SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 21, 1997
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
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(Exact name of registrant as specified in its charter)
California 33-91136 33-0707612
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, California 92626
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 662-5565
N/A
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Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
WNC Housing Tax Credit Fund V, L.P., Series 4 ("SERIES 4") has acquired a
Local Limited Partnership Interest in Mesa Verde Apartments, Limited Partnership
("MESA VERDE" or the "Local Limited Partnership"). MESA VERDE owns the Mesa
Verde Apartments (the "Apartment Complex") in Roswell, New Mexico.
The following tables contain information concerning the Apartment Complex
and the Local Limited Partnership identified herein:
<TABLE>
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ESTIMATED ESTIMATED PERMANENT LOCAL LIMITED YEAR
PROJECT CONSTRUC- DEVELOPMENT MORTGAGE PARTNERSHIP'S CREDITS
LOCAL NAME AND TION COST NUMBER OF BASIC LOAN ANTICIPATED TO BE
LIMITED NUMBER OF LOCATION OF COMPLETION (INCLUDING APARTMENT MONTHLY PRINCIPAL AGGREGATE TAX FIRST
PARTNERSHIP BUILDINGS PROPERTY DATE LAND COST) UNITS RENTS AMOUNT CREDITS(1) AVAILABLE
- -----------------------------------------------------------------------------------------------------------------------------------
MESA Mesa Roswell December $6,840,387 11 1BR units $256 $2,280,000 $6,427,180 1998
VERDE Verde (Chaves 1997 45 1BR units $314 Bank of
Apartments County), 6 2BR units $305 America(2)
New Mexico 23 2BR units $374 $277,904
18 11 3BR units $351 HOME(3)
buildings 46 4BR units $431
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</TABLE>
(1) Low Income Housing Credits are available over a 10-year period. For the
year in which the credit first becomes available, SERIES 4 will receive only
that percentage of the annual credit which corresponds to the number of months
during which SERIES 4 was a limited partner of the Local Limited Partnership,
and during which the Apartment Complex was completed and in service.
(2) Bank of America will provide the first mortgage loan for a term of 15
years at an annual interest rate equal to the 15-year Treasury Bond yield plus
225 basis points. Principal and interest will be payable monthly based on a
30-year amortization schedule. Outstanding principal will be due on maturity.
(3) HOME will provide the second mortgage loan for a term of 30 years at an
annual interest rate of 7.13%. Principal and interest will be payable monthly
based on a 30-year amortization schedule.
Roswell (MESA VERDE): Roswell (population 48,700) is in southeast New
Mexico at the intersection of U.S.Highways 380 and 285, approximately 175 miles
southeast of Albuquerque. The major employers for Roswell residents are Roswell
Independent School District, Eastern New Mexico Medical Center and Levi Strauss.
<TABLE>
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<S> <C> <C> <C> <C> <C> <C> <C>
SHARING
RATIOS: SERIES 4's ESTIMATED
ALLOCATIONS CAPITAL ACQUISITION
LOCAL LOCAL SHARING (4) AND SALE CONTRI- FEES PAYABLE
LIMITED GENERAL PROPERTY DEVELOPMENT RATIOS: OR REFINANCING BUTION TO FUND
PARTNERSHIP PARTNER MANAGER (1) FEE (2) CASH FLOW(3) PROCEEDS (5) (6) MANAGER
- ----------------------------------------------------------------------------------------------------------------------------------
MESA Trianon-Mesa Trianon $735,611 WNC: 99/1 $3,940,587 $394,100
VERDE Verde, LLC Development Greater 50/50
Company of 15% or
$5,000
LGP: $5,000
plus 40% of
the balance
The balance:
50/50
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</TABLE>
(1) The maximum annual management fee payable to the property manager
generally is determined pursuant to lender regulations. The Local General
Partner is authorized to employ either itself or one of its affiliates, or a
third party, as property manager for leasing and management of the Apartment
Complex so long as the fee therefor does not exceed the amount authorized and
approved by the lender for the Apartment Complex.
(2) The Local Limited Partnership will pay its Local General Partner a
development fee in the amount set forth, for services incident to the
development and construction of the Apartment Complex, which services include:
negotiating the financing commitments for the Apartment Complex; securing
necessary approvals and permits for the development and construction of the
2
<PAGE>
Apartment Complex; and obtaining allocations of Low Income Housing Credits. This
payment will be made in installments after receipt of each installment of the
capital contribution made by SERIES 4.
(3) Reflects the amount of the net cash flow from operations, if any, to be
distributed to SERIES 4 ("WNC") and the Local General Partner ("LGP") of the
Local Limited Partnership for each year of operations. Generally, to the extent
that the specific dollar amounts which are to be paid to WNC are not paid
annually, they will accrue and be paid from sale or refinancing proceeds as an
obligation of the Local Limited Partnership.
(4) Subject to certain special allocations, reflects the respective
percentage interests in profits, losses and Low Income Housing Credits of SERIES
4, and the Local General Partner.
(5) Reflects the percentage interests of SERIES 4 and the Local General
Partner in any net cash proceeds from sale or refinancing of the Apartment
Complex, after payment of the mortgage loan and other Local Limited Partnership
obligations (see, e.g., note 3), and the following, in the order set forth: the
capital contribution of SERIES 4; and the capital contribution of the Local
General Partner.
(6) SERIES 4 will make its capital contributions to the Local Limited
Partnership in stages, with each contribution due when certain conditions
regarding construction or operations of the Apartment Complex have been
fulfilled.
3
<PAGE>
Item 7. Financial Statements and Exhibits
a. Financial Statements of Businesses Acquired
Inapplicable
b. Proforma Financial Information
Proforma Balance Sheet, September 30, 1996
Proforma Statement of Operations, for the Period July 1, 1996
(date operations commenced) to September 30, 1996
Notes to Proforma Financial Information
c. Exhibits
10.1 Amended and Restated Agreement of Limited Partnership of Mesa
Verde Apartments, Limited Partnership
4
<PAGE>
WNC HOUSING TAX CREDIT FUND V, L.P., Series 4
(A California Limited Partnership)
(A Development-Stage Enterprise)
PROFORMA BALANCE SHEET
September 30, 1996
ASSETS
<TABLE>
Historical Proforma Proforma
Balance Adjustments Balance
---------- ----------- ----------
<S> <C> <C> <C>
Cash $766,107 $6,526,965
(120,750)
(574,163) $6,598,159
Subscriptions receivable 450,000 120,750 570,750
Investment in limited partnerships 3,973,325 9,894,212
574,163 14,441,700
Other assets 702 0 702
------------ ----------- -----------
$5,190,134 $16,421,177 $21,611,311
============ =========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Notes payable to limited partnerships $2,482,421 $9,894,212 $12,376,633
Accrued fees and expenses due to
general partner and affiliates 83,373 0 83,373
------------ ----------- -----------
2,565,794 9,894,212 12,460,006
------------ ----------- -----------
Partners' capital
General partner (3,578) (11,285) (14,863)
Limited partners 2,627,918 6,538,250 9,166,168
------------ ----------- -----------
Total partners' equity 2,624,340 6,526,965 9,151,305
------------ ----------- -----------
$5,190,134 $16,421,177 $21,611,311
============ =========== ===========
</TABLE>
- Unaudited -
See Accompanying Notes to Proforma Financial Statements
FS-1
<PAGE>
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
(A Development-Stage Enterprise)
PROFORMA STATEMENT OF OPERATIONS
For the Period July 1, 1996 (date operations commenced)
to September 30, 1996
<TABLE>
Historical Proforma Proforma
Balance Adjustments Balance
---------- ----------- ----------
<S> <C> <C> <C>
Interest income $2,427 $2,427
------ ------
Operating expense
Amortization 418 418
Legal and accounting 44 44
------ ------
Total operating expense 462 462
------ ------
Income from operations 1,965 1,965
Equity in loss
of limited partnerships (2,040) (3,200) (5,240)
------- ------- -------
Net loss $ (75) $(3,200) $(3,275)
======= ======== ========
</TABLE>
- Unaudited -
See Accompanying Notes to Proforma Financial Statements
FS-2
<PAGE>
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
(A Development-Stage Enterprise)
NOTES TO PROFORMA FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The information contained in the following notes to the proforma financial
statements is condensed from that which appears in the financial statements.
Accordingly, these proforma financial statements should be reviewed in
conjunction with the financial statements and related notes thereto contained in
the WNC Housing Tax Credit Fund V, L.P., Series 4 financial statements dated
September 30, 1996. WNC Housing Tax Credit Fund V, L.P., Series 4 is referred to
in these notes as the "Partnership."
NOTE 2 - INTRODUCTION TO PROFORMA ADJUSTMENTS
As of September 30, 1996, the Partnership was admitted as majority limited
partner in two limited partnerships, Blessed Rock and Crescent City Apartments.
Subsequent to September 30, 1996, the Partnership has acquired a limited
partnership interest in five limited partnerships, Ashford Place, L.P., Lamar
Plaza, Mesa Verde, Ogallalla Apartments I, L.P. and Woodland Townhomes, L.P. and
is negotiating to acquire limited partnership interests in three other
partnerships. The investments commit the Partnership to capital contributions as
follows:
Ashford Place $2,317,180
Belen Vista 488,274
Hilltop 120,814
Lamar 797,842
Mesa Verde 3,940,587
Mountain Vista 481,602
Ogallalla 400,905
Woodland Townhomes 1,347,008
----------
$9,894,212
==========
In accordance with Article 11, Proforma Financial Information of Regulation
S-X of the Securities and Exchange Commission, the accompanying proforma balance
sheet was computed assuming that the limited partnerships discussed above were
acquired at the end of the period presented. The first adjustment to cash and
the adjustment to partners' equity of $6,526,965 reflects the net proceeds from
October 1, 1996 to February 21, 1997 from issuance of 7,783 units of limited
partners' capital ($7,783,000 less notes receivable of $127,500, and commissions
and offering costs of $1,128,535.) The second adjustment to cash and the
adjustment to subscriptions receivable of $120,750 reflects the subscriptions
FS-3
<PAGE>
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)
(A Development-Stage Enterprise)
NOTES TO PROFORMA FINANCIAL STATEMENTS (Continued)
receivable from the above subscriptions. The adjustment to investment in
limited partnerships and notes payable to limited partnerships of $9,894,212
reflects the Partnership's acquisition of the eight limited partnership
interests as if the Partnership's date of acquisition was September 30, 1996.
The second adjustment to investment in limited partnerships and the third
adjustment to cash of $574,163 reflects the acquisition fee for the acquisition
of the identified limited partnerships.
The eight apartment complexes were under construction or rehabilitation
during the period presented and had no operations which should be reported.
Crescent City Apartments had operations during the period presented prior to the
Partnership's acquisition of the limited partnership interest therein (July 1,
1996 to September 25, 1996), and a proforma loss of $3,200 has been recorded in
the Proforma Statement of Operations. The Partnership uses the equity method of
accounting to account for its investments in these local limited partnerships.
FS-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
Date: March 6, 1997 By: WNC & Associates, Inc.,
General Partner\
By: /s/ JOHN B. LESTER, JR.
John B. Lester, Jr.,
President
5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
10.1 Amended and Restated Agreement of Limited Partnership of Mesa Verde
Apartments, Limited Partnership
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
MESA VERDE APARTMENTS, LIMITED PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS ........................................... 2
1.1 "Accountant" ................................. 2
1.2 "Act" ........................................ 2
1.3 "Actual Tax Credit"........................... 2
1.4 "Adjusted Capital Account Deficit" ........... 2
1.5 "Affiliate" .................................. 2
1.6 "Agreement" or "Partnership Agreement"........ 3
1.7 "Assignee" ................................... 3
1.8 "Bankruptcy" or "Bankrupt".................... 3
1.9 "Capital Account" ............................ 3
1.10 "Capital Contribution" ....................... 3
1.11 "Cash Flow From Operations" .................. 4
1.12 "Code" ....................................... 4
1.13 "Completion of Construction".................. 4
1.14 "Compliance Period"........................... 4
1.15 "Consent of the Limited Partner".............. 4
1.16 "Construction Contract"....................... 4
1.17 "Construction Loan" .......................... 4
1.18 "Contractor" ................................. 5
1.19 "Debt Service Coverage"....................... 5
1.20 "Deferred Management Fee"..................... 5
1.21 "Developer"................................... 5
1.22 "Development Fee" ............................ 5
1.23 "Distributions" .............................. 6
1.24 "Fair Market Value" .......................... 6
1.25 "First Year Certificate" ..................... 6
1.26 "Force Majeure"............................... 6
1.27 "General Partner" ............................ 6
1.28 "Gross Asset Value" .......................... 6
1.29 "Hazardous Substance"......................... 7
1.30 "Improvements"................................ 8
1.31 "Incentive Management Fee".................... 8
1.32 "Income and Losses"........................... 8
1.33 "Insurance"................................... 9
1.34 "Insurance Company"........................... 9
1.35 "Interest" ................................... 9
1.36 "Involuntary Withdrawal"...................... 9
1.37 "LIHTC"....................................... 9
1.38 "Limited Partner"............................. 9
1.39 "Management Agent"............................ 10
1.40 "Management Agreement"........................ 10
1.41 "Minimum Set-Aside Test"...................... 10
1.42 "Mortgage" or "Mortgage Loan"................. 10
1.43 "Mortgage Note"............................... 10
1.44 "Nonrecourse Deductions"...................... 10
1.45 "Nonrecourse Liability"....................... 10
i
<PAGE>
1.46 "Operating Deficit" .......................... 10
1.47 "Operating Deficit Guarantee Period".......... 11
1.48 "Operating Loans"............................. 11
1.49 "Original Limited Partner" ................... 11
1.50 "Partner(s)" ................................. 11
1.51 "Partner Nonrecourse Debt" ................... 11
1.52 "Partner Nonrecourse Debt Minimum Gain" ...... 11
1.53 "Partner Nonrecourse Deductions" ............. 11
1.54 "Partnership" ................................ 11
1.55 "Partnership Minimum Gain" ................... 11
1.56 "Permanent Mortgage Commencement" ............ 11
1.57 "Person" ..................................... 12
1.58 "Project" .................................... 12
1.59 "Project Documents" .......................... 12
1.60 "Projected Annual Tax Credits" ............... 12
1.61 "Projected Tax Credits" ...................... 12
1.62 "Qualified Tenants" .......................... 12
1.63 "Reference Rate".............................. 12
1.64 "Rent Restriction Test" ...................... 12
1.65 "Reporting Fee"............................... 12
1.66 "Revised Projected Tax Credits"............... 12
1.67 "Sale or Refinancing"......................... 12
1.68 "Sale or Refinancing Proceeds" ............... 12
1.69 "State" ...................................... 12
1.70 "State Tax Credit Agency" .................... 12
1.71 "Substitute Limited Partner" ................. 12
1.72 "Tax Credit" ................................. 12
1.73 "Tax Credit Conditions"....................... 12
1.74 "TRA 1986" ................................... 12
1.75 "Treasury Regulations" ....................... 12
1.76 "Withdrawing" or "Withdrawal"..................... 14
II. NAME .................................................. 14
III. PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE .......... 14
3.1 Principal Executive Office ................... 14
3.2 Agent for Service of Process ................. 14
IV. PURPOSE ............................................... 14
V. TERM .................................................. 15
VI. GENERAL PARTNER'S CONTRIBUTIONS AND LOANS.............. 15
6.1 Capital Contribution of General Partner....... 15
6.2 Construction and Operating Obligations;
General Partner Loans....................... 15
6.3 Other General Partner Loans................... 16
VII. CAPITAL CONTRIBUTIONS OF LIMITED PARTNER............... 16
7.1 Original Limited Partner...................... 16
7.2 Capital Contribution of Limited Partner....... 17
ii
<PAGE>
7.3 Repurchase of Limited Partner's Interest...... 19
7.4 Reduction of Limited Partner's
Capital Contribution........................ 19
7.5 Return of Capital Contribution................ 21
7.6 Liability of Limited Partner.................. 21
VIII. WORKING CAPITAL AND RESERVES .......................... 22
8.1 Operation and Maintenance Reserve and
Replacement Reserve Account................... 22
8.2 Other Reserves................................ 22
IX. MANAGEMENT AND CONTROL ................................ 22
9.1 Power and Authority of General Partner ....... 22
9.2 Payments to the General Partners and Others .. 23
9.3 Specific Powers of the General Partner ....... 25
9.4 Authority Requirements........................ 26
9.5 Limitations on General Partner's
Power and Authority ........................ 26
9.6 Restrictions on Authority of General Partner.. 27
9.7 Duties of General Partner .................... 28
9.8 Partnership Expenses ......................... 30
9.9 General Partner Expenses ..................... 31
9.10 Other Business of Partners ................... 31
9.11 Covenants, Representations and Warranties..... 31
X. ALLOCATIONS OF INCOME, LOSSES AND CREDITS ............. 35
10.1 General ...................................... 35
10.2 Allocations From Sale or Refinancing.......... 35
10.3 Special Allocations........................... 36
10.4 Curative Allocations.......................... 39
10.5 Other Allocation Rules........................ 39
10.6 Tax Allocations: Code Section 704(c)......... 40
10.7 Allocation Among Limited Partners............. 41
10.8 Allocation Among General Partners ............ 41
10.9 Modification of Allocations .................. 41
XI. DISTRIBUTION .......................................... 41
11.1 Distribution of Cash Flow From Operations .... 41
11.2 Distribution of Sale or Refinancing Proceeds.. 42
XII. TRANSFERS OF LIMITED PARTNER'S INTEREST
IN THE PARTNERSHIP..................................... 43
12.1 Assignment of Limited Partner's Interest ..... 43
12.2 Effective Date of Transfer ................... 43
12.3 Invalid Assignment ........................... 43
12.4 Assignee's Rights to Allocations
and Distributions .......................... 44
12.5 Substitution of Assignee as Limited Partner... 44
12.6 Death, Bankruptcy, Incompetency, etc.
of a Limited Partner ....................... 44
iii
<PAGE>
XIII. WITHDRAWAL, REMOVAL AND REPLACEMENT OF GENERAL
PARTNER ............................................... 45
13.1 Withdrawal of General Partner ................ 45
13.2 Removal of General Partner ................... 45
13.3 Effects of a Withdrawal....................... 46
13.4 Successor General Partner..................... 48
13.5 Admission of Additional or Successor
General Partner ............................ 49
13.6 Transfer of Interest ......................... 49
13.7 No Goodwill Value............................. 49
XIV. BOOKS AND ACCOUNTS, REPORTS, TAX RETURNS,
FISCAL YEAR AND BANKING ............................... 49
14.1 Books and Accounts ........................... 49
14.2 Accounting Reports ........................... 50
14.3 Other Reports ................................ 51
14.4 Late Reports ................................. 52
14.5 Annual Site Visits............................ 53
14.6 Tax Returns................................... 53
14.7 Fiscal Year .................................. 53
14.8 Banking ...................................... 53
14.9 Certificates and Elections ................... 53
XV. DISSOLUTION, WINDING UP, TERMINATION AND
LIQUIDATION OF THE PARTNERSHIP ........................ 54
15.1 Dissolution of Partnership ................... 54
15.2 Return of Capital Contribution upon
Dissolution ................................ 54
15.3 Distributions of Assets ...................... 54
15.4 Deferral of Liquidation....................... 55
15.5 Liquidation of Statement ..................... 56
15.6 Certificates of Dissolution; Certificate of
Cancellation of Certificate of Limited
Partnership ................................ 56
XVI. AMENDMENTS ............................................ 56
XVII. MISCELLANEOUS ......................................... 57
17.1 Voting Rights ................................ 57
17.2 Meeting of Partnership ....................... 57
17.3 Notices ...................................... 58
17.4 Successors and Assigns ....................... 58
17.5 Recording of Certificate of Limited
Partnership. ................................. 58
17.6 Amendment of Certificate of Limited
Partnership .................................. 58
17.7 Counterparts ................................. 59
17.8 Captions ..................................... 59
17.9 Saving Clause................................. 59
iv
<PAGE>
17.10 Tax Matters Partners............................. 59
17.11 Expiration of Compliance Period.................. 60
17.12 Number and Gender ............................... 61
17.13 Entire Agreement ................................ 61
17.14 Governing Law ................................... 61
17.15 Attorney's Fees ................................. 61
17.16 Receipt of Correspondence ....................... 61
17.17 Security Interest and Right of Set-Off .......... 61
EXHIBIT A - Legal Description................................... A-1
EXHIBIT B - Form of Legal Opinion............................... B-1 - B-4
EXHIBIT C - Certification and Agreement......................... C-1 - C-4
EXHIBIT D - General Partner Certification....................... D-1 - D-5
EXHIBIT E - Form of Completion Certificate...................... E-1
EXHIBIT F - Accountant's Certificate............................ F-1
EXHIBIT G - Report of Operations................................ G-1 - G-10
DEVELOPMENT FEE AGREEMENT
GUARANTY AGREEMENT
v
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
MESA VERDE APARTMENTS, LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is being entered
into effective as of the date written below by and between TRIANON-MESA VERDE,
LLC, a New Mexico limited liability company (the "General Partner"), WNC HOUSING
TAX CREDIT FUND V, L.P., SERIES 4, a California limited partnership, as the
limited partner (the "Limited Partner) and TRIANON DEVELOPMENT CORPORATION, a
California corporation as the withdrawing limited partner (the "Original Limited
Partner").
RECITALS
WHEREAS, on November 30, 1995, a partnership agreement (the "Original
Partnership Agreement") for MESA VERDE APARTMENTS, LIMITED PARTNERSHIP (the
"Partnership") was entered into by and between the Trianon Development
Corporation and Foundation for Social Resources, Inc., as the General Partners,
and TRIANON DEVELOPMENT CORPORATION as the limited partner.
WHEREAS, a certificate of Limited Partnership was filed with the New Mexico
Secretary of State on December 1, 1995. An Amendment to Certificate of Limited
Partnership was filed with the New Mexico Secretary of State on December 5,
1995. An additional Certificate of Amendment to Certificate of Limited
Partnership was executed by Trianon Development Corporation on March 20, 1996
but never filed with the New Mexico Secretary of State.
WHEREAS, concurrent with the execution of this Agreement, an Amendment to
the Certificate of Limited Partnership will be filed with the New Mexico
Secretary of State whereby Trianon Development Corporation and Foundation for
Social Resources, Inc. will provide public notice of their withdrawal from the
Partnership and the General Partner will be shown as the sole successor General
Partner.
WHEREAS, the Partners desire to enter into this Agreement to provide for,
among other things, (i) the continuation of the Partnership, (ii) the admission
of the Limited Partner as a partner of the Partnership, (iii) the liquidation of
Trianon Development Corporation's general partner's Interest in the Partnership,
(iv) the liquidation of Foundation for Social Resources, Inc.'s general
partner's Interest in the Partnership, (v) the liquidation of the Original
Limited Partner's Interest in the Partnership, (vi) the payment of Capital
Contributions by the Limited Partner to the Partnership, (vii) the allocation of
Income, Losses, Tax Credits and distributions of Cash Flow From Operations and
other cash funds of the Partnership among the Partners (viii) the respective
rights, obligations and interests of the Partners to each other and to the
Partnership, and (ix) certain other matters.
