-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MSPY0k9uDnzhVhylwAL19zLyx5mGmDS+xKGngceVvYYFmaEECpUF75jeGiVribRQ mOEqcQNNz3wrfsTP6UpQNQ== 0000810663-99-000021.txt : 19990628 0000810663-99-000021.hdr.sgml : 19990628 ACCESSION NUMBER: 0000810663-99-000021 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L P V CENTRAL INDEX KEY: 0000852953 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 043054464 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-19706 FILM NUMBER: 99652274 BUSINESS ADDRESS: STREET 1: 101 ARCH ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174393911 10-K 1 QH5 3/99 10-K June 25, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Boston Financial Qualified Housing Tax Credits L.P. V Annual Report on Form 10-K for the Year Ended March 31, 1999 Commission File Number 0-19706 Dear Sir / Madam: Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of 1934, there is filed herewith one copy of the subject report. Very truly yours, /s/Stephen Guilmette Stephen Guilmette Assistant Controller QH510K-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission file number March 31, 1999 0-19706 BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (Exact name of registrant as specified in its charter) Massachusetts 04-3054464 (State of organization) (I.R.S. Employer Identification No.) 101 Arch Street, 16th Floor Boston, Massachusetts 02110-1106 (Address of Principal executive office) (Zip Code) Registrant's telephone number, including area code 617/439-3911 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered None None Securities registered pursuant to Section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class) 100,000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] State the aggregate sales price of partnership units held by non-affiliates of the registrant. $60,904,650 as of March 31, 1999 DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE DOCUMENT IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS: (2) ANY PROXY OR INFORMATION STATEMENT: AND (3) ANY PROSPECTUS FILED PURSUANT TO RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933.
Part of Report on Form 10-K into Which the Document Documents incorporated by reference is Incorporated Post-effective amendments No. 1 - 5 to the Form S-11 Registration Statement, File # 33-29935 Part I, Item 1 Acquisition Reports Part I, Item 1 Post-effective amendment No. 6 to the Registration Statement on Form S-11, File # 33-29935 Part III, Item 12 Prospectus - Sections Entitled: "Estimated Use of Proceeds" Part III, Item 13 "Management Compensations and Fees" Part III, Item 13 "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions" Part III, Item 13
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 1999 TABLE OF CONTENTS Page No. PART I Item 1 Business K-3 Item 2 Properties K-6 Item 3 Legal Proceedings K-12 Item 4 Submission of Matters to a Vote of Security Holders K-12 PART II Item 5 Market for the Registrant's Units and Related Security Holder Matters K-13 Item 6 Selected Financial Data K-14 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations K-15 Item 7A. Quantitative and Qualitative Disclosures about Market Risk K-18 Item 8 Financial Statements and Supplementary Data K-18 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-18 PART III Item 10 Directors and Executive Officers of the Registrant K-18 Item 11 Management Remuneration K-20 Item 12 Security Ownership of Certain Beneficial Owners and Management K-20 Item 13 Certain Relationships and Related Transactions K-20 PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K K-23 SIGNATURES K-24 PART I Item 1. Business Boston Financial Qualified Housing Tax Credits L.P. V (the "Partnership") is a Massachusetts limited partnership formed on June 16, 1989 under the laws of the State of Massachusetts. The Partnership's partnership agreement ("Partnership Agreement") authorized the sale of up to 100,000 units of Limited Partnership Interest ("Units") at $1,000 per Unit, adjusted for certain discounts. The Partnership raised $68,928,650 ("Gross Proceeds"), net of discounts of $350, through the sale of 68,929 Units. Such amounts exclude five unregistered Units previously acquired for $5,000 by the Initial Limited Partner, which is also one of the General Partners. The offering of Units terminated on August 31, 1991. No further sale of Units is expected. The Partnership is engaged solely in the business of real estate investment. On March 1, 1997, an affiliate of the Partnership's Managing General Partner, Boston Financial GP1-LLC, became the Local General Partner of Burbank Limited Partnership I ("Burbank"). As a result, the Partnership was deemed to have control over Burbank (the "Combined Entity") and the accompanying financial statements are presented in combined form to conform with the required accounting treatment under generally accepted accounting principles. However, this change only affects the presentation of the Partnership's operating results, not the business of the Partnership. Accordingly, presentation of information about industry segments is not applicable and would not be material to an understanding of the Partnership's business taken as a whole. The Partnership has invested as a limited partner in other limited partnerships ("Local Limited Partnerships") which own and operate residential apartment complexes ("Properties") some of which benefit from some form of federal, state or local assistance programs and all of which qualify for the low-income housing tax credits ("Tax Credits") added to the Internal Revenue Code (the "Code") by the Tax Reform Act of 1986. The investment objectives of the Partnership include the following: (i) to provide current tax benefits in the form of Tax Credits which qualified limited partners may use to offset their federal income tax liability; (ii) to preserve and protect the Partnership's capital; (iii) to provide limited cash distributions from property operations which are not expected to constitute taxable income during the expected duration of the Partnership's operations; and (iv) to provide cash distributions from sale or refinancing transactions. There cannot be any assurance that the Partnership will attain any or all of these investment objectives. Table A on the following page lists the Properties owned by the Local Limited Partnerships in which the Partnership has invested. Item 7 of this Report contains other significant information with respect to the Local Limited Partnerships. As required by applicable rules, the terms of the acquisition of each Local Limited Partnership interest have been described in supplements to the Prospectus and collected in the post-effective amendments to the Registration Statement listed in Part IV of this Report (collectively, the "Acquisition Reports"); such descriptions are incorporated herein by this reference.
