedness plus sale
expenses and the investors receive distributions from those sale or refinancing
transactions.
Series 35 has selected a 10%-11% annual tax credit as a percentage of capital
invested, as an investment objective, after consulting with the underwriter
regarding tax-free returns currently available to investors in other similar
tax credit investments. No additional tax credits will be available for the
remaining term of the fifteen-year federal housing tax credit compliance
period. This calculation assumes:
o the applicability of current tax law;
9
<PAGE>
o each apartment complex is occupied with qualifying individuals throughout the
fifteen-year federal housing tax credit compliance period; and
o investors cannot use any passive tax losses generated by Series 35.
In accordance with the rules for the allocation of federal housing tax credits,
Series 35's investment goal is for the following annual tax-free amounts for
each $10,000 investment in Series 35: $100-$200 in 1999; $400-$600 in 2000;
$1,000-$1,100 in 2001-2009; and $400-$600 in 2010. This tax credit investment
goal is not a forecast of anticipated tax credits, nor does it represent a
yield or return on investment. Rather it is an investment goal of Series 35 for
the credit period applicable to its investments.
The attainment of Series 35's investment objectives will depend on many
factors, including the ability of Boston Associates to select suitable
investments on a timely basis, the timely completion and successful management
of such investments and future economic conditions in the United States.
Accordingly, there can be no assurance that Series 35 will meet its investment
objectives.
Series 35 and Investor Protections
Series 35 will try to protect your investment in a number of ways. First, it
will invest its capital in each apartment complex in stages based on completion
of construction, rental of apartments to qualified tenants and demonstrated
experience in covering operating costs through rental income. In this way
Series 35 will try to put as little capital at risk as possible in the stages
of an apartment complex's life cycle that are most uncertain.
Second, Series 35's permission will be required to make major decisions, such
as the decision to sell an apartment complex. Other specific protections are as
follows:
Tax Credit Adjuster. If the amount of tax credits achieved by an apartment
complex is less than expected, Series 35 will decrease its capital contribution
to that apartment complex. Decreasing its capital contribution to one apartment
complex allows Series 35 to buy other tax credits from another apartment
complex.
Construction Guarantees. The Operating General Partner(s) will provide
financial assurances that construction of the apartment complex will be
completed in a timely manner and in accordance with all requirements necessary
to obtain the required certificates of occupancy. The cost of completing the
construction may be greater than the Operating General Partner's guarantee.
10
<PAGE>
Operating Deficit Guarantees. The Operating General Partner(s) will guarantee
to cover operating expenses arising from the operation of each apartment
complex. The amount of such operating deficit guarantees will, in some
instances, be limited to a specified term and/or dollar amount.
Repurchase of Operating Partnership Interest. The Operating General Partner(s)
must repay Series 35's capital contributions if the apartment complex fails to:
(1) receive the allocation of tax credits; (2) remain eligible for tax credits
during the period when capital contributions of Series 35 are due to the
Operating Partnership; or (3) obtain permanent mortgage loan financing.
Tax Credit Programs
Section 42 of the tax code offers tax credits to encourage investments in
qualified apartment complexes for use by persons of low and moderate income.
The U.S. Bureau of Census estimates that by the year 2000, there will be an
unmet national demand for twelve million units of affordable rental housing.
The tax code pre-funded and made available to eligible properties $3.3 billion
of federal housing tax credits, that is $1.25 annually per resident of each
state, each year since 1987. In 1993, Congress passed permanent legislation
that annually funds this ten-year tax credit allocation for additional tax
credits properties. The allocation of tax credits to a particular building is
for the full ten-year credit period and no reauthorization of the tax credit
program is required for any such existing allocation of tax credits.
Investors in a partnership that owns an apartment complex are eligible to
receive, for a ten-year period, a credit against federal tax liability. A tax
credit is a dollar for dollar reduction in tax liability, while a tax deduction
is a subtraction from adjusted gross income. The laws and rules authorizing
federal housing tax credits defined:
o the types of apartment complexes that qualify for the federal housing tax
credit;
o the kinds of tenants that must live in the apartment complex; and
o the rents the tenants may be charged and costs of construction or renovation
of the apartment complexes.
These rules are complicated and must be followed for investors to receive tax
credits, and are described in the section of the Prospectus entitled "Tax
Credit Programs."
11
<PAGE>
Because federal housing tax credits do not reduce a taxpayer's basis, a
taxpayer's gain upon the sale or other disposition of certificates is not
increased by the allowed tax credits.
The federal housing tax credit program requires that its rules be complied with
during the fifteen-year period after federal housing tax credits are first
taken. To the extent the federal housing tax credit rules are not adhered to
during the fifteen-year period, investors would have to repay a portion of the
federal housing tax credits previously generated by the non-complying dwelling
units in the applicable apartment complex. See "Tax Credit Programs--The
Federal Housing Tax Credit."
Investors may use the increased cash flow from the use of tax credits to make
other investments such as dollar cost averaging into mutual funds, saving for
retirement or future college expenses, funding life insurance expenses or
simply diversifying a tax advantaged or conventional investment portfolio. The
tax credit benefit itself also may be used to offset the tax liability arising
from retirement plan withdrawals or used to reduce quarterly estimated tax
payments.
Management
Series 35 maintains its principal office c/o Boston Capital Partners, Inc., One
Boston Place, Suite 2100, Boston, Massachusetts 02108-4406, telephone (617)
624-8900.
The General Partner of Boston Capital Tax Credit Fund IV L.P. is Boston Capital
Associates IV L.P., a Delaware limited partnership. The general partner of the
General Partner is Boston Capital Associates, a Massachusetts general
partnership whose two partners are Herbert F. Collins ("Collins") and John P.
Manning ("Manning"), the principals of Boston Capital Partners. The business
address of the General Partner is the same as that of Series 35.
The General Partner has complete authority in the overall management and
operation of Series 35 and will have responsibility for supervising Series 35's
selection, negotiation and investment in apartment complexes.
Prior Performance of the General Partner and Its Affiliates
Boston Capital Tax Credit Fund IV L.P. (the "Fund") has issued other series in
other offerings--Series 20 to Series 34. The Fund has issued a total of
49,295,559 certificates, raised $492,656,500 and admitted 27,705 investors
within Series 20 through 34, and may still sell up to $122,343,500 to the
public if all the certificates in Series 35 are sold. See "Prior Performance of
the General Partner and its Affiliates" in the Prospectus for information about
Series 20 through 32.
12
<PAGE>
The Fund received orders for a total of 3,530,319 Series 34 certificates
($35,283,000), and issued the last of these certificates on February 11, 1999.
The fees paid as of February 11, 1999 to Boston Capital and affiliates for
Series 34 totaled $4,163,394. No additional Series 34 certificates will be
offered.
Affiliates of Series 35 have raised approximately $1.6 billion in equity from
approximately 60,000 investors in more than 350 investment programs to acquire
interests in approximately 1,800 properties containing approximately 83,000
apartment units in 48 states and territories, representing approximately $4.55
billion in original development cost.
The section of the Prospectus entitled "Prior Performance of the General
Partner and Its Affiliates" contains a discussion of the prior real estate
investment programs in which Boston Associates affiliates have been involved
and it is not intended as an assurance of future performance. The Prior
Performance Tables attached to the Prospectus following the Financial
Statements contain tabular and statistical data regarding the prior investment
programs of Boston Associates's affiliates that have invested in low-income and
government-assisted housing.
Description of Certificates
Investors will invest in certificates, representing assignments of units of the
beneficial interest of Series 35 issued to BCTC IV Assignor Corp., a Delaware
corporation that is wholly owned by Collins and Manning (the "Assignor Limited
Partner"). The Assignor Limited Partner was formed for the purpose of serving
in that capacity for Series 35 and will not engage in any other business.
Investors will be entitled to all the rights and economic benefits of a limited
partner of Series 35, including the rights to a percentage of Series 35's
income, gain, credits, losses, deductions and distributions. No investor will
be personally liable for the debts, liabilities, contracts or other obligations
of Series 35. See "Summary of the Voting Rights Provisions of the Fund
Agreement-Liability of Partners and Investors to Third Parties." Investors will
be bound by the terms of the Fund's Agreement of Limited Partnership. The
Assignor Limited Partner agrees that on any matter calling for a vote of the
limited partners, it will vote the assigned limited partnership interests only
if and as directed by the investors.
We anticipate the certificates to be transferable, subject to some
restrictions. No more than 50% of the certificates will be permitted to be
transferred in any twelve-month period. This prevents any potential recapture
of tax credits upon the transfer of certificates. See "Description of
Certificates," "Risk Factors--Certain Other Risks--Transferability" and
"Federal Income Tax Matters--Recapture of Tax Credits." We will identify each
certificate as representing a particular series.
13
<PAGE>
Sharing Arrangements: Profits, Credits, Losses
Net Cash Flow and Residuals
Series 35 will allocate or distribute, as applicable, to the investors:
o 99% of its tax credits and tax losses from normal operations; and
o 99% of its cash generated after all expenses are paid, if any.
The remaining amount will go to Boston Associates provided that Boston
Associates's distribution of cash will be subordinated to the achievement of
the priority return to investors.
If there is a sale or refinancing of an apartment complex or the sale of Series
35's interest in an Operating Partnership, Series 35 will distribute 95% of the
proceeds to the investors, and 5% of the proceeds to Boston Associates;
provided that Boston Associates's distribution will be subordinated to the
achievement of the priority return to investors.
The priority return base for Series 35 is $1.10 per certificate (11%). The
priority return base is the level of return that investors must receive before
Boston Associates may receive a 5% share in the proceeds from the sale or
refinancing of apartment complexes. In establishing the priority return base,
Boston Associates does not represent that Series 35 is expected to provide this
level of return to investors. Boston Associates will receive fees and
compensation for services prior to investors receiving the priority return.
Federal Income Tax Matters
The section of the Prospectus entitled "Federal Income Tax Matters" contains a
more detailed discussion of the numerous federal income tax issues already
mentioned in this Summary. It is expected that each purchaser of a certificate
(1) will be treated as a partner for federal income tax purposes; and (2) will
be entitled to its allocable share of the tax credits, profits and losses from
Series 35. It is also expected that federal income tax will be imposed only at
the partner level with regard to an investment in Series 35 avoiding the double
taxation applicable to corporations. The "Federal Income Tax Matters" section
of the Prospectus also contains the legal opinions of Peabody & Brown as to all
material federal income tax matters with respect to an investment in Series 35.
See pages 108 and 109 of the Prospectus for a summarization of the precise
nature of the legal opinions being given with respect to these matters.
14
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Summary of the Voting Rights Provisions
of the Fund Agreement--
Liability of Partners and Investors to Third Parties
The Fund Agreement that will govern the relationship between the investors and
Boston Associates is a legal document, described in the section of the
Prospectus entitled "Summary of Provisions of the Fund Agreement." Other
important portions of the Fund Agreement are summarized under "Sharing
Arrangements: Profits, Credits, Losses, Net Cash Flow and Residuals" and
"Description of Certificates."
Investors should particularly be aware of the following terms of the Fund
Agreement:
o Voting rights. The Fund Agreement gives a majority of certificates the right
to:
(1) approve or disapprove the sale of all or substantially all of the assets
of Series 35 at any one time;
(2) amend the Fund Agreement, subject to important limitations;
(3) remove Boston Associates with or without cause and elect a replacement;
and
(4) dissolve Series 35.
The majority vote will still bind investors who do not vote with the majority
in interest of their fellow investors.
15
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o Changes in the rights of investors. The Fund Agreement may not be amended to:
(1) alter the rights and obligations of each investor under the Fund
Agreement; or
(2) modify the order of distributions or allocations of tax credits or cash
distributions without the approval of any affected investor.
o Changes in investment objectives and policies. Boston Associates cannot
change the investment objectives or policies of Series 35 unless the Fund
Agreement is amended by the approval of a majority in interest of the
investors. If such an amendment is made, the majority vote will still bind
investors who do not vote with the majority in interest of their fellow
investors.
o Mergers and rollups. The Fund Agreement specifically prohibits the merger or
combination of the Fund with any other entity.
Under the Revised Uniform Limited Partnership Act as enacted in the State of
Delaware, a limited partner in a limited partnership is liable only for the
amount of the capital contributions that the limited partner agrees to make.
If a limited partner does not participate in the management of a partnership
and does not receive a distribution from the limited partnership or have
knowledge at the time of the distribution that the distribution was in
violation of the Revised Uniform Limited Partnership Act of the State of
Delaware or the applicable partnership agreement, he or she will have no
additional financial liability to the limited partnership or to creditors of
the limited partnership. All rights accorded limited partners in a limited
partnership under the laws of the State of Delaware extend to investors under
the terms of the Fund Agreement.
16
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Investor Reports
Each investor will receive:
o an acknowledgment of receipt of the investment;
o a letter after the applicable Closing Date, confirming the assignment of
certificates;
o quarterly reports with unaudited financial information for each of the first
three fiscal quarters of each year;
o annual reports with audited financial statements; and
o Schedule K-1 and other necessary tax information.
Experts
<TABLE>
<CAPTION>
Counsel for Series 35 is: Accountants for Series 35 are:
<S> <C>
Peabody & Brown Reznick Fedder & Silverman
1255 23rd Street N.W. 4520 East-West Highway, Suite 300
Washington, D.C. 20037 Bethesda, Maryland 20814
</TABLE>
17
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RISK FACTORS
An investment in the Series 35 involves various risks. Here is a summary of the
most important of these risks. Investors should read the entire Prospectus to
fully understand all of these risks.
General Risks of Series 35's Investments
Investors will not be able to evaluate all of the apartment complexes in which
Series 35 will invest. Boston Associates has not yet identified all of the
apartment complexes in which Series 35 will invest. Investors must rely on the
ability of Boston Associates to find suitable investments for Series 35.
Investors should read the sections "Management" and "Prior Performance of the
General Partner and Its Affiliates" to learn about the prior real estate
experience of Boston Associates. All of Series 35's investments are required to
meet Series 35's investment objectives and acquisition policies, as described
in the section of the Prospectus entitled "Investment Objectives and
Acquisition Policies." Series 35 does not guarantee that it will be able to
find investments meeting its investment objectives or that any investment it
does make will generate income for investors or increase in value over time.
Sale of less than all certificates may result in fewer investments for Series
35. The more certificates that are sold, the more money Series 35 will have to
invest in apartment complexes. If fewer than all of the certificates in any
series are sold, Series 35 will invest in fewer apartment complexes. The fewer
the apartment complexes Series 35 invests in, the less diversified its
portfolio of apartment complexes will be. Also if Series 35 invests in several
apartment complexes in the same geographic area, there will be less diversity.