1
<PAGE>
WHEREAS, the Limited Partner and the General Partner desire hereby to amend
and restate the Original Partnership Agreement.
NOW, THEREFORE, in consideration of their mutual agreements herein set
forth, the Partners hereby agree to amend and restate the Original Partnership
Agreement in its entirety to provide as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "Accountant" shall mean Richard Suarez, Jr., C.P.A., or such
other firm of independent certified public accountants as may be engaged for the
Partnership by the General Partner with the Consent of the Limited Partner.
Notwithstanding any provision of this Agreement to the contrary, the Limited
Partner shall have the discretion to dismiss the Accountant if the Accountant
fails to provide timely reports in accordance with this Agreement or fails to
accurately reflect the Partnership's financial position.
Section 1.2 "Act" shall mean the laws of the State governing limited
partnerships, as now in effect and as the same may be amended from time to time.
Section 1.3 "Actual Tax Credit" shall mean as of any point in time, the
total amount of the LIHTC actually allocated by the Partnership to the Limited
Partner, representing 99% of the LIHTC actually received by the Partnership, as
shown on the applicable tax returns of the Partnership.
Section 1.4 "Adjusted Capital Account Deficit" shall mean with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant fiscal period, after giving effect to the following
adjustments:
(a) Credit to such Capital Account any amounts which such Partner is
obligated to restore or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Treasury Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations and shall be interpreted consistently therewith.
Section 1.5 "Affiliate" shall mean (a) any Person directly or indirectly
controlling, controlled by, or under common control with another Person; (b) any
2
<PAGE>
Person owning or controlling 10% or more of the outstanding voting securities of
such other Person; (c) any officer, director, trustee, or partner of such other
Person; and (d) if such Person is an officer, director, trustee or general
partner, any other Person for which such Person acts in any such capacity.
Section 1.6 "Agreement" or "Partnership Agreement" shall mean this Amended
and Restated Agreement of Limited Partnership, as it may be amended from time to
time. Words such as "herein," "hereinafter," "hereof," "hereto," "hereby" and
"hereunder," when used with reference to this Agreement, refers to this
Agreement as a whole, unless the context otherwise requires.
Section 1.7 "Assignee" shall mean a Person who has acquired all or a
portion of the Limited Partner's beneficial interest in the Partnership and has
not become a Substitute Limited Partner.
Section 1.8 "Bankruptcy" or "Bankrupt" shall mean the making of an
assignment for the benefit of creditors, becoming a party to any liquidation or
dissolution action or proceeding, the commencement of any bankruptcy,
reorganization, insolvency or other proceeding for the relief of financially
distressed debtors, or the appointment of a receiver, liquidator, custodian or
trustee and, if any of the same occur involuntarily, the same not being
dismissed, stayed or discharged within 90 days; or the entry of an order for
relief under Title 11 of the United States Code. A Partner shall be deemed
Bankrupt if the Bankruptcy of such Partner shall have occurred and be
continuing.
Section 1.9 "Capital Account" shall mean, with respect to each Partner, the
account maintained for such Partner comprised of such Partner's Capital
Contribution as increased by allocations to such Partner of Partnership Income
(or items thereof) and any items in the nature of income or gain which are
specially allocated pursuant to Section 10.3 or 10.4 hereof, and decreased by
the amount of any Distributions made to such Partner, and allocations to such
Partner of Partnership Losses (or items thereof) and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 10.3 or
10.4 hereof.
In the event of any transfer of an interest in the Partnership in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest.
The foregoing definition and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulation Section 1.704-1(b), as amended or any successor thereto, and
shall be interpreted and applied in a manner consistent with such Treasury
Regulation.
Section 1.10 "Capital Contribution" shall mean the total amount of
money, or the Gross Asset Value of property contributed to the Partnership, if
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any, by all the Partners or any class of Partners or any one Partner as the case
may be (or by a predecessor-in-interest of such Partner or Partners), reduced by
any of such capital which shall have been returned pursuant to Section 7.3, 7.4
or 7.5 of this Agreement. A loan to the Partnership by a Partner shall not be
considered a Capital Contribution.
Section 1.11 "Cash Flow From Operations" shall mean gross receipts (not
including any subsidy for rental income from the General Partner or an Affiliate
thereof, prepayments of rent, security deposits and interest thereon (unless
non-refundable or forfeited), Capital Contributions, Sale or Refinancing
Proceeds or proceeds of Partnership borrowings) from Partnership operations,
determined on a cash basis, less debt payments, capital expenditures to the
extent not paid from borrowings or reserves, amounts set aside as reserves
pursuant to Article VIII and operating expenses associated with rental and
maintenance of the Project; but excluding deductions for cost recovery of
buildings, improvements and personal property, and amortization of any financing
fees.
Section 1.12 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute.
Section 1.13 "Completion of Construction" shall mean the completion of
construction of the Project substantially in accordance with the Project
Documents in order to obtain the required certificates of occupancy (or the
local equivalent) for all one hundred forty-two (142) apartment units as
evidenced by the issuance of the certificate of occupancy by the governmental
agency having jurisdiction over the Project or by the issuance of the inspecting
architect's certification, in a form substantially similar to that attached
hereto as Exhibit "E". The construction shall be completed in good workmanlike
manner, free and clear of all mechanic's, materialmen's or similar liens, and
all other expenses and costs, including but not limited to costs of financing,
must be paid with respect to the Project through completion.
Section 1.14 "Compliance Period" shall mean the period set forth in Section
42 (i)(1) of the Code, as amended, or any successor statute.
Section 1.15 "Consent of the Limited Partner" shall mean the prior written
consent or approval of the Limited Partner.
Section 1.16 "Construction Contract" shall mean the construction contract
in the amount of $4,891,549, entered into between the Partnership and the
Contractor pursuant to which the Project is being constructed.
Section 1.17 "Construction Loan" shall mean the loan obtained from Bank of
America, Federal Savings Bank in the principal amount of $3,627,130 at an
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interest rate equal to Bank of America National Trust and Savings Association's
Reference Rate plus 1 percentage point per year for a term of 16 months after
recordation of the Deed of Trust securing the loan, but no later than June 30,
1998, to provide funds for the construction and development of the Project.
Where the context admits, the term "Construction Loan" shall include any deed,
deed of trust, note, security agreement, assumption agreement or other
instrument executed in connection with the Construction Loan which is binding on
the Partnership.
Section 1.18 "Contractor" shall mean Banes General Contractors, Inc., which
is the general construction contractor for the Project.
Section 1.19 "Debt Service Coverage" shall mean the ratio between the net
operating income and the debt service required to be paid on the Mortgage(s); as
example, a 1.15 Debt Service Coverage means that for every $1.00 of debt service
required to be paid there must be $1.15 of net operating income available. For
purposes of this definition net operating income is the actual receipt on a cash
basis by the Partnership of revenues from operations of the Partnership,
including, without limitation, rental income (but not any subsidy thereof from
the General Partner or an Affiliate thereof), but excluding prepayments,
security deposits and interest thereon (unless non-refundable or forfeited),
less all cash operating obligations of the Partnership (other than those covered
by insurance) in accordance with the applicable budget adopted by the
Partnership in accordance with Section 14.3(j) of this Agreement (the "Budget"),
including, without limitation, the payment of Management Agent fees (which shall
be deemed to include that portion of such fees which is deferred and not
currently paid) and the funding of reserves in accordance with Article VIII of
this Agreement, and a reserve for all taxes or payments in lieu of taxes and any
other expenses which may reasonably be expected to be paid in a subsequent
period but which on an accrual basis are allocable to the period in question,
such as insurance premiums, audit, tax or accounting expenses. Without limiting
the generality of the foregoing, the Partnership's gross revenues for purposes
of this Section shall not include Capital Contributions, borrowings, any
lump-sum payment or any other extraordinary receipt of funds thereby, or
interest or any other income earned on investment of its funds, and unless
otherwise provided in a Budget, the cash operating obligations of the
Partnership shall be deemed to include real estate taxes for the period at the
fully assessed rate. A worksheet for the calculation of Debt Service Coverage is
found in the Report of Operations exhibit attached to this Agreement and
incorporated herein by this reference.
Section 1.20 "Deferred Management Fee" shall have the meaning set forth in
Section 9.2(c) hereof.
Section 1.21 "Developer" shall mean Trianon Development Corporation.
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Section 1.22 "Development Fee" shall mean the fee payable to the Developer
pursuant to Section 9.2(a) of this Agreement for services incident to the
development and construction of the Project in accordance with the Development
Fee Agreement between the Partnership and the Developer dated the even date
herewith and incorporated herein by this reference.
Section 1.23 "Distributions" shall mean the total amount of money, or the
Gross Asset Value of property (net of liabilities securing such distributed
property that such Partner is considered to assume or take subject to under
Section 752 of the Code), distributed to Partners with respect to their
Interests in the Partnership, but shall not include any payments to the General
Partner or its Affiliates for fees or other compensation as provided in this
Agreement or any guaranteed payment within the meaning of Section 707(c) of the
Code, as amended, or any successor thereto.
Section 1.24 "Fair Market Value" shall mean, with respect to any property,
real or personal, the price a ready, willing and able buyer would pay to a
ready, willing and able seller of the property, provided that such value is
reasonably agreed to between the parties in arm's-length negotiations and the
parties have sufficiently adverse interests.
Section 1.25 "First Year Certificate" shall mean the certificate to be
filed by the General Partner with the Secretary of the Treasury as required by
Code Section 42(1)(1), as amended, or any successor thereto.
Section 1.26 "Force Majeure" shall mean any act of God, strike, lockout, or
other industrial disturbance, act of the public enemy, war, blockage, public
riot, fire, flood, explosion, governmental action, governmental delay, restraint
or inaction and any other cause or event, whether of the kind enumerated
specifically herein, or otherwise, which is not reasonably within the control of
a Partner to this Agreement claiming such suspension.
Section 1.27 "General Partner" shall mean TRIANON-MESA VERDE, LLC, a New
Mexico limited liability company and shall mean such other Persons as are
admitted to the Partnership as additional or substitute General Partners
pursuant to this Agreement.
Section 1.28 "Gross Asset Value" shall mean with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the Fair Market Value of such asset, as determined
by the contributing Partner and the General Partner, provided that, if the
contributing Partner is a General Partner, the determination of the Fair Market
Value of a contributed asset shall be determined by appraisal;
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(b) The Gross Asset Values of all Partnership assets shall be adjusted to
equal their respective Fair Market Values, as determined by the General Partner,
as of the following times: (1) the acquisition of an additional Interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (2) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership property as
consideration for an Interest in the Partnership; and (3) the liquidation of the
Partnership within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to
clauses (1) and (2) above shall be made only with the Consent of the Limited
Partner and only if the General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(c) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be adjusted to equal the Fair Market Value of such asset on the
date of distribution as determined by the distributee and the General Partner,
provided that, if the distributee is a General Partner, the determination of the
Fair Market Value of the distributed asset shall be determined by appraisal; and
(d) The Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Section
10.3(g) hereof; provided however, that Gross Asset Values shall not be adjusted
pursuant to this Section 1.28(d) to the extent the General Partner determines
that an adjustment pursuant to Section 1.28(b) hereof is necessary or
appropriate in connection with a transaction that would otherwise result in an
adjustment pursuant to this Section 1.28(d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Section 1.28(a), Section 1.28(b), or Section 1.28(d) hereof, such
Gross Asset Value shall thereafter be adjusted by the depreciation taken into
account with respect to such asset for purposes of computing Income and Losses.
Section 1.29 "Hazardous Substance" shall mean and include any substance,
material or waste, including asbestos, petroleum and petroleum products
(including crude oil), that is or becomes designated, classified or regulated as
"toxic" or "hazardous" or a "pollutant" or that is or becomes similarly
designated, classified or regulated, under any federal, state or local law,
regulation or ordinance including, without limitation, Compensation and
Liability Act of 1980, as amended, the Hazardous Materials Transportation Act,
as amended, the Resource Conservation and Recovery Act, as amended, and the
regulations adopted and publications promulgated pursuant thereto.
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Section 1.30 "Improvements" shall mean the one hundred forty-two (142) unit
apartment complex which the Partnership intends to develop and construct in a
good and workmanlike manner substantially in accordance with the plans and
specifications and Project Documents.
Section 1.31 "Incentive Management Fee" shall have the meaning set forth in
Section 9.2(e) hereof.
Section 1.32 "Income and Losses" shall mean, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income tax
and not otherwise taken into account in computing Income or Losses pursuant to
this Section 1.32 shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Income and Losses pursuant to this Section 1.32 shall be subtracted
from such taxable income or loss;
(c) In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section 1.28(a) or (b) hereof, the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such asset for
purposes of computing Income and Losses;
(d) Gain or loss resulting from any disposition of Partnership assets with
respect to which gain or loss is recognized for federal income purposes shall be
computed by reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account depreciation for such fiscal year or other period,
computed as provided below; and
(f) Notwithstanding any other provision of this definition, any items which
are specially allocated pursuant to Sections 10.3 or 10.4 hereof shall not
otherwise be taken into account in computing Income or Losses.
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Depreciation for each fiscal year or other period shall be calculated as
follows: an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period for federal income tax purposes, except that if the Gross Asset Value of
an asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, depreciation shall be an amount which
bears the same ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis; provided, however,
if the federal income tax depreciation, amortization, or other cost recovery
deduction for such year is zero, depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method selected by the
General Partner.
Section 1.33 "Insurance" shall mean casualty coverage, including but not
limited to, fire or other casualty loss to any structure or building on the
Project in an amount equal to the full replacement value of the damaged property
without deduction for depreciation; shall include comprehensive general
liability coverage against liability claims for bodily injury or property damage
arising out of Project operations in an amount equal to $5,000,000; and shall
include an umbrella liability coverage in an amount equal to $1,000,000 to
protect against claims in excess of the limits of the other primary policies
required herein. All Insurance policies shall provide that they are not subject
to cancellation without 30 days prior written notice to the Limited Partner and
shall not contain any co-insurance provisions.
Section 1.34 "Insurance Company" shall mean any insurance company engaged
by the General Partner for the Partnership with the Consent of the Limited
Partner which Insurance Company shall have an A rating or better for financial
safety by A.M. Best or Standard & Poor's.
Section 1.35 "Interest" shall mean the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled hereunder and
the obligation of such Partner to comply with the terms of this Agreement.
Section 1.36 "Involuntary Withdrawal" means any Withdrawal caused by the
death, adjudication of insanity or incompetence, or Bankruptcy of a General
Partner, or the removal of a General Partner pursuant to Section 13.2 hereof.
Section 1.37 "LIHTC" shall mean the low-income housing tax credit
established by TRA 1986 and which is provided for in Section 42 of the Code, as
amended, or any successor thereto.
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Section 1.38 "Limited Partner" shall mean WNC HOUSING TAX CREDIT FUND V,
L.P., SERIES 4, a California limited partnership, and such other Persons as are
admitted to the Partnership as additional or Substitute Limited Partners
pursuant to this Agreement.
Section 1.39 "Management Agent" shall mean the property management company
which oversees the property management functions for the Project and which is
on-site at the Project. The initial Management Agent shall be Trianon
Development Corporation, a California corporation, formerly known as Mariners
Enterprise, Inc.
Section 1.40 "Management Agreement" shall mean the agreement between the
Partnership and the Management Agent for property management services.
Section 1.41 "Minimum Set-Aside Test" shall mean the 40-60 set-aside test
pursuant to Section 42(g), as amended and any successor thereto, of the Code
with respect to the percentage of apartment units in the Project to be occupied
by tenants whose incomes are equal to or less than the required percentage of
the area median gross income. Notwithstanding, the General Partner has agreed
that 40% of the apartment units will be rented to tenants with incomes of 50% or
less of the area median income, adjusted for family size.
Section 1.42 "Mortgage" or "Mortgage Loan" shall mean any source of
permanent financing of the Project by a qualified commercial lender (as defined
in Section 42 of the Code) evidencing the indebtedness of the Partnership and
encumbering the Project. Where the context admits, the term "Mortgage" or
"Mortgage Loan" shall include any mortgage, deed, deed of trust, note,
regulatory agreement, security agreement, assumption agreement or other
instrument executed in connection with the Mortgage Note which is binding on the
Partnership; and in case any Mortgage is replaced or supplemented by any
subsequent mortgage or mortgages, the Mortgage shall refer to any such
subsequent mortgage or mortgages.
Section 1.43 "Mortgage Note" shall mean the nonrecourse promissory note
whereby the Partnership promises to pay Bank of America, Federal Savings Bank,
or its successor or assignee, the principal sum of $2,280,000, plus interest on
the principal based on a 15 Treasury Bond yield plus 225 base points per annum
over a term of 15 years and amortized over 30 years.
Section 1.44 "Nonrecourse Deductions" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(1).
Section 1.45 "Nonrecourse Liability" shall have the meaning given it in
Treasury Regulations Section 1.704-2(b)(3).
Section 1.46 "Operating Deficit" shall mean for any fiscal year the total
amount by which the sum of the Partnership's operating expenses (defined solely
as the expenses incurred in connection with the operation and maintenance of the
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Project), debt service on the Mortgage Loan and other Partnership debt and
required additions to Partnership reserves in accordance with Article VIII of
this Agreement, exceeds the cash revenues received in respect of the operation
of the Project for such fiscal year (not including any subsidy for rental income
from the General Partner or an Affiliate thereof, prepayments of rent, security
deposits and interest thereon, Capital Contributions, Sale or Refinancing
Proceeds or proceeds of Partnership borrowings).
Section 1.47 "Operating Deficit Guarantee Period" shall mean the period
commencing with the date of this Agreement and ending 5 years following
Completion of Construction.
Section 1.48 "Operating Loans" shall mean loans made by the General Partner
to the Partnership pursuant to Article VI of this Agreement, which loans do not
bear interest and are repayable only as provided in Article XI of this
Agreement.
Section 1.49 "Original Limited Partner" shall mean TRIANON DEVELOPMENT
CORPORATION, a California corporation.
Section 1.50 "Partner(s)" shall collectively mean the General Partner
and/or the Limited Partner.
Section 1.51 "Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Treasury Regulations.
Section 1.52 "Partner Nonrecourse Debt Minimum Gain" shall mean an amount,
with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Treasury Regulations.
Section 1.53 "Partner Nonrecourse Deductions" shall have the meaning set
forth in Sections 1.704-2 (i)(1) and 1.704-2(i)(2) of the Treasury Regulations.
Section 1.54 "Partnership" shall mean the limited partnership continued
under this Agreement.
Section 1.55 "Partnership Minimum Gain" shall mean the amount determined in
accordance with the principles of Treasury Regulation Sections 1.704-2(b)(2) and
1.704-2(d).
Section 1.56 "Permanent Mortgage Commencement" shall mean the first date on
which all of the following have occurred: (a) the Construction Loan shall have
been repaid in full; and (b) the closing of the Mortgage shall have occurred and
amortization of the Mortgage shall have commenced.
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Section 1.57 "Person" shall mean an individual, proprietorship, trust,
estate, partnership, joint venture, association, company, corporation or other
entity.
Section 1.58 "Project" shall collectively mean the approximately 8 acres of
land in Roswell, Chaves County, New Mexico, as more fully described in Exhibit
"A" attached hereto and incorporated herein by this reference, and the
Improvements.
Section 1.59 "Project Documents" shall mean and include all documents
delivered to or required by the Construction Loan and Mortgage Loan and/or any
governmental agency having jurisdiction over the Project in connection with the
development, construction and financing of the Project, including but not
limited to, the approved plans and specifications for the development and
construction of the Project.
Section 1.60 "Projected Annual Tax Credits" shall mean LIHTC in the amount
of $640,746 per year for each of the years 1998 through 2007 which the General
Partner has projected to be the total amount of LIHTC which will be allocated to
the Limited Partner by the Partnership, constituting 99% of the aggregate amount
of LIHTC of $6,472,180 to be available to the Partnership; provided, however,
that if the Actual Tax Credit for 1998 is less than $640,746, the Projected Tax
Credit for the year 2008 shall be increased by an amount equal to the amount by
which the Actual Tax Credit for 1997 is less than $640,746.
Section 1.61 "Projected Tax Credits" shall mean LIHTC in the aggregate
amount of $6,472,180.
Section 1.62 "Qualified Tenants" shall mean any tenants who have incomes of
60% or less of the area median gross income, as adjusted for family size, so as
to make the Project eligible for LIHTC.
Section 1.63 "Reference Rate" shall mean the per annum rate of interest
publicly announced from time to time by Bank of America National Trust & Savings
Association at San Francisco, California as its reference rate.
Section 1.64 "Rent Restriction Test" shall mean the test pursuant to
Section 42 of the Code whereby the gross rent charged to tenants of the
low-income apartment units in the Project must not exceed 30% of the applicable
income standards.
Section 1.65 "Reporting Fee" shall have the meaning set forth in Section
9.2(d) hereof.
Section 1.66 "Revised Projected Tax Credits" shall have the meaning set
forth in Section 7.4(a) hereof.
Section 1.67 "Sale or Refinancing" shall mean any of the following items or
transactions: a sale, transfer, exchange or other disposition of all or
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substantially all of the assets of the Partnership, a condemnation of or
recovery of insurance proceeds by the Partnership on account of a casualty at
the Project or any part thereof, a claim against a title insurance company, the
refinancing or any Mortgage Note or other indebtedness of the Partnership and
any similar item or transaction; provided, however, that the payment of Capital
Contributions by the Partners shall not be included within the meaning of the
term "Sale or Refinancing."
Section 1.68 "Sale or Refinancing Proceeds" shall mean all cash receipts of
the Partnership arising from a Sale or Refinancing (including principal and
interest received on a debt obligation received as consideration in whole or in
part, on a Sale or Refinancing) less the amount paid or to be paid in connection
with or as an expense of such Sale or Refinancing, and with regard to damage
recoveries or insurance or condemnation proceeds, the amount paid or to be paid
for repairs, replacements or renewals resulting from damage to or partial
condemnation of the Project.
Section 1.69 "State" shall mean the State of New Mexico.
Section 1.70 "State Tax Credit Agency" shall mean the state agency of New
Mexico which has the responsibility and authorization to administer the LIHTC
program in New Mexico.
Section 1.71 "Substitute Limited Partner" shall mean any Person who is
admitted to the Partnership as a Limited Partner pursuant to Section 12.5 or
acquires the Interest of the Limited Partner pursuant to Section 7.3 of this
Agreement.
Section 1.72 "Tax Credit" shall mean any credit permitted under the Code or
the law of any state against the federal or a state income tax liability of any
Partner as a result of activities or expenditures of the Partnership including,
without limitation, LIHTC.
Section 1.73 "Tax Credit Conditions" shall mean, for the duration of the
Compliance Period, any and all restrictions including, but not limited to,
applicable federal, state and local laws, rules and regulations, which must be
complied with in order to qualify for the LIHTC or to avoid an event of
recapture in respect of the LIHTC.
Section 1.74 "TRA 1986" shall mean the Tax Reform Act of 1986.