TABLE A SELECTED LOCAL LIMITED PARTNERSHIP DATA Date Properties Owned by Local Interest Limited Partnerships* Location Acquired - -------------------------------- ---------------------- -------------- Strathern Park/Lorne Park (1) Los Angeles, CA 07/05/90 Park Caton Catonsville, MD 08/17/90 Cedar Lane I London, KY 09/10/90 Silver Creek II Berea, KY 08/15/90 Rosecliff Sanford, FL 09/18/90 Brookwood Ypsilanti, MI 10/01/90 Oaks of Dunlop Colonial Heights, VA 01/01/91 Water Oak Orange City, FL 01/01/91 Yester Oaks Lafayette, GA 01/01/91 Ocean View Fernandina Beach, FL 01/01/91 Wheeler House Nashua, NH 01/01/91 Archer Village Archer, FL 01/01/91 Timothy House Towson, MD 03/05/91 Westover Station Newport News, VA 03/30/91 Carib III St. Croix, VI 03/21/91 Carib II St. Croix, VI 03/01/91 Whispering Trace Woodstock, GA 05/01/91 New Center Detroit, MI 06/27/91 Huguenot Park New Paltz, NY 06/26/91 Hillwood Pointe Jacksonville, FL 07/19/91 Pinewood Pointe Jacksonville, FL 07/31/91 Westgate Bismark, ND 07/25/91 Woodlake Hills Pontiac, MI 08/01/91 Bixel House Los Angeles, CA 07/31/91 Magnolia Villas North Hollywood, CA 07/31/91 Schumaker Place Salisbury, MD 09/20/91 Circle Terrace Lansdowne, MD 12/06/91
* The Partnership's interest in profits and losses of each Local Limited Partnership arising from normal operations is approximately 99%, except for a 95% interest in Strathern Park/Lorne Park Apartments and an 88.6% interest in Huguenot Park. Profits and losses arising from sale or refinancing transactions are allocated in accordance with the respective Local Limited Partnership Agreements. (1) On January 1, 1994, Lorne Park merged into Strathern Park in a business combination accounted for as a pooling of interests. Lorne Park's total assets, liabilities and partners' equity were combined with Strathern Park at their existing book value, and neither partnership recognized a gain or loss on the merger. Although the Partnership's investments in Local Limited Partnerships are not subject to seasonal fluctuations, the Partnership's equity in losses of Local Limited Partnerships, to the extent it reflects the operations of individual Properties, may vary from quarter to quarter based upon changes in occupancy and operating expenses as a result of seasonal factors. Each Local Limited Partnership has, as its general partners ("Local General Partners"), one or more individuals or entities not affiliated with the Partnership or its General Partners. In accordance with the partnership agreements under which such entities are organized ("Local Limited Partnership Agreements"), the Partnership depends on the Local General Partners for the management of each Local Limited Partnership. As of March 31, 1999, the following Local Limited Partnerships have a common Local General Partner or affiliated group of Local General Partners accounting for the specified percentage of the capital contributions to Local Limited Partnerships: (i) Timothy House and Maidens Choice, representing 10.04%, have Shelter Development Corp. as Local General Partner; (ii) Hillwood Pointe, Pinewood Pointe and Whispering Trace, representing 11.88%, have Flournoy Development Co. as Local General Partner; (iii) Silver Creek and Cedar Lane, representing .87%, have Robinson A. Williams as Local General Partner; (iv) Water Oak, Yester Oaks and Ocean View, representing 1.70%, have Seals & Associates, Inc. & E. Lamar Seals as Local General Partners; (v) Bixel House and Harmony Apartments, representing 7.04%, have Julian Weinstock Construction Co., Inc. as Local General Partner; and (vi) Carib Villas II and Carib Villas III, representing 1.21%, have First Centrum Corp. as Local General Partner (BF Lansing Limited Partnership, an affiliate of the Managing General Partner, became the Administrative General Partner in Carib Villas II and Carib Villas III on January 31, 1993). The Local General Partners of the remaining Local Limited Partnerships are identified in the Acquisition Reports, which are incorporated herein by this reference. The Properties owned by the Local Limited Partnerships in which the Partnership has invested are, and will continue to be, subject to competition from existing and future