In such circumstances, apartment complexes which suffer poor operating results
can have a greater negative effect on Series 35's operations as a whole. See
"The Offering--Issuance of Certificates in Series."
Boston Associates may not be able to buy certificates to fund start up costs of
Series 35. Series 35 can borrow money in order to make investments in apartment
complexes before all of the money is raised from the offering. Any such loan is
to be repaid from the money that is raised from the offering. If insufficient
money is raised in the offering to repay such loans, Boston Associates has
agreed to buy enough certificates to provide Series 35 with money to repay such
loan(s). If Boston Associates does buy certificates, they will be purchased on
the same terms as any other investor, except Boston Associates will not pay
commissions and fees that otherwise would go to it or its affiliates. There is
a possibility that Boston Associates will not have enough money to meet these
obligations.
Investors may not receive cash if apartment complexes are sold. There is no
assurance that investors will receive any cash distributions from the sale or
refinancing of an apartment
18
<PAGE>
complex. The price at which an apartment complex is sold may not be large
enough to pay the mortgage and other expenses which must be paid at such time.
If that happens, investors will not get all of their investment back, and the
only benefit from an investment in Series 35 will be the tax credits received.
A decrease in an individual investor's taxable income will limit his benefit
received from tax credits. A change in an individual investor's personal tax
situation which reduces his taxable income will substantially reduce, defer or
eliminate the benefits to him of the tax credits. If an investor's adjusted
gross income increases to more than $200,000 in a particular year, any
allocated historic tax credits also will be substantially reduced, deferred or
eliminated.
Investors may not be able to liquidate their investment promptly at a
reasonable price. Although it is possible that the certificates in all series
may be listed on a national securities exchange, there is no guarantee that
such a listing can or will be accomplished or that a public trading market will
develop. Currently, no certificates have been listed on a national securities
exchange. The transfer of certificates will be limited in some cases. Investors
should consider their investment in Series 35 to be a long term investment. See
"Description of Certificates--Transfers" and "Federal Income Tax
Matters--Classification as a Partnership" and "-- Fund Income."
Boston Associates can impose restrictions on the transfers of certificates in
order to prevent a termination of Series 35 for tax purposes or prevent a
classification of Series 35 as something other than a partnership for federal
income tax purposes. In addition, Boston Associates will not allow sales of
certificates to an investor who does not meet the then applicable suitability
standards. See "Federal Income Tax Matters--Sale or Disposition of
Certificates."
Investors are liable for a period of time for the amount of their returned
contributions to any Series 35 creditors. In general, limited partners are not
liable for partnership obligations unless they take an active part in the
day-to-day management or control of the partnership's business. The Delaware
Revised Uniform Limited Partnership Act presently allows the investors to
exercise all of their rights in the Fund Agreement without jeopardizing their
limited liability. All rights given limited partners under the laws of the
State of Delaware extend to investors under the terms of the Fund Agreement.
Unless an investor is deemed to be taking part in the control of Series 35's
business, his liability is limited to the amount invested in Series 35.
Under Delaware law, if an investor has received the return of any part of his
investment without violation of Delaware law or the Fund Agreement, the
investor is liable for a period of one year for the amount of his returned
contribution which would be necessary to pay Series 35's creditors for
liabilities incurred during the period the contribution was held by Series 35.
However, if any of the money returned to an investor was returned in violation
of applicable
19
<PAGE>
Delaware law or the Fund Agreement, then the investor is liable for a period of
three years for the amount of the contribution wrongfully returned.
Investors may have limited rights of action against Boston Associates. Under
Delaware law, the Boston Associates is required to exercise good faith and
integrity in handling the affairs of Series 35. The Fund Agreement provides
that Boston Associates will not be liable to investors for its actions or
omissions made in good faith and in a manner it reasonably believes was allowed
under the Fund Agreement and in the best interest of Series 35. However, if
Boston Associates's conduct constitutes fraud, bad faith, negligence or
misconduct, it would be liable to investors. Therefore, investors may have more
limited rights of action against Boston Associates than would otherwise be
available, absent these provisions in the Fund Agreement.
Series 35 may be liable for the liabilities of other series. Certificates are
issued in series, and the Fund Agreement provides that each series will be
treated for economic purposes as a separate partnership, sharing in a separate
and distinct pool of apartment complexes. The rights of investors in all series
will be identical in all other respects, except with respect to voting rights
and accounting matters applicable only to a particular series. See "The
Offering--Issuance of Certificates and Series."
It is possible, however, that each series may not stand on its own with respect
to outside creditors. In such an event, such creditors would be able to reach
all of the assets of Series 35, despite the fact that the matter affecting the
creditor related only to a particular series. Therefore, in the event that a
creditor makes a claim against the assets of Series 35 and it can be determined
that such claim relates to one series only, Boston Associates will assume
liability for any such claim to the extent that the series does not have
sufficient funds to satisfy the claim. In the event there is a proper claim
against more than one series, if the proportional liability of a particular
series can be determined, such series will be liable only for such proportional
amount of the claim. Series 35 intends to require that the various series
reimburse each other to the extent that expenses relating to a particular
series are borne by another series, but a series may be financially unable to
do so. There is a risk, therefore, that investors in a particular series will
be affected by the performance of another series. This could result in lower
returns on their investments than would otherwise be the case.
An independent underwriter will not make an independent investigation of Series
35. The Dealer-Manager will receive commissions and other compensation as an
agent of Series 35. The Dealer-Manager has not retained counsel separate from
Series 35's counsel, but has conducted such due diligence investigation as it
deems necessary under the circumstances. However, because the Dealer-Manager is
an affiliate of Boston Associates, investors will not have the benefit of an
independent investigation of Series 35 as is customarily made by independent
underwriters.
20
<PAGE>
The prohibition on mergers in the Fund Agreement may limit the operational
flexibility of Series 35. Although at this time, Boston Associates has no
intent to effect a merger of Series 35 with any other entity, the presence of
this prohibition in the Fund Agreement may make it more difficult to effect any
sort of change in control that would involve a merger in the future.
Real Estate Risks
If the expenses of apartment complexes are greater than their income, Series 35
may have to pay any operating shortfalls. If the expenses of an apartment
complex are greater than its income, Series 35 may have to provide money to pay
the shortfall. Otherwise, the apartment complex may need to be sold on
disadvantageous terms in order to raise money. Also if the apartment complex
does not generate enough income to pay its mortgage payments and property
taxes, the lender could foreclose and Series 35 could lose its investment,
including a partial recapture of tax credits.
Leveraged investments may increase the risk of loss because of the debt
payments. Each of the apartment complexes will have mortgage debt which
leverages Series 35's investment in the apartment complex. Leveraging allows
Series 35 to increase the amount of property that can be invested in with the
amount of money raised from the offering, and thus increase the amount of tax
credits available to Series 35. However, leveraging also can increase the risk
of loss. If there is a foreclosure of a mortgage loan on an apartment complex,
there can be a tax liability to investors including a partial recapture of tax
credits previously taken.
Operating General Partners have limited financial resources and if they fail to
meet their obligations, Series 35 may have limited remedies against them. The
Operating General Partner is responsible for completing the construction or
renovation and then renting and operating the apartment complex. If there are
cost overruns in the construction or renovation, or if rental income is not
enough to pay operating expenses, the Operating General Partner usually is
required to pay such shortfalls with its own money. In addition, the Operating
General Partners generally will be required to pay Series 35 some amounts if
the amount of tax credits generated by the apartment complex falls below an
agreed upon level. See "Investment Objectives and Acquisition
Policies--Acquisition Policies." There is no guarantee that such Operating
General Partners will have enough money to meet their obligations. If any of
the Operating General Partners fail to meet their obligations to make these
payments, the remedies of Series 35 may be limited to removing the Operating
General Partner as general partner of the Operating Partnership.
Government regulations regarding apartment complexes receiving government
assistance may limit the flexibility of those complexes to rent to tenants or
increase rents, thereby restricting the economic benefit to Series 35. Some of
the apartment complexes may receive
21
<PAGE>
government assistance. Generally, rents in an apartment complex receiving
government assistance cannot be increased without the prior approval of the
applicable government agencies. If needed rent increases are not approved in a
timely manner, an apartment complex may have operating deficits.
Some government regulations may restrict the type of tenants that can rent
apartments in the apartment complex. This would reduce the pool of potential
renters available to rent apartments in the apartment complex.
Other government assistance programs provide rent supplement payments to
tenants. These payments are fixed in amount, unless Congress and/or the
appropriate agency has approved funding for an increase in the payments. If
there are no increases in rent supplement payments, the operating expenses of
an apartment complex could increase without a corresponding increase in rental
income, ultimately leading to a foreclosure on the apartment complex and the
loss or recapture of tax credits.
Apartment complexes that receive government assistance generally are subject to
restrictions on when and how they can be sold or refinanced. Due to these
restrictions, it may not be possible to sell or refinance an apartment complex
when it is in the economic interest of Series 35 or investors to do so.
Tax Risks
IRS may challenge Series 35's tax positions which could result in the loss or
recapture of tax benefits. Series 35 will not request any tax rulings from the
IRS. Thus, there is no certainty as to the tax consequences of investing in
Series 35. Peabody & Brown, counsel to Series 35 and Boston Associates,
provides its legal opinion with regard to many of the material tax issues
involved in investing in Series 35. However, Peabody & Brown's opinion does not
cover some material tax issues because those issues depend upon the specific
investments made by Series 35 which have not yet been identified. Peabody &
Brown's opinion is not binding on the IRS or on any court. It is possible that
the IRS will challenge tax deductions and tax credits Series 35 claims. If such
a challenge is successful, it will have a material and adverse effect on the
tax benefits expected from an investment in Series 35. Each investor is urged
to speak with his or her own tax advisor with respect to the federal and state
tax consequences from an investment in Series 35.
IRS may audit Series 35 which might increase the chance that investors' returns
are audited. The IRS may audit the income tax returns of Series 35 and the
Operating Partnerships. In fact, the IRS has audited twenty-seven limited
partnerships of a total of more than 3450 such limited partnerships with which
affiliates of Series 35 are associated. Twenty-six
22
<PAGE>
of these audits have been settled with the IRS without material changes and one
is still pending. If the income tax returns of Series 35 or an Operating
Partnership are audited, the returns of investors also may be audited.
Apartment complexes must adhere to complex rules in order to be eligible for
tax credits. In order for an investor to receive tax credits, the apartment
complexes must satisfy the complex rules for the federal housing tax credit
and, in some cases, the historic tax credit. The rules that determine whether
an apartment complex is eligible for tax credits and the rules regarding the
use of tax credits are complicated. The tax credits are generated during
ten-to-twelve years of an investment in each apartment complex. Therefore,
investors must reasonably expect to owe federal income taxes for each of the
next twelve years against which tax credits can be used. If an apartment
complex is not built on time, or fails to meet applicable income and rent
restrictions, it will not generate any tax credits. Typically, Series 35
invests in an apartment complex before construction has been completed and
before the apartment complex has been rented.
Even though tax credits are generated during a ten-to-twelve year period, the
apartment complex must satisfy the applicable income and rent restrictions
during an initial fifteen-year compliance period. If an apartment complex fails
to satisfy the applicable income and rent restrictions at any time during the
initial fifteen-year tax credit compliance period, there will be a recapture of
a portion of the tax credits and a loss of tax credits for the year the failure
took place and for future years. In addition, if Series 35 sells its interest
in an apartment complex during the initial fifteen-year compliance period, a
portion of tax credits previously received could be recaptured. Prior to
investing in any apartment complex, Series 35 will require legal opinions that
state, based on specific assumptions, that investors will be entitled to the
tax benefits from the apartment complex owned by the Operating Partnership. See
"Investment Objectives and Acquisition Policies--Acquisition Policies" and
"Federal Income Tax Matters--
Federal Housing Tax Credit" and "--Historic Tax Credit."
Under the tax code, investors are limited in what they can deduct from passive
activities so it is possible that investors may not be able to use all of the
tax benefits. The tax credits and losses allocated to investors will be
"passive activity credits and losses" and may be deducted by investors only to
the extent of their income from other passive activities or tax on net passive
income, except in some limited circumstances. See "Federal Income Tax Matters--
Passive Loss and Tax Credit Limitations."
The restrictions imposed by the alternative minimum tax and business tax credit
issues may limit the tax liability that can be offset by tax credits. Tax
credits are subject to an IRS rule governing general business credits that
limits the amount of tax liability that may be offset. Also, neither federal
housing tax credits nor historic tax credits can be used to reduce any
liability for the alternative minimum tax.
23
<PAGE>
IRS may unfavorably change the allocation of credits and losses. Series 35 will
allocate ninety-nine per cent of all of its profits, credits and losses. If the
IRS audits Series 35, it may try to reallocate profits, credits and losses in a
manner less favorable to the investors. In the opinion of Series 35's
attorneys, if the matter were litigated, it is more likely than not that the
allocations will be respected. See "Federal Income Tax Matters--Allocation of
Profits, Credits, Losses, and Other Items in Accordance with Fund Agreements"
and "Calculation of Investor's Basis in His Certificates or Fund Interests" and
"Sharing Arrangements: Profits, Credits, Losses, Credits, Net Cash Flow and
Residuals."
Investors may realize taxable gain on sale or disposition of certificates. Upon
the sale or other taxable disposition of certificates, investors will realize
taxable income to the extent that their allocable share of the nonrecourse
mortgage indebtedness on the apartment complexes, together with the money they
receive from the sale of the certificates, is greater than the original cost of
their certificates. This realized taxable income is reduced to the extent that
investors have suspended passive losses or credits. It is possible that the
sale of certificates may not generate enough cash to pay the tax obligations
arising from the sale. See "Federal Income Tax Matters--Depreciation," "--Sale
of Fund Interests" and "--Certain Other Tax Considerations--Alternative Minimum
Tax."
Investors may have tax liability in excess of cash. Investors eventually may be
allocated profits for tax purposes which exceed any cash Series 35 distributes
to them. Under these circumstances, unless an investor has passive losses or
credits to reduce such tax liability, the investor will have to pay federal
income tax without a corresponding cash distribution from Series 35. Similarly,
in the event of a sale or foreclosure of an apartment complex or a sale of
certificates, an investor may be allocated taxable income, resulting in tax
liability, in excess of any cash distributed to him or her as a result of such
event. See "Federal Income Tax Matters--
Sale or Disposition of Certificates" and "--Sale or Other Disposition of an
apartment complex and Interests in Operating Partnerships."
24
<PAGE>
ANTICIPATED INVESTMENTS
Series 35 expects to invest in the ten Operating Partnerships described below.
Each Operating Partnership will use a significant part of the funds invested by
Series 35 to pay fees to the Operating General Partners. See the table entitled
"Terms of Investment in Operating Partnerships" in this Supplement.