Section 1.75 "Treasury Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
Section 1.76 "Withdrawing" or "Withdrawal" (including the verb form
"Withdraw" and the adjectival forms "Withdrawing" and "Withdrawn") shall mean,
as to a General Partner, the occurrence of the death, adjudication of insanity
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or incompetence, or Bankruptcy of such Partner, or the withdrawal, removal or
retirement from the Partnership of such Partner for any reason, including any
sale, pledge, encumbering, assignment or other transfer of all or any part of
its General Partner Interest and those situations when a General Partner may no
longer continue as a General Partner by reason of any law or pursuant to any
terms of this Agreement.
ARTICLE II
NAME
The name of the Partnership shall be "MESA VERDE APARTMENTS, LIMITED
PARTNERSHIP."
ARTICLE III
PRINCIPAL EXECUTIVE OFFICE/AGENT FOR SERVICE
Section 3.1 Principal Executive Office. The principal executive office of
the Partnership is located at 4695 MacArthur Court, Suite 830, Newport Beach,
California 92660, or at such other place or places within the State as the
General Partner may hereafter designate.
Section 3.2 Agent for Service of Process. The office and the name and
address of the agent for service of process required by Section 54-2-5 N.M.S.A.
1978 are Capitol Document Services, Inc., 601 Tijeras Avenue, N.W., Albuquerque,
New Mexico 87102.
ARTICLE IV
PURPOSE
The purpose of the Partnership is to acquire, construct, own and operate
the Project in order to provide, in part, Tax Credits to the Partners in
accordance with the provisions of the Code and the Treasury Regulations
applicable to LIHTC and to sell the Project. The Partnership shall not engage in
any business or activity which is not incident to the attainment of such
purpose.
ARTICLE V
TERM
The Partnership term commenced upon the filing of the Certificate of
Limited Partnership in the office of, and on the form prescribed by, the
Secretary of State of the State, and shall continue until December 31, 2050
unless terminated earlier in accordance with the provisions of this Agreement or
as otherwise provided by law.
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ARTICLE VI
GENERAL PARTNER'S CONTRIBUTIONS AND LOANS
Section 6.1 Capital Contribution of General Partner. The General Partner
shall make a Capital Contribution in the amount required in accordance with the
Construction Loan and Mortgage Loan.
Section 6.2 Construction and Operating Obligations; General Partner Loans.
(a) The General Partner shall cause Completion of Construction and shall
equip the Project or cause the same to be equipped with all necessary and
appropriate fixtures, equipment and articles of personal property, including
refrigerators and ranges. If costs and expenses necessary to effect Completion
of Construction exceed the sum of the Capital Contributions and the proceeds of
the Mortgage Note, the General Partner shall be responsible for and shall be
obligated to pay such deficiencies. Any such advances shall not be reimbursable
or otherwise change the Interest of any Partner in the Partnership but shall be
considered a cost overrun and not be repayable. In addition, if (1) the
Improvements are not completed on or before December 31, 1997 (the "Completion
Date") (which date may be extended in the events of Force Majeure, but in no
event longer than three months from the Completion Date); (2) prior to
completing the Improvements, there is an uncured default under or termination of
the Construction Loan or Mortgage Loan commitment; or (3) a foreclosure action
is commenced against the Partnership, then at the Limited Partner's election,
either the General Partner will be removed from the Partnership and the Limited
Partner, or an assignee, will be admitted as successor General Partner, all in
accordance with Article XIII hereof, or the General Partner will repurchase the
Interest of the Limited Partner for an amount equal to the amounts theretofore
paid by the Limited Partner, and the Limited Partner shall have no further
Interest in the Partnership. If the Limited Partner elects to have the General
Partner repurchase the Interest of the Limited Partner then the repurchase shall
occur within 90 days after the General Partner receives written demand from the
Limited Partner. In reference to clauses (2) and (3) of this Section 6.2(a), the
General Partner shall have 60 days to cure following the receipt of notice from
the Lender for the Construction Loan or Mortgage or notice from the Limited
Partner. During said period the General Partner may cure the condition(s) which
caused the notice to be sent. During such period the Limited Partner will take
no further action to remove the General Partner or cause a repurchase of the
Limited Partner's Interest.
(b) During the Operating Deficit Guarantee Period, the General Partner, as
required from time to time, shall provide Operating Loans in amounts necessary
to cover any Operating Deficits. Each Operating Loan shall be nonrecourse to the
Partners and shall be repayable out of 50% of the available Cash Flow From
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Operations or from Sale or Refinancing Proceeds in accordance with Article XI of
this Agreement. In the event the General Partner shall fail to make any
Operating Loans required by this Section 6.2(b), the Partnership shall withhold
those funds otherwise payable to the General Partner or its Affiliates pursuant
to Section 9.2 ("General Partner Funds") and utilize the withheld funds to meet
the obligations of the General Partner pursuant to this Section 6.2(b); any such
use of General Partner Funds will be deemed an Operating Loan of the General
Partner repayable to the General Partner as aforesaid. Such use of General
Partner Funds shall also constitute payment and satisfaction of amounts payable
to the General Partner or Affiliates thereof pursuant to Section 9.2, and the
obligation of the Partnership to make such payments to the General Partner or
its Affiliates pursuant to Section 9.2 shall therefore be deemed satisfied.
Section 6.3 Other General Partner Loans. After expiration of the Operating
Deficit Guarantee Period, with the Consent of the Limited Partner, the General
Partner may loan to the Partnership any sums required by the Partnership and not
otherwise reasonably available to it. Notwithstanding, the General Partner may
loan up to $2,500 per calendar year to the Partnership without the Consent of
the Limited Partner. Any such loan shall bear simple interest (not compounded)
at the rate of 2% per annum above the then prevailing prime or reference rate
charged by Bank of America N.T. & S.A., Main Office, San Francisco, California,
or, if lesser, the maximum legal rate. The maturity date and repayment schedule
of any such loan shall be as agreed to by the General Partner and the Limited
Partner. The terms of any such loan shall be evidenced by a written instrument.
The General Partner shall not charge a prepayment penalty on any such loan. Any
loan in contravention of this Section shall be deemed an invalid action taken by
the General Partner and such advance will be classified as a General Partner
Capital Contribution.
ARTICLE VII
CAPITAL CONTRIBUTIONS OF LIMITED PARTNER
Section 7.1 Original Limited Partner. The Original Limited Partner made a
Capital Contribution of $100. Effective as of the date of this Agreement, the
Original Limited Partner's Interest has been liquidated and the Partnership has
reacquired the Original Limited Partner's Interest in the Partnership. The
Original Limited Partner acknowledges that it has no further interest in the
Partnership as a limited partner as of the date of this Agreement, and has
released all claims, if any, against the Partnership arising out of its
participation as a limited partner.
Section 7.2 Capital Contribution of Limited Partner. The Limited Partner
shall make a Capital Contribution in the amount of $3,940,587, as may be
adjusted in accordance with Section 7.4 of this Agreement, in cash on the dates
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and subject to the conditions hereinafter set forth:
(a) The obligation of the Limited Partner to pay the aforesaid Capital
Contribution shall be subject to the satisfaction of the following conditions:
(1) prior to the initial payment of the Capital Contribution only,
the issuance to the Limited Partner of an opinion of the Partnership's legal
counsel, in a form substantially similar to the form of opinion attached hereto
as Exhibit "B" and incorporated herein by this reference;
(2) prior to the initial payment of the Capital Contribution only,
the General Partner shall deliver to the Limited Partner a fully executed
Certification and Agreement in the form attached hereto as Exhibit "C" and
incorporated herein by this reference;
(3) prior to the due date of each installment of such Capital
Contribution except the first payment, the General Partner shall deliver
to the Limited Partner a fully executed General Partner Certification in the
form attached hereto as Exhibit "D" and incorporated herein by this reference,
to the effect that all of the representations and warranties set forth in
Article IX are accurate in all material respects;
(4) prior to the Capital Contribution payment referenced in Section
7.2(b)(3) the General Partner shall deliver to the Limited Partner a copy of the
certificate of occupancy (or equivalent evidence of local occupancy approval) on
all the apartment units in the Project and a copy of the recorded grant deed
(warranty deed);
(5) prior to the Capital ontribution payment referenced in Section
7.2(b)(4), the General Partner shall deliver to the Limited Partner a copy of an
ALTA Owner's Title Insurance Policy, copies of all Mortgage Notes and Mortgage
Loan documents required by Bank of America, Federal Savings Bank to close the
Mortgage and disburse the Mortgage proceeds to the Partnership;
(6) prior to the Capital Contribution payment referenced in Section
7.2(b)(4) the General Partner shall deliver to the Limited Partner the current
rent roll, copies of all initial tenant files including completed applications,
completed questionnaires or checklist of income and assets, documentation of
third party verification of income and assets, income certification forms (LIHTC
specific) and executed lease agreements collected by the Management Agent, or
the General Partner, verifying each tenant's eligibility as a Qualified Tenant;
(7) prior to each Capital Contribution payment referenced in Section
7.2(b)(1) through and including 7.2(b)(3) the General Partner shall deliver to
the Limited Partner copies of all inspecting architect's application and
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certificate of payment (AIA Document G702, or similar form acceptable to the
Limited Partner), all Construction Loan draw requests and a copy of the
construction schedule and any updates to the construction schedule;
(8) prior to the Capital Contribution payment referenced in Section
7.2(b)(5) the General Partner shall deliver to the Limited Partner a copy of the
Declaration of Restrictive Covenants/Extended Use Agreement entered into between
the Partnership and the State Tax Credit Agency, an audited construction cost
certification with an itemized cost breakdown, Internal Revenue Code Form 8609,
or any successor form and any documents previously not provided to the Limited
Partner but required pursuant to this Section 7.2(a) and Sections 14.3(a), (b)
and (c).
(b) Provided the conditions of Section 7.2(a) of this Partnership Agreement
have been met, the Limited Partner shall make the following Capital
Contributions:
(1) $2,048,889 shall be payable upon admittance of the Limited Partner
into the Partnership, provided the conditions of Section 7.2(a) have been met;
(2) $1,009,169 shall be payable upon 50% Completion of Construction
as evidenced by the inspecting architect's certification and the construction
draw request, provided the conditions of Section 7.2(a) have been met;
(3) $576,784 shall be payable upon 95% Completion of Construction as
evidenced by the inspecting architect's certification and the construction draw
request, provided the conditions of Section 7.2(a) have been met;
(4) $135,282 shall be payable upon Completion of Construction as
evidenced by the inspecting architect's certification in a form substantially
similar to the form attached here as Exhibit "E" and incorporated herein by
this reference, the issuance of a permanent certificate of occupancy (or
equivalent evidence of local occupancy approval) for all units and receipt
of a letter from the Contractor stating all amounts payable to the Contractor
have been paid in full or bonded and that the Partnership is not in violation
of the construction contract, provided the conditions of Section 7.2(a) have
been met;
(5) $135,282 shall be payable upon the date the Project maintains a
debt coverage ratio of 1.15 for a period of 120 days, the Limited Partner's
receipt of, and review of, tenant income verification data to determine that
100% of the units in the Project qualify under Section 42 of the Code,
delivery to the Limited Partner of the Accountant's final Tax Credit cost
certification in a form substantially similar to the form attached here
as Exhibit "F" and incorporated herein by this reference, setting forth the
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Project's eligible basis and the amount of the Tax Credits to which the
Partnership is entitled, and delivery to the Limited Partner copies of a
fully executed set of permanent mortgage documents, provided the conditions of
Section 7.2(a) have been met; and
(6) $35,181 shall be payable after all the above conditions have been
met and delivery to the Limited Partner of IRS Form 8609 and the first year
tax return in which Tax Credits are taken, provided the conditions of Section
7.2(a) have been met.
Section 7.3 Repurchase of Limited Partner's Interest. Within 90 days after
the General Partner receives written demand from the Limited Partner, the
Partnership shall repurchase the Limited Partner's Interest in the Partnership
by refunding to it in cash the full amount of the Capital Contribution which the
Limited Partner has theretofore made in the event that, for any reason, the
Partnership shall fail to:
(a) receive an allocation of LIHTC no later than the close of the calendar
year during which the Project is placed in service;
(b) cause the Project to be placed in service by December 31, 1997;
(c) achieve 90% occupancy of the Project by Qualified Tenants by June 1,
1998;
(d) obtain Permanent Mortgage Commencement by May 15, 1998 or such later
date extended by Bank of America;
(e) meet both the Minimum Set-Aside Test and the Rent Restriction Test not
later than December 31 of the first year the Partnership elects the LIHTC to
commence in accordance with the Code; and
Section 7.4 Reduction of Limited Partner's Capital Contribution.
(a) If the anticipated amount of Tax Credits to be allocated to the Limited
Partner as evidenced by IRS Form 8609, and Schedule A thereto, and the audited
construction cost certification provided to the Limited Partner is less than
$3,577,850 (the "Revised Projected Tax Credits") then the Limited Partner's
Capital Contribution provided for in Section 7.2 shall be reduced by the amount
which will make the total Capital Contribution to be paid by the Limited Partner
to the Partnership equal to 61.5% of the Revised Projected Tax Credits so
anticipated to be allocated to the Limited Partner.
(b) The General Partner is required to use its best efforts to rent 100% of
the Project's apartment units to Qualified Tenants throughout the Compliance
Period. If at any time during the first five calendar years following the year
in which the Project is placed in service, the Actual Tax Credit for any fiscal
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year or portion thereof is or will be less than the Projected Annual Tax Credit,
or the Revised Projected Tax Credit calculated on an annual basis ("Revised
Projected Annual Tax Credit"), if applicable, then, unless the shortfall shall
have previously been addressed under Section 7.4(a), the amount of the reduction
shall be applied to the next Capital Contribution owed by the Limited Partner,
if any, and any portion of such reduction in excess of such Capital Contribution
shall be applied to reduce succeeding Capital Contributions of the Limited
Partner, if any. If, at the time of determination thereof, the Capital
Contribution reduction referenced in Section 7.4(a) and/or this Section 7.4(b)
is greater than the balance of the Limited Partner's Capital Contribution
payments which is then due, if any ("Reduction Shortfall"), then the amount of
the Reduction Shortfall shall be paid by the General Partner to the Limited
Partner within ninety days of the General Partner receiving notice of the
Reduction Shortfall from the Limited Partner.
(c) In the event that, for any reason, at any time after the first five
calendar years following the year in which the Project is placed in service, the
amount of the Actual Tax Credit is less than the Projected Annual Tax Credit, or
the Revised Projected Annual Tax Credit, if applicable, (the "Annual Credit
Shortfall"), then, unless the Annual Credit Shortfall shall have previously been
addressed under Section 7.4(a) or Section 7.4(b), there shall be a reduction in
the General Partner's share of Cash Flow From Operations in an amount equal to
the Annual Credit Shortfall and said amount instead shall be paid to the Limited
Partner. In the event there are not sufficient funds to pay the full Annual
Credit Shortfall to the Limited Partner at the time of the next Distribution of
Cash Flow From Operations, then the Limited Partner shall be treated as having
made a constructive advance to the Partnership in an amount equal to the Annual
Credit Shortfall (a "Credit Shortfall Loan"), which shall be deemed to have been
made on January 1 of the year in which the Annual Credit Shortfall arises. Each
Credit Shortfall Loan shall bear simple interest (not compounded) from the date
on which such loan is deemed to have been made under this Section 7.4(c) at the
rate equal to the 10-year Treasury money rate at the time of the Credit
Shortfall Loan, or, if lesser, the maximum legal rate applicable to such loans.
Credit Shortfall Loans or any portion thereof shall be repaid in the next year
in which sufficient monies are available from the General Partner's Cash Flow
From Operations, with interest payable prior to principal. In the event a Sale
or Refinancing of the Project occurs prior to repayment in full of the Credit
Shortfall Loan then the excess will be paid in accordance with Section 11.2(b).
(d) In the event there is a reduction in the qualified basis of the Project
for income tax purposes following an audit by the Internal Revenue Service
(IRS), and any review and/or appeals rights afforded the Partnership, resulting
in a recapture of Tax Credits previously claimed and such recapture was not due
to an action of the Limited Partner, whether directly or indirectly, then, in
addition to any other payments to which the Limited Partner is entitled under
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the terms of this Section 7.4 the General Partner shall pay to the Limited
Partner the sum of (1) the deficiency assessed against the Limited Partner as a
result of the Tax Credit recapture, (2) any interest and penalties imposed on
the Limited Partner with respect to such deficiency, and (3) an amount
sufficient to pay any tax liability owed by the Limited Partner resulting from
the receipt of the amounts specified in (1) and (2). Notwithstanding, if the
reduction in basis is due to an IRS determination that the allocation provisions
in Article X of this Agreement do not permit the allocation as contemplated
herein then the provisions of this Section 7.4(d) shall not apply.
Section 7.5 Return of Capital Contribution. From time to time the
Partnership may have cash in excess of the amount required for the conduct of
the affairs of the Partnership, and the General Partner may, with the Consent of
the Limited Partner, determine that such cash should, in whole or in part, be
returned to the Limited Partner in reduction of its Capital Contribution. No
such return shall be made unless all recourse liabilities of the Partnership
(except those to Partners on account of amounts credited to them pursuant to
this Agreement) have been paid or there remain assets of the Partnership
sufficient, in the sole discretion of the General Partner, to pay such
liabilities.
Section 7.6 Liability of Limited Partner. The Limited Partner shall not be
liable for any of the debts, liabilities, contracts or other obligations of the
Partnership unless otherwise specified in the Act. The Limited Partner shall be
liable only to make Capital Contributions in the amounts and on the dates
specified in this Agreement and, except as otherwise expressly required
hereunder, shall not be required to lend any funds to the Partnership or, after
their respective Capital Contributions have been paid, to make any further
Capital Contribution to the Partnership.
ARTICLE VIII
WORKING CAPITAL AND RESERVES
Section 8.1 Operating and Maintenance Reserve and Replacement Reserve
Account. The Partnership shall establish an operating and maintenance reserve
account and a replacement reserve account and shall deposit thereinto an annual
amount equal to 1% of the total indebtedness to be funded in twelve monthly
installments per residential unit per year commencing with the Completion of
Construction for the purpose of repairs, maintenance and capital repairs. Said
deposit shall be made monthly in equal installments. Any balance remaining in
these accounts at the time of a sale of the Project shall be first used to pay
any unpaid Development Fee in accordance with the Development Fee Agreement and
the balance shall be allocated and distributed equally between the General
Partner and the Limited Partner.
Section 8.2 Other Reserves. The General Partner shall establish out of
funds available to the Partnership a reserve account sufficient in its sole
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discretion to pay any unforeseen contingencies which might arise in connection
with the furtherance of the Partnership business including, but not limited to,
(a) any rent subsidy required to maintain rent levels in compliance with the Tax
Credit Conditions; and (b) any real estate taxes, insurance, debt service or
other payments for which other funds are not provided for hereunder or otherwise
expected to be available to the Partnership. The General Partner shall not be
liable for any good-faith estimate which it shall make in connection with
establishing or maintaining any such reserves nor shall the General Partner be
required to establish or maintain any such reserves if, in its sole discretion,
such reserves do not appear to be necessary.
ARTICLE IX
MANAGEMENT AND CONTROL
Section 9.1 Power and Authority of General Partner. Subject to the receipt
of Consent of the Limited Partner where required by this Agreement, and subject
to the other limitations and restrictions included in this Agreement, the
General Partner shall have complete and exclusive control over the management of
the Partnership business and affairs, and shall have the right, power and
authority, on behalf of the Partnership, and in its name, to exercise all of the
rights, powers and authority of a partner of a partnership without limited
partners. No Limited Partner (except one who may also be a General Partner, and
then only in its capacity as General Partner within the scope of its authority
hereunder) shall have any right to be active in the management of the
Partnership's business or investments or to exercise any control thereover, nor
have the right to bind the Partnership in any contract, agreement, promise or
undertaking, or to act in any way whatsoever with respect to the control or
conduct of the business of the Partnership, except as otherwise specifically
provided in this Agreement.
Section 9.2 Payments to the General Partners and Others.
(a) The Partnership shall pay to the Developer a Development Fee in the
amount of $735,611. The Development Fee shall first be paid from available
proceeds in accordance with Section 9.2(b) of this Agreement and any Cash Flow
From Operations through Completion of Construction and if not paid in full then
paid in accordance with the Development Fee Agreement.
(b) Notwithstanding the preceding, the Partnership shall retain the sum of
$3,940,587 from the Capital Contributions paid pursuant to Section 7.2(b) of
this Agreement to be used for supplemental development costs including, but not
limited to, land costs, architectural fees, survey and engineering costs,
financing costs, loan fees, building materials and labor, but the amount
retained shall in no event be greater than the difference between the
Construction Loan and the Mortgage Loan. If any such funds are remaining after
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Completion of Construction and all construction costs are paid in full and the
Construction Loan retired, then the remainder shall first be paid to the General
Partner in an amount equal to any unpaid Development Fee and the balance, if
any, shall be paid to the General Partner as a reduction of the General
Partner's Capital Contribution and/or an incentive rent-up fee.
(c) The Partnership shall pay to the Management Agent a property management
fee for the leasing and management of the Project in an amount in accordance
with the Management Agreement. The term of the Management Agreement shall not
exceed one year. If the Management Agent is an Affiliate of the General Partner
then commencing with the termination of the Operating Deficit Guarantee Period
referenced in Section 6.2(b), in any year in which the Project has an Operating
Deficit, 40% of the management fee will be deferred ("Deferred Management Fee").
Deferred Management Fees, if any, shall be paid to the Management Agent solely
in accordance with and to the extent permitted by Section 11.1 of this
Agreement.
(1) The General Partner shall, upon receiving any request of the
Mortgage lender requesting such action, dismiss the Management Agent as
the entity responsible for management of the Project under the terms of the
Management Agreement; or, the General Partner shall dismiss the Management
Agent at the request of the Limited Partner for cause which shall mean:
(A) the failure to timely or accurately provide the information
needed to complete the reports required by Section 14.2 and 14.3 herein;
(B) the rental of apartment units to non-Qualified Tenants; and
(C) the vacancy rate at the Project is 12% or greater for
three consecutive months, excluding a reasonable rent-up period.
2) The appointment of any successor Management Agent is
subject to the Consent of the Limited Partner, which will not be unreasonably
withheld, and which may only be sought after the General Partner has provided
the Limited Partner accurate and complete disclosure respecting the proposed
Management Agent.
(3) The Partners consent and agree that all initial tenants
must be approved and accepted by the Management Agent, General Partner and a
third party retained by the Limited Partner. The Management Agent shall submit
all tenant files to the Limited Partner's agent including, but not limited to
copies of tenant applications, certifications and third party verifications. The
Limited Partner's agent shall have 48 hours to review the completed file and
approve or disapprove of the applicant as a tenant. Approval or disapproval
shall be made strictly on the basis of Tax Credit compliance.
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(d) The Partnership shall pay to the Limited Partner a fee (the "Reporting
Fee") commencing in 1998 equal to 15% of the Cash Flow From Operations but in no
event less than $5,000 for the Limited Partner's services in monitoring the
operations of the Partnership and for services in connection with the
Partnership's accounting matters and assisting with the preparation of tax
returns and the reports required in Sections 14.2 and 14.3 of this Agreement.