apartment complexes in the same areas. The continued success of the Partnership will depend on many outside factors, most of which are beyond the control of the Partnership and which cannot be predicted at this time. Such factors include general economic and real estate market conditions, both on a national basis and in those areas where the Properties are located, the availability and cost of borrowed funds, real estate tax rates, operating expenses, energy costs and government regulations. In addition, other risks inherent in real estate investment may influence the ultimate success of the Partnership, including: (i) possible reduction in rental income due to an inability to maintain high occupancy levels or adequate rental levels; (ii) possible adverse changes in general economic conditions and local conditions, such as competitive over-building, or a decrease in employment or adverse changes in real estate laws, including building codes; and (iii) the possible future adoption of rent control legislation which would not permit increased costs to be passed on to the tenants in the form of rent increases, or which suppress the ability of the Local Limited Partnerships to generate operating cash flow. Since most of the Properties benefit from some form of government assistance, the Partnership is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission for rent increases. In addition, any Tax Credits allocated to investors with respect to a Property are subject to recapture to the extent that the Property or any portion thereof ceases to qualify for the Tax Credits. Other future changes in federal and state income tax laws affecting real estate ownership or limited partnerships could have a material and adverse affect on the business of the Partnership. The Partnership is managed by Arch Street V, Inc., the Managing General Partner of the Partnership. The other General Partner of the Partnership is Arch Street V Limited Partnership. The Partnership, which does not have any employees, reimburses The Boston Financial Group Limited Partnership, an affiliate of the General Partners, for certain expenses and overhead costs. A complete discussion of the management of the Partnership is set forth in Item 10 of this Report. Item 2. Properties The Partnership owns limited partnership interests in twenty-seven Local Limited Partnerships which own and operate Properties, some of which benefit from some form of federal, state or local assistance programs and all of which qualify for the Tax Credits added to the Code by the Tax Reform Act of 1986. The Partnership's ownership interest in each Local Limited Partnership is generally 99%, except for Strathern Park/Lorne Park, Westgate and Huguenot Park, where the Partnership's ownership interests are 95%, 49.5% and 88.6%, respectively. Each of the Local Limited Partnerships has received an allocation of Tax Credits from its relevant state tax credit agency. In general, the Tax Credit runs for ten years from the date the Property is placed in service. The required holding period (the "Compliance Period") of the properties is fifteen years. During these fifteen years, the properties must satisfy rent restrictions, tenant income limitations and other requirements, as promulgated by the Internal Revenue Service, in order to maintain eligibility for the Tax Credit at all times during the Compliance Period. Once a Local Limited Partnership has become eligible for the Tax Credits, it may lose such eligibility and suffer an event of recapture if its property fails to remain in compliance with the requirements. To date, none of the Local Limited Partnerships have suffered an event of recapture of Tax Credits. In addition, some of the Local Limited Partnerships have obtained one or a combination of different types of loans such as: i) below market rate interest loans; ii) loans provided by a redevelopment agency of the town or city in which the property is located at favorable terms; and iii) loans that have repayment terms that are based on a percentage of cash flow. The schedules on the following pages provide certain key information on the Local Limited Partnership interests acquired by the Partnership.