While Boston Associates believes that Series 35 is reasonably likely to acquire
interests in the apartment complexes described below, it may not be able to do
so. Before any acquisition is made, Boston Associates will complete its due
diligence review as to the Operating Partnership and its apartment complex.
This process will include the review and analysis of information concerning,
among other matters, market competition and environmental factors. If any
significant adverse information is obtained by Boston Associates, either action
will be taken to mitigate the adverse factor(s), or the acquisition will not be
made. It is also possible that the acquisition terms may differ significantly
from those described below. Accordingly, investors should not rely on the
ability of Series 35 to invest in these apartment complexes or under the
described investment terms in deciding whether to invest in Series 35. If
Series 35 raises the entire $35 million, the anticipated acquisition of the
Operating Partnership Interests, described below, will represent approximately
75% of the total money which Series 35 currently expects to spend.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Because Series 35 is currently in the offering phase, it has no material assets
or any operating history. Series 35 expects to acquire interests in the
following ten Operating Partnerships, all of which are to be newly constructed:
<TABLE>
<CAPTION>
Partnership Operating General Partner(s)
- ----------- ----------------------------
<S> <C>
1. Ashton Cove L.P. William J. Rea
(the "Ashton Cove Partnership") Michael H. Godwin
R. Ryan Holmes
2. Tennessee Partners XII L.P. J.H. Thames, Jr.
(the "Autumn Park Partnership") Chip Triplett
3. Brazoswood L.P. Sally Gaskin
(the "Brazoswood Partnership")
4. Columbia Woods L.P. Noel Khalil
(the "Columbia Woods Partnership")
</TABLE>
25
<PAGE>
<TABLE>
<S> <C>
5. Mulvane Housing L.P. Midland Residential Ventures
(the "Country Walk Partnership")
6. Cypress Point L.P. Campbell, Hogue & Associates
(the "Cypress Point Partnership")
7. New Caney Housing Ltd. Houston Our House, Inc.
(the "Garden Gates Partnership") East Montgomery Housing LLC
8. Hillside Terrace L.P. Home Properties
(the "Hillside Terrace Partnership")
9. Pyramid VI L.P. Phillips Development Corporation
(the "North Fork Partnership")
10. Riverwalk Homes II LLC Gorman & Company, Inc.
(the "Riverwalk Partnership")
</TABLE>
None of the Operating General Partners or the management companies are
affiliated with Boston Associates. Construction has begun on Country Walk and
Riverwalk Apartments.
Permanent Mortgage Loan financing for the apartment complexes will be provided
from a variety of sources. Boston Associates believes that each of the
apartment complexes will have adequate property insurance. The tables included
in this Supplement describe in greater detail information concerning the
apartment complexes and the anticipated terms of investment in each Operating
Partnership.
26
<PAGE>
<TABLE>
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Basic Government
Location Number Monthly(1) Assistance
Partnership Name of Property of Units Rents Anticipated
- ------------------ -------------------- ---------- ------------ ---------------------
<S> <C> <C> <C> <C>
1. Ashton Cove Kingsland, Georgia 72 $270 1BR HOME Investment
Partnership $330- Partnerships
$340 2BR Program
$390 3BR
2. Autumn Park Dickson, Tennessee 104 $407- Tennessee Housing
Partnership $440 1BR Development
$482- Agency 1998 Tax
$535 2BR Exempt Multi-family
$610 3BR Bond Authority
Program
3. Brazoswood Clute, 72 $400- Federal Housing Tax
Partnership Texas $440 1BR Credits
$440-
$560 2BR
$575-
$650 3BR
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Permanent Mortgage Annual Annual
Mortgage Interest Reserve Management Management
Partnership Name Loan (2) Rate Amount (3) Agent Fee
- ------------------ ------------------------ ---------- ------------ ------------------- -----------------
<S> <C> <C> <C> <C> <C>
1. Ashton Cove Georgia 1% $14,400 Ambling 6% of net rental
Partnership Department of Management income
Community Affairs Company
$1,993,000
(4)
2. Autumn Park Dickson Health and 5% $20,800 Park Management 6% of net rental
Partnership Educational income
Facilities Board
$5,000,000
(5)
3. Brazoswood General Electric 8.5% $15,200 Orion Real Estate 6% of net rental
Partnership Capital Corporation income
$1,846,000
(6)
</TABLE>
- -----------------
1 Exclusive of utilities, unless indicated otherwise.
2 Except as and to the extent noted in the following footnote, the terms of
all permanent mortgage loans, described in the following footnotes, which
have a term to maturity which is shorter than the term employed for the
amortization schedule provide or are expected to provide that the entire
outstanding balance of principal of and interest on such permanent mortgage
loan shall be due and payable in full at the maturity of such mortgage
loan.
3 Amount deposited annually by the Operating Partnership to its Capital
Reserves Account for future capital improvements or capital replacements.
4 The terms of the Ashton Cove Partnership's anticipated permanent first
mortgage loan in the amount of $1,993,000 are expected to include a term of
20 years, an interest rate of 1% and payments of principal and interest on
the basis of a 30-year amortization schedule.
5 The terms of the Autumn Park Partnership's anticipated permanent first
mortgage loan in the amount of $5,000,000 are expected to include a term of
30 years, an interest rate of 5% and payments of principal and interest on
the basis of a 30-year amortization schedule.
6 The terms of the Brazoswood Partnership's anticipated permanent first
mortgage loan in the amount of $1,846,000 are expected to include a term of
15 years, an interest rate of 8.5% and payments of principal and interest
on the basis of a 30-year amortization schedule.
27
<PAGE>
<TABLE>
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Basic Government
Location Number Monthly Assistance
Partnership Name of Property of Units Rents Anticipated
- ------------------- ---------------------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C>
4. Columbia Woods Newnan, 120 $450- Federal Housing Tax
Partnership Georgia $475 1BR Credits
$535-
$575 2BR
$615-
$675 3BR
5. Country Walk Mulvane, 68 $380- Federal Housing Tax
Partnership Kansas $425 1BR Credits
$225-
$540 2BR
$575-
$625 3BR
6. Cypress Point Casa Grande, Arizona 104 $282- Federal Housing Tax
Partnership $463 1BR Credits
$444-
$635 2BR
7. Garden Gates New Caney, 32 $418- Federal Housing Tax
Partnership Texas $510 1BR Credits
$503-
$621 2BR
$578-
$706 3BR
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Permanent Mortgage Annual Annual
Mortgage Interest Reserve Management Management
Partnership Name Loan Rate Amount Agent Fee
- ------------------- -------------------- ---------- --------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
4. Columbia Woods Bank of America 8% $24,000 Affordable 6% of net rental
Partnership $3,905,000 Housing income
(7) Partnership
5. Country Walk General Motors 8.5% $13,600 Midland 6% of net rental
Partnership Acceptance Management income
Corporation
$1,800,000
(8)
6. Cypress Point Llama Capital 8% $20,800 Campbell-Hogue 6% of net rental
Partnership $2,700,000 Management income
(9)
7. Garden Gates Llama Capital 8.12% $6,400 LCJ Management 6% of net rental
Partnership $ 731,000 Inc. income
(10)
</TABLE>
- -----------------
7 The terms of the Columbia Woods Partnership's anticipated permanent first
mortgage loan in the amount of $3,905,000 are expected to include a term of
30 years, an interest rate of 8% and payments of principal and interest on
the basis of a 30-year amortization schedule.
8 The terms of the Country Walk Partnership's anticipated permanent first
mortgage loan in the amount of $1,800,000 are expected to include a term of
15 years, an interest rate of 8.5% and payments of principal and interest
on the basis of a 20-year amortization schedule.
9 The terms of the Cypress Point Partnership's anticipated permanent first
mortgage loan in the amount of $2,700,000 are expected to include a term of
30 years, an interest rate of 8% and payments of principal and interest on
the basis of a 30-year amortization schedule.
10 The terms of the Garden Gates Partnership's anticipated permanent first
mortgage loan in the amount of $731,000 are expected to include a term of
30 years, an interest rate of 8.12% and payments of principal and interest
on the basis of a 30-year amortization schedule.
28
<PAGE>
<TABLE>
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Basic Government
Location Number Monthly Assistance
Partnership Name of Property of Units Rents Anticipated
- --------------------- ----------------------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C>
8. Hillside Terrace Poughkeepsie, 64 $498- HOME Investment
Partnership New York $603 1BR Partnerships
$598- Program
$724 2BR
$690 3BR
9. North Fork West Plains, Missouri 32 $200 1BR MultiFamily Loan
Partnership $300 2BR Program
$400 3BR
10. Riverwalk Sheboygan, Wisconsin 20 $230- Federal Housing Tax
Partnership $425 1BR Credits
$471-
$495 2BR
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Permanent Mortgage Annual Annual
Mortgage Interest Reserve Management Management
Partnership Name Loan Rate Amount Agent Fee
- --------------------- ---------------------------- ---------- --------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
8. Hillside Terrace Home Properties 8.25% $12,800 Conifer Realty 6% of net rental
Partnership $1,600,000 (11)(a) income
Dutchess County
$214,000 1%
(11)(b)
9. North Fork Missouri Housing 1% $8,250 Phillips 6% of net rental
Partnership Development Management income
Commission
$511,000
(12)
10. Riverwalk Llama Capital 8% $3,000 Gorman & 6% of net rental
Partnership $460,000 Company, Inc. income
(13)
</TABLE>
- -----------------
11 (a) The terms of the Hillside Terrace Partnership's anticipated
permanent first mortgage loan in the amount of $1,600,000 are expected
to include a term of 30 years, an interest rate of 8.25% and payments
of principal and interest on the basis of a 30-year amortization
schedule.
(b) The terms of the Hillside Terrace Partnership's anticipated permanent
second mortgage loan in the amount of $214,000 are expected to include
a term of 30 years, an interest rate of 1% and payments of principal
and interest on the basis of a 30-year amortization schedule, provided,
however, that the terms of the permanent second mortgage loan will
provide for the deferral and accrual of payments of principal and
interest based on available cash flow, and for the payment of the
entire outstanding balance of principal and interest at the end of the
30-year term.
12 The terms of the North Fork Partnership's anticipated permanent first
mortgage loan in the amount of $511,000 are expected to include a term of 30
years, an interest rate of 1% and payments of principal and interest on the
basis of a 30-year amortization schedule.
13 The terms of the Riverwalk Partnership's anticipated permanent first
mortgage loan in the amount of $460,000 are expected to include a term of 30
years, an interest rate of 8% and payments of principal and interest on the
basis of a 30-year amortization schedule.
29
<PAGE>
<TABLE>
<CAPTION>
TERMS OF INVESTMENT IN OPERATING PARTNERSHIPS
Ownership
Interest(%)
Profits,
Losses, Operating
BCTC IV Credit/Net General
Partnership Capital Cash Flow/ Partner Operating Deficit
Name Contribution Backend Contribution Guarantee
- ----------------- -------------- ---------------- -------------- ---------------------
<S> <C> <C> <C> <C>
1. Ashton Cove $2,664,000 100/20/50 $100 $300,000 in the
Partnership aggregate for
3 years
2. Autumn $1,608,802 100/10/20 $100 $250,000 in the
Park aggregate for
Partnership 3 years
3. Brazoswood $3,074,829 100/20/20 $100 Unlimited in
Partnership amount for
3 years
4. Columbia $4,676,332 100/15/35 $100 Unlimited in
Woods amount for
Partnership 3 years
5. Country $1,958,266 100/20/20 $100 Unlimited in
Walk amount for
Partnership 3 years
6. Cypress $2,615,172 100/10/20 $100 Unlimited in time
Point and amount
Partnership
7. Garden $1,010,439 100/20/99 $100 $350,000 in the
Gates aggregate for
Partnership 4 years
8. Hillside $3,646,180 90/9/27 $100 Unlimited in time
Terrace and amount
Partnership
9. North Fork $1,215,817 100/20/20 $12,120 Unlimited in
Partnership amount for
5 years
10. Riverwalk $1,354,094 99.99/20/20 $100 Unlimited in time
Partnership and amount
TERMS OF INVESTMENT IN OPERATING PARTNERSHIPS
<CAPTION>
Fund's Annual
Approximate Development Partnership Asset
Operating Average Annual Fee/Other Management Management
Partnership Partnership's Anticipated Distributions Fee to Fee to Boston
Name Credit Base Federal Credit to Operating GP Operating GP Associates
- ----------------- --------------- ---------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1. Ashton Cove $4,437,000 $360,000 $573,000 $6,000 $6,000
Partnership
2. Autumn $6,230,000 $217,406 $200,416 $15,000 $5,000
Park
Partnership
3. Brazoswood $5,235,000 $415,517 $682,800 $7,600 $7,600
Partnership
4. Columbia $7,829,000 $631,937 $1,090,000 $12,000 $12,000
Woods
Partnership
5. Country $3,181,000 $264,631 $339,000 $6,000 $6,000
Walk
Partnership
6. Cypress $4,401,000 $353,402 $460,000 $10,400 $10,400
Point
Partnership
7. Garden $1,676,000 $136,546 $219,000 $3,000 $3,000
Gates
Partnership
8. Hillside $7,394,000 $499,477 $745,000 $5,000 $5,000
Terrace
Partnership
9. North Fork $1,997,000 $164,300 $259,000 $5,000 $2,000
Partnership
10. Riverwalk $2,206,000 $183,000 $221,000 $2,000 $2,000
Partnership
</TABLE>
30
<PAGE>
THE ASHTON COVE PARTNERSHIP
(Ashton Cove Apartments)
Ashton Cove Apartments is a 72-unit apartment complex for families which is to
be constructed on North Gross Road between Middle School Road and East King
Avenue in Kingsland, Georgia. Ashton Cove Apartments will consist of 18
one-bedroom units, 38 two-bedroom units and 16 three-bedroom units contained in
10 buildings. The complex will offer a function building, pool, playground and
central laundry facilities.
Individual units will contain a refrigerator, range with hood, dishwasher,
disposal, air conditioning and a patio or porch.
Construction of Ashton Cove Apartments is anticipated to begin in March, 1999.
The Operating General Partners anticipate that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
18 October, 1999 6 November, 1999
18 November, 1999 6 December, 1999
18 December, 1999 12 January, 2000
18 January, 2000 12 February, 2000
12 March, 2000
12 April, 2000
12 May, 2000
</TABLE>
THE AUTUMN PARK PARTNERSHIP
(Autumn Park Apartments)
Autumn Park Apartments is a 104-unit apartment complex for families which is to
be constructed on Cowan Road and Beasley Drive in Dickson, Tennessee. Autumn
Park Apartments will consist of 16 one-bedroom units, 56 two-bedroom units and
32 three-bedroom units contained in 13 buildings. The complex will offer a
pool, function room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning and a patio or porch.