The Reporting Fee shall be payable within seventy-five (75) days following each
calendar year and shall be payable from Cash Flow From Operations in the manner
and priority set forth in Section 11.1 of this Agreement; provided, however,
that if in any year Cash Flow From Operations is insufficient to pay the full
$5,000, the unpaid portion thereof shall accrue without interest and be payable
on a cumulative basis in the first year in which there is sufficient Cash Flow
From Operations, as provided in Section 11.1, or sufficient Sale or Refinancing
Proceeds, as provided in Section 11.2.
(e) The Partnership shall pay to the General Partner an Incentive
Management Fee equal to 40% of the available Cash Flow From Operations in
accordance with Section 11.1 of this Agreement for each fiscal year of the
Partnership commencing in 1998 for services incident to the administration of
the business and affairs of the Partnership, which services shall include, but
not limited to, maintaining the books and records of the Partnership, selecting
and supervising the Partnership's Accountants, bookkeepers and other Persons
required to prepare and audit the Partnership's financial statements and tax
returns, and preparing and disseminating reports on the status of the Project
and the Partnership, all as required by Article XIV of this Agreement. The
Incentive Management Fee shall be payable within seventy-five (75) days
following each calendar year and shall be payable from Cash Flow From Operations
in the manner and priority set forth in Section 11.1. If the Incentive
Management Fee is not paid in any year it shall not accrue for payment in
subsequent years.
Section 9.3 Specific Powers of the General Partner.
Subject to the other provisions of this Agreement, the General Partner
shall have the following powers:
(a) In the Partnership's name and on its behalf, the General Partner may
hold, sell, transfer, lease or otherwise deal with any real, personal or mixed
property, interest therein or appurtenance thereto in accordance with the
purpose of this Agreement as indicated in Article IV hereto;
(b) In the Partnership's name and on its behalf, the General Partner may
employ, contract and otherwise deal with, from time to time, Persons whose
services are necessary or appropriate in connection with management and
operation of the Partnership business, including, without limitation,
contractors, agents, brokers, Accountants and Management Agents (provided that
the selection of any Management Agent has received the Consent of the Limited
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Partner) and attorneys, on such terms as the General Partner shall determine;
(c) In the Partnership's name and on its behalf, the General Partner may
bring or defend, pay, collect, compromise, arbitrate, resort to legal action or
otherwise adjust claims or demands of or against the Partnership;
(d) In the Partnership's name and on its behalf, the General Partner may
pay as a Partnership expense any and all costs and expenses associated with the
formation, development, organization and operation of the Partnership, including
the expense of annual audits, tax returns and LIHTC compliance;
(e) In the Partnership's name and on its behalf, the General Partner may
deposit, withdraw, invest, pay, retain and distribute the Partnership's funds in
a manner consistent with the provisions of this Agreement;
(f) In the Partnership's name and on its behalf, the General Partner is
authorized to execute the Construction Loan and the Mortgage;
(g) The General Partner may require in any or all Partnership contracts
that the General Partner shall not have any personal liability thereunder but
that the Person contracting with the Partnership shall look solely to the
Partnership and its assets for satisfaction;
(h) In the Partnership's name and on its behalf, the General Partner may
execute, acknowledge and deliver any and all instruments to effectuate any of
the foregoing; and
(i) The General Partner shall operate the Project and shall cause the
Management Agent to manage the Project in such a manner that the Project will be
eligible to receive LIHTC with respect to 100% of the apartment units in the
Project. To that end, the General Partner agrees, without limitation, to make
all elections requested by the Limited Partner under Section 42 of the Code to
allow the Partnership or its Partners to claim the Tax Credit, to file Form 8609
with respect to the Project as required, for at least the duration of the
Compliance Period to operate the Project and cause the Management Agent to
manage the Project so as to comply with the requirements of Section 42 of the
Code, as amended, or any successor thereto, including, but not limited to,
Section 42(g) and Section 42(i)(3) of the Code, as amended, or any successors
thereto, to make all certifications required by Section 42(l) of the Code, as
amended, or any successor thereto, and to operate the Project and cause the
Management Agent to manage the Project so as to comply with all other Tax Credit
Conditions.
Section 9.4 Authority Requirements. During the Compliance Period, the
following provisions shall apply:
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(a) Each of the provisions of this Agreement shall be subject to, and the
General Partner covenants to act in accordance with, the Tax Credit Conditions
and all applicable federal, state and local laws and regulations;
(b) The Tax Credit Conditions and all such laws and regulations, as amended
or supplemented, shall govern the rights and obligations of the Partners, their
heirs, executors, administrators, successor and assigns, and they shall control
as to any terms in this Agreement which are inconsistent therewith, and any such
inconsistent terms of this Agreement shall be unenforceable by or against any of
the Partners;
(c) Upon any dissolution of the Partnership or any transfer of the Project,
no title or right to the possession and control of the Project and no right to
collect rent therefrom shall pass to any Person who is not, or does not become,
bound by the Tax Credit Conditions in a manner that, in the opinion of counsel
to the Partnership, would not avoid a recapture thereof on the part of the
former owners; and
(d) Any conveyance or transfer of title to all or any portion of the
Project required or permitted under this Agreement shall in all respects be
subject to the Tax Credit Conditions and all conditions, approvals or other
requirements of the rules and regulations of any authority applicable thereto.
Section 9.5 Limitations on General Partner's Power and Authority.
Notwithstanding the provisions of this Article IX, the General Partner shall
not:
(a) Except as required by Section 9.4, act in contravention of this
Agreement;
(b) Act in any manner which would make it impossible to carry on the
ordinary business of the Partnership;
(c) Confess a judgment against the Partnership;
(d) Possess Partnership property, or assign the Partner's right in specific
Partnership property, for other than the exclusive benefit of the Partnership;
(e) Admit a Person as a General Partner except as provided in this
Agreement;
(f) Admit a Person as a Limited Partner except as provided in this
Agreement;
(g) Violate any provision of the Mortgage Loan or Mortgage Note;
(h) Cause the Project apartment units to be rented to anyone other than
Qualified Tenants;
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(i) Violate the Minimum Set-Aside Test or the Rent Restriction Test for the
Project;
(j) Cause any recapture of the Tax Credits;
(k) Permit any creditor who makes a nonrecourse loan to the Partnership to
have, or to acquire at any time as a result of making such loan, any direct or
indirect interest in the profits, income, capital or other property of the
Partnership, other than as a secured creditor;
(l) Commingle funds of the Partnership with the funds of another Person; or
(m) Take any action which requires the Consent of the Limited Partner
unless the General Partner has received the Consent of the Limited Partner.
Section 9.6 Restrictions on Authority of General Partner. Without the
Consent of the Limited Partner which will not be unreasonably withheld, the
General Partner shall:
(a) Sell, exchange, lease or otherwise dispose of the Project;
(b) Incur indebtedness other than the Construction Loan and Mortgage Loan
in the name of the Partnership, other than in the ordinary course of the
Partnership's business;
(c) Contract away the fiduciary duty owed to the Limited Partner at common
law;
(d) Take any action which would cause the Project to fail to qualify, or
which would cause a termination or discontinuance of the qualification of the
Project, as a "qualified low income housing project" under Section 42(g)(1) of
the Code, as amended, or any successor thereto, or which would cause the Limited
Partner to fail to obtain the Projected Tax Credits or which would cause the
recapture of any LIHTC;
(e) Make any expenditure of funds, or commit to make any such expenditure,
other than in response to an emergency, except as provided for in the annual
budget as provided in Section 14.3(i) hereof;
(f) Cause the merger or other reorganization of the Partnership; or
(g) Dissolve the Partnership except as provided in this Agreement.
Section 9.7 Duties of General Partner. The General Partner agrees that it
shall at all times:
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(a) Diligently and faithfully devote such of its time to the business of
the Partnership as may be necessary to properly conduct the affairs of the
Partnership;
(b) File and publish all certificates, statements or other instruments
required by law for the formation and operation of the Partnership as a limited
partnership in all appropriate jurisdictions;
(c) Cause the Partnership to carry Insurance from an Insurance Company;
(d) Have a fiduciary responsibility for the safekeeping and use of all
funds and assets of the Partnership, whether or not in its immediate possession
or control and not employ or permit another to employ such funds or assets in
any manner except for the benefit of the Partnership;
(e) Use its best efforts so that all requirements shall be met which are
reasonably necessary to obtain or achieve (1) compliance with the Minimum
Set-Aside Test, the Rent Restriction Test, and any other requirements necessary
for the Project to initially qualify, and to continue to qualify, for LIHTC; (2)
issuance of all necessary certificates of occupancy, including all governmental
approvals required to permit occupancy of all of the apartment units in the
Project; (3) compliance with all provisions of the Project Documents and (4) a
reservation and allocation of LIHTC from the Agency;
(f) Use its best efforts to keep the Project and Project dwelling units, in
decent, safe, sanitary and good condition, repair and working order, ordinary
use and obsolescence excepted, and make or cause to be made from time to time
all necessary repairs thereto (including external and structural repairs) and
renewals and replacements thereof;
(g) Pay, before the same shall become delinquent and before penalties
accrue thereon all Partnership taxes, assessments and other governmental charges
against the Partnership or its properties, and all of its other liabilities,
except to the extent and so long as the same are being contested in good faith
by appropriate proceedings in such manners as not to cause any material adverse
effect on the Partnership's property, financial condition or business
operations, with adequate reserves provided for such payments;
(h) Permit, and cause the Management Agent to permit, the Limited Partner
and its representatives to have access to the Project and personnel employed by
the Partnership and by the Management Agent who are concerned with management of
the Project at all reasonable times during normal business hours and to examine
all agreements, LIHTC compliance data and plans and specifications and deliver
copies thereof and such reports as may reasonably be required by the Limited
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Partner. The General Partner shall provide the Limited Partner with copies of
all correspondence, notices and reports sent pursuant to or received under the
Project Documents or any authority with respect to the Project at the time such
correspondence, notices or reports are sent or received, copies of all other
correspondence of substantial importance which a prudent investor would wish to
examine in connection with the transaction at the time such correspondence is
sent or received, and all reports required by Article XIV within the required
time periods set forth therein.
(i) Exercise good faith in all activities relating to the conduct of
the business of the Partnership, including the development, operation and
maintenance of the Project, and it shall take no action with respect to the
business and property of the Partnership which is not reasonably related to the
achievement of the purpose of the Partnership;
(j) Make any Capital Contributions, advances or loans required to be made
by the General Partner under the terms of this Agreement;
(k) Establish and maintain all reserves required to be established and
maintained under the terms of this Agreement;
(l) Comply with each and every covenant, representation and warranty set
forth in Section 9.11; and
(m) Perform such other acts as may be expressly required of it under the
terms of this Agreement.
Section 9.8 Partnership Expenses.
(a) All of the Partnership's expenses shall be billed directly to and
paid by the Partnership to the extent reasonably practicable. Reimbursements to
the General Partner or any of its Affiliates by the Partnership shall be allowed
only for the Partnership's operating cash expenses and subject to the
limitations on the reimbursement of such expenses set forth herein. As used in
this Section 9.8 the term "operating cash expenses" shall mean, with respect to
any fiscal period, the amount of cash disbursed by the Partnership for
Partnership business in that period in the ordinary course of business for the
payment of its operating expenses, including but not limited to as expenses for
advertising and promotion, management, utilities, repair and maintenance,
Insurance, Partner communications, legal, accounting, statistical and
bookkeeping services, use of computing or accounting equipment, travel and
telephone expenses, salaries and direct expenses of Partnership employees while
engaged in Partnership business, and any other operational and administrative
expenses necessary for the prudent operation of the Partnership. Without
limiting the generality of the foregoing, "operating cash expenses" shall
include fees paid by the Partnership to the General Partner or any Affiliate of
the General Partner permitted by this Agreement and the actual cost of goods,
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materials and administrative services used for or by the Partnership, whether
incurred by the General Partner, an Affiliate of the General Partner or a
nonaffiliated Person in performing the foregoing functions. As used in the
preceding sentence, "actual cost of goods and materials" means the actual cost
of goods and materials used for or by the Partnership and obtained from entities
which are not Affiliates of the General Partner, and actual cost of
administrative services means the pro rata cost of personnel (as if such persons
were employees of the Partnership) associated therewith, but in no event to
exceed the amount which would be charged by nonaffiliated Persons for comparable
goods and services.
(b) Reimbursement to the General Partner or any of its Affiliates of
operating cash expenses pursuant to Subsection (a) hereof shall be subject to
the following:
(1) No such reimbursement shall be permitted for services for
which the General Partner or any of its Affiliates is entitled to compensation
by way of a separate fee; and
(2) No such reimbursement shall be made for (A) rent or
depreciation, utilities, capital equipment or other such administrative items,
and (B) salaries, fringe benefits, travel expenses and other administrative
items incurred or allocated to any "controlling person" of the General Partner
or any Affiliate of the General Partner. For the purposes of this Section
9.8(b)(2), "controlling person" includes, but is not limited to, any Person,
however titled, who performs functions for the General Partner or any Affiliate
of the General Partner similar to those of: (i) chairman or member of the board
of directors; (ii) executive management, such as president, vice president or
senior vice president, corporate secretary or treasurer; (iii) senior
management, such as the vice president of an operating division who reports
directly to executive management; or (iv) those holding 5% or more equity
interest in such General Partner or any such Affiliate of the General Partner or
a person having the power to direct or cause the direction of such General
Partner or any such Affiliate of the General Partner, whether through the
ownership of voting securities, by contract or otherwise.
Section 9.9 General Partner Expenses. The General Partner or Affiliates of
the General Partner shall pay all Partnership expenses which are not permitted
to be reimbursed pursuant to Section 9.8 and all expenses which are unrelated to
the business of the Partnership.
Section 9.10 Other Business of Partners. Any Partner may engage
independently or with others in other business ventures wholly unrelated to the
Partnership business of every nature and description, including, without
limitation, the acquisition, development, construction, operation and management
of real estate projects and developments of every type on their own behalf or on
behalf of other partnerships, joint ventures, corporations or other business
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ventures formed by them or in which they may have an interest, including,
without limitation, business ventures similar to, related to or in direct or
indirect competition with the Project. Neither the Partnership nor any Partner
shall have any right by virtue of this Agreement or the partnership relationship
created hereby in or to such other ventures or activities or to the income or
proceeds derived therefrom. Conversely, no Person shall have any rights to
Partnership assets, incomes or proceeds by virtue of such other ventures or
activities of any Partner.
Section 9.11 Covenants, Representations and Warranties. The General Partner
covenants, represents and warrants that the following are presently true, or as
the case may be, will be true during the term of this Agreement, to the extent
then applicable:
(a) The Partnership is a duly organized limited partnership validly
existing under the laws of the State and has complied with all filing
requirements necessary for the protection of the limited liability of the
Limited Partner.
(b) The Partnership Agreement and the applicable Project Documents are in
full force and effect and neither the Partnership nor the General Partner is in
breach or violation of any provisions thereof.
(c) Improvements will be completed in a timely and workmanlike manner in
accordance with all applicable requirements of the Mortgage Loan, all applicable
requirements of all appropriate governmental entities and substantially in
accordance with the plans and specifications of the Project that have been or
shall be hereafter approved by Bank of America, Federal Savings Bank, if
required, and all applicable governmental entities, as such plans and
specifications may be changed from time to time with the approval of Bank of
America, Federal Savings Bank and any applicable governmental entities, if such
approval shall be required.
(d) The Project is being operated in accordance with standards and
procedures which are prudent and customary for the operation of properties
similar to the Project.
(e) Additional Improvements on the Project, if any, shall be completed
substantially in conformity with the Project Documents and any other
requirements necessary to obtain Completion of Construction.
(f) No Partner has or will have any personal liability with respect to or
has or will have personally guaranteed the payment of the Mortgage.
(g) The Partnership is in compliance with all construction and use codes
applicable to the Project and is not in violation of any zoning, environmental
or similar regulations applicable to the Project.
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(h) All appropriate public utilities, including sanitary and storm sewers,
water, gas and electricity, are currently available and will be operating
properly for all units in the Project at the time of first occupancy and
generally throughout the term of the Partnership.
(i) The Project has obtained, or will obtain before Permanent Mortgage
Commencement, and will maintain throughout the term of this Partnership
Insurance written by an Insurance Company.
(j) The Partnership owns the fee simple interest in the Project.
(k) The Construction Contract has been entered into between the Partnership
and the Contractor; no other consideration or fee shall be paid to the
Contractor other than amounts set forth in the Construction Contract.
(l) A builder's risk insurance policy in favor of the Partnership is in
full force and effect and will remain in full force and effect until Completion
of Construction.
(m) Except as otherwise disclosed to the Limited Partner in writing prior
to the execution of this Agreement, to the best of the General Partner's
knowledge: (1) no Hazardous Substance has been disposed of, or released to or
from, or otherwise now exists in, on, under or around, the Project and (2) no
aboveground or underground storage tanks are now or have ever been located on or
under the Project. The General Partner will not install or allow to be installed
any aboveground or underground storage tanks on the Project. The General Partner
covenants that the Project shall be kept free of Hazardous Materials and shall
not be used to generate, manufacture, refine, transport, treat, store, handle,
dispose of, transfer, produce or process Hazardous Materials, except in
connection with the normal maintenance and operation of any portion of the
Project. The General Partner shall comply, or cause there to be compliance, with
all applicable Federal, state and local laws, ordinances, rules and regulations
with respect to Hazardous Materials and shall keep, or cause to be kept, the
Project free and clear of any liens imposed pursuant to such laws, ordinances,
rules and regulations. The General Partner shall promptly notify the Limited
Partner in writing (3) if it knows, or suspects or believes there may be any
Hazardous Substance in or around any part of the Project, any Improvements
constructed on the Project, or the soil, groundwater or soil vapor, (4) if the
General Partner or the Partnership may be subject to any threatened or pending
investigation by any governmental agency under any law, regulation or ordinance
pertaining to any Hazardous Substance, and (5) of any claim made or threatened
by any Person, other than a governmental agency, against the Partnership or
General Partner arising out of or resulting from any Hazardous Substance being
present or released in, on or around any part of the Project.
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(n) To the best of its knowledge and belief, the General Partner has
not executed and will not execute any agreements with provisions contradictory
to, or in opposition to, the provisions of this Agreement.
(o) To the best of its knowledge, the Partnership will allocate to the
Limited Partner the Projected Annual Tax Credits.
(p) To the best of its actual knowledge and belief, after due inquiry, no
charges, liens or encumbrances exist with respect to the Project other than
those which are created or permitted by the Project Documents or Mortgage or are
noted or excepted in the title policy for the Project.
(q) The buildings on the Project site constitute or shall constitute a
"qualified low-income housing project" as defined in Section 42(g) of the Code,
and as amplified by the Treasury Regulations thereunder. In this connection, not
later than December 31 of the first year in which the Partners elect the LIHTC
to commence in accordance the Code, the Project will satisfy the Minimum
Set-Aside Test.
(r) The General Partner has not lent or otherwise advanced any funds to the
Partnership other than its Capital Contribution and the Partnership has no
unsatisfied obligation to make any payments of any kind to the General Partner
or any Affiliate thereof, except as may be provided in accordance with Section
6.2 or 6.3 of this Agreement.
(s) To the best of its knowledge and belief, no event has occurred which
constitutes a default under any of the Project Documents.
(t) To the best of its knowledge and belief, no event has occurred which
has caused, and the General Partner has not acted in any manner which will cause
(1) the Partnership to be treated for federal income tax purposes as an
association taxable as a corporation, (2) the Partnership to fail to qualify as
a limited partnership under the Act, or (3) the Limited Partner to be liable for
Partnership obligations; provided however, the General Partner shall not be in
breach of this representation if all or a portion of a Limited Partner's agreed
upon Capital Contributions are used to satisfy the Partnership's obligations to
creditors of the Partnership and such action by the General Partner is otherwise
authorized under this Agreement and, provided further, however the General
Partner shall not be in breach of this representation if the action causing the
Limited Partner to be liable for the Partnership obligations is undertaken by
the Limited Partner.
(u) No legal actions or proceedings before any court, commission,
administrative body or other governmental authority, and/or acts of any
governmental authority having jurisdiction over the zoning or land use laws
applicable to the Project, have occurred the continuing effect of which has: (1)
materially and adversely affected the operation of the Partnership or the
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Project; (2) materially and adversely affected the ability of the General
Partner to perform its obligations hereunder or under any other agreement with
respect to the Project; or (3) prevented the completion of construction of the
Improvements in substantial conformity with the Project Documents, other than
legal proceedings which have been bonded against (or as to which other adequate
financial security has been issued) in a manner as to indemnify the Partnership
against loss; provided however the foregoing does not apply to matters of
general applicability which would adversely affect the Partnership, the General
Partner, Affiliates of the General Partner or the Project only insofar as they
or any of them are part of the general public.
(v) Neither the Partnership nor the General Partner has any liabilities,
contingent or otherwise, which have not been disclosed in writing to the Limited
Partner and which in the aggregate materially affect the ability of the Limited
Partner to obtain the anticipated benefits of its investment in the Partnership.
(w) The General Partner has and shall maintain a net worth equal to at
least $500,000 computed in accordance with generally accepted accounting
principles.
The General Partner shall be liable to the Limited Partner for any costs,
damages, loss of profits, or other losses, of every nature and kind whatsoever,
direct or indirect, realized or incurred by the Limited Partner as a result of
any material breach of the representations and warranties set forth in this
Section 9.11.
ARTICLE X
ALLOCATIONS OF INCOME, LOSSES AND CREDITS
Section 10.1 General. All items includable in the calculation of Income or
Loss not arising from a Sale or Refinancing, and all Tax Credits, shall be
allocated 99% to the Limited Partner and 1% to the General Partner.
Section 10.2 Allocations From Sale or Refinancing. All Income and Losses
arising from a Sale or Refinancing shall be allocated between the Partners as
follows:
(a) As to Income:
(1) First, an amount of Income equal to the aggregate negative
balances (if any) in the Capital Accounts of all Partners having negative
Capital Accounts (prior to taking into account the Sale or Refinancing and the
Distribution of the related Sale or Refinancing Proceeds, but after giving
effect to Distributions of Cash Flow From Operations and allocations of other
Income and Losses pursuant to this Article X up to the date of the Sale or
Refinancing) shall be allocated to such Partners in proportion to their negative
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Capital Account balances until all such Capital Accounts shall have zero
balances; and
(2) Second, an amount of Income sufficient to increase the Limited
Partner's positive Capital Account balance to its Capital Contribution and to
increase the Limited Partner's positive Capital Account balance to an amount
equal to its Capital Contribution, shall be allocated to the Limited Partner;
(3) Third, an amount of Income sufficient to increase the General
Partner's positive Capital Account balance to an amount equal to its Capital
Contribution; and
(4) The balance, if any, of such Income shall be allocated 50% to the
Limited Partner and 50% to the General Partner.