Capital Contributions Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type at Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1999 1999 1998 Subsidy* 1999 - --------------------------------- -------------- ------------- ----------- --------------- ------------- --------------- Strathern Park/Lorne Park, a California Limited Partnership (1) Strathern Park/Lorne Park Los Angeles, CA 241 $8,418,667 $8,418,667 $17,428,457 None 98% Maiden Choice Limited Partnership Park Caton Catonsville, MD 101 2,513,300 2,513,300 4,021,395 None 98% Cedar Lane I, Ltd. Cedar Lane I London, KY 36 288,587 288,587 1,108,259 None 100% Silver Creek II, Ltd. Silver Creek II Berea, KY 24 193,278 193,278 768,386 None 100% Tompkins/Rosecliff, Ltd. Rosecliff Sanford, FL 168 3,604,720 3,604,720 5,562,595 None 88% Brookwood L.D.H.A. Brookwood Ypsilanti, MI 81 2,373,295 2,373,295 3,019,835 None 96% Water Oak Apartment, L.P. Water Oak Orange City, FL 40 293,519 293,519 1,256,023 None 98%
Capital Contributions Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type at Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1999 1999 1998 Subsidy* 1999 - --------------------------- ----------- ------------ ---------- --------------- ------------- --------------- Yester Oaks, L.P. Yester Oaks Lafayette, GA 44 319,254 319,254 1,286,809 FmHA 98% Ocean View Apartments, L.P. Ocean View Fernandina Beach, FL 42 334,177 334,177 1,366,353 None 100% Burbank Limited Partnership I Wheeler House Nashua, NH 17 300,531 300,531 706,873 Section 8 100% Archer Village, Ltd. Archer Village Archer, FL 24 171,380 171,380 708,517 FmHA 95% The Oaks of Dunlop Farms, L.P. Oaks of Dunlop Colonial Heights, VA 144 2,791,280 2,791,280 4,428,393 None 97% Timothy House Limited Partnership Timothy House Towson, MD 112 3,064,250 3,064,250 2,500,426 None 98% Westover Station Associates, L.P. Westover Station Newport News, VA 108 1,972,947 1,972,947 2,661,411 None 99%
Capital Contribution Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type At Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1999 1999 1998 Subsidy* 1999 - ------------------------------ ------------ ------------- ------------- -------------- ------------- ------------ Christiansted Limited Dividend Housing Association Carib III St. Croix, VI 24 322,260 322,260 1,482,307 FmHA 79% St. Croix II Limited Partnership Carib II St. Croix, VI 20 347,680 347,680 1,402,191 FmHA 95% Whispering Trace Apartments, A Limited Partnership Whispering Trace Woodstock, GA 40 1,093,330 1,093,330 1,376,939 None 88% Historic New Center Apartments Limited Partnership New Center Detroit, MI 104 2,949,420 2,949,420 2,932,517 Section 8 95% Huguenot Park Associates, L.P. Huguenot Park New Paltz, NY 24 982,358 982,358 1,400,000 None 100% Cobblestone Place Townhomes, A Limited Partnership Hillwood Pointe Jacksonville, FL 100 2,356,133 2,356,133 2,926,844 None 96% Kensington Place Townhomes, A Limited Partnership Pinewood Pointe Jacksonville, FL 136 3,153,173 3,153,173 3,962,864 None 97%
Capital Contributions Total Paid Mortgage loans Occupancy Local Limited Partnership Number Committed at through payable at Type At Property Name of March 31, March 31, December 31, of March 31, Property Location Apt. Units 1999 1999 1998 Subsidy* 1999 - ------------------------------ ----------- ------------- ----------------- ---------------- ------------- ------------- Westgate Apartments Limited Partnership Westgate Bismark, ND 60 935,893 935,893 1,365,415 None 85% Woodlake Hills Limited Partnership Woodlake Hills Pontiac, MI 144 4,154,670 4,154,670 3,811,770 None 91% Bixel House, a California Limited Partnership Bixel House Los Angeles, CA 76 710,677 710,677 1,273,858 Section 8 99% Harmony Apartments, a California Limited Partnership Magnolia Villas North Hollywood, CA 65 3,203,996 3,203,996 2,238,307 None 99% Schumaker Place Associates, L.P. Schumaker Place Salisbury, MD 96 2,910,453 2,910,453 2,913,267 None 100% Circle Terrace Associates Limited Partnership Circle Terrace Lansdowne, MD 303 5,811,234 5,811,234 8,872,936 Section 8 99% ------- ------------ ------------ ------------- 2,374 $ 55,570,462 $ 55,570,462 $ 82,782,947 ======= ============ ============ =============
* FmHA This subsidy, which is authorized under Section 515 of the Housing Act of 1949, can be one or a combination of different types of financing. For instance, FmHA may provide: 1) direct below-market-rate mortgage loans for rural rental housing; 2) mortgage interest subsidies which effectively lower the interest rate of the loan to 1%; 3) a rental assistance subsidy to tenants which allows them to pay no more than 30% of their monthly income as rent with the balance paid by the federal government; or