Construction of Autumn Park Apartments is anticipated to begin in April, 1999.
The Operating General Partners anticipate that construction completion and
occupancy will occur as follows:
31
<PAGE>
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
13 May, 2000 10 April, 2000
13 June, 2000 10 May, 2000
13 July, 2000 10 June, 2000
13 August, 2000 10 July, 2000
13 September, 2000 10 August, 2000
13 October, 2000 10 September, 2000
13 November, 2000 10 October, 2000
13 December, 2000 10 November, 2000
10 December, 2000
14 January, 2001
</TABLE>
THE BRAZOSWOOD PARTNERSHIP
(Brazoswood Apartments)
Brazoswood Apartments is a 72-unit apartment complex for families which is to
be constructed on the east side of the 500 block of Brazoswood Drive in Clute,
Texas. Brazoswood Apartments will consist of 12 one-bedroom units, 36
two-bedroom units and 24 three-bedroom units contained in 19 buildings. The
complex will offer a function room, pool, playground and central laundry
facilities.
Individual units will contain a refrigerator, range with hood and fan,
dishwasher, disposal, air conditioning and ceiling fans.
Construction of Brazoswood Apartments is anticipated to begin in March, 1999.
The Operating General Partner anticipates that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
18 December, 1999 18 January, 2000
18 January, 2000 9 February, 2000
18 February, 2000 9 March, 2000
18 March, 2000 9 April, 2000
9 May, 2000
9 June, 2000
9 July, 2000
</TABLE>
32
<PAGE>
THE COLUMBIA WOODS PARTNERSHIP
(Columbia Woods Townhomes)
Columbia Woods Townhomes is a 120-unit apartment complex for families which is
to be constructed on Greison Trail in Newnan, Georgia. Columbia Woods Townhomes
will consist of 18 one-bedroom units, 71 two-bedroom units and 31 three-bedroom
units contained in 29 buildings. The complex will offer a pool, playground and
central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning and a patio or porch.
Construction of Columbia Woods Townhomes is anticipated to begin in May, 1999.
The Operating General Partner anticipates that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
20 March, 2000 12 April, 2000
20 April, 2000 12 May, 2000
20 May, 2000 12 June, 2000
20 June, 2000 12 July, 2000
20 July, 2000 12 August, 2000
20 August, 2000 12 September, 2000
12 October, 2000
12 November, 2000
12 December, 2000
12 January, 2001
</TABLE>
THE COUNTRY WALK PARTNERSHIP
(Country Walk Apartments)
Country Walk Apartments is a 68-unit apartment complex for families which is to
be constructed on North Rock Road in Mulvane, Kansas. Country Walk Apartments
will consist of 24 one-bedroom units, 28 two-bedroom units and 16 three-bedroom
units contained in 8 buildings. The complex will offer a playground and central
laundry facilities.
Individual units will contain a refrigerator, range with exhaust fan,
dishwasher, disposal, air conditioning and a patio or porch.
Construction of Country Walk Apartments began in February, 1999. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
33
<PAGE>
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
17 August, 1999 17 September, 1999
17 September, 1999 17 October, 1999
17 October, 1999 17 November, 1999
17 November, 1999 17 December, 1999
</TABLE>
THE CYPRESS POINT PARTNERSHIP
(Cypress Point Apartments)
Cypress Point Apartments is a 104-unit apartment complex for senior citizens
which is to be constructed in Casa Grande, Arizona. Cypress Point Apartments
will consist of 52 one-bedroom units and 52 two-bedroom units contained in 12
buildings. The complex will offer a function room and central laundry
facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning and a patio or porch.
Construction of Cypress Point Apartments is anticipated to begin in April,
1999. The Operating General Partner anticipates that construction completion
and occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
25 March, 2000 15 April, 2000
25 April, 2000 15 May, 2000
25 May, 2000 15 June, 2000
29 June, 2000 15 July, 2000
15 August, 2000
24 September, 2000
</TABLE>
34
<PAGE>
THE GARDEN GATES PARTNERSHIP
(Garden Gates Apartments)
Garden Gates Apartments is a 32-unit apartment complex for families which is to
be constructed on Farm to Market Road 1485 in New Caney, Texas. Garden Gates
Apartments will consist of 10 one-bedroom units, 12 two-bedroom units and 10
three-bedroom units contained in 4 buildings. The complex will offer a function
room, pool, playground and central laundry facilities.
Individual units will contain a refrigerator, range with fan, microwave,
ceiling fans, dishwasher, disposal, air conditioning and a patio or porch.
Construction of Garden Gates Apartments is anticipated to begin in March, 1999.
The Operating General Partners anticipate that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
8 November, 1999 16 January, 2000
8 December, 1999 8 February, 2000
8 January, 2000 8 March, 2000
8 February, 2000
</TABLE>
THE HILLSIDE TERRACE PARTNERSHIP
(Hillside Terrace Apartments)
Hillside Terrace Apartments is a 64-unit apartment complex for families which
is to be constructed on Dutchess Turnpike between Pleasant View Road and
Rochdale Road in Poughkeepsie, New York. Hillside Terrace Apartments will
consist of 24 one-bedroom units, 35 two-bedroom units and 5 three-bedroom units
contained in 8 buildings. The complex will offer a function room and central
laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal and a
patio or porch.
Construction of Hillside Terrace Apartments is anticipated to begin in March,
1999. The Operating General Partner anticipates that construction completion
and occupancy will occur as follows:
35
<PAGE>
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
16 April, 2000 4 May, 2000
16 May, 2000 6 June, 2000
16 June, 2000 6 July, 2000
16 July, 2000 6 August, 2000
6 September, 2000
6 October, 2000
6 November, 2000
6 December, 2000
6 January, 2001
6 February, 2001
6 March, 2001
</TABLE>
THE NORTH FORK PARTNERSHIP
(North Fork Apartments)
North Fork Apartments is a 32-unit apartment complex for families which is to
be constructed in West Plains, Missouri. North Fork Apartments will consist of
4 one-bedroom units, 16 two-bedroom units and 12 three-bedroom units contained
in 8 buildings. The complex will offer a meeting room and central laundry
facilities.
Individual units will contain a refrigerator, range and a patio or porch.
Construction of North Fork Apartments is anticipated to begin in August, 1999.
The Operating General Partner anticipates that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
8 February, 2000 2 March, 2000
8 March, 2000 5 April, 2000
8 April, 2000 5 May, 2000
8 May, 2000 5 June, 2000
5 July, 2000
5 August, 2000
5 September, 2000
</TABLE>
36
<PAGE>
THE RIVERWALK PARTNERSHIP
(Riverwalk Apartments)
Riverwalk Apartments is a 20-unit apartment complex for families which is to be
constructed on North Water at North 11 Street in Sheboygan, Wisconsin.
Riverwalk Apartments will consist of 7 one-bedroom units and 13 two-bedroom
units contained in 1 building. The complex will offer central laundry
facilities.
Individual units will contain a refrigerator, range with fan, dishwasher,
disposal and a patio or porch.
Construction of Riverwalk Apartments began in February, 1999. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
20 September, 1999 3 October, 1999
4 November, 1999
4 December, 1999
4 January, 2000
5 February, 2000
</TABLE>
* * * * * * * *
37
<PAGE>
YEAR 2000
Boston Associates and its management have reviewed the potential computer
problems that may arise from the century date change known as the "Year 2000"
or "Y2K" problem. Boston Associates is currently taking the necessary
precautions to minimize any disruptions in normal operations that may cause a
materially adverse impact on Series 35's liquidity and financial condition. The
majority of Boston Associates's systems are "Y2K" compliant, including its
Accounting/Financial systems and database systems. For all remaining systems,
Boston Associates has contacted the vendors to provide the necessary upgrades,
replacements, and testing no later than year-end 1999. Boston Associates is
committed to ensuring that the "Y2K" issue will have no impact on our
investors. None of the costs incurred creating "Y2K" compliant systems will be
paid by Series 35, but rather by affiliates of Boston Associates.
38
<PAGE>
Filed Pursuant to Rule 424(B)3
Registration No. 333-38189
NY
FEBRUARY 12, 1999
SUPPLEMENT NO. 4 TO PROSPECTUS FOR
BOSTON CAPITAL TAX CREDIT FUND IV L.P.
DATED
AUGUST 1, 1998
SUPPLEMENT OFFERING BCTC IV SERIES 35 AND
IDENTIFYING ANTICIPATED INVESTMENTS
Series 35's Purpose--
o to invest in other limited partnerships that will each develop, own and
operate an apartment complex used as low and moderate income housing.
Terms of Offering--
o Series 35 is offering at least 250,000 and up to 3,500,000 Beneficial
Assignee Certificates that are the equivalent of limited partnership
interests in Series 35;
o the price of the certificates is $10 a piece with a minimum investment of
$5,000;
o this offering will end no later than December 31, 1999; and
o your money will be held in escrow until at least 250,000 certificates are
sold.
Series 35's Investors Will Receive--
o federal housing tax credits;
o tax losses that can offset passive income from any other investments; and
o profits, if any, from the sale of the apartment complexes.
These Securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission, nor has the Commission
or any state securities commission passed upon the accuracy or adequacy of the
Prospectus. Any representation to the contrary is a criminal offense.
Risk Factors as to Series 35, which begin on page 18 of the Supplement and page
24 of the Prospectus--
o tax credit rules can be complicated and the failure of apartment complexes to
comply with them can result in the loss of tax credits;
o the use of tax credits is limited so the investor may not be able to use them
all;
o tax credits may be the only material benefit from the investment;
o when the apartment complexes are eventually sold, there may not be enough
money to return the original investment;
o there are limits on the transferability of the certificates; and
o it is unlikely that there will be a market for the certificates.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
The Offering Per Certificate
- ------------ ---------------
<S> <C>
Public Price..................................................... $10.00
Selling Commissions and Fees........................................ .90
Proceeds to Series 35.............................................. 9.10
Apartment Complexes........................................... 7.20-7.30
Working Capital Reserves............................................ .40
Fees and Expenses of General Partner
and Affiliates............................................... 1.40-1.50
- ------------------------------------------------------------------------
</TABLE>
<PAGE>
SUMMARY
This Summary outlines the main points of the offering, but does not replace a
full and careful reading of the Prospectus, and is qualified by the Prospectus.
All prospective investors should read the Prospectus in its entirety.
Boston Capital Tax Credit Fund IV L.P. is organized as a limited partnership
because that structure allows the pass through of tax benefits. Each series of
certificates issued by Boston Capital Tax Credit Fund IV L.P. assigns
beneficial interests in the limited partner interests allocated to that series
to the purchaser of those certificates. Certificates of beneficial interests
are being issued instead of direct limited partner interests because dealing
with the transfer of the certificates is less cumbersome than dealing with the
transfer of direct limited partner interests. Each series of certificates
issued by Boston Capital Tax Credit Fund IV L.P. is separate from the other
series. This offering allows investors to acquire an interest in Series 35
only.
The structure of the investment in Series 35 involves two tiers. In the bottom
tier is the operating partnership which will be the owner of an apartment
complex. Any tax credits, profits, losses or net cash produced by the
operations of, or sale or refinancing transactions with regard to, an apartment
complex for the Operating Partnership will be shared between Series 35 and the
general partners of the Operating Partnership in percentages to be negotiated
between Series 35 and each Operating Partnership. Series 35 expects that it
will usually receive 99% of the tax credits, profits and losses available from
the Operating Partnership. Series 35 will allocate 99% of the profits, losses,
tax credits it receives and 99% of the net cash flow it has available from
operations to the owners of the Series 35 certificates and 1% of those items
will go to the general partner, Boston Capital Associates IV L.P. ("Boston
Associates"). Net proceeds from sale or refinancing transactions will be split
95% to Series 35 investors and 5% to Boston Associates; however, if Series 35
investors have not received a return from cash distributions and tax credits
equal to 11% per year on a cumulative basis from the quarter in which they
invested, Boston Associates's 5% share will be subordinated until Series 35
investors have received enough to meet the priority return.
2
<PAGE>
The following organization chart shows the basic structure of the investment
and the identity of the parties:
<TABLE>
<S> <C> <C> <C> <C> <C>
------------------
| INVESTORS |
------------------
/ \ 100% |
| |
tax | |
benefits | capital
| contributions
| |
| |
CERTIFICATES |
| |
capital capital | |
contributions contributions | \ /
- -------------- ---------- --------------------
| General |-----------------}| |{-----------------| Assignor |
| Partner | | SERIES | | Limited Partner |
| Boston |{-----------------| 35 |-----------------}| BCTC IV Assignor |
| Associates | tax | | tax --------------------
- -------------- benefits ---------- benefits
1% of tax credits, / \ | 99% of tax credits,
profits, losses, net | | capital contributions profits, losses, net
cash flow; 5% of | | cash flow; 95% of
net proceeds from | | net proceeds from
sale or refinancing | | sale or refinancing
transactions after | | transactions after
the priority return limited partner receiving the priority
| | return
tax | |
benefits (1) | \ /
- -------------------- --------------
| Operating |{----------| Operating |
| General Partners |----------}| Partnership |
- -------------------- --------------
capital contributions / \ |
| |
| |
| |
| |
| |
tax | |
benefits | |
| | cost of apartment complex
| \ /
---------------------
| Apartment Complex |
---------------------
</TABLE>
(1) percentages to be negotiated;
See details on page 30
of this Supplement.
3
<PAGE>
Risk Factors
Investors should be aware that an investment in Series 35 entails risk. The
"Risk Factors" section of the Prospectus contains a detailed discussion of the
material risks.
General risks associated with Series 35's investments include:
o The only benefit of this investment may be federal housing tax credits.
Investors may not get their capital back from the sale or refinancing of the
apartment complexes. In such instance, a material portion of the tax credits
will represent a return of the money originally invested in Series 35.
o Series 35 will depend upon the ability, integrity and expertise of Boston
Capital Associates IV L.P. ("Boston Associates"), as general partner, in
selecting the appropriate mix of properties.
o There is no trading market for certificates and there are no assurances that
any market will develop. Accordingly, investors may not be able to sell
their certificates promptly and should therefore consider certificates to be
a long-term investment.
o Investors will not have the benefit of an independent underwriter's
investigation of Series 35 because the lead underwriter is an affiliate of
Boston Associates.
Real Estate Risks:
o If a lender forecloses on an apartment complex that has not timely paid its
mortgage, a significant portion of tax credits previously received will be
taken back.