(b) As to Losses:
(1) an amount of Losses equal to the aggregate positive
balances (if any) in the Capital Accounts of all Partners having positive
Capital Accounts (prior to taking into account the Sale or Refinancing and the
Distribution of the related Sale or Refinancing Proceeds, but after giving
effect to Distributions of Cash Flow From Operations and allocations of Income
and Losses pursuant to Section 10.1 up to the date of the Sale or Refinancing)
shall be allocated to such Partners in proportion to their positive Capital
Account balances until all such Capital Accounts shall have zero balances; and
(2) the balance of any such Losses shall be allocated 99% to the
Limited Partner and 1% to the General Partner.
(c) Notwithstanding the foregoing provisions of Section 10.2(a) and (b), in
no event shall any Losses be allocated to the Limited Partner if and to the
extent that such allocation would create or increase an Adjusted Capital Account
Deficit for the Limited Partner. In the event an allocation of 99% of each item
includable in the calculation of Income or Loss not arising from a Sale or
Refinancing, would create or increase an Adjusted Capital Account Deficit for
the Limited Partner then so much of the items of deduction other than projected
depreciation shall be allocated to the General Partner instead of the Limited
Partner as is necessary to allow the Limited Partner to be allocated 99% of the
items of Income and Project depreciation without creating or increasing an
Adjusted Capital Account Deficit for the Limited Partner, it being the intent of
the parties that the Limited Partner always shall be allocated 99% of the items
of Income not arising from a Sale or Refinancing and 99% of the Project
depreciation.
Section 10.3 Special Allocations. The following special allocations shall
be made in the following order:
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(a) Except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, notwithstanding any other provisions of this Article X, if there is
a net decrease in Partnership Minimum Gain during any Partnership fiscal year,
each Partner shall be specially allocated items of Partnership income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in an amount
equal to such Person's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(a) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(b) Except as otherwise provided in Section 1.704-2(i)(4) of the Treasury
Regulations, notwithstanding any other provision of this Article X, if there is
a net decrease in Partner Nonrecourse Debt Minimum Gain attributable to a
Partner Nonrecourse Debt during any Partnership fiscal year, each Person who has
a share of the Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, shall be specially allocated items of Partnership
income and gain for such fiscal year (and, if necessary, subsequent fiscal
years) in an amount equal to such Person's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Treasury Regulations. This Section
10.3(b) is intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(i)(4) of the Treasury Regulations and shall be interpreted
consistently therewith.
(c) In the event any Partner unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Treasury Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible, provided that an allocation
pursuant to this Section 10.3(c) shall be made if and only to the extent that
such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 10.3 have been tentatively made as if
this Section 10.3(c) were not in the Agreement.
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(d) In the event any Partner has a deficit Capital Account at the end of
any Partnership fiscal year which is in excess of the sum of (i) the amount such
Partner is obligated to restore, and (ii) the amount such Partner is deemed to
be obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 10.3(d) shall be made if and only to the extent that such Partner would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 10.3 have been tentatively made as if this Section
10.3(d) and Section 10.3(c) hereof were not in the Agreement.
(e) Nonrecourse Deductions for any fiscal year shall be specially allocated
99% to the Limited Partner and 1% to the General Partner.
(f) Any Partner Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)(1).
(g) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Partner in complete liquidation of
his interest in the Partnership, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in accordance with
their interests in the Partnership in the event that Treasury Regulations
Section 1.704-1 (b)(2)(iv)(m)(2) applies, or to the Partner to whom such
distribution was made in the event that Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) To the extent the Partnership has taxable interest income with respect
to any promissory note pursuant to Section 483 or Section 1271 through 1288 of
the Code:
(1) Such interest income shall be specially allocated to the Limited
Partner to whom such promissory note relates; and
(2) The amount of such interest income shall be excluded from the
Capital Contributions credited to such Partner's Capital Account in connection
with payments of principal with respect to such promissory note.
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(i) In the event the adjusted tax basis of any investment tax credit
property that has been placed in service by the Partnership is increased
pursuant to Code Section 50(c), such increase shall be specially allocated among
the Partners (as an item in the nature of income or gain) in the same
proportions as the investment tax credit that is recaptured with respect to such
property is shared among the Partners.
(j) Any reduction in the adjusted tax basis (or cost) of Partnership
investment tax credit property pursuant to Code Section 50(c) shall be specially
allocated among the Partners (as an item in the nature of expenses or losses) in
the same proportions as the basis (or cost) of such property is allocated
pursuant to Treasury Regulations Section 1.46-3(f)(2)(i).
(k) Any income, gain, loss or deduction realized as a direct or indirect
result of the issuance of an interest in the Partnership by the Partnership to a
Partner (the "Issuance Items") shall be allocated among the Partners so that, to
the extent possible, the net amount of such Issuance Items, together with all
other allocations under this Agreement to each Partner, shall be equal to the
net amount that would have been allocated to each such Partner if the Issuance
Items had not been realized.
(l) If any Partnership expenditure treated as a deduction on its federal
income tax return is disallowed as a deduction and treated as a distribution
pursuant to Section 731(a) of the Code, there shall be a special allocation of
gross income to the Partner deemed to have received such distribution equal to
the amount of such distribution.
(m) The allocation to the General Partner of each material item of
Partnership income, loss, deduction or credit will not be less than 1% of each
such item at all times during the existence of the Partnership.
(n) Interest deduction on the Partnership indebtedness referred to in
Section 6.3 shall be allocated 100% to the General Partner.
Section 10.4 Curative Allocations. The allocations set forth in Sections
10.2(c), 10.3(a), 10.3(b), 10.3(c), 10.3(d), 10.3(e), 10.3(f), and 10.3(g)
hereof (the "Regulatory Allocations") are intended to comply with certain
requirements of the Treasury Regulations. It is the intent of the Partners that,
to the extent possible, all Regulatory Allocations shall be offset either with
other Regulatory Allocations or with special allocations of other items of
Partnership income, gain, loss, or deduction pursuant to this Section 10.4.
Therefore, notwithstanding any other provision of this Article X (other than the
Regulatory Allocations), with the Consent of the Limited Partner, the General
Partner shall make such offsetting special allocations of Partnership income,
gain, loss, or deduction in whatever manner the General Partner, with the
Consent of the Limited Partner, determines appropriate so that, after such
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offsetting allocations are made, each Partner's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Sections 10.1, 10.2(a), 10.2(b),
10.3(h), 10.3(i), 10.3(j), 10.3(k), 10.3(l), 10.3(m), 10.3(n) and 10.5. In
exercising its authority under this Section 10.4, the General Partner shall take
into account future Regulatory Allocations under Section 10.3(a) and 10.3(b)
that, although not yet made, are likely to offset other Regulatory Allocations
previously made under Sections 10.3(e) and 10.3(f).
Section 10.5 Other Allocation Rules.
(a) The basis (or cost) of any Partnership investment tax credit property
shall be allocated among the Partners in accordance with Treasury Regulations
Section 1.46-3(f)(2)(i). All Tax Credits (other than the investment tax credit)
shall be allocated among the Partners in accordance with applicable law.
Consistent with the foregoing, the Partners intend that LIHTC will be allocated
99% to the Limited Partner and 1% to the General Partner.
(b) In the event Partnership investment tax credit property is disposed of
during any taxable year, profits for such taxable year (and, to the extent such
profits are insufficient, profits for subsequent taxable years) in an amount
equal to the excess, if any, of (1) the reduction in the adjusted tax basis (or
cost) of such property pursuant to Code Section 50(c), over (2) any increase in
the adjusted tax basis of such property pursuant to Code Section 50(c) caused by
the disposition of such property, shall be excluded from the profits allocated
pursuant to Section 10.1 and Section 10.2(a) hereof and shall instead be
allocated among the Partners in proportion to their respective shares of such
excess, determined pursuant to Section 10.3(i) and 10.3(j) hereof. In the event
more than one item of such property is disposed of by the Partnership, the
foregoing sentence shall apply to such items in the order in which they are
disposed of by the Partnership, so the profits equal to the entire amount of
such excess with respect to the first such property disposed of shall be
allocated prior to any allocations with respect to the second such property
disposed of, and so forth.
(c) For purposes of determining the Income, Losses, or any other items
allocable to any period, Income, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the General
Partner with the Consent of the Limited Partner, using any permissible method
under Code Section 706 and the Treasury Regulations thereunder.
(d) Solely for purposes of determining a Partner's proportionate share of
the "excess nonrecourse liabilities" of the Partnership within the meaning of
Treasury Regulations Section 1.752-3(a)(3), the Partners' interests in
Partnership profits are as follows: Limited Partner: 99%; and the General
Partner: 1%.
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(e) To the extent permitted by Section 1.704-2(h)(3) of the Treasury
Regulations, the General Partner shall endeavor to treat Distributions as having
been made from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse
Debt only to the extent that such Distributions would cause or increase an
Adjusted Capital Account Deficit for any Partner who is not a General Partner.
Section 10.6 Tax Allocations: Code Section 704(c). In accordance with Code
Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and
deduction with respect to any property contributed to the capital of the
Partnership shall, solely for tax purposes, be allocated among the Partners so
as to take account of any variation between the adjusted basis of such property
to the Partnership for federal income tax purposes and its initial Gross Asset
Value (computed in accordance with Section 1.25(a) hereof).
In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to Section 1.25(b) hereof, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made
by the General Partner in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this Section 10.6 are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Person's Capital Account or
share of Income, Losses, other items, or distributions pursuant to any provision
of this Agreement.
Section 10.7 Allocation Among Limited Partners. In the event that the
Interest of the Limited Partner hereunder is at any time held by more than one
Limited Partner all items which are specifically allocated to the Limited
Partner for any month pursuant to this Article X shall be apportioned among such
Persons according to the ratio of their respective profit-sharing interests in
the Partnership at the last day of such month.
Section 10.8 Allocation Among General Partners. In the event that the
Interest of the General Partner hereunder is at any time held by more than one
General Partner all items which are specifically allocated to the General
Partner for any month pursuant to this Article X shall be apportioned among such
Persons in such percentages as may from time to time be determined by agreement
among them without amendment to this Agreement.
Section 10.9 Modification of Allocations. The provisions of Articles X and
XI and other provisions of this Agreement are intended to comply with Treasury
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Regulations Section 1.704 and shall be interpreted and applied in a manner
consistent with such section of the Treasury Regulations. In the event that the
General Partner determines, in its sole discretion, that it is prudent to modify
the manner in which the Capital Accounts of the Partners, or any debit or credit
thereto, are computed in order to comply with such section of the Treasury
Regulations, the General Partner may make such modification to the minimum
extent necessary, to effect the plan of allocations and Distributions provided
for elsewhere in this Agreement. Further, the General Partner shall make any
appropriate modifications in the event it appears that unanticipated events
(e.g., the existence of a Partnership election pursuant to Code Section 754)
might otherwise cause this Agreement not to comply with Treasury Regulation
Section 1.704.
ARTICLE XI
DISTRIBUTION
Section 11.1 Distribution of Cash Flow From Operations. Cash Flow From
Operations for each fiscal year shall be distributed within seventy-five (75)
days following each calendar year and shall be applied in the following order of
priority:
(a) To pay the Deferred Management Fee, if any, but in no event shall this
payment exceed 50% of the Cash Flow From Operations;
(b) To pay the current Reporting Fee and then to pay any accrued Reporting
Fees which have not been paid in full from previous years;
(c) To pay the Development Fee in accordance with the Development Fee
Agreement;
(d) To the General Partner a noncumulative Distribution equal to $5,000;
(e) To pay the Operating Loans, if any, as referenced in Section 6.2(b) of
this Agreement, limited to 50% of the Cash Flow From Operations remaining after
reduction for the payments made pursuant to subsections (a) through (d) of this
Section 11.1;
(f) To pay the Incentive Management Fee equal to 40% of the Cash Flow From
Operations remaining after reduction for the payments made pursuant to
subsections (a) through (e) of this Section 11.1; and
(g) To the Limited Partner in an amount equal to 50% of the remaining Cash
Flow From Operations and to the General Partner in an amount equal to 50% of the
remaining Cash Flow From Operations.
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Section 11.2 Distribution of Sale or Refinancing Proceeds. Sale or
Refinancing Proceeds shall be distributed in the following order:
(a) To the payment of the Mortgage Note and other matured debts and
liabilities of the Partnership, other than accrued payments, debts or other
liabilities owing to Partners or former Partners;
(b) To any accrued payments, debts or other liabilities owing to the
Partners or former Partners, including, but not limited to, accrued Reporting
Fees, Development Fee and Operating Loans, to be paid prorata if necessary;
(c) To the establishment of any reserves which the General Partner, with
the Consent of the Limited Partner, shall deem reasonably necessary for
contingent, unmatured or unforeseen liabilities or obligations of the
Partnership;
(d) To the Limited Partner in an amount equal to its Capital Contribution;
(e) To the General Partner in an amount equal to its Capital Contribution;
and
(f) Thereafter, 50% to the Limited Partner and 50% to the General Partner.
ARTICLE XII
TRANSFERS OF LIMITED
PARTNER'S INTEREST IN THE PARTNERSHIP
Section 12.1 Assignment of Limited Partner's Interest. The Limited Partner
shall not have the right to assign all or any part of its Interest to any other
Person, whether or not a Partner, except upon satisfaction of each of the
following:
(a) By a written instrument in form and substance satisfactory to the
General Partner and its counsel, setting forth the name and address of the
proposed transferee, the nature and extent of the Interest which is proposed to
be transferred and the terms and conditions upon which the transfer is proposed
to be made, stating that the Assignee accepts and agrees to be bound by all of
the terms and provisions of this Agreement, and providing for the payment of all
reasonable expenses incurred by the Partnership in connection with such
assignment, including but not limited to the cost of preparing any necessary
amendment to this Agreement;
(b) Upon consent of the General Partner to such assignment, which shall not
be unreasonably withheld; and
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(c) Upon receipt by the General Partner of the Assignee's written
representation that the Partnership Interest is to be acquired by the Assignee
for the Assignee's own account for long-term investment and not with a view
toward resale, fractionalization, division or distribution thereof.
THE LIMITED PARTNERSHIP INTEREST DESCRIBED HEREIN HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR UNDER ANY STATE SECURITIES LAW.
THESE INTERESTS MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Section 12.2 Effective Date of Transfer. Any assignment of a Limited
Partner's Interest pursuant to Section 12.1 shall become effective as of the
last day of the calendar month in which the last of the conditions to such
assignment are satisfied.
Section 12.3 Invalid Assignment. Any purported assignment of an Interest of
a Limited Partner otherwise than in accordance with Section 12.1 or Section 12.6
shall be of no effect as between the Partnership and the purported assignee and
shall be disregarded by the General Partner in making allocations and
Distributions hereunder.
Section 12.4 Assignee's Rights to Allocations and Distributions. An
Assignee shall be entitled to receive allocations and Distributions from the
Partnership attributable to the Interest acquired by reason of any permitted
assignment from and after the first day of the calendar month following the
month which ends with the effective date of the transfer of such Interest as
provided in Section 12.2. The Partnership and the General Partner shall be
entitled to treat the assignor of such Partnership Interest as the absolute
owner thereof in all respects, and shall incur no liability for allocations and
Distributions made in good faith to such assignor, until such time as the
written instrument of assignment has been received by the Partnership.
Section 12.5 Substitution of Assignee as Limited Partner.
(a) An Assignee shall not have the right to become a Substitute Limited
Partner in place of his assignor unless the written consent of the General
Partner to such substitution shall have been obtained, which consent, in the
General Partner's absolute discretion, may be withheld.
(b) A nonadmitted transferee of a Limited Partner's Interest in the
Partnership shall only be entitled to receive that share of allocations,
Distributions and the return of Capital Contribution to which its transferor
would otherwise have been entitled with respect to the Interest transferred, and
shall have no right to obtain any information on account of the Partnership's
transactions, to inspect the Partnership's books and records or have any other
of the rights and privileges of a Limited Partner, provided, however, that the
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Partnership shall, if a transferee and transferor jointly advise the General
Partner in writing of a transfer of an Interest in the Partnership, furnish the
transferee with pertinent tax information at the end of each fiscal year of the
Partnership.
(c) The General Partner may elect to treat a transferee of a Partnership
Interest who has not become a Substitute Limited Partner as a Substitute Limited
Partner as the case may be, in the place of its transferor should the General
Partner determine in its absolute discretion that such treatment is in the best
interest of the Partnership.
Section 12.6 Death, Bankruptcy, Incompetency, etc. of a Limited Partner.
Upon the death, dissolution, adjudication of bankruptcy, or adjudication of
incompetency or insanity of a Limited Partner such Partner's executors,
administrators or legal representatives shall have all the rights of a Limited
Partner for the purpose of settling or managing such Partner's estate, including
such power as such Partner possessed to constitute a successor as a transferee
of its Interest in the Partnership and to join with such transferee in making
the application to substitute such transferee as a Partner. However, such
executors, administrators or legal representatives will not have the right to
become Substitute Limited Partners in the place of their respective
predecessors-in-interest except in accordance with the provisions of Section
12.5
ARTICLE XIII
WITHDRAWAL, REMOVAL AND REPLACEMENT OF
GENERAL PARTNER
Section 13.1 Withdrawal of General Partner.
(a) The General Partner may not Withdraw (other than as a result of an
Involuntary Withdrawal) without the Consent of the Limited Partner, and, to the
extent required, of Bank of America, Federal Savings Bank and the State Tax
Credit Agency. Withdrawal shall be conditioned upon the agreement of one or more
Persons who satisfy the requirements of Section 13.5 of this Agreement to be
admitted as successor General Partner(s).
(b) Each General Partner shall indemnify and hold harmless the Partnership
and all Partners from its Withdrawal in violation of Section 13.1(a) hereof.
Each General Partner shall be liable for damages to the Partnership resulting
from its Withdrawal in violation of Section 13.1(a).
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Section 13.2 Removal of General Partner.
(a) The Limited Partner may remove the General Partner:
(1) For cause if such General Partner has:
(A) Been subject to an event of Bankruptcy;
(B) Committed any fraud, willful misconduct, breach of fiduciary
duty or other negligent conduct in the performance of its duties under this
Agreement;
(C) Been convicted of, or entered into a plea of guilty to, a
felony;
(D) Made personal use of Partnership funds or properties;
(E) Violated the terms of the Mortgage Note, and such violation
prompts Bank of America, Federal Savings Bank to issue a default letter or
acceleration notice to the Partnership or General Partner;
(F) Failed to provide any loan, advance, Capital Contribution or
any other payment to the Partnership required under this Agreement;
(G) Failed to obtain the Consent of the Limited Partner prior to
any decision, act or omission under circumstances where this Agreement requires
that such consent be obtained;
(H) Breached any representation, warranty or covenant contained
in this Agreement, or failed to perform any other action which may be required
by this Agreement;
(I) Violated any federal or state tax law which causes a 5% or
greater recapture of LIHTC; or
(J) Failed during any six-month period during the Compliance
Period to cause at least 85% of the total apartment units in the Project to
qualify for LIHTC, unless such failure is the result of Force Majeure or unless
such failure is cured within 120 days after the end of the six-month period.
(2) As provided in Section 6.2(a) hereof.
(b) Notwithstanding any provision of Section 13.2(a), written notice of the
removal for cause of the General Partner shall be served upon the General
Partner either by certified or by registered mail, return receipt requested, or
by personal service. Such notice shall be served upon the General Partner in
conjunction with a meeting of the Partners in accordance with Section 17.2 of
this Agreement. With the Limited Partner's approval, which shall not be
unreasonably withheld, the General Partner shall have a reasonable time to cure
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any default which is of its nature not susceptible to cure within 30 days
provided that curative action is commenced promptly upon notice and is
diligently pursued to completion within 60 days.
(c) Upon receipt of such notice of removal for cause, the General Partner
shall cause an accounting to be prepared covering the transactions of the
Partnership from the end of the previous fiscal year through the date of receipt
of such notice, and thereafter it shall not sell or dispose of Partnership
assets under any circumstances. The accounting shall be completed by the
effective date of the removal and shall be in sufficient detail to accurately
and fully reflect the earnings or losses for the period and the financial
condition of the Partnership. If the General Partner fails to cause the
accounting to be prepared within 30 days of receipt of the notice of removal for
cause then the Limited Partner may cause the accounting to be prepared. The
expenses of the accounting shall be borne by the General Partner.
Section 13.3 Effects of a Withdrawal. In the event of a Withdrawal, the
entire Interest of the Withdrawing General Partner shall immediately and
automatically terminate on the effective date of such Withdrawal, and such
General Partner shall immediately cease to be a General Partner, shall have no
further right to participate in the management or operation of the Partnership
or the Project or to receive any allocations or Distributions from the
Partnership or any other funds or assets of the Partnership, except as
specifically set forth below. In the event of a Withdrawal, any or all executory
contracts, including but not limited to the Management Agreement, between the
Partnership and the Withdrawing General Partner or its Affiliates may be
terminated by the Partnership within 30 days after such Withdrawal.
Furthermore, notwithstanding such Withdrawal, the Withdrawing General
Partner shall be and shall remain, liable as a General Partner for all
liabilities and obligations incurred by the Partnership or by the General
Partner prior to the effective date of the Withdrawal, or which may arise upon
such Withdrawal. Any remaining Partner shall have all other rights and remedies
against the Withdrawing General Partner as provided by law or under this
Agreement.
The General Partner agrees that in the event of its Withdrawal it will
indemnify and hold the Limited Partner harmless from and against all losses,
costs and expenses incurred in connection with the Withdrawal, including,
without limitation, all legal fees and other expenses of the Limited Partner in
connection with the transaction.
The following additional provisions shall apply in the event of a
Withdrawal:
(a) In the event of a Withdrawal which is not an Involuntary Withdrawal,
the Withdrawing General Partner shall have no further right to receive any
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future allocations or Distributions from the Partnership or any other funds or
assets of the Partnership, nor shall it be entitled to receive or to be paid by
the Partnership any further payments of fees (including fees which have been
earned but are unpaid) or to be repaid any outstanding advances or loans made by
it to the Partnership or to be paid any amount for its former Interest. From and
after the effective date of such Withdrawal, the former rights of the
Withdrawing General Partner to receive or to be paid such allocations,
Distributions, funds, assets, fees or repayments shall be assigned to the other
General Partner or General Partners (which may include the Limited Partner), or
if there is no other general partner of the Partnership at that time, to the
Limited Partner.
(b) In the event of an Involuntary Withdrawal, except as provided in
Section 13.3(b)(3) below, the Withdrawing General Partner shall have no further
right to receive any future allocations or Distributions from the Partnership or
any other funds or assets of the Partnership, provided that accrued and payable
fees (i.e., fees earned but unpaid as of the date of Withdrawal) owed to the
Withdrawing General Partner, and any outstanding loans of the Withdrawing
General Partner to the Partnership, shall be paid to the Withdrawing General
Partner in the manner and at the times such fees and loans would have been paid
had the Withdrawing General Partner not Withdrawn. The Interest of the General
Partner shall be purchased as follows:
(1) If the Involuntary Withdrawal arises from removal for cause as set
forth in Section 13.2(a) hereof, the Withdrawn General Partner shall be entitled
to receive as its sole compensation for its Interest in the Partnership an
amount equal to its positive Capital Account balance determined as of the
effective date of the removal, if any, payable upon the dissolution and
termination of the Partnership after all of the Partners have been distributed
the positive balances in their Capital Accounts.
(2) If the Involuntary Withdrawal does not arise from removal for
cause under Sections 13.2(a) or (b) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s), the
Partnership, with the Consent of the Limited Partner, may, but is not obligated
to, purchase the Interest of the Withdrawing General Partner in Partnership
allocations, Distributions and capital. The purchase price of such Interest
shall be its Fair Market Value as determined by agreement between the
Withdrawing General Partner and the Limited Partner, or, if they cannot agree,
by arbitration in accordance with the then current rules of the American
Arbitration Association. The cost of such arbitration shall be borne equally
by the Withdrawing General Partner and the Partnership. The purchase price shall
be paid by the Partnership by delivering to the General Partner or its
representative the Partnership's non-interest bearing unsecured promissory
note payable, if at all, from the General Partner's share of the Cash Flow
From Operations in accordance with Section 11.1 herein and if not paid in
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full then upon liquidation of the Partnership in accordance with Section
11.2(b). The note shall also provide that the Partnership may prepay all or any
part thereof without penalty.
(3) If the Involuntary Withdrawal does not arise from removal for
cause under Sections 13.2(a) or (b) hereof, and if the Partnership is to be
continued with one or more remaining or successor General Partner(s),
and if the Partnership does not purchase the Interest of the Withdrawing
General Partner in Partnership allocations, Distributions and capital, then the
Withdrawing General Partner shall retain its Interest in such items, but such
Interest shall be held as a special limited partner.
Section 13.4 Successor General Partner. Upon the occurrence of an event
giving rise to a Withdrawal of a General Partner, any remaining General Partner,
or, if there be no remaining General Partner, the Withdrawing General Partner or
its legal representative, shall promptly notify the Limited Partner of such
Withdrawal (the "Withdrawal Notice"). Whether or not the Withdrawal Notice shall
have been sent as provided herein, the Limited Partner shall have the right to
become a successor General Partner. In order to effectuate the provisions of
this Section 13.4 and the continuance of the Partnership, the Withdrawal of a
General Partner shall not be effective until the expiration of 120 days from the
date on which occurred the event giving rise to the Withdrawal, unless the
Limited Partner shall have elected to become a successor General Partner as
provided herein prior to expiration of such 120-day period, whereupon the
Withdrawal of the General Partner shall be deemed effective upon the
notification of all the other Partners by the Limited Partner of such election.
Section 13.5 Admission of Additional or Successor General Partner. No
Person shall be admitted as an additional or successor General Partner unless
(a) such Person shall have agreed to become a General Partner by a written
instrument which shall include the acceptance and adoption of this Agreement;
(b) the Consent of the Limited Partner to the admission of such Person as a
substitute General Partner, which consent may be withheld in the discretion of
the Limited Partner, shall have been given; and (c) such Person shall have
executed and acknowledged any other instruments which the Limited Partner shall
reasonably deem necessary or appropriate to affect the admission of such Person
as a substitute General Partner. If the foregoing conditions are satisfied, this
Agreement shall be amended in accordance with the provisions of the Act, and all
other steps shall be taken which are reasonably necessary to effect the
Withdrawal of the Withdrawing General Partner and the substitution of the
successor General Partner. Nothing contained herein shall reduce the Limited
Partner's Interest in the Partnership.
Section 13.6 Transfer of Interest. Except as otherwise provided herein, the
General Partner may not Withdraw from the Partnership, or enter into any
agreement as the result of which any Person shall become interested in the
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Partnership, without the Consent of the Limited Partner.
Section 13.7 No Goodwill Value. At no time during continuation of the
Partnership shall any value ever be placed on the Partnership name, or the right
to its use, or to the goodwill appertaining to the Partnership or its business,
either as among the Partners or for the purpose of determining the value of any
Interest, nor shall the legal representatives of any Partner have any right to
claim any such value. In the event of a termination and dissolution of the
Partnership as provided in this Agreement, neither the Partnership name, nor the
right to its use, nor the same goodwill, if any, shall be considered as an asset
of the Partnership, and no valuation shall be put thereon for the purpose of
liquidation or distribution, or for any other purpose whatsoever.
ARTICLE XIV
BOOKS AND ACCOUNTS, REPORTS,
TAX RETURNS, FISCAL YEAR AND BANKING
Section 14.1 Books and Accounts.
(a) The General Partner shall cause the Partnership to keep and maintain at
its principal executive office full and complete books and records which shall
include each of the following:
(1) a current list of the full name and last known business or
residence address of each Partner set forth in alphabetical order together
with the Capital Contribution and the share in Income and Losses of each
Partner;
(2) a copy of the Certificate of Limited Partnership and all
certificates of amendment thereto, together with executed copies of any
powers of attorney pursuant to which any certificate has been executed;
(3) copies of the Partnership's federal, state and local income tax
information returns and reports, if any, for the six most recent taxable years;
(4) copies of the original of this Agreement and all amendments
thereto;
(5) financial statements of the Partnership for the six most recent
fiscal years; and
(6) the Partnership's books and records for at least the current and
past three fiscal years.
(b) Upon the request of the Limited Partner, the General Partner shall
promptly deliver to the Limited Partner, at the expense of the Partnership, a
copy of the information set forth in Section 14.1(a) above. The Limited Partner
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shall have the right upon reasonable request and during normal business hours to
inspect and copy any of the foregoing, or any of the other books and records of
the Partnership or the Project at its own expense.
Section 14.2 Accounting Reports.
(a) By March 1 of each calendar year the General Partner shall provide to
the Limited Partner all tax information necessary for the preparation of their
federal and state income tax returns and other tax returns with regard to the
jurisdiction(s) in which the Partnership is formed and in which the Project is
located.
(b) By March 1 of each calendar year the General Partner shall send to the
Limited Partner: (1) a balance sheet as of the end of such fiscal year and
statements of income, Partners' equity and changes in cash flow for such fiscal
year prepared in accordance with generally accepted accounting principles and
accompanied by an auditor's report containing an opinion of the Partnership's
Accountants; (2) a report (which need not be audited) of any Distributions made
at any time during the fiscal year, separately identifying Distributions from
Cash Flow From Operations for the fiscal year, Cash Flow From Operations for
prior years, Sale or Refinancing Proceeds, and reserves; (3) a report setting
forth the amount of all fees and other compensation and Distributions and
reimbursed expenses paid by the Partnership for the fiscal year to the General
Partner or Affiliates of the General Partner and the services performed in
consideration therefor, which report shall be verified by the Partnership's
Accountants, with the method of verification to include, at a minimum, a review
of the time records of individual employees, the costs of whose services were
reimbursed, and a review of the specific nature of the work performed by each
such employee, all in accordance with generally accepted auditing standards and,
accordingly, including such tests of the accounting records and such other
auditing procedures as the Accountants consider appropriate in the
circumstances; (4) a copy of the Project's rent roll for the most recent
calendar quarter; (5) a statement signed by the General Partner indicating the
number of apartment units which are occupied by Qualified Tenants; and (6) a
report of the significant activities of the Partnership during the year.
(c) Within 60 days after the end of each fiscal quarter in which a Sale or
Refinancing of the Project occurs, the General Partner shall send to the Limited
Partner a report as to the nature of the Sale or Refinancing and as to the
Income and Losses for tax purposes and proceeds arising from the Sale or
Refinancing.
Section 14.3 Other Reports. The General Partner shall provide to the
Limited Partner:
(a) During the period of construction, a copy of the initial construction
schedule and any updates to the construction schedule, and by the tenth day of
each month a copy of the previous month's Construction Loan draw request and the
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inspecting architect's application and certification of payment (AIA Document
G702, or similar form acceptable to the Limited Partner);
(b) During the rent-up phase, and continuing until the end of the first
six-month period during which the Project has a sustained occupancy of 95% or
better, by the tenth day of each month within such period a copy of the previous
month's rent roll (through the last day of the month) and a tenant LIHTC
compliance worksheet similar to the monthly initial tenant certification
worksheet included in Exhibit "G" attached hereto and incorporated herein by
this reference;
(c) A quarterly tax credit compliance report similar to the worksheet
included in Exhibit "G" due on or before April 30 of each year for the first
quarter, July 31 of each year for the second quarter, October 31 of each year
for the third quarter and January 31 of each year for the fourth quarter. In
order to verify the reliability of the information being provided on the
compliance report the Limited Partner may request a small sampling of tenant
files to be provided. The sampling will include, but not be limited to, copies
of tenant applications, certifications and third party verifications used to
qualify tenants. If any inaccuracies are found to exist on the tax credit
compliance report or any items of noncompliance are discovered then the sampling
will be expanded as determined by the Limited Partner.
(d) By September 15 of each year, an estimate of LIHTC for that year;
(e) During the Compliance Period, no later than the day any such
certification is filed, copies of any certifications which the Partnership must
furnish to federal or state governmental authorities administering any Tax
Credit program including, but not limited to, copies of all annual tenant
recertifications required under Section 42 of the Code;
(f) A quarterly report on operations, in the form attached hereto as
Exhibit "G", due on or before April 30 of each year for the first quarter of
operations, July 31 of each year for the second quarter of operations, October
31 of each year for the third quarter of operations and January 31 of each year
for the fourth quarter of operations which shall include, but is not limited to,
an unaudited income statement showing all activity in the reserve accounts
required to be maintained pursuant to Section VIII of this Agreement, statement
of income and expenses, balance sheet, rent roll as of the end of each calendar
quarter of each year, and third party verification of current utility allowance;
(g) By the annual renewal date of each and every year, an executed copy or
certified copy of each and every Insurance policy or certificate required by the
terms of this Agreement;
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(h) On or before March 15th of each calendar year, the General Partner's
updated financial statement as of December 31 of the previous year;
(i) On or before December 15 of each calendar year, a copy of the following
year's proposed operating budget. Each such budget shall contain an amount
required for reserves in accordance with Article VIII and for the payment of
real estate taxes, insurance, debt service and other payments; and
(j) Notice of the occurrence, or of the likelihood of occurrence, of any
event which has had a material adverse effect upon the Project or the
Partnership, including, but not limited to, any breach of any of the
representations and warranties set forth in Section 9.11 of this Agreement, and
any inability of the Partnership to meet its cash obligations as they become
payable, within ten days after the occurrence of such event.
Section 14.4 Late Reports. If the General Partner does not fulfill its
obligations under Sections 14.2(a) and (b) within the time periods set forth
therein, the General Partner, using its own funds, shall pay as damages the sum
of $100 per week (plus interest at the rate established by Section 6.3 of this
Agreement) to the Limited Partner until such obligations shall have been
fulfilled. Such damages shall be paid forthwith by the General Partner, and
failure to so pay shall constitute a material default of the General Partner
hereunder and cause for removal under Section 13.2 hereof. In addition, if the
General Partner shall so fail to pay, the General Partner and its Affiliates
shall forthwith cease to be entitled to any fees hereunder (other than the
Development Fee) and/or to the payment of any Cash Flow From Operations or Sale
or Refinancing Proceeds to which the General Partner may otherwise be entitled
hereunder. Payments of fees and Distributions shall be restored only upon
payment of such damages in full.
Section 14.5 Annual Site Visits. On an annual basis a representative of the
Limited Partner, at the Limited Partner's expense, will conduct a site visit
which will include, in part, an inspection of the property, a review of the
office and tenant files and an interview with the property manager. The Limited
Partner may, in its sole discretion, cancel all or any part of the annual site
visit.
Section 14.6 Tax Returns. The General Partner shall cause income tax
returns for the Partnership to be prepared and timely filed with the appropriate
federal, state and local taxing authorities.
Section 14.7 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year or such other period as may be approved by the Internal Revenue
Service for federal income tax purposes.
Section 14.8 Banking. All funds of the Partnership shall be deposited in a
separate bank account or accounts as shall be determined by the General Partner.
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All withdrawals therefrom shall be made upon checks signed by the General
Partner or by any person authorized to do so by the General Partner. The General
Partner shall provide to any Partner who requests same the name and address of
the financial institution, the account number and other relevant information
regarding any Partnership bank account.
Section 14.9 Certificates and Elections.
(a) The General Partner shall file the First Year Certificate within 90
days following the close of the taxable year during which Completion of
Construction occurs and thereafter shall timely file any certificates which the
Partnership must furnish to federal or state governmental authorities
administering the Tax Credit programs under Section 42 of the Code.
(b) The General Partner may, but is not required to, cause the Partnership
to make or revoke the election referred to in Section 754 of the Code, as
amended, or any similar provisions enacted in lieu thereof.
ARTICLE XV
DISSOLUTION, WINDING UP, TERMINATION
AND LIQUIDATION OF THE PARTNERSHIP
Section 15.1 Dissolution of Partnership. The Partnership shall be
dissolved upon the expiration of its term or the earlier occurrence of any of
the following events:
(a) The effective date of the Withdrawal or removal of the General Partner,
unless (1) at the time there is at least one other General Partner (which may be
the Limited Partner if it elects to serve as successor General Partner under
Section 13.4 hereof) who will continue as General Partner, or (2) within 120
days after the occurrence of any such event the Limited Partner elects to
continue the business of the Partnership; or
(b) The sale of the Project and the receipt in cash of the full amount of
the proceeds of such sale.
Notwithstanding the foregoing, however, in no event shall the Partnership
terminate prior to the expiration of its term if such termination would result
in a violation of the Mortgage Note or any other agreement with or rule or
regulation of Bank of America, Federal Savings Bank to which the Partnership is
subject.
Section 15.2 Return of Capital Contribution upon Dissolution. Except as
provided in Sections 7.3, 7.4 and 7.6 of this Agreement, which provide for a
reduction or refund of the Limited Partner's Capital Contribution under certain
circumstances, and which shall represent the personal obligation of the General
Partner, as well as the obligation of the Partnership, each Partner shall look
solely to the assets of the Partnership for all Distributions with respect to
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the Partnership (including the return of its Capital Contribution) and shall
have no recourse therefor (upon dissolution or otherwise) against any General
Partner. No Partner shall have any right to demand property other than money
upon dissolution and termination of the Partnership.
Section 15.3 Distributions of Assets. Upon a dissolution of the
Partnership, the General Partner (or, if there is no General Partner then
remaining, such other Person(s) designated as the liquidator of the Partnership
by the Limited Partner or by the court in a judicial dissolution) shall take
full account of the Partnership assets and liabilities and shall liquidate the
assets as promptly as is consistent with obtaining the fair value thereof.
(a) Upon dissolution and termination, after payment of, or adequate
provision for, the debts and obligations of the Partnership pursuant to Section
11.2(a) through and including 11.2(c), the remaining assets of the Partnership
shall be distributed to the Partners in accordance with the positive balances in
their Capital Accounts, after taking into account all allocations under Article
X hereof.
(b) In the event that a General Partner has a deficit balance in its
Capital Account following the liquidation of the Partnership or its Interest, as
determined after taking into account all Capital Account adjustments for the
Partnership's taxable year in which such liquidation occurs, such General
Partner shall pay to the Partnership the amount necessary to restore such
deficit balance to zero in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(3).
The deficit make-up shall be paid by the General Partner by the end of such
taxable year and shall, upon liquidation of the Partnership, be paid to
creditors of the Partnership or distributed to other Partners in accordance with
their positive Capital Account balances. Notwithstanding, if the Limited Partner
has become successor General Partner, it shall not be responsible for any
deficit balance in its Capital Account which arose during the time the former
General Partner served as General Partner.
(c) With respect to assets distributed in kind to the Partners in
liquidation or otherwise:
(1) unrealized appreciation or unrealized depreciation in the values
of such assets shall be deemed to be Income and Losses realized by the
Partnership immediately prior to the liquidation or other Distribution event;
and
(2) such Income and Losses shall be allocated to the Partners in
accordance with Section 10.2 hereof, and any property so distributed shall be
treated as a Distribution of an amount in cash equal to the excess of such Fair
Market Value over the outstanding principal balance of and accrued interest
on any debt by which the property is encumbered.
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(d) For the purposes of Section 15.3(c), "unrealized appreciation" or
"unrealized depreciation" shall mean the difference between the Fair Market
Value of such assets, taking into account the Fair Market Value of the
associated financing but subject to Section 7701(g) of the Code, and the
Partnership's adjusted basis in such assets for book purposes. Section 15.3(c)
is merely intended to provide a rule for allocating unrealized Income and Losses
upon liquidation or other Distribution event, and nothing contained in Section
15.3(c) or elsewhere in this Agreement is intended to treat or cause such
Distributions to be treated as sales for value. The Fair Market Value of such
assets shall be determined by an independent appraiser to be selected by the
General Partner with the Consent of the Limited Partner.
Section 15.4 Deferral of Liquidation. If at the time of liquidation the
General Partner or other liquidator shall determine that an immediate sale of
part or all of the Partnership assets could cause undue loss to the Partners,
the liquidator may, in order to avoid loss, but only with the Consent of the
Limited Partner, either defer liquidation and retain all or a portion of the
assets or distribute all or a portion of the assets to the Partners in kind. In
the event that the liquidator elects to distribute such assets in kind, the
assets shall first be assigned a value (by appraisal by an independent
appraiser) and the unrealized appreciation or depreciation in value of the
assets shall be allocated to the Partners' Capital Accounts, as if such assets
had been sold, in the manner described in Section 10.2, and such assets shall
then be distributed to the Partners as provided herein. In applying the
preceding sentence, the Project shall not be assigned a value less than the
unamortized principal balance of any loan secured thereby.
Section 15.5 Liquidation Statement. Each of the Partners shall be furnished
with a statement prepared or caused to be prepared by the General Partner or
other liquidator, which shall set forth the assets and liabilities of the
Partnership as of the date of complete liquidation. Upon compliance with the
distribution plan as outlined in Sections 15.3 and 15.4, the Limited Partner
shall cease to be such and the General Partner shall execute, acknowledge and
cause to be filed those certificates referenced in Section 15.6.
Section 15.6 Certificates of Dissolution; Certificate of Cancellation of
Certificate of Limited Partnership.
(a) Upon the dissolution of the Partnership, the General Partner shall
cause to be filed in the office of, and on a form prescribed by the Secretary of
State of the State, a certificate of dissolution. The certificate of dissolution
shall set forth the Partnership's name, the Secretary of State's file number for
the Partnership, the event causing the Partnership's dissolution and the date of
the dissolution.
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(b) Upon the completion of the winding up of the Partnership's affairs, the
General Partner shall cause to be filed in the office of, and on a form
prescribed by, the Secretary of State of the State, a certificate of
cancellation of the Certificate of Limited Partnership. The certificate of
cancellation of the Certificate of Limited Partnership shall set forth the
Partnership's name, the Secretary of State's file number for the Partnership,
and any other information which the General Partner determines to include
therein.
ARTICLE XVI
AMENDMENTS
This Agreement may be amended at any time by the Limited Partner. This
Agreement may not be amended by the General Partner absent the Consent of the
Limited Partner. Notwithstanding the foregoing, no amendment shall change the
Partnership to a general partnership; extend the term of the Partnership beyond
the date provided for in this Agreement; modify the limited liability of the
Limited Partner; allow the Limited Partner to take control of the Partnership's
business within the meaning of the Act; reduce or defer the realization of any
Partner's interest in allocations, Distributions, capital or compensation
hereunder, or increase any Partner's obligations hereunder, without the consent
of the Partner so affected; or change the provisions of this Article XVI.
ARTICLE XVII
MISCELLANEOUS
Section 17.1 Voting Rights.
(a) The Limited Partner shall have no right to vote upon any matters
affecting the Partnership, except as provided in this Agreement. Notwithstanding
the foregoing, the Limited Partner may, without the concurrence of the General
Partner:
(1) Approve or disapprove, but, except as otherwise expressly provided
herein, not initiate, the Sale or Refinancing of the Project;
(2) Remove the General Partner and elect a substitute General Partner
as provided in this Agreement;
(3) Elect a successor General Partner upon the Withdrawal of the
General Partner;
(4) Approve or disapprove, but not initiate, the dissolution of the
Partnership; or
(5) Subject to the provisions of Article XVI hereof, amend this
Agreement.
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(b) On any matter where the Limited Partner has the right to vote, votes
may only be cast at a duly called meeting of the Partnership or through written
action without a meeting.
(c) The Limited Partner shall have the right to consent to those actions or
inactions of the Partnership and/or General Partner as otherwise set forth in
this Agreement, and the General Partner is prohibited from any action or
inaction requiring such consent unless such consent has been obtained.
Section 17.2 Meeting of Partnership. Meetings of the Partnership may be
called either (a) at any time by the General Partner; or (b) upon the General
Partner's receipt of a written or facsimile request from the Limited Partner
setting forth the purpose of such meeting. Within ten days after receipt of the
Limited Partner's written or facsimile request for a meeting, the General
Partner shall provide all Partners with written notice of the meeting (which
shall be by telephone conference, or at the principal place of business of the
Partnership or such other location referenced in the notice) to be held not less
than 15 days nor more than 30 days after receipt of such written or facsimile
request from the Limited Partner, which notice shall specify the time and place
of such meeting and the purpose or purposes thereof. If the General Partner
fails to provide the written notice of the meeting within ten days after receipt
of the Limited Partner's request to hold a meeting, then the Limited Partner may
provide the written notice of the meeting to all the Partners, which notice
shall specify the time and place of such meeting and the purpose or purposes
thereof. All meetings and actions of the Limited Partner shall be governed in
all respects, including matters relating to notice, quorum, adjournment,
proxies, record dates and actions without a meeting, by the applicable
provisions of the Act, as it shall be amended from time to time.
Section 17.3 Notices. Any notice given pursuant to this Agreement may be
served personally on the Partner to be notified, or may be mailed, first class
postage prepaid, to the following address, or to such other address as a party
may from time to time designate in writing:
To the General Partner: TRIANON-MESA VERDE, LLC
4695 MacArthur Court, Suite 830,
Newport Beach, California 92660
To the Limited Partner: WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
c/o WNC & ASSOCIATES, INC.
3158 Redhill Ave., Suite 120
Costa Mesa, CA 92626-3416
Section 17.4 Successors and Assigns. All the terms and conditions of this
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Partners.
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Section 17.5 Recording of Certificate of Limited Partnership. If the
General Partner should deem it advisable to do so, the Partnership shall record
in the office of the County Recorder of the county in which the principal place
of business of the Partnership is located a certified copy of the Certificate of
Limited Partnership, or any amendment thereto, after such Certificate or
amendment has been filed with the Secretary of State of the State.
Section 17.6 Amendment of Certificate of Limited Partnership.
(a) The General Partner shall cause to be filed, within 30 days after the
happening of any of the following events, an amendment to the Certificate of
Limited Partnership reflecting the occurrence thereof:
(1) A change in the name of the Partnership.
(2) A change in the street address of the Partnership's principal
executive office.
(3) A change in the address, or the Withdrawal, of a General Partner,
or a change in the address of the agent for service of process, or appointment
of a new agent for service of process.
(4) The admission of a General Partner and that Partner's address.
(5) The discovery by the General Partner of any false or erroneous
material statement contained in the Certificate of Limited Partnership or any
amendment thereto.
(b) The Certificate of Limited Partnership may also be amended in
conformity with this Agreement at any time in any other respect that the General
Partner determines.