Tax Risks:
o The use of tax credits can be limited because of the complicated nature of
the tax credit rules in the Internal Revenue Code. Failure to comply with
any of these complicated rules by an apartment complex could cause the loss
of some of the tax credits.
o Tax credits are generated over a ten-year period, but Series 35 intends to
hold the apartment complexes for at least fifteen years. Although investors
are not required to hold their certificates for any particular period of
time, there is no assurance a market will develop and there are restrictions
on their transfer in the agreement of limited partnership.
4
<PAGE>
o There are significant continuing occupancy requirements that each apartment
complex must comply with for a fifteen-year period after the federal housing
tax credits are first taken. Failure to comply with these requirements could
result in the loss of some tax credits.
o Tax credits cannot be used to offset alternative minimum tax.
The Offering
Series 35 is offering up to 3,500,000 certificates, with a minimum required
investment by each investor of five hundred certificates at $10 per certificate
($5,000), on the terms and conditions set forth in the Prospectus. No Series 35
certificates will be issued unless at least 250,000 certificates are sold. If
only the minimum number of Series 35 certificates is sold, Series 35 will not
invest in many of the apartment complexes identified below. In addition, Series
35 will use approximately $.72 to $.73 of each dollar raised for investments in
apartment complexes. About one-half of the balance will be used to pay fees and
expenses to Boston Associates or its affiliates. See "Estimated Use of
Proceeds," and "Compensation and Fees" in the Prospectus. The offering of
Series 35 certificates will not exceed twelve months.
Series 35 will place the initial monies raised in an escrow account until the
$2,500,000 minimum for Series 35 is achieved. During this time, which may take
several months, interest will be earned at the business money market rate.
Series 35 will pay the interest to the investor even if the minimum is not
reached. After $2,500,000 is raised, Series 35 will hold closings approximately
twice every month until the conclusion of the offering.
Boston Capital Tax Credit Fund IV L.P. has already issued other series of
certificates in other offerings--Series 20 to Series 34. The purchase of Series
35 certificates will not entitle the investor to any interest in any other
series of Boston Capital Tax Credit Fund IV L.P. or any interest in Boston
Capital Tax Credit Fund Limited Partnership, Boston Capital Tax Credit Fund II
Limited Partnership or Boston Capital Tax Credit Fund III L.P.
5
<PAGE>
Suitability of an Investment in Certificates
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
Considerations for Individual Investors Considerations for Corporate Investors
- ---------------------------------------------------------------------------------------------
o individuals should only invest in tax credits o tax credits cannot be used against the
if they expect to have income taxes which corporate alternative minimum tax;
the tax credits can offset.
o tax credits cannot be used against the o the general limitations on business tax
alternative minimum tax; credits apply;
o tax credits cannot be used in IRA, Keogh o corporations generally have no limits on
or other retirement plans; the amount of tax credits and passive
losses they may use each year; and
o non-resident aliens cannot use tax credits; o closely-held, personal service and S
and corporations are specially limited in their
use of tax credits.
o married persons filing separately and living
together in any year may not use tax
credits against taxes owed in that year on
income derived from wages, salaries,
dividends or interest income.
- ---------------------------------------------------------------------------------------------
</TABLE>
See "Suitability of an Investment in Certificates" for a detailed explanation
of these limitations for each category of investor and a description of the
minimum net worth and income requirements that various states impose on
investors.
Estimated Use of Proceeds
We will use the proceeds in the following way:
o invest approximately $.72 to $.73 of each dollar we raise directly in
constructing or rehabilitating the apartment complexes;
o hold $.04 of each dollar in working capital reserves; and
o use the rest to pay fees and expenses to Boston Associates and others. See
"Estimated Use of Proceeds" for a detailed breakdown of Series 35's estimate
of the use of the capital it raises.
Fiduciary Responsibility of Boston Associates
Boston Associates will act as a fiduciary to Series 35. Series 35 will
partially indemnify Boston Associates, and therefore may be required to pay
some of Boston Associates's business costs in
6
<PAGE>
connection with its operation of Series 35 that Series 35 would not otherwise
be required to pay. As described under "Conflicts of Interest," Boston
Associates will be permitted to engage in some activities that potentially may
involve a conflict of interest, such as sponsoring other programs investing in
apartment complexes that generate tax credits without providing the benefits of
those activities to Series 35 investors.
Conflicts of Interest
The interests of investors may conflict with the interests of Boston
Associates. Its affiliates are committed to the management of many other
limited partnerships that have investments similar to those made by Series 35.
Boston Associates and its affiliates, including the Dealer-Manager, will
receive substantial fees, commissions, compensation and other income from
transactions with and by Series 35 regardless of the success of your
investment.
Compensation and Fees
Boston Associates will manage the business of Series 35, including the
investment and management of its assets, and will receive substantial
compensation and fees from Series 35 and/or the apartment complexes in
connection with this offering. The section of the Prospectus entitled
"Compensation and Fees" specifies the compensation payable to Boston Associates
and its affiliates. The most significant items of compensation are as follows:
7
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Who Receives the
Compensation Category Compensation What the Compensation Equals
- -------------------------------------------------------------------------------------
<S> <C> <C>
Reimbursement for Boston Associates o equal to all accountable expenses
Accountable Expenses or its affiliates paid to third parties
- -------------------------------------------------------------------------------------
Dealer-Manager Fee Boston Capital o equal to $0.20 per certificate sold
Services, Inc. o also may receive selling commissions
of up to $0.70 per certificate sold
o also may receive accountable and
non-accountable due diligence
expense reimbursements of up to
$0.15 per certificate sold
- -------------------------------------------------------------------------------------
Asset Acquisition Fee Boston Capital o equal to $0.85 per certificate sold
Partners, Inc.
- -------------------------------------------------------------------------------------
Annual Fund Management Boston Associates o annually equal to 0.5% of the
and Reporting Fees or its affiliates aggregate cost of the apartment
complexes, which is the sum of
equity invested by Series 35 in the
apartment complex plus the amount
of mortgage debt on the apartment
complex
o could be about $36,000 per year if
$2,500,000 is raised and $504,000 if
$35,000,000 is raised
- -------------------------------------------------------------------------------------
Share of Series 35 Boston Associates o 1% of tax credits;
Distributions o 1% of any cash distributions; and
o 5% of net proceeds of the sale of the
apartment complexes
- -------------------------------------------------------------------------------------
</TABLE>
Investment Objectives and Acquisition Policies
Series 35's principal business is to invest, as a limited partner, in other
limited partnerships (the "Operating Partnerships"), each of which will
develop, own and operate an apartment complex which is expected to qualify for
federal housing tax credits in order to:
(1) Generate tax credits, which can be used by investors to offset federal
income taxes from all sources. These tax credits include federal housing tax
credits, and a small number of historic tax credits in limited instances.
Occupancy requirements must be met for each apartment complex during the
initial fifteen-year period.
(2) Preserve and protect Series 35's capital. Series 35 requires the general
partners of the Operating Partnerships to:
8
<PAGE>
o guarantee completion of the apartment complex;
o fund any construction cost overruns;
o pay operating shortfalls for a limited period; and
o guarantee a specific amount of tax credits.
(3) Provide tax benefits in the form of passive losses. Individual investors
generally may deduct tax losses only to the extent of their income other than
wages, salaries, dividends and interest.
(4) Distribute net cash, if any, from the sale or refinancing of apartment
complexes. Investors can get money back from the sale or refinancing of an
apartment complex only if the net sales price is large enough to pay all costs
of the sale plus fees and expenses paid in this offering, which is estimated to
be 27% of your initial investment.
The attainment of Series 35's investment objectives will depend on many
factors, including the ability of Boston Associates to select suitable
investments on a timely basis, the timely completion and successful management
of such investments and future economic conditions in the United States.
Accordingly, there can be no assurance that Series 35 will meet its investment
objectives.
[This Section Intentionally Left Blank]
9
<PAGE>
[This Section Intentionally Left Blank]
Series 35 and Investor Protections
Series 35 will try to protect your investment in a number of ways. First, it
will invest its capital in each apartment complex in stages based on completion
of construction, rental of apartments to qualified tenants and demonstrated
experience in covering operating costs through rental income. In this way
Series 35 will try to put as little capital at risk as possible in the stages
of an apartment complex's life cycle that are most uncertain.
Second, Series 35's permission will be required to make major decisions, such
as the decision to sell an apartment complex. Other specific protections are as
follows:
Tax Credit Adjuster. If the amount of tax credits achieved by an apartment
complex is less than expected, Series 35 will decrease its capital contribution
to that apartment complex. Decreasing its capital contribution to one apartment
complex allows Series 35 to buy other tax credits from another apartment
complex.
Construction Guarantees. The Operating General Partner(s) will provide
financial assurances that construction of the apartment complex will be
completed in a timely manner and in accordance with all requirements necessary
to obtain the required certificates of occupancy. The cost of completing the
construction may be greater than the Operating General Partner's guarantee.
10
<PAGE>
Operating Deficit Guarantees. The Operating General Partner(s) will guarantee
to cover operating expenses arising from the operation of each apartment
complex. The amount of such operating deficit guarantees will, in some
instances, be limited to a specified term and/or dollar amount.
Repurchase of Operating Partnership Interest. The Operating General Partner(s)
must repay Series 35's capital contributions if the apartment complex fails to:
(1) receive the allocation of tax credits; (2) remain eligible for tax credits
during the period when capital contributions of Series 35 are due to the
Operating Partnership; or (3) obtain permanent mortgage loan financing.
Tax Credit Programs
Section 42 of the tax code offers tax credits to encourage investments in
qualified apartment complexes for use by persons of low and moderate income.
The U.S. Bureau of Census estimates that by the year 2000, there will be an
unmet national demand for twelve million units of affordable rental housing.
The tax code pre-funded and made available to eligible properties $3.3 billion
of federal housing tax credits, that is $1.25 annually per resident of each
state, each year since 1987. In 1993, Congress passed permanent legislation
that annually funds this ten-year tax credit allocation for additional tax
credits properties. The allocation of tax credits to a particular building is
for the full ten-year credit period and no reauthorization of the tax credit
program is required for any such existing allocation of tax credits.
Investors in a partnership that owns an apartment complex are eligible to
receive, for a ten-year period, a credit against federal tax liability. A tax
credit is a dollar for dollar reduction in tax liability, while a tax deduction
is a subtraction from adjusted gross income. The laws and rules authorizing
federal housing tax credits defined:
o the types of apartment complexes that qualify for the federal housing tax
credit;
o the kinds of tenants that must live in the apartment complex; and
o the rents the tenants may be charged and costs of construction or renovation
of the apartment complexes.
These rules are complicated and must be followed for investors to receive tax
credits, and are described in the section of the Prospectus entitled "Tax
Credit Programs."
11
<PAGE>
Because federal housing tax credits do not reduce a taxpayer's basis, a
taxpayer's gain upon the sale or other disposition of certificates is not
increased by the allowed tax credits.
The federal housing tax credit program requires that its rules be complied with
during the fifteen-year period after federal housing tax credits are first
taken. To the extent the federal housing tax credit rules are not adhered to
during the fifteen-year period, investors would have to repay a portion of the
federal housing tax credits previously generated by the non-complying dwelling
units in the applicable apartment complex. See "Tax Credit Programs--The
Federal Housing Tax Credit."
Investors may use the increased cash flow from the use of tax credits to make
other investments such as dollar cost averaging into mutual funds, saving for
retirement or future college expenses, funding life insurance expenses or
simply diversifying a tax advantaged or conventional investment portfolio. The
tax credit benefit itself also may be used to offset the tax liability arising
from retirement plan withdrawals or used to reduce quarterly estimated tax
payments.
Management
Series 35 maintains its principal office c/o Boston Capital Partners, Inc., One
Boston Place, Suite 2100, Boston, Massachusetts 02108-4406, telephone (617)
624-8900.
The General Partner of Boston Capital Tax Credit Fund IV L.P. is Boston Capital
Associates IV L.P., a Delaware limited partnership. The general partner of the
General Partner is Boston Capital Associates, a Massachusetts general
partnership whose two partners are Herbert F. Collins ("Collins") and John P.
Manning ("Manning"), the principals of Boston Capital Partners. The business
address of the General Partner is the same as that of Series 35.
The General Partner has complete authority in the overall management and
operation of Series 35 and will have responsibility for supervising Series 35's
selection, negotiation and investment in apartment complexes.
Prior Performance of the General Partner and Its Affiliates
Boston Capital Tax Credit Fund IV L.P. (the "Fund") has issued other series in
other offerings--Series 20 to Series 34. The Fund has issued a total of
49,295,559 certificates, raised $492,656,500 and admitted 27,705 investors
within Series 20 through 34, and may still sell up to $122,343,500 to the
public if all the certificates in Series 35 are sold. See "Prior Performance of
the General Partner and its Affiliates" in the Prospectus for information about
Series 20 through 32.
12
<PAGE>
The Fund received orders for a total of 3,530,319 Series 34 certificates
($35,283,000), and issued the last of these certificates on February 11, 1999.
The fees paid as of February 11, 1999 to Boston Capital and affiliates for
Series 34 totaled $4,163,394. No additional Series 34 certificates will be
offered.
Affiliates of Series 35 have raised approximately $1.6 billion in equity from
approximately 60,000 investors in more than 350 investment programs to acquire
interests in approximately 1,800 properties containing approximately 83,000
apartment units in 48 states and territories, representing approximately $4.55
billion in original development cost.
The section of the Prospectus entitled "Prior Performance of the General
Partner and Its Affiliates" contains a discussion of the prior real estate
investment programs in which Boston Associates affiliates have been involved
and it is not intended as an assurance of future performance. The Prior
Performance Tables attached to the Prospectus following the Financial
Statements contain tabular and statistical data regarding the prior investment
programs of Boston Associates's affiliates that have invested in low-income and
government-assisted housing.
Description of Certificates
Investors will invest in certificates, representing assignments of units of the
beneficial interest of Series 35 issued to BCTC IV Assignor Corp., a Delaware
corporation that is wholly owned by Collins and Manning (the "Assignor Limited
Partner"). The Assignor Limited Partner was formed for the purpose of serving
in that capacity for Series 35 and will not engage in any other business.
Investors will be entitled to all the rights and economic benefits of a limited
partner of Series 35, including the rights to a percentage of Series 35's
income, gain, credits, losses, deductions and distributions. No investor will
be personally liable for the debts, liabilities, contracts or other obligations
of Series 35. See "Summary of the Voting Rights Provisions of the Fund
Agreement-Liability of Partners and Investors to Third Parties." Investors will
be bound by the terms of the Fund's Agreement of Limited Partnership. The
Assignor Limited Partner agrees that on any matter calling for a vote of the
limited partners, it will vote the assigned limited partnership interests only
if and as directed by the investors.
We anticipate the certificates to be transferable, subject to some
restrictions. No more than 50% of the certificates will be permitted to be
transferred in any twelve-month period. This prevents any potential recapture
of tax credits upon the transfer of certificates. See "Description of
Certificates," "Risk Factors--Certain Other Risks--Transferability" and
"Federal Income Tax Matters--Recapture of Tax Credits." We will identify each
certificate as representing a particular series.
13
<PAGE>
Sharing Arrangements: Profits, Credits, Losses
Net Cash Flow and Residuals
Series 35 will allocate or distribute, as applicable, to the investors:
o 99% of its tax credits and tax losses from normal operations; and
o 99% of its cash generated after all expenses are paid, if any.
The remaining amount will go to Boston Associates provided that Boston
Associates's distribution of cash will be subordinated to the achievement of
the priority return to investors.
If there is a sale or refinancing of an apartment complex or the sale of Series
35's interest in an Operating Partnership, Series 35 will distribute 95% of the
proceeds to the investors, and 5% of the proceeds to Boston Associates;
provided that Boston Associates's distribution will be subordinated to the
achievement of the priority return to investors.
The priority return base for Series 35 is $1.10 per certificate (11%). The
priority return base is the level of return that investors must receive before
Boston Associates may receive a 5% share in the proceeds from the sale or
refinancing of apartment complexes. In establishing the priority return base,
Boston Associates does not represent that Series 35 is expected to provide this
level of return to investors. Boston Associates will receive fees and
compensation for services prior to investors receiving the priority return.
Federal Income Tax Matters
The section of the Prospectus entitled "Federal Income Tax Matters" contains a
more detailed discussion of the numerous federal income tax issues already
mentioned in this Summary. It is expected that each purchaser of a certificate
(1) will be treated as a partner for federal income tax purposes; and (2) will
be entitled to its allocable share of the tax credits, profits and losses from
Series 35. It is also expected that federal income tax will be imposed only at
the partner level with regard to an investment in Series 35 avoiding the double
taxation applicable to corporations. The "Federal Income Tax Matters" section
of the Prospectus also contains the legal opinions of Peabody & Brown as to all
material federal income tax matters with respect to an investment in Series 35.
See pages 108 and 109 of the Prospectus for a summarization of the precise
nature of the legal opinions being given with respect to these matters.
14
<PAGE>
Summary of the Voting Rights Provisions
of the Fund Agreement--
Liability of Partners and Investors to Third Parties
The Fund Agreement that will govern the relationship between the investors and
Boston Associates is a legal document, described in the section of the
Prospectus entitled "Summary of Provisions of the Fund Agreement." Other
important portions of the Fund Agreement are summarized under "Sharing
Arrangements: Profits, Credits, Losses, Net Cash Flow and Residuals" and
"Description of Certificates."
Investors should particularly be aware of the following terms of the Fund
Agreement:
o Voting rights. The Fund Agreement gives a majority of certificates the right
to:
(1) approve or disapprove the sale of all or substantially all of the assets
of Series 35 at any one time;
(2) amend the Fund Agreement, subject to important limitations;
(3) remove Boston Associates with or without cause and elect a replacement;
and
(4) dissolve Series 35.
The majority vote will still bind investors who do not vote with the majority
in interest of their fellow investors.
15
<PAGE>
o Changes in the rights of investors. The Fund Agreement may not be amended to:
(1) alter the rights and obligations of each investor under the Fund
Agreement; or
(2) modify the order of distributions or allocations of tax credits or cash
distributions without the approval of any affected investor.
o Changes in investment objectives and policies. Boston Associates cannot
change the investment objectives or policies of Series 35 unless the Fund
Agreement is amended by the approval of a majority in interest of the
investors. If such an amendment is made, the majority vote will still bind
investors who do not vote with the majority in interest of their fellow
investors.
o Mergers and rollups. The Fund Agreement specifically prohibits the merger or
combination of the Fund with any other entity.
Under the Revised Uniform Limited Partnership Act as enacted in the State of
Delaware, a limited partner in a limited partnership is liable only for the
amount of the capital contributions that the limited partner agrees to make.
If a limited partner does not participate in the management of a partnership
and does not receive a distribution from the limited partnership or have
knowledge at the time of the distribution that the distribution was in
violation of the Revised Uniform Limited Partnership Act of the State of
Delaware or the applicable partnership agreement, he or she will have no
additional financial liability to the limited partnership or to creditors of
the limited partnership. All rights accorded limited partners in a limited
partnership under the laws of the State of Delaware extend to investors under
the terms of the Fund Agreement.
16
<PAGE>
Investor Reports
Each investor will receive:
o an acknowledgment of receipt of the investment;
o a letter after the applicable Closing Date, confirming the assignment of
certificates;
o quarterly reports with unaudited financial information for each of the first
three fiscal quarters of each year;
o annual reports with audited financial statements; and
o Schedule K-1 and other necessary tax information.
Experts
<TABLE>
<CAPTION>
Counsel for Series 35 is: Accountants for Series 35 are:
<S> <C>
Peabody & Brown Reznick Fedder & Silverman
1255 23rd Street N.W. 4520 East-West Highway, Suite 300
Washington, D.C. 20037 Bethesda, Maryland 20814
</TABLE>
17
<PAGE>
RISK FACTORS
An investment in the Series 35 involves various risks. Here is a summary of the
most important of these risks. Investors should read the entire Prospectus to
fully understand all of these risks.
General Risks of Series 35's Investments
Investors will not be able to evaluate all of the apartment complexes in which
Series 35 will invest. Boston Associates has not yet identified all of the
apartment complexes in which Series 35 will invest. Investors must rely on the
ability of Boston Associates to find suitable investments for Series 35.
Investors should read the sections "Management" and "Prior Performance of the
General Partner and Its Affiliates" to learn about the prior real estate
experience of Boston Associates. All of Series 35's investments are required to
meet Series 35's investment objectives and acquisition policies, as described
in the section of the Prospectus entitled "Investment Objectives and
Acquisition Policies." Series 35 does not guarantee that it will be able to
find investments meeting its investment objectives or that any investment it
does make will generate income for investors or increase in value over time.
Sale of less than all certificates may result in fewer investments for Series
35. The more certificates that are sold, the more money Series 35 will have to
invest in apartment complexes. If fewer than all of the certificates in any
series are sold, Series 35 will invest in fewer apartment complexes. The fewer
the apartment complexes Series 35 invests in, the less diversified its
portfolio of apartment complexes will be. Also if Series 35 invests in several
apartment complexes in the same geographic area, there will be less diversity.
In such circumstances, apartment complexes which suffer poor operating results
can have a greater negative effect on Series 35's operations as a whole. See
"The Offering--Issuance of Certificates in Series."
Boston Associates may not be able to buy certificates to fund start up costs of
Series 35. Series 35 can borrow money in order to make investments in apartment
complexes before all of the money is raised from the offering. Any such loan is
to be repaid from the money that is raised from the offering. If insufficient
money is raised in the offering to repay such loans, Boston Associates has
agreed to buy enough certificates to provide Series 35 with money to repay such
loan(s). If Boston Associates does buy certificates, they will be purchased on
the same terms as any other investor, except Boston Associates will not pay
commissions and fees that otherwise would go to it or its affiliates. There is
a possibility that Boston Associates will not have enough money to meet these
obligations.
Investors may not receive cash if apartment complexes are sold. There is no
assurance that investors will receive any cash distributions from the sale or
refinancing of an apartment
18
<PAGE>
complex. The price at which an apartment complex is sold may not be large
enough to pay the mortgage and other expenses which must be paid at such time.
If that happens, investors will not get all of their investment back, and the
only benefit from an investment in Series 35 will be the tax credits received.
A decrease in an individual investor's taxable income will limit his benefit
received from tax credits. A change in an individual investor's personal tax
situation which reduces his taxable income will substantially reduce, defer or
eliminate the benefits to him of the tax credits. If an investor's adjusted
gross income increases to more than $200,000 in a particular year, any
allocated historic tax credits also will be substantially reduced, deferred or
eliminated.
Investors may not be able to liquidate their investment promptly at a
reasonable price. Although it is possible that the certificates in all series
may be listed on a national securities exchange, there is no guarantee that
such a listing can or will be accomplished or that a public trading market will
develop. Currently, no certificates have been listed on a national securities
exchange. The transfer of certificates will be limited in some cases. Investors
should consider their investment in Series 35 to be a long term investment. See
"Description of Certificates--Transfers" and "Federal Income Tax
Matters--Classification as a Partnership" and "-- Fund Income."
Boston Associates can impose restrictions on the transfers of certificates in
order to prevent a termination of Series 35 for tax purposes or prevent a
classification of Series 35 as something other than a partnership for federal
income tax purposes. In addition, Boston Associates will not allow sales of
certificates to an investor who does not meet the then applicable suitability
standards. See "Federal Income Tax Matters--Sale or Disposition of
Certificates."
Investors are liable for a period of time for the amount of their returned
contributions to any Series 35 creditors. In general, limited partners are not
liable for partnership obligations unless they take an active part in the
day-to-day management or control of the partnership's business. The Delaware
Revised Uniform Limited Partnership Act presently allows the investors to
exercise all of their rights in the Fund Agreement without jeopardizing their
limited liability. All rights given limited partners under the laws of the
State of Delaware extend to investors under the terms of the Fund Agreement.
Unless an investor is deemed to be taking part in the control of Series 35's
business, his liability is limited to the amount invested in Series 35.
Under Delaware law, if an investor has received the return of any part of his
investment without violation of Delaware law or the Fund Agreement, the
investor is liable for a period of one year for the amount of his returned
contribution which would be necessary to pay Series 35's creditors for
liabilities incurred during the period the contribution was held by Series 35.
However, if any of the money returned to an investor was returned in violation
of applicable
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<PAGE>
Delaware law or the Fund Agreement, then the investor is liable for a period of
three years for the amount of the contribution wrongfully returned.
Investors may have limited rights of action against Boston Associates. Under
Delaware law, the Boston Associates is required to exercise good faith and
integrity in handling the affairs of Series 35. The Fund Agreement provides
that Boston Associates will not be liable to investors for its actions or
omissions made in good faith and in a manner it reasonably believes was allowed
under the Fund Agreement and in the best interest of Series 35. However, if
Boston Associates's conduct constitutes fraud, bad faith, negligence or
misconduct, it would be liable to investors. Therefore, investors may have more
limited rights of action against Boston Associates than would otherwise be
available, absent these provisions in the Fund Agreement.
Series 35 may be liable for the liabilities of other series. Certificates are
issued in series, and the Fund Agreement provides that each series will be
treated for economic purposes as a separate partnership, sharing in a separate
and distinct pool of apartment complexes. The rights of investors in all series
will be identical in all other respects, except with respect to voting rights
and accounting matters applicable only to a particular series. See "The
Offering--Issuance of Certificates and Series."
It is possible, however, that each series may not stand on its own with respect
to outside creditors. In such an event, such creditors would be able to reach
all of the assets of Series 35, despite the fact that the matter affecting the
creditor related only to a particular series. Therefore, in the event that a
creditor makes a claim against the assets of Series 35 and it can be determined
that such claim relates to one series only, Boston Associates will assume
liability for any such claim to the extent that the series does not have
sufficient funds to satisfy the claim. In the event there is a proper claim
against more than one series, if the proportional liability of a particular
series can be determined, such series will be liable only for such proportional
amount of the claim. Series 35 intends to require that the various series
reimburse each other to the extent that expenses relating to a particular
series are borne by another series, but a series may be financially unable to
do so. There is a risk, therefore, that investors in a particular series will
be affected by the performance of another series. This could result in lower
returns on their investments than would otherwise be the case.
An independent underwriter will not make an independent investigation of Series
35. The Dealer-Manager will receive commissions and other compensation as an
agent of Series 35. The Dealer-Manager has not retained counsel separate from
Series 35's counsel, but has conducted such due diligence investigation as it
deems necessary under the circumstances. However, because the Dealer-Manager is
an affiliate of Boston Associates, investors will not have the benefit of an
independent investigation of Series 35 as is customarily made by independent
underwriters.
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The prohibition on mergers in the Fund Agreement may limit the operational
flexibility of Series 35. Although at this time, Boston Associates has no
intent to effect a merger of Series 35 with any other entity, the presence of
this prohibition in the Fund Agreement may make it more difficult to effect any
sort of change in control that would involve a merger in the future.
Real Estate Risks
If the expenses of apartment complexes are greater than their income, Series 35
may have to pay any operating shortfalls. If the expenses of an apartment
complex are greater than its income, Series 35 may have to provide money to pay
the shortfall. Otherwise, the apartment complex may need to be sold on
disadvantageous terms in order to raise money. Also if the apartment complex
does not generate enough income to pay its mortgage payments and property
taxes, the lender could foreclose and Series 35 could lose its investment,
including a partial recapture of tax credits.
Leveraged investments may increase the risk of loss because of the debt
payments. Each of the apartment complexes will have mortgage debt which
leverages Series 35's investment in the apartment complex. Leveraging allows
Series 35 to increase the amount of property that can be invested in with the
amount of money raised from the offering, and thus increase the amount of tax
credits available to Series 35. However, leveraging also can increase the risk
of loss. If there is a foreclosure of a mortgage loan on an apartment complex,
there can be a tax liability to investors including a partial recapture of tax
credits previously taken.
Operating General Partners have limited financial resources and if they fail to
meet their obligations, Series 35 may have limited remedies against them. The
Operating General Partner is responsible for completing the construction or
renovation and then renting and operating the apartment complex. If there are
cost overruns in the construction or renovation, or if rental income is not
enough to pay operating expenses, the Operating General Partner usually is
required to pay such shortfalls with its own money. In addition, the Operating
General Partners generally will be required to pay Series 35 some amounts if
the amount of tax credits generated by the apartment complex falls below an
agreed upon level. See "Investment Objectives and Acquisition
Policies--Acquisition Policies." There is no guarantee that such Operating
General Partners will have enough money to meet their obligations. If any of
the Operating General Partners fail to meet their obligations to make these
payments, the remedies of Series 35 may be limited to removing the Operating
General Partner as general partner of the Operating Partnership.
Government regulations regarding apartment complexes receiving government
assistance may limit the flexibility of those complexes to rent to tenants or
increase rents, thereby restricting the economic benefit to Series 35. Some of
the apartment complexes may receive
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government assistance. Generally, rents in an apartment complex receiving
government assistance cannot be increased without the prior approval of the
applicable government agencies. If needed rent increases are not approved in a
timely manner, an apartment complex may have operating deficits.
Some government regulations may restrict the type of tenants that can rent
apartments in the apartment complex. This would reduce the pool of potential
renters available to rent apartments in the apartment complex.