(c) The General Partner shall cause the Certificate of Limited Partnership
to be amended, when required or permitted as aforesaid, by filing a certificate
of amendment thereto in the office of, and on a form prescribed by, the
Secretary of State of the State. The certificate of amendment shall set forth
the Partnership's name, the Secretary of State's file number for the Partnership
and the text of the amendment.
Section 17.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument which may sufficiently be
evidenced by one counterpart.
Section 17.8 Captions. Captions to and headings of the Articles, Sections
and subsections of this Agreement are solely for the conveniences of the
parties, are not a part of this Agreement, and shall not be used for the
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interpretation or determination of the validity of this Agreement or any
provision hereof.
Section 17.9 Saving Clause. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
Section 17.10 Tax Matters Partners. All the Partners hereby agree that WNC
Housing, L.P. shall be the "Tax Matters Partner", if it accepts, pursuant to the
Code and in connection with any audit of the Federal income tax returns of the
Partnership; provided, however, that if the Limited Partner shall withdraw from
the Partnership or become Bankrupt, the General Partner shall thereafter be the
"Tax Matters Partner". If the Tax Matters Partner shall determine to litigate
any administrative determination relating to federal income tax matters, it
shall litigate such matter in such court as the Tax Matters Partner shall decide
in its sole discretion. In discharging its duties and responsibilities, the Tax
Matters Partner shall act as a fiduciary (i) to the Limited Partner (to the
exclusion of the other Partners) insofar as tax matters related to the Tax
Credits are concerned, and (ii) to all of the Partners in other respects.
Section 17.11 Expiration of Compliance Period.
(a) Notwithstanding any provision hereof to the contrary (other than this
Section 17.11), the Limited Partner shall have the right at any time after the
beginning of the last year of the Compliance Period to require, by written
notice to the General Partner, that the General Partner promptly submit a
written request to the applicable State Tax Credit Agency pursuant to Section
42(h) of the Code (or any successor provision) that such agency endeavor to
locate within one year from the date of such written request a purchaser for the
Project who will continue to operate the Project as a qualified low income
property, at a purchase price that is not less than the minimum amount set forth
in Section 42(h)(6) of the Code (or any successor provision). In the event that
the State Tax Credit Agency obtains an offer satisfying the conditions of the
preceding sentence, the General Partner shall promptly notify the Limited
Partner in writing with respect to the terms and conditions of such offer, and,
if the Limited Partner notifies the General Partner that such offer should be
accepted, the General Partner shall cause the Partnership promptly to accept
such offer and to proceed to sell the Project pursuant to such offer.
(b) Notwithstanding any other provision of this Agreement to the contrary,
the Limited Partner shall have the right at any time after the end of the
Compliance Period to require, by written notice to the General Partner (the
"Required Sale Notice"), that the General Partner promptly use its best efforts
to obtain a buyer for the Project on the most favorable terms then available.
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The General Partner shall submit the terms of any proposed sale to the Limited
Partner for its approval in the manner set forth in Section 17.11(a) hereof. If
the General Partner shall fail to so obtain a buyer for the Project within six
months of receipt of the Required Sale Notice or if the Consent of the Limited
Partner in its sole discretion shall be withheld to any proposed sale, then the
Limited Partner shall have the right at any time during the next six months to
obtain a buyer for the Project on terms acceptable to the Limited Partner (but
not less favorable to the Partnership than any proposed sale previously rejected
by the Limited Partner). In the event that the Limited Partner so obtains a
buyer, it shall notify the General Partner in writing with respect to the terms
and conditions of the proposed sale and the General Partner shall cause the
Partnership promptly to sell the Project to such buyer. If the Limited Partner
does not locate a buyer in the applicable six month period then the Partners
shall cooperate to locate a buyer for the Project.
(c) A sale of the Project prior to the end of the Compliance Period may
only take place if the conditions of Section 42(j)(6) of the Code (or any
successor provision) will be satisfied upon such sale by having the purchaser of
the Project post the required bond on behalf of the Partnership.
Section 17.12 Number and Gender. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the Person or Persons may require.
Section 17.13 Entire Agreement. This Agreement together with all Exhibits
constitutes the entire understanding between the parties with respect to the
subject matter hereof and all prior understandings and agreements between the
parties, written or oral, respecting this transaction are merged in this
Agreement.
Section 17.14 Governing Law. This Agreement and its application shall be
governed by the laws of the State.
Section 17.15 Attorney's Fees. If a suit or action is instituted in
connection with an alleged breach of any provision of this Agreement, the
prevailing party shall be entitled to recover, in addition to costs, such sums
as the court may adjudge reasonable as attorney's fees, including fees on any
appeal.
Section 17.16 Receipt of Correspondence. The Partners agree that the
General Partner shall send to the Limited Partner a copy of any correspondence
relative to the Project's noncompliance with the Mortgage Note, relative to the
acceleration of the Mortgage Note and/or relative to the disposition of the
Project.
Section 17.17 Security Interest and Right of Set-Off. As security for the
performance of the respective obligations to which any Partner may be subject
under this Agreement, the Partnership shall have (and each Partner hereby grants
to the Partnership) a security interest in all funds distributable to said
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Partner to the extent of the amount of such obligation.
IN WITNESS WHEREOF, this Amended and Restated Agreement of Limited
Partnership of MESA VERDE APARTMENTS, LIMITED PARTNERSHIP, a New Mexico limited
partnership, is made and entered into as of the 21st day of February, 1997.
GENERAL PARTNER
TRIANON-MESA VERDE, LLC, a New Mexico Limited
Liability Company
By: TRIANON DEVELOPMENT CORPORATION, a California
corporation, Member
By: /s/ Lester G. Day
Lester G. Day,
President
By: FOUNDATION FOR SOCIAL RESOURCES, INC., a
Delaware non-profit corporation, Member
By: /s/ William W. Hirsch
William W. Hirsch,
President
WITHDRAWING GENERAL PARTNER
Trianon Development Corporation,
a California corporation
By: /s/ Lester G. Day
Lester G. Day,
President
Foundation for Social Resources, Inc.,
a Delaware non-profit corporation
By: /s/ William W. Hirsch
William W. Hirsch,
President
WITHDRAWING ORIGINAL LIMITED PARTNER
TRIANON DEVELOPMENT CORPORATION, a California
corporation
By: /s/ Lester G. Day
Lester G. Day,
President
Signatures continued on next page....
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LIMITED PARTNER
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4,
a California limited partnership
By: WNC & ASSOCIATES, INC.,
a California corporation
General Partner
By: /s/ John B. Lester, Jr.
John B. Lester, Jr.,
President
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EXHIBIT A TO PARTNERSHIP AGREEMENT
LEGAL DESCRIPTION
PARCEL 1:
Lot 2, of West Springs East, a subdivision, in the City of Roswell, County of
Chaves and State of New Mexico, as shown on the Official Plat filed in the
Chaves County Clerk's Office on December 19, 1989 and recorded in Book M of Plat
Records, at Page 47.
PARCEL 2:
The South 355 feet of the SW1/4NE1/4 of Section 6 in Township 11 South of Range
24 East of New Mexico Principal Meridian, in the City of Roswell, County of
Chaves and State of New Mexico, EXCEPT the West 187.45 feet thereof and EXCEPT
so much thereof as is within the right-of-way of West Bland Street, and EXCEPT
so much thereof as was subdivided into West Springs Summary Plat in the City of
Roswell, County of Chaves and State of New Mexico, as shown on the Official Plat
filed in the Chaves County Clerk's Office on February 27, 1996 and recorded in
Book K of Plat Records, at Page 43.
A-1
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EXHIBIT B TO PARTNERSHIP AGREEMENT
FORM OF LEGAL OPINION
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
c/o WNC & Associates, Inc.
3158 Redhill Avenue, Suite 120
Costa Mesa, California 92626
RE: MESA VERDE APARTMENTS, LIMITED PARTNERSHIP
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the investment by WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4,
a California limited partnership (the "Limited Partner") in MESA VERDE
APARTMENTS, LIMITED PARTNERSHIP (the "Partnership"), a New Mexico limited
partnership formed to own, develop, (construct/-rehabilitate) finance and
operate an apartment complex for low-income persons (the "Apartment Complex") in
Roswell, Chaves County, New Mexico. The general partner(s) of the Partnership
(is/are) TRIANON-MESA VERDE, LLC, a New Mexico Limited Liability Company.
In rendering the opinions stated below, we have examined and relied upon
the following:
(i) [Certificate of Limited Partnership];
(ii) [Agreement of Limited Partnership] (the "Partnership Agreement");
(iii) A preliminary reservation letter from [State Allocating Agency] (the
"State Agency") dated _________, 199___ conditionally awarding $_______________
in Federal tax credits annually for each of ten years and $_______________ in
California tax credits annually for each of four years for the Apartment
Complex; and
(iv) Such other documents, records and instruments as we have deemed
necessary in order to enable us to render the opinions referred to in this
letter.
For purposes of rendering the opinions stated below we have assumed that,
in those cases in which we have not been involved directly in the preparation,
execution or the filing of a document, that (a) the document reviewed by us is
an original document, or a true and accurate copy of the original document, and
has not been subsequently amended, (b) the signatures on each original document
are genuine, and (c) each party who executed the document had proper authority
and capacity.
B-1
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WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
c/o WNC & ASSOCIATES, Inc.
______________, 199__
Page 2
Based on the foregoing we are of the opinion that:
(a) ________________________, one of the General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of _____________________ and has full power and authority to enter into
and perform its obligations under the Partnership Agreement.
_____________________, one of the other General Partners, is a
[corporation/partnership] duly formed and validly existing under the laws of the
State of __________________ and has full power and authority to enter into and
perform its obligations under the Partnership Agreement.
(b) The Partnership is a limited partnership duly formed and validly
existing under the laws of the State of New Mexico.
(c) The Partnership is validly existing under and subject to the laws of
New Mexico with full power and authority to own, develop,
[construct/rehabilitate], finance and operate the Apartment Complex and to
otherwise conduct business under the Partnership Agreement.
(d) Execution of the Partnership Agreement by the General Partner(s) has
been duly and validly authorized by or on behalf of the General Partner(s) and,
having been executed and delivered in accordance with its terms, the Partnership
Agreement constitutes the valid and binding agreement of the General Partner(s),
enforceable in accordance with its terms.
(e) The execution and delivery of the Partnership Agreement by the General
Partner(s) does not conflict with and will not result in a breach of any of the
terms, provisions or conditions of any agreement or instrument known to counsel
to which any of the General Partner(s) or the Partnership is a party or by which
any of them may be bound, or any order, rule, or regulation to be applicable to
any of such parties of any court or governmental body or administrative agency
having jurisdiction over any of such parties or over the property.
(f) To the best of counsel's knowledge, after due inquiry, there is no
litigation or governmental proceeding pending or threatened against, or
involving the Apartment Complex, the Partnership or any General Partner which
would materially adversely affect the condition (financial or otherwise) or
business of the Apartment Complex, the Partnership or any of the Partners of the
Partnership.
(g) The Limited Partner has been admitted to the Partnership as a limited
partner of the Partnership under __________ law and are entitled to all of the
rights of limited partners under the Partnership Agreement. Except as described
B-2
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WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
c/o WNC & ASSOCIATES, Inc.
______________, 199__
Page 3
in the Partnership Agreement, no person is a partner of or has any legal or
equitable interest in the Partnership, and all former partners of record or
known to counsel have validly withdrawn from the Partnership and have released
any claims against the Partnership arising out of their participation as
partners therein.
(h) Liability of the Limited Partner for obligations of the Partnership is
limited to the amount of the Limited Partner's capital contributions required by
the Partnership Agreement.
(i) Neither the General Partner(s) of the Partnership nor the Limited
Partner will have any liability for the Mortgage Note or the Mortgage Loan
represented thereby (as those terms are defined in the Partnership Agreement,
and the lender of the Mortgage Loan will look only to its security in the
Apartment Complex for repayment of the Mortgage Loan.
(j) The Partnership owns a fee simple interest in the Apartment Complex.
(k) To the best of our actual knowledge and belief, after due inquiry, the
Partnership has obtained all consents, permissions, licenses, approvals, or
orders required by all applicable governmental or regulatory agencies for the
development, [construction/rehabilitation] and operation of the Apartment
Complex, and the Apartment Complex conforms to all applicable Federal, state and
local land use, zoning, health, building and safety laws, ordinances, rules and
regulations.
(l) The Apartment Complex has obtained a preliminary reservation of low
income housing tax credits ("LIHTC") from the State Agency. the final allocation
of the LIHTC and ultimately eligibility of the Apartment Complex for such final
allocation are subject to a series of requirements which must be met, performed
or achieved at various times prior to and after such final allocation. Assuming
all such requirements are met, performed or achieved at the time or times
provided by applicable laws and regulations, the Apartment Complex will qualify
for LIHTC.
All of the opinions set forth above are qualified to the extent that the
validity of any provision of any agreement may be subject to or affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. We do not express any opinion as to
the availability of any equitable or specific remedy upon any breach of any of
the covenants, warranties or other provisions contained in any agreement. We
have not examined, and we express no opinion with respect to, the applicability
B-3
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WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
c/o WNC & ASSOCIATES, Inc.
______________, 199__
Page 4
of, or liability under, any Federal, state or local law, ordinance or regulation
governing or pertaining to environmental matters, hazardous wastes, toxic
substances or the like.
We express no opinion as to any matter except those set forth above. These
opinions are rendered for use by the Limited Partner and its legal counsel which
will rely on this opinion in connection with federal income tax opinions to be
rendered by that firm. This opinion may not be delivered to or relied upon by
any other person or entity without our express written consent.
Sincerely,
__________________________
B-4
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EXHIBIT C TO PARTNERSHIP AGREEMENT
CERTIFICATION AND AGREEMENT
CERTIFICATION AND AGREEMENT made as of the date written below by MESA
VERDE APARTMENTS, LIMITED PARTNERSHIP, a New Mexico limited partnership (the
"Partnership"); TRIANON-MESA VERDE, LLC, a New Mexico Limited Liability Company
(the "General Partner"); and TRIANON DEVELOPMENT CORPORATION, a California
corporation (the "Original Limited Partner") for the benefit of WNC HOUSING TAX
CREDIT FUND V, L.P., SERIES 4, a California limited partnership (the "Investment
Partnership"), and WNC & ASSOCIATES, INC. ("WNC").
WHEREAS, the Partnership proposes to admit the Investment Partnership as a
limited partner thereof pursuant to an Amended and Restated Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement"), in accordance with
which the Investment Partnership will make substantial capital contributions to
the Partnership; and
WHEREAS, the Investment Partnership and WNC have relied upon certain
information and representations described herein in evaluating the merits of
investment by the Investment Partnership in the Partnership;
NOW, THEREFORE, to induce the Investment Partnership to enter into the
Partnership Agreement and become a limited partner of the Partnership, and for
$1.00 and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Partnership, the General Partner and the
Original Limited Partner hereby agree as follows for the benefit of the
Investment Partnership and WNC.
1. Representations, Warranties and Covenants of the Partnership, the
General Partner and the Original Limited Partner
The Partnership, the General Partner and the Original Limited Partner
jointly and severally represent, warrant and certify to the Investment
Partnership and WNC that, with respect to the Partnership, as of the date
hereof:
1.1 The Partnership is duly organized and in good standing as a limited
partnership pursuant to the laws of the state of its formation with full power
and authority to own its apartment complex (the "Apartment Complex") and conduct
its business; the Partnership, the General Partner and the Original Limited
Partner have the power and authority to enter into and perform this
Certification and Agreement; the execution and delivery of this Certification
and Agreement by the Partnership, the General Partner and the Original Limited
Partner have been duly and validly authorized by all necessary action; the
execution and delivery of this Certification and Agreement, the fulfillment of
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its terms and consummation of the transactions contemplated hereunder do not and
will not conflict with or result in a violation, breach or termination of or
constitute a default under (or would not result in such a conflict, violation,
breach, termination or default with the giving of notice or passage of time or
both) any other agreement, indenture or instrument by which the Partnership or
any General Partner or Original Limited Partner is bound or any law, regulation,
judgment, decree or order applicable to the Partnership or any General Partner
or Original Limited Partner or any of their respective properties; this
Certification and Agreement constitutes the valid and binding agreement of the
Partnership, the General Partner and the Original Limited Partner, enforceable
against each of them in accordance with its terms.
1.2 The General Partner has delivered to the Investment Partnership, WNC or
their affiliates all documents and information which would be material to a
prudent investor in deciding whether to invest in the Partnership. All factual
information provided to the Investment Partnership, WNC or their affiliates
either in writing or orally, did not, at the time given, and does not, on the
date hereof, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they are made.
1.3 Each of the representations and warranties contained in the Partnership
Agreement is true and correct as of the date hereof.
1.4 Each of the covenants and agreements of the Partnership and the General
Partner contained in the Partnership Agreement has been duly performed to the
extent that performance of any covenant or agreement is required on or prior to
the date hereof.
1.5 All conditions to admission of the Investment Partnership as the
investment limited partner of the Partnership contained in the Partnership
Agreement have been satisfied.
1.6 No default has occurred and is continuing under the Partnership
Agreement or any of the Project Documents (as such term is defined in the
Partnership Agreement) for the Partnership.
1.7 The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits.
1.8 The General Partner agrees to take all actions necessary to claim the
Projected Tax Credit, including, without limitation, the filing of Form(s) 8609
with the Internal Revenue Service.
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1.9 No person or entity other than the Partnership holds any equity
interest in the Apartment Complex.
1.10 The Partnership has the sole responsibility to pay all maintenance and
operating costs, including all taxes levied and all insurance costs,
attributable to the Apartment Complex.
1.11 The Partnership, except to the extent it is protected by insurance and
excluding any risk borne by lenders, bears the sole risk of loss if the
Apartment Complex is destroyed or condemned or there is a diminution in the
value of the Apartment Complex.
1.12 No person or entity except the Partnership has the right to any
proceeds, after payment of all indebtedness, from the sale, refinancing, or
leasing of the Apartment Complex.
2. Miscellaneous
2.1 This Certification and Agreement is made solely for the benefit of the
Investment Partnership and WNC, and their respective successors and assignees,
and no other person shall acquire or have any right under or by virtue of this
Agreement.
2.2 This Certification and Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, all of which
together shall constitute one and the same instrument.
2.3 Capitalized terms used but not defined in this Certification Agreement
shall have the meanings given to them in the Partnership Agreement.
IN WITNESS WHEREOF, this Certificate and Agreement is made and entered into
as of the ____ day of ____________________ , 1997.
PARTNERSHIP
MESA VERDE APARTMENTS, LIMITED PARTNERSHIP
TRIANON-MESA VERDE, LLC, a New Mexico Limited Liability
Company, General Partner
By: TRIANON DEVELOPMENT CORPORATION, a California corporation,
Member
By: /s/ Lester G. Day
Lester G. Day,
President
Signatures continued on next page. . .
C-3
<PAGE>
By: FOUNDATION FOR SOCIAL RESOURCES, INC., a
Delaware non-profit corporation,
Member
By: /s/ William W. Hirsch
William W. Hirsch,
President
GENERAL PARTNER
TRIANON-MESA VERDE, LLC, a New Mexico Limited Liability Company
By: TRIANON DEVELOPMENT CORPORATION, a California corporation,
Member
By: /s/ Lester G. Day
Lester G. Day,
President
By: FOUNDATION FOR SOCIAL RESOURCES, INC., a
Delaware non-profit corporation, Member
By: /s/ Michael Hirsch
Michael Hirsch,
President
ORIGINAL LIMITED PARTNER
TRIANON DEVELOPMENT CORPORATION, a California corporation
By: /s/ Lester G. Day
Lester G. Day,
President
C-4
<PAGE>
<PAGE>
EXHIBIT D TO THE PARTNERSHIP AGREEMENT
GENERAL PARTNER CERTIFICATION
This General Partner Certification is being issued to WNC HOUSING TAX
CREDIT FUND V, L.P., SERIES 4 ("Limited Partner") by TRIANON-MESA VERDE, LLC, a
New Mexico Limited Liability Company (the General Partner") of MESA VERDE
APARTMENTS, LIMITED PARTNERSHIP, a New Mexico limited partnership
("Partnership") in accordance with Section 7.2 of the Amended and Restated
Agreement of Limited Partnership of the Partnership ("Partnership Agreement").
Capitalized terms used but not defined in this General Partner
Certification shall have the meanings given to them in the Partnership
Agreement.
WHEREAS, the Limited Partner is scheduled to make a Capital Contribution to
the Partnership;
WHEREAS, the Partnership Agreement requires the General Partner to issue
this Certification prior to the Limited Partner's payment; and
WHEREAS, the Limited Partner shall rely on this Certification in evaluating
the continued merits of its investment in the Partnership;
NOW, THEREFORE, to induce the Limited Partner to make its scheduled Capital
Contribution to the Partnership, the General Partner represents and
warrants to the Limited Partner that the following are true, or as the case may
be, will be true as of the date written below:
(a) The Partnership is a duly organized limited partnership validly
existing under the laws of the State and has complied with all filing
requirements necessary for the protection of the limited liability of the
Limited Partner.
(b) The Partnership Agreement and the applicable Project Documents are in
full force and effect and neither the Partnership nor the General Partner is in
breach or violation of any provisions thereof.
(c) Improvements will be completed in a timely and workmanlike manner in
accordance with all applicable requirements of the Mortgage Loan, all applicable
requirements of all appropriate governmental entities and substantially in
accordance with the plans and specifications of the Project that have been or
shall be hereafter approved by Bank of America, Federal Savings Bank, if
D-1
<PAGE>
required, and all applicable governmental entities, as such plans and
specifications may be changed from time to time with the approval of Bank of
America, Federal Savings Bank and any applicable governmental entities, if such
approval shall be required.
(d) The Project is being operated in accordance with standards and
procedures which are prudent and customary for the operation of properties
similar to the Project.
(e) Additional Improvements on the Project, if any, shall be completed
substantially in conformity with the Project Documents and any other
requirements necessary to obtain Completion of Construction.
(f) No Partner has or will have any personal liability with respect to, or
has or will have personally guaranteed the payment of, the Mortgage.
(g) The Partnership is in compliance with all construction and use codes
applicable to the Project and is not in violation of any zoning, environmental
or similar regulations applicable to the Project.
(h) All appropriate public utilities, including sanitary and storm sewers,
water, gas and electricity, are currently available and will be operating
properly for all units in the Project at the time of first occupancy and
generally throughout the term of the Partnership.
(i) The Project has obtained, or will obtain before Permanent Mortgage
Commencement, and will maintain throughout the term of this Partnership
Insurance written by an Insurance Company.
(j) The Partnership owns the fee simple interest in the Project.
(k) The Construction Contract has been entered into between the Partnership
and the Contractor; no other consideration or fee shall be paid to the
Contractor other than amounts set forth in the Construction Contract.
(l) A builder's risk insurance policy in favor of the Partnership will be
and is in full force and effect until Completion of Construction.