Other government assistance programs provide rent supplement payments to
tenants. These payments are fixed in amount, unless Congress and/or the
appropriate agency has approved funding for an increase in the payments. If
there are no increases in rent supplement payments, the operating expenses of
an apartment complex could increase without a corresponding increase in rental
income, ultimately leading to a foreclosure on the apartment complex and the
loss or recapture of tax credits.
Apartment complexes that receive government assistance generally are subject to
restrictions on when and how they can be sold or refinanced. Due to these
restrictions, it may not be possible to sell or refinance an apartment complex
when it is in the economic interest of Series 35 or investors to do so.
Tax Risks
IRS may challenge Series 35's tax positions which could result in the loss or
recapture of tax benefits. Series 35 will not request any tax rulings from the
IRS. Thus, there is no certainty as to the tax consequences of investing in
Series 35. Peabody & Brown, counsel to Series 35 and Boston Associates,
provides its legal opinion with regard to many of the material tax issues
involved in investing in Series 35. However, Peabody & Brown's opinion does not
cover some material tax issues because those issues depend upon the specific
investments made by Series 35 which have not yet been identified. Peabody &
Brown's opinion is not binding on the IRS or on any court. It is possible that
the IRS will challenge tax deductions and tax credits Series 35 claims. If such
a challenge is successful, it will have a material and adverse effect on the
tax benefits expected from an investment in Series 35. Each investor is urged
to speak with his or her own tax advisor with respect to the federal and state
tax consequences from an investment in Series 35.
IRS may audit Series 35 which might increase the chance that investors' returns
are audited. The IRS may audit the income tax returns of Series 35 and the
Operating Partnerships. In fact, the IRS has audited twenty-seven limited
partnerships of a total of more than 3450 such limited partnerships with which
affiliates of Series 35 are associated. Twenty-six
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of these audits have been settled with the IRS without material changes and one
is still pending. If the income tax returns of Series 35 or an Operating
Partnership are audited, the returns of investors also may be audited.
Apartment complexes must adhere to complex rules in order to be eligible for
tax credits. In order for an investor to receive tax credits, the apartment
complexes must satisfy the complex rules for the federal housing tax credit
and, in some cases, the historic tax credit. The rules that determine whether
an apartment complex is eligible for tax credits and the rules regarding the
use of tax credits are complicated. The tax credits are generated during
ten-to-twelve years of an investment in each apartment complex. Therefore,
investors must reasonably expect to owe federal income taxes for each of the
next twelve years against which tax credits can be used. If an apartment
complex is not built on time, or fails to meet applicable income and rent
restrictions, it will not generate any tax credits. Typically, Series 35
invests in an apartment complex before construction has been completed and
before the apartment complex has been rented.
Even though tax credits are generated during a ten-to-twelve year period, the
apartment complex must satisfy the applicable income and rent restrictions
during an initial fifteen-year compliance period. If an apartment complex fails
to satisfy the applicable income and rent restrictions at any time during the
initial fifteen-year tax credit compliance period, there will be a recapture of
a portion of the tax credits and a loss of tax credits for the year the failure
took place and for future years. In addition, if Series 35 sells its interest
in an apartment complex during the initial fifteen-year compliance period, a
portion of tax credits previously received could be recaptured. Prior to
investing in any apartment complex, Series 35 will require legal opinions that
state, based on specific assumptions, that investors will be entitled to the
tax benefits from the apartment complex owned by the Operating Partnership. See
"Investment Objectives and Acquisition Policies--Acquisition Policies" and
"Federal Income Tax Matters--
Federal Housing Tax Credit" and "--Historic Tax Credit."
Under the tax code, investors are limited in what they can deduct from passive
activities so it is possible that investors may not be able to use all of the
tax benefits. The tax credits and losses allocated to investors will be
"passive activity credits and losses" and may be deducted by investors only to
the extent of their income from other passive activities or tax on net passive
income, except in some limited circumstances. See "Federal Income Tax Matters--
Passive Loss and Tax Credit Limitations."
The restrictions imposed by the alternative minimum tax and business tax credit
issues may limit the tax liability that can be offset by tax credits. Tax
credits are subject to an IRS rule governing general business credits that
limits the amount of tax liability that may be offset. Also, neither federal
housing tax credits nor historic tax credits can be used to reduce any
liability for the alternative minimum tax.
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IRS may unfavorably change the allocation of credits and losses. Series 35 will
allocate ninety-nine per cent of all of its profits, credits and losses. If the
IRS audits Series 35, it may try to reallocate profits, credits and losses in a
manner less favorable to the investors. In the opinion of Series 35's
attorneys, if the matter were litigated, it is more likely than not that the
allocations will be respected. See "Federal Income Tax Matters--Allocation of
Profits, Credits, Losses, and Other Items in Accordance with Fund Agreements"
and "Calculation of Investor's Basis in His Certificates or Fund Interests" and
"Sharing Arrangements: Profits, Credits, Losses, Credits, Net Cash Flow and
Residuals."
Investors may realize taxable gain on sale or disposition of certificates. Upon
the sale or other taxable disposition of certificates, investors will realize
taxable income to the extent that their allocable share of the nonrecourse
mortgage indebtedness on the apartment complexes, together with the money they
receive from the sale of the certificates, is greater than the original cost of
their certificates. This realized taxable income is reduced to the extent that
investors have suspended passive losses or credits. It is possible that the
sale of certificates may not generate enough cash to pay the tax obligations
arising from the sale. See "Federal Income Tax Matters--Depreciation," "--Sale
of Fund Interests" and "--Certain Other Tax Considerations--Alternative Minimum
Tax."
Investors may have tax liability in excess of cash. Investors eventually may be
allocated profits for tax purposes which exceed any cash Series 35 distributes
to them. Under these circumstances, unless an investor has passive losses or
credits to reduce such tax liability, the investor will have to pay federal
income tax without a corresponding cash distribution from Series 35. Similarly,
in the event of a sale or foreclosure of an apartment complex or a sale of
certificates, an investor may be allocated taxable income, resulting in tax
liability, in excess of any cash distributed to him or her as a result of such
event. See "Federal Income Tax Matters--
Sale or Disposition of Certificates" and "--Sale or Other Disposition of an
apartment complex and Interests in Operating Partnerships."
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<PAGE>
ANTICIPATED INVESTMENTS
Series 35 expects to invest in the ten Operating Partnerships described below.
Each Operating Partnership will use a significant part of the funds invested by
Series 35 to pay fees to the Operating General Partners. See the table entitled
"Terms of Investment in Operating Partnerships" in this Supplement.
While Boston Associates believes that Series 35 is reasonably likely to acquire
interests in the apartment complexes described below, it may not be able to do
so. Before any acquisition is made, Boston Associates will complete its due
diligence review as to the Operating Partnership and its apartment complex.
This process will include the review and analysis of information concerning,
among other matters, market competition and environmental factors. If any
significant adverse information is obtained by Boston Associates, either action
will be taken to mitigate the adverse factor(s), or the acquisition will not be
made. It is also possible that the acquisition terms may differ significantly
from those described below. Accordingly, investors should not rely on the
ability of Series 35 to invest in these apartment complexes or under the
described investment terms in deciding whether to invest in Series 35. If
Series 35 raises the entire $35 million, the anticipated acquisition of the
Operating Partnership Interests, described below, will represent approximately
75% of the total money which Series 35 currently expects to spend.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Because Series 35 is currently in the offering phase, it has no material assets
or any operating history. Series 35 expects to acquire interests in the
following ten Operating Partnerships, all of which are to be newly constructed:
<TABLE>
<CAPTION>
Partnership Operating General Partner(s)
- ----------- ----------------------------
<S> <C>
1. Ashton Cove L.P. William J. Rea
(the "Ashton Cove Partnership") Michael H. Godwin
R. Ryan Holmes
2. Tennessee Partners XII L.P. J.H. Thames, Jr.
(the "Autumn Park Partnership") Chip Triplett
3. Brazoswood L.P. Sally Gaskin
(the "Brazoswood Partnership")
4. Columbia Woods L.P. Noel Khalil
(the "Columbia Woods Partnership")
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
5. Mulvane Housing L.P. Midland Residential Ventures
(the "Country Walk Partnership")
6. Cypress Point L.P. Campbell, Hogue & Associates
(the "Cypress Point Partnership")
7. New Caney Housing Ltd. Houston Our House, Inc.
(the "Garden Gates Partnership") East Montgomery Housing LLC
8. Hillside Terrace L.P. Home Properties
(the "Hillside Terrace Partnership")
9. Pyramid VI L.P. Phillips Development Corporation
(the "North Fork Partnership")
10. Riverwalk Homes II LLC Gorman & Company, Inc.
(the "Riverwalk Partnership")
</TABLE>
None of the Operating General Partners or the management companies are
affiliated with Boston Associates. Construction has begun on Country Walk and
Riverwalk Apartments.
Permanent Mortgage Loan financing for the apartment complexes will be provided
from a variety of sources. Boston Associates believes that each of the
apartment complexes will have adequate property insurance. The tables included
in this Supplement describe in greater detail information concerning the
apartment complexes and the anticipated terms of investment in each Operating
Partnership.
26
<PAGE>
<TABLE>
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Basic Government
Location Number Monthly(1) Assistance
Partnership Name of Property of Units Rents Anticipated
- ------------------ -------------------- ---------- ------------ ---------------------
<S> <C> <C> <C> <C>
1. Ashton Cove Kingsland, Georgia 72 $270 1BR HOME Investment
Partnership $330- Partnerships
$340 2BR Program
$390 3BR
2. Autumn Park Dickson, Tennessee 104 $407- Tennessee Housing
Partnership $440 1BR Development
$482- Agency 1998 Tax
$535 2BR Exempt Multi-family
$610 3BR Bond Authority
Program
3. Brazoswood Clute, 72 $400- Federal Housing Tax
Partnership Texas $440 1BR Credits
$440-
$560 2BR
$575-
$650 3BR
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Permanent Mortgage Annual Annual
Mortgage Interest Reserve Management Management
Partnership Name Loan (2) Rate Amount (3) Agent Fee
- ------------------ ------------------------ ---------- ------------ ------------------- -----------------
<S> <C> <C> <C> <C> <C>
1. Ashton Cove Georgia 1% $14,400 Ambling 6% of net rental
Partnership Department of Management income
Community Affairs Company
$1,993,000
(4)
2. Autumn Park Dickson Health and 5% $20,800 Park Management 6% of net rental
Partnership Educational income
Facilities Board
$5,000,000
(5)
3. Brazoswood General Electric 8.5% $15,200 Orion Real Estate 6% of net rental
Partnership Capital Corporation income
$1,846,000
(6)
</TABLE>
- -----------------
1 Exclusive of utilities, unless indicated otherwise.
2 Except as and to the extent noted in the following footnote, the terms of
all permanent mortgage loans, described in the following footnotes, which
have a term to maturity which is shorter than the term employed for the
amortization schedule provide or are expected to provide that the entire
outstanding balance of principal of and interest on such permanent mortgage
loan shall be due and payable in full at the maturity of such mortgage
loan.
3 Amount deposited annually by the Operating Partnership to its Capital
Reserves Account for future capital improvements or capital replacements.
4 The terms of the Ashton Cove Partnership's anticipated permanent first
mortgage loan in the amount of $1,993,000 are expected to include a term of
20 years, an interest rate of 1% and payments of principal and interest on
the basis of a 30-year amortization schedule.
5 The terms of the Autumn Park Partnership's anticipated permanent first
mortgage loan in the amount of $5,000,000 are expected to include a term of
30 years, an interest rate of 5% and payments of principal and interest on
the basis of a 30-year amortization schedule.
6 The terms of the Brazoswood Partnership's anticipated permanent first
mortgage loan in the amount of $1,846,000 are expected to include a term of
15 years, an interest rate of 8.5% and payments of principal and interest
on the basis of a 30-year amortization schedule.
27
<PAGE>
<TABLE>
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Basic Government
Location Number Monthly Assistance
Partnership Name of Property of Units Rents Anticipated
- ------------------- ---------------------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C>
4. Columbia Woods Newnan, 120 $450- Federal Housing Tax
Partnership Georgia $475 1BR Credits
$535-
$575 2BR
$615-
$675 3BR
5. Country Walk Mulvane, 68 $380- Federal Housing Tax
Partnership Kansas $425 1BR Credits
$225-
$540 2BR
$575-
$625 3BR
6. Cypress Point Casa Grande, Arizona 104 $282- Federal Housing Tax
Partnership $463 1BR Credits
$444-
$635 2BR
7. Garden Gates New Caney, 32 $418- Federal Housing Tax
Partnership Texas $510 1BR Credits
$503-
$621 2BR
$578-
$706 3BR
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Permanent Mortgage Annual Annual
Mortgage Interest Reserve Management Management
Partnership Name Loan Rate Amount Agent Fee
- ------------------- -------------------- ---------- --------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
4. Columbia Woods Bank of America 8% $24,000 Affordable 6% of net rental
Partnership $3,905,000 Housing income
(7) Partnership
5. Country Walk General Motors 8.5% $13,600 Midland 6% of net rental
Partnership Acceptance Management income
Corporation
$1,800,000
(8)
6. Cypress Point Llama Capital 8% $20,800 Campbell-Hogue 6% of net rental
Partnership $2,700,000 Management income
(9)
7. Garden Gates Llama Capital 8.12% $6,400 LCJ Management 6% of net rental
Partnership $ 731,000 Inc. income
(10)
</TABLE>
- -----------------
7 The terms of the Columbia Woods Partnership's anticipated permanent first
mortgage loan in the amount of $3,905,000 are expected to include a term of
30 years, an interest rate of 8% and payments of principal and interest on
the basis of a 30-year amortization schedule.
8 The terms of the Country Walk Partnership's anticipated permanent first
mortgage loan in the amount of $1,800,000 are expected to include a term of
15 years, an interest rate of 8.5% and payments of principal and interest
on the basis of a 20-year amortization schedule.
9 The terms of the Cypress Point Partnership's anticipated permanent first
mortgage loan in the amount of $2,700,000 are expected to include a term of
30 years, an interest rate of 8% and payments of principal and interest on
the basis of a 30-year amortization schedule.
10 The terms of the Garden Gates Partnership's anticipated permanent first
mortgage loan in the amount of $731,000 are expected to include a term of
30 years, an interest rate of 8.12% and payments of principal and interest
on the basis of a 30-year amortization schedule.