(m) Except as otherwise disclosed to the Limited Partner in writing prior
to the execution of the Partnership Agreement, to the best of the General
Partner's knowledge: (1) no Hazardous Substance has been disposed of, or
released to or from, or otherwise now exists in, on, under or around, the
Project and (2) no aboveground or underground storage tanks are now or have ever
D-2
<PAGE>
been located on or under the Project. The General Partner will not install or
allow to be installed any aboveground or underground storage tanks on the
Project. The General Partner covenants that the Project shall be kept free of
Hazardous Materials and shall not be used to generate, manufacture, refine,
transport, treat, store, handle, dispose of, transfer, produce or process
Hazardous Materials, except in connection with the normal maintenance and
operation of any portion of the project. The General Partner shall comply, or
cause there to be compliance, with all applicable Federal, state and local laws,
ordinances, rules and regulations with respect to Hazardous Materials and shall
keep, or cause to be kept, the Project free and clear of any liens imposed
pursuant to such laws, ordinances, rules and regulations. The General Partner
shall promptly notify the Limited Partner in writing (3) if it knows, or
suspects or believes there may be any Hazardous Substance in or around any part
of the Project, any Improvements constructed on the Project, or the soil,
groundwater or soil vapor, (4) if the General Partner or the Partnership may be
subject to any threatened or pending investigation by any governmental agency
under any law, regulation or ordinance pertaining to any Hazardous Substance,
and (5) of any claim made or threatened by any Person, other than a governmental
agency, against the Partnership or General Partner arising out of or resulting
from any Hazardous Substance being present or released in, on or around any part
of the Project.
(n) To the best of its knowledge and belief, the General Partner has not
executed and will not execute any agreements with provisions contradictory to,
or in opposition to, the provisions of the Partnership Agreement.
(o) The Partnership will allocate to the Limited Partner the Projected
Annual Tax Credits.
(p) To the best of its actual knowledge and belief, after due inquiry no
charges or encumbrances exist with respect to the Project other than those which
are created or permitted by the Project Documents or are noted or excepted in
the title policy for the Project.
(q) The buildings on the Project site constitute or shall constitute a
"qualified low-income housing project" as defined in Section 42(g) of the Code,
and as amplified by the Treasury Regulations thereunder. In this connection, not
later than December 31 of the first year in which the Partners elect the LIHTC
to commence in accordance the Code, the Project will satisfy the Minimum
Set-Aside Test.
(r) The General Partner has not lent or otherwise advanced any funds to the
Partnership other than its Capital Contribution and the Partnership has no
unsatisfied obligation to make any payments of any kind to the General Partner
or any Affiliate thereof, except as may be provided in accordance with Section
D-3
<PAGE>
6.2 or 6.3 of this Partnership Agreement.
(s) To the best of its knowledge and belief, no event has occurred which
constitutes a material default under any of the Project Documents.
(t) To the best of its knowledge and belief, no event has occurred which
has caused, and the General Partner has not acted in any manner which will cause
(1) the Partnership to be treated for federal income tax purposes as an
association taxable as a corporation, (2) the Partnership to fail to qualify as
a limited partnership under the Act, or (3) the Limited Partner to be liable for
Partnership obligations; provided however, the General Partner shall not be in
breach of this representation if all or a portion of a Limited Partner's agreed
upon Capital Contributions are used to satisfy the Partnership's obligations to
creditors of the Partnership and such action by the General Partner is otherwise
authorized under this Agreement and; provided further, however the General
Partner shall not be in breach of this representation if the action causing the
Limited Partner to be liable for the Partnership obligations is undertaken by
the Limited Partner.
(u) No legal actions or proceedings before any court, commission,
administrative body or other governmental authority, and/or acts of any
governmental authority having jurisdiction over the zoning or land use laws
applicable to the Project, have occurred the continuing effect of which has: (1)
materially and adversely affected the operation of the Partnership or the
Project; (2) materially and adversely affected the ability of the General
Partner to perform its obligations hereunder or under any other agreement with
respect to the Project; or (3) prevented the completion of construction of the
Improvements in substantial conformity with the Project Documents, other than
legal proceedings which have been bonded against (or as to which other adequate
financial security has been issued) in a manner as to indemnify the Partnership
against loss; provided however the foregoing does not apply to matters of
general applicability which would adversely affect the Partnership, the General
Partner, Affiliates of the General Partner or the Project only insofar as they
or any of them are part of the general public.
(v) Neither the Partnership nor the General Partner has any liabilities,
contingent or otherwise, which have not been disclosed in writing to the Limited
Partner and which in the aggregate materially affect the ability of the Limited
Partner to obtain the anticipated benefits of its investment in the Partnership.
(w) The General Partner has and shall maintain a net worth equal to at
least $500,000 computed in accordance with generally accepted accounting
principles.
D-4
<PAGE>
IN WITNESS WHEREOF, the undersigned have set their hands to this General
Partner Certification this _______ day of ______________________, 1997.
GENERAL PARTNER
TRIANON-MESA VERDE, LLC, a New Mexico Limited Liability Company
By: TRIANON DEVELOPMENT CORPORATION, a California corporation,
Member
By: /s/ Lester G. Day
Lester G. Day,
President
By: FOUNDATION FOR SOCIAL RESOURCES, INC., a
Delaware non-profit corporation, Member
By: /s/ Michael Hirsch
Michael Hirsch,
President
D-5
<PAGE>
EXHIBIT E TO PARTNERSHIP AGREEMENT
FORM OF COMPLETION CERTIFICATE
(to be used when construction [rehabilitation] completed)
COMPLETION CERTIFICATE
The undersigned, an architect duly licensed and registered in the State of New
Mexico, has prepared final working plans and detailed specifications for MESA
VERDE APARTMENTS, LIMITED PARTNERSHIP, a New Mexico limited partnership (the
"Partnership"), between WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4, a
California limited partnership ("Limited Partner") and the Partnership in
connection with the construction [rehabilitation] of improvements on certain
real property located in Roswell, Chaves County, New Mexico (the
"Improvements").
The undersigned hereby certifies (i) that the Improvements have been completed
in accordance with the aforesaid plans and specifications, (ii) that a permanent
certificate of occupancy and all other permits required for the continued use
and occupancy of the Improvements have been issued with respect thereto by the
governmental agencies having jurisdiction thereof, (iii) that the Improvements
are in compliance with all requirements and restrictions of all governmental
authorities having jurisdiction over the Improvements, including, without
limitation, all applicable zoning, building, environmental, fire, and health
ordinances, rules and regulations and (iv) that all contractors, subcontractors
and workmen who worked on the Improvements have been paid in full except for
normal retainages and amounts in dispute.
___________________________________
Project Architect
Date: ____________________________
Confirmed by:
___________________________________
General Partner
Date: ____________________________
E-1
<PAGE>
EXHIBIT F TO PARTNERSHIP AGREEMENT
[ACCOUNTANT'S CERTIFICATE]
[Accountant's Letterhead]
_______________, 199____
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
c/o WNC & Associates, Inc.
3158 Redhill Ave., Suite 120
Costa Mesa, California 92626
RE: Partnership
Certification as to Amount
of Eligible Tax Credit Base
Gentlemen:
In connection with the acquisition by WNC HOUSING TAX CREDIT FUND V, L.P.,
SERIES 4 (the "Limited Partner") of a limited partnership interest in MESA VERDE
APARTMENTS, LIMITED PARTNERSHIP, a New Mexico limited partnership (the
"Partnership") which owns a certain parcel of land located in Roswell, Chaves
County, New Mexico and improvements thereon (the "Project"), the Limited Partner
has requested our certification as to the amount of low-income housing tax
credits ("Tax Credits") available with respect to the Project under Section 42
of the Internal Revenue Code of 1986, as amended (the "Code"). Based upon our
review of [the financial information provided by the Partnership] of the
Partnership, we are prepared to file the Federal information tax return of the
Partnership claiming annual Tax Credits in the amount of $_______________, which
amount is based on an eligible basis (as defined in Section 42(d) of the Code)
of the Project of $________________, a qualified basis (as defined in Section
42(c) of the Code) of the Project of $_________________ and an applicable
percentage (as defined in Section 42(b) of the Code) of _____%.
Sincerely,
_______________________________
F-1
<PAGE>
REPORT OF OPERATIONS
QUARTER ENDED:____________________________,199X
- ------------------------------------- -----------------------------------
LOCAL PARTNERSHIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
GENERAL PARTNER:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
FIRM NAME:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PROPERTY NAME:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
-----------------------------------
- ------------------------------------- -----------------------------------
RESIDENT MANAGER:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ACCOUNTANT:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
FIRM:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------ -----------------------------------
MANAGEMENT COMPANY
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
ADDRESS:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CITY, STATE, ZIP:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
PHONE:
- ------------------------------------- -----------------------------------
- ------------------------------------- -----------------------------------
CONTACT:
- ------------------------------------- -----------------------------------
- -------------------------------------------------------------------------------
OCCUPANCY INFORMATION
A. Number of Units_____ Number of RA Units_____ Number of Section 8 Tenants ____
B. Occupancy for the Quarter has: Increased ____ Decreased_____
Remained the Same _____
C. Number of: Move-Ins ______ Move-Outs __________ % of Occupancy ______
D. Average length of tenant residency: 1-6 months ______ 6-12 months ______
1-3 years ______ Over 4 years_____
E. Number of Basic rent qualified applicants on waiting list: ________
F. If the apartments are less than 90% occupied, please explain why and
describe what efforts are being made to lease-up remaining units.
___________________________________________________________________________
G. On site manager: Full Time__________ Part Time____________.
If part-time, the number of hours per week_____________.
G-1
<PAGE>
OPERATIONAL INFORMATION
Rent Schedule and Increases from Previous Quarter
Number Monthly Rent Rent Increases Effective
of Units Basic / Market Amount Percent Date
1 Bedroom ________ ______________ _________________ ________
2 Bedroom ________ ______________ _________________ ________
3 Bedroom ________ ______________ _________________ ________
PROPOSED MAINTENANCE
Completed Funded by
Type Description or Operations or Amount
Planned Reserves
- ------------------------------------------------------------------------------
Interior Painting
- ------------------------------------------------------------------------------
Exterior Painting
- ------------------------------------------------------------------------------
Siding
- ------------------------------------------------------------------------------
Roofing
- ------------------------------------------------------------------------------
Drainage
- ------------------------------------------------------------------------------
Paving
- ------------------------------------------------------------------------------
Landscaping
- ------------------------------------------------------------------------------
Playground
- ------------------------------------------------------------------------------
Community Room
- ------------------------------------------------------------------------------
Laundry Room
- ------------------------------------------------------------------------------
Common Areas
- ------------------------------------------------------------------------------
Carpet
- ------------------------------------------------------------------------------
Appliances
- ------------------------------------------------------------------------------
Lighting
- ------------------------------------------------------------------------------
Other
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Please describe in detail any major repairs:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
G-2
<PAGE>
CONDITION OF PROPERTY
THE OVERALL APPEARANCE OF THE BUILDING(S) IS:
Excellent Good Fair Bad
THE OVERALL APPEARANCE OF THE GROUNDS IS:
Excellent Good Fair Bad
EXTERIOR CONDITION (Please Check Appropriate Box)
- ------------------------------------------------------------------------------
Type of Condition Excellent Good Fair Problems/Comments
- ------------------------------------------------------------------------------
Signage
- -------------------------------------------------------------------------------
Parking Lots
- -------------------------------------------------------------------------------
Office/Storage
- -------------------------------------------------------------------------------
Equipment
- -------------------------------------------------------------------------------
Community Building
- -------------------------------------------------------------------------------
Laundry Room
- -------------------------------------------------------------------------------
Benches/Playground
- -------------------------------------------------------------------------------
Lawns, Plantings
- -------------------------------------------------------------------------------
Drainage, Erosion
- -------------------------------------------------------------------------------
Carports
- -------------------------------------------------------------------------------
Fences
- -------------------------------------------------------------------------------
Walks/Steps/Guardrails
- -------------------------------------------------------------------------------
Lighting
- -------------------------------------------------------------------------------
Painting
- -------------------------------------------------------------------------------
Walls/Foundation
- -------------------------------------------------------------------------------
Roof/Flashing/Vents
- -------------------------------------------------------------------------------
Gutters/Splashblocks
- -------------------------------------------------------------------------------
Balconies/Patios
- -------------------------------------------------------------------------------
Doors Windows/Screens
- -------------------------------------------------------------------------------
Elevators
- -------------------------------------------------------------------------------
INTERIOR CONDITION
- -------------------------------------------------------------------------------
Stairs
- -------------------------------------------------------------------------------
Flooring
- -------------------------------------------------------------------------------
Doors/Cabinets/Hardware
- -------------------------------------------------------------------------------
Drapes/Blinds
- -------------------------------------------------------------------------------
Interior Painting
- -------------------------------------------------------------------------------
Refrig/Stoves/Sinks
- -------------------------------------------------------------------------------
Bathroom/Tubs/Showers
Toilets
- -------------------------------------------------------------------------------
G-3
<PAGE>
FINANCIAL STATUS
A. Replacement Reserve is: Fully-funded Under-funded Amount
(complete attached schedule)
Tax/Insurance Escrow is: Fully-funded Under-funded Amount
(complete attached schedule)
Property is operating at a: Surplus Deficit Amount
If deficit, General Partner funding? Yes No Amount
Mortgage Payments are: On Schedule Delinquent Amount
Are the taxes current? Yes No
(please provide copy of paid tax bill)
Is the insurance current? Yes No Renewal Date
(please provide copy of yearly renewal)
B. Please note and explain any significant changes in the following:
Administrative Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Repairs/Maintenance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Utility Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
Taxes/Insurance Expense Increase Decrease Amount
------------------------------------------------------------------------
------------------------------------------------------------------------
C. Do you anticipate making a return to owner distribution? Yes No
Explanation:
------------------------------------------------------------------------
------------------------------------------------------------------------
D. Please explain in detail any change in the financial condition:
------------------------------------------------------------------------
------------------------------------------------------------------------
E. Any insurance claims files? Yes______ No______
If yes, please explain:
------------------------------------------------------------------------
------------------------------------------------------------------------
G-4
<PAGE>
SCHEDULE OF RESERVES
Replacement Tax & Insurance Other Total
Beginning Balance:
Deposits:
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
---------- ----------- ---------- ------- -------
Total Deposits
----------- ---------- ------- -------
Authorized Disbursements:
Description:
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
--------- ----------- ---------- ------- -------
Total Disbursements: ----------- ---------- -------- ------
Ending Balance: (1) ----------- ---------- -------- ------
Required Balance: ----------- ---------- -------- ------
Over/under funding: ----------- ---------- -------- ------
(1) Must agree with amount shown on the balance sheet.
Prepared By: Date:
- -------------------------------------------------------------------------------
Firm: Telephone:
- -------------------------------------------------------------------------------
Reminder: Please include the following documents:
1. Completed Report of Operations
2. Balance Sheet
3. Statement of Income & Expenses
4. Rent roll for quarter ending
5. Tax Credit Compliance Report
G-5
<PAGE>
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
Fund: Tax Credit Set-Asides Information: Loan/Regulatory Set-Asides:
Property Name: [ ] 20/50 or [ ] 40/60 Election
Address: Does the 51% average apply? [ ] Y [ ] N
Deeper Set-Aside __% @ 50% AMI
County:
Management Company
[ ] Multi-Family Contact Person:
[ ] Elderly
24 Number of Units Phone #
Number of Exempt
Units
LIHTC Project#
- -----------------------------------------------------------------------------
Gross Move-In
Unit First Time Move-In No. of No. in Income Income
No. Tenant Name Date Bdrms Sq. Ft. Set-Aside Unit Move-In Limits
- -------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
- -----------------------------------------------------------------------------
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- -------------------------------------------------------------------------------
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BIN # Certificate of Occupancy Date:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
BIN # Certificate of Occupancy Date:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-6 (a)
<PAGE>
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant Tenant
Income Income Asset Unit Rent Tenant Utility
Qualified Verification Verification Rent Subsidy Payment Allowance
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-6(b)
<PAGE>
INITIAL TENANT CERTIFICATIONS
PARTNERSHIP NAME
(CONTINUED)
Tenant Tenant Overall
Gross Maximum Rent Tenant
Rent Rent Qualified Eligible
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
YES YES
- -------------------------------------------------------------------------------
G-6(c)
<PAGE>
QUARTERLY TAX CREDIT COMPLIANCE REPORT
PROPERTY NAME
Quarter Ending: Tax Credit Set-Asides Information: Loan/Regulatory Set-Asides:
[ ] 20/50 or [ ] 40/60 Election
Does the 51% average apply? [ ] Y [ ] N
Deeper Set-Aside : ( List Details)
County: Allocation: Management Company:
Pre-1990 (Rent based on number of persons) Contact Person:
Elected to change No. Bedrm
Post-1989 (Based on number of Bedroom)
[ ] Multi-Family [ ] Elderly Phone No.
Number of Units
Number of Exempt Units Fax No.
Prepared by:
LIHTC Project#
- -----------------------------------------------------------------------------
Gross Annual
Unit Tenant Move-In No. Of Inc. Set- No. In Annual Income
No. Name Date Bdrms Pct. Aside Unit Income Limits
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-7 (a)
<PAGE>
QUARTERLY TAX CREDIT COMPLIANCE REPORT
PROPERTY NAME
(CONTINUED)
Annual Tenant Less
Recert. Income Income Assets Unit Rent Tenant
Date Qualified Verified Verified Rent Subsidy Payment
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Tenant Tenant Overall
Utility Gross Maximum Rent Tenat
Allow. Rent Rent Qualified Eligible
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
G-7(b)
<PAGE>
Tenant Tax Credit Compliance Audit
Document Transmittal Checklist
Unit Number Property Name Date
Tenant Name Completed By:
Initial _________ Annual________
Check Box for Type of Certification Management Company
This Section For WNC Use Only
Check Documents Being Sent
Received. Reviewed
___Internal Checklist or worksheet
___Initial - Rental Application/Rental Agreement
___Initial - Questionnaire of Income/Assets
___Recertification - Questionnaire of Income/Assets
___Recertification - Addendum to Lease
___Employment Verification
___Employment Termination Verification
___Military Verification
___Verification of Welfare Benefits
___Verification of Social Security Benefits
___Verification of Disability Benefits
___Unemployment Verification
___Verification of Unemployment Compensation
___Verification Worksmen Compensation
___Retirement/Annuities Verification
___Verification of Veterans Pension
___Verification of Child Support
___Verification of Alimony Support
___Disposed of Assets Last 2 yrs.
___Real Estate
___Investment
___Assets Verifications (savings, stocks etc.)
___Trusts/with Current Tax Return
___Lump Sum Settlements
___Notarized Affidavit of Support
___Certification of Handicap
___Notarized Self-Employed-Tax Return
___Notarized statement of no income
___Tenant Certification
- ------------------------------------------------------------------------------
This Section For WNC Use Only
YES NO
Are all required forms completed?
Are all required forms dated?
Did the Manager and Tenant sign all documents?
Third party verification of income completed?
Third party verification of assets completed?
Are verifications completed for all members 18 yrs. and
over?
Did all the members of the household 18 yrs. and
over sign all documents?
Is lease completed with a minimum of six months/ SRO
monthly?
Addendum completed?
Tenant Certification completed?
Are all members of the household full-time students?
Is utility allowance correct?
Is correct income limit being used?
Is correct rent limit being used?
For tenants with no income
Was notarized statement of no income obtained with tax
return?
or Were all sources verified (AFDC, Unemployment,
Soc. Sec., Disability)?
G-8
<PAGE>
TAX CREDIT COMPLIANCE MONITORING:
ANNUAL CERTIFICATION
As General Partner of MESA VERDE APARTMENTS, LIMITED PARTNERSHIP, I hereby
certify as to the following:
1. MESA VERDE APARTMENTS, LIMITED PARTNERSHIP owns a one hundred forty-two
(142) unit project ("Project") in Roswell, Chaves County, New Mexico.
2. An annual income certification (including supporting documentation) has
been received from each tenant. The income certification reflects that the
tenant's income meets the income limitation applicable to the Project pursuant
to Section 42(g)(1) of the Internal Revenue Code ("Code").
3. The Project satisfies the requirements of the applicable minimum set
aside test as defined in Section 42(g)(1) of the Code.
4. Each unit within the Project is rent restricted as defined in Section
42(g)(2)of the Code.
5. Each unit in the Project is available for use by the general public and
not for use on a transient basis.
6. Each building in the Project is suitable for occupancy in accordance
with local health, safety, and building codes.
7. During the preceding calendar year, there had been no change in the
eligible basis, as defined in Section 42(d)of the Code, of any building within
the Project.
8. All common area facilities included in the eligible basis of the
Apartment Complex are provided to the tenants on a comparable basis without a
separate fee to any tenant in the Project.
9. During the preceding calendar year when a unit in the Project became
vacant reasonable attempts were made to rent that unit to tenants whose incomes
met the income limitation applicable to the Project pursuant to Section 42(g)(1)
of the Code and while that unit was vacant no units of comparable or smaller
size were rented to tenants whose income did not meet the income limitation
applicable to the Project pursuant to Section 42(g)(1) of the Code.
10. If the income of a tenant in a unit increased above the limit allowed
in Section 42 (g)(2)(D)(ii), then the next available unit of comparable or
smaller size was rented to tenants whose incomes met the income limitation
applicable to the Project pursuant to Section 42(g)(1) of the Code.
IN VERIFICATION OF THE FOREGOING ENCLOSED HEREWITH IS A COPY OF THE ANNUAL
INCOME CERTIFICATION RECEIVED FROM EACH TENANT IN THE PROJECT. UPON REQUEST I
WILL PROVIDE COPIES OF ALL DOCUMENTATION RECEIVED FROM THE TENANT TO SUPPORT
THAT CERTIFICATION.
I declare under penalty of perjury under the law of the State of New Mexico
that the foregoing is true and correct.
Executed this _____ day of ____________ at , _____________________, _____.
______________________________________
G-9
<PAGE>
Calculation of Debt Service Coverage
Month 1 Month 2 Month 3
------------ ------------ ------------
INCOME
Gross Potential Rent
Other Income
Vacancy Loss ____________ ____________ ____________
Adjusted Gross Income ____________ ____________ ____________
OPERATING EXPENSES
Utilities
Maintenance
Management Fee
Administration
Insurance
Real Estate Taxes
Other Expenses ____________ ____________ ____________
Total Operating Expenses ____________ ____________ ____________
Net Operating Income (1)
Accrual adjustments for:
R/E Taxes
Insurance
Tax/ Accounting
Other
Replacement Reserves ____________ ____________ ____________
Income for DSC Calculation ============ ============ ============
Stabilized Debt Service ____________ ____________ ____________
Debt Service Coverage (2) ____________ ____________ ____________
Please submit this form along with the following supporting documentation:
Monthly Financial Reports (income statement, balance sheet, general ledger
and rent rolls)
Operating Budget
Copies of bank statements.
(1) This number should reconcile easily with the monthly financial
statements.
(2) The ratio between the Income for DSC calculation and Stabilized Debt
Service. As example, a 1.15 DSC means that for every $1.00 of Stabilized
Debt Service required to be paid there must be $1.15 of Net Operating
Income available.
G-10
<PAGE>