28
<PAGE>
<TABLE>
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Basic Government
Location Number Monthly Assistance
Partnership Name of Property of Units Rents Anticipated
- --------------------- ----------------------- ---------- ---------- ---------------------
<S> <C> <C> <C> <C>
8. Hillside Terrace Poughkeepsie, 64 $498- HOME Investment
Partnership New York $603 1BR Partnerships
$598- Program
$724 2BR
$690 3BR
9. North Fork West Plains, Missouri 32 $200 1BR MultiFamily Loan
Partnership $300 2BR Program
$400 3BR
10. Riverwalk Sheboygan, Wisconsin 20 $230- Federal Housing Tax
Partnership $425 1BR Credits
$471-
$495 2BR
<CAPTION>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
Permanent Mortgage Annual Annual
Mortgage Interest Reserve Management Management
Partnership Name Loan Rate Amount Agent Fee
- --------------------- ---------------------------- ---------- --------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
8. Hillside Terrace Home Properties 8.25% $12,800 Conifer Realty 6% of net rental
Partnership $1,600,000 (11)(a) income
Dutchess County
$214,000 1%
(11)(b)
9. North Fork Missouri Housing 1% $8,250 Phillips 6% of net rental
Partnership Development Management income
Commission
$511,000
(12)
10. Riverwalk Llama Capital 8% $3,000 Gorman & 6% of net rental
Partnership $460,000 Company, Inc. income
(13)
</TABLE>
- -----------------
11 (a) The terms of the Hillside Terrace Partnership's anticipated
permanent first mortgage loan in the amount of $1,600,000 are expected
to include a term of 30 years, an interest rate of 8.25% and payments
of principal and interest on the basis of a 30-year amortization
schedule.
(b) The terms of the Hillside Terrace Partnership's anticipated permanent
second mortgage loan in the amount of $214,000 are expected to include
a term of 30 years, an interest rate of 1% and payments of principal
and interest on the basis of a 30-year amortization schedule, provided,
however, that the terms of the permanent second mortgage loan will
provide for the deferral and accrual of payments of principal and
interest based on available cash flow, and for the payment of the
entire outstanding balance of principal and interest at the end of the
30-year term.
12 The terms of the North Fork Partnership's anticipated permanent first
mortgage loan in the amount of $511,000 are expected to include a term of 30
years, an interest rate of 1% and payments of principal and interest on the
basis of a 30-year amortization schedule.
13 The terms of the Riverwalk Partnership's anticipated permanent first
mortgage loan in the amount of $460,000 are expected to include a term of 30
years, an interest rate of 8% and payments of principal and interest on the
basis of a 30-year amortization schedule.
29
<PAGE>
<TABLE>
<CAPTION>
TERMS OF INVESTMENT IN OPERATING PARTNERSHIPS
Ownership
Interest(%)
Profits,
Losses, Operating
BCTC IV Credit/Net General
Partnership Capital Cash Flow/ Partner Operating Deficit
Name Contribution Backend Contribution Guarantee
- ----------------- -------------- ---------------- -------------- ---------------------
<S> <C> <C> <C> <C>
1. Ashton Cove $2,664,000 100/20/50 $100 $300,000 in the
Partnership aggregate for
3 years
2. Autumn $1,608,802 100/10/20 $100 $250,000 in the
Park aggregate for
Partnership 3 years
3. Brazoswood $3,074,829 100/20/20 $100 Unlimited in
Partnership amount for
3 years
4. Columbia $4,676,332 100/15/35 $100 Unlimited in
Woods amount for
Partnership 3 years
5. Country $1,958,266 100/20/20 $100 Unlimited in
Walk amount for
Partnership 3 years
6. Cypress $2,615,172 100/10/20 $100 Unlimited in time
Point and amount
Partnership
7. Garden $1,010,439 100/20/99 $100 $350,000 in the
Gates aggregate for
Partnership 4 years
8. Hillside $3,646,180 90/9/27 $100 Unlimited in time
Terrace and amount
Partnership
9. North Fork $1,215,817 100/20/20 $12,120 Unlimited in
Partnership amount for
5 years
10. Riverwalk $1,354,094 99.99/20/20 $100 Unlimited in time
Partnership and amount
TERMS OF INVESTMENT IN OPERATING PARTNERSHIPS
<CAPTION>
Fund's Annual
Approximate Development Partnership Asset
Operating Average Annual Fee/Other Management Management
Partnership Partnership's Anticipated Distributions Fee to Fee to Boston
Name Credit Base Federal Credit to Operating GP Operating GP Associates
- ----------------- --------------- ---------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
1. Ashton Cove $4,437,000 $360,000 $573,000 $6,000 $6,000
Partnership
2. Autumn $6,230,000 $217,406 $200,416 $15,000 $5,000
Park
Partnership
3. Brazoswood $5,235,000 $415,517 $682,800 $7,600 $7,600
Partnership
4. Columbia $7,829,000 $631,937 $1,090,000 $12,000 $12,000
Woods
Partnership
5. Country $3,181,000 $264,631 $339,000 $6,000 $6,000
Walk
Partnership
6. Cypress $4,401,000 $353,402 $460,000 $10,400 $10,400
Point
Partnership
7. Garden $1,676,000 $136,546 $219,000 $3,000 $3,000
Gates
Partnership
8. Hillside $7,394,000 $499,477 $745,000 $5,000 $5,000
Terrace
Partnership
9. North Fork $1,997,000 $164,300 $259,000 $5,000 $2,000
Partnership
10. Riverwalk $2,206,000 $183,000 $221,000 $2,000 $2,000
Partnership
</TABLE>
30
<PAGE>
THE ASHTON COVE PARTNERSHIP
(Ashton Cove Apartments)
Ashton Cove Apartments is a 72-unit apartment complex for families which is to
be constructed on North Gross Road between Middle School Road and East King
Avenue in Kingsland, Georgia. Ashton Cove Apartments will consist of 18
one-bedroom units, 38 two-bedroom units and 16 three-bedroom units contained in
10 buildings. The complex will offer a function building, pool, playground and
central laundry facilities.
Individual units will contain a refrigerator, range with hood, dishwasher,
disposal, air conditioning and a patio or porch.
Construction of Ashton Cove Apartments is anticipated to begin in March, 1999.
The Operating General Partners anticipate that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
18 October, 1999 6 November, 1999
18 November, 1999 6 December, 1999
18 December, 1999 12 January, 2000
18 January, 2000 12 February, 2000
12 March, 2000
12 April, 2000
12 May, 2000
</TABLE>
THE AUTUMN PARK PARTNERSHIP
(Autumn Park Apartments)
Autumn Park Apartments is a 104-unit apartment complex for families which is to
be constructed on Cowan Road and Beasley Drive in Dickson, Tennessee. Autumn
Park Apartments will consist of 16 one-bedroom units, 56 two-bedroom units and
32 three-bedroom units contained in 13 buildings. The complex will offer a
pool, function room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning and a patio or porch.
Construction of Autumn Park Apartments is anticipated to begin in April, 1999.
The Operating General Partners anticipate that construction completion and
occupancy will occur as follows:
31
<PAGE>
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
13 May, 2000 10 April, 2000
13 June, 2000 10 May, 2000
13 July, 2000 10 June, 2000
13 August, 2000 10 July, 2000
13 September, 2000 10 August, 2000
13 October, 2000 10 September, 2000
13 November, 2000 10 October, 2000
13 December, 2000 10 November, 2000
10 December, 2000
14 January, 2001
</TABLE>
THE BRAZOSWOOD PARTNERSHIP
(Brazoswood Apartments)
Brazoswood Apartments is a 72-unit apartment complex for families which is to
be constructed on the east side of the 500 block of Brazoswood Drive in Clute,
Texas. Brazoswood Apartments will consist of 12 one-bedroom units, 36
two-bedroom units and 24 three-bedroom units contained in 19 buildings. The
complex will offer a function room, pool, playground and central laundry
facilities.
Individual units will contain a refrigerator, range with hood and fan,
dishwasher, disposal, air conditioning and ceiling fans.
Construction of Brazoswood Apartments is anticipated to begin in March, 1999.
The Operating General Partner anticipates that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
18 December, 1999 18 January, 2000
18 January, 2000 9 February, 2000
18 February, 2000 9 March, 2000
18 March, 2000 9 April, 2000
9 May, 2000
9 June, 2000
9 July, 2000
</TABLE>
32
<PAGE>
THE COLUMBIA WOODS PARTNERSHIP
(Columbia Woods Townhomes)
Columbia Woods Townhomes is a 120-unit apartment complex for families which is
to be constructed on Greison Trail in Newnan, Georgia. Columbia Woods Townhomes
will consist of 18 one-bedroom units, 71 two-bedroom units and 31 three-bedroom
units contained in 29 buildings. The complex will offer a pool, playground and
central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning and a patio or porch.
Construction of Columbia Woods Townhomes is anticipated to begin in May, 1999.
The Operating General Partner anticipates that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
20 March, 2000 12 April, 2000
20 April, 2000 12 May, 2000
20 May, 2000 12 June, 2000
20 June, 2000 12 July, 2000
20 July, 2000 12 August, 2000
20 August, 2000 12 September, 2000
12 October, 2000
12 November, 2000
12 December, 2000
12 January, 2001
</TABLE>
THE COUNTRY WALK PARTNERSHIP
(Country Walk Apartments)
Country Walk Apartments is a 68-unit apartment complex for families which is to
be constructed on North Rock Road in Mulvane, Kansas. Country Walk Apartments
will consist of 24 one-bedroom units, 28 two-bedroom units and 16 three-bedroom
units contained in 8 buildings. The complex will offer a playground and central
laundry facilities.
Individual units will contain a refrigerator, range with exhaust fan,
dishwasher, disposal, air conditioning and a patio or porch.
Construction of Country Walk Apartments began in February, 1999. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
33
<PAGE>
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
17 August, 1999 17 September, 1999
17 September, 1999 17 October, 1999
17 October, 1999 17 November, 1999
17 November, 1999 17 December, 1999
</TABLE>
THE CYPRESS POINT PARTNERSHIP
(Cypress Point Apartments)
Cypress Point Apartments is a 104-unit apartment complex for senior citizens
which is to be constructed in Casa Grande, Arizona. Cypress Point Apartments
will consist of 52 one-bedroom units and 52 two-bedroom units contained in 12
buildings. The complex will offer a function room and central laundry
facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning and a patio or porch.
Construction of Cypress Point Apartments is anticipated to begin in April,
1999. The Operating General Partner anticipates that construction completion
and occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
25 March, 2000 15 April, 2000
25 April, 2000 15 May, 2000
25 May, 2000 15 June, 2000
29 June, 2000 15 July, 2000
15 August, 2000
24 September, 2000
</TABLE>
34
<PAGE>
THE GARDEN GATES PARTNERSHIP
(Garden Gates Apartments)
Garden Gates Apartments is a 32-unit apartment complex for families which is to
be constructed on Farm to Market Road 1485 in New Caney, Texas. Garden Gates
Apartments will consist of 10 one-bedroom units, 12 two-bedroom units and 10
three-bedroom units contained in 4 buildings. The complex will offer a function
room, pool, playground and central laundry facilities.
Individual units will contain a refrigerator, range with fan, microwave,
ceiling fans, dishwasher, disposal, air conditioning and a patio or porch.
Construction of Garden Gates Apartments is anticipated to begin in March, 1999.
The Operating General Partners anticipate that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
8 November, 1999 16 January, 2000
8 December, 1999 8 February, 2000
8 January, 2000 8 March, 2000
8 February, 2000
</TABLE>
THE HILLSIDE TERRACE PARTNERSHIP
(Hillside Terrace Apartments)
Hillside Terrace Apartments is a 64-unit apartment complex for families which
is to be constructed on Dutchess Turnpike between Pleasant View Road and
Rochdale Road in Poughkeepsie, New York. Hillside Terrace Apartments will
consist of 24 one-bedroom units, 35 two-bedroom units and 5 three-bedroom units
contained in 8 buildings. The complex will offer a function room and central
laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal and a
patio or porch.
Construction of Hillside Terrace Apartments is anticipated to begin in March,
1999. The Operating General Partner anticipates that construction completion
and occupancy will occur as follows:
35
<PAGE>
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
16 April, 2000 4 May, 2000
16 May, 2000 6 June, 2000
16 June, 2000 6 July, 2000
16 July, 2000 6 August, 2000
6 September, 2000
6 October, 2000
6 November, 2000
6 December, 2000
6 January, 2001
6 February, 2001
6 March, 2001
</TABLE>
THE NORTH FORK PARTNERSHIP
(North Fork Apartments)
North Fork Apartments is a 32-unit apartment complex for families which is to
be constructed in West Plains, Missouri. North Fork Apartments will consist of
4 one-bedroom units, 16 two-bedroom units and 12 three-bedroom units contained
in 8 buildings. The complex will offer a meeting room and central laundry
facilities.
Individual units will contain a refrigerator, range and a patio or porch.
Construction of North Fork Apartments is anticipated to begin in August, 1999.
The Operating General Partner anticipates that construction completion and
occupancy will occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
8 February, 2000 2 March, 2000
8 March, 2000 5 April, 2000
8 April, 2000 5 May, 2000
8 May, 2000 5 June, 2000
5 July, 2000
5 August, 2000
5 September, 2000
</TABLE>
36
<PAGE>
THE RIVERWALK PARTNERSHIP
(Riverwalk Apartments)
Riverwalk Apartments is a 20-unit apartment complex for families which is to be
constructed on North Water at North 11 Street in Sheboygan, Wisconsin.
Riverwalk Apartments will consist of 7 one-bedroom units and 13 two-bedroom
units contained in 1 building. The complex will offer central laundry
facilities.
Individual units will contain a refrigerator, range with fan, dishwasher,
disposal and a patio or porch.
Construction of Riverwalk Apartments began in February, 1999. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
<TABLE>
<CAPTION>
Number of Units Completion Number of Units Rent-Up
--------------- ---------- --------------- -------
<S> <C> <C> <C>
20 September, 1999 3 October, 1999
4 November, 1999
4 December, 1999
4 January, 2000
5 February, 2000
</TABLE>
* * * * * * * *
37
<PAGE>
YEAR 2000
Boston Associates and its management have reviewed the potential computer
problems that may arise from the century date change known as the "Year 2000"
or "Y2K" problem. Boston Associates is currently taking the necessary
precautions to minimize any disruptions in normal operations that may cause a
materially adverse impact on Series 35's liquidity and financial condition. The
majority of Boston Associates's systems are "Y2K" compliant, including its
Accounting/Financial systems and database systems. For all remaining systems,
Boston Associates has contacted the vendors to provide the necessary upgrades,
replacements, and testing no later than year-end 1999. Boston Associates is
committed to ensuring that the "Y2K" issue will have no impact on our
investors. None of the costs incurred creating "Y2K" compliant systems will be
paid by Series 35, but rather by affiliates of Boston Associates.
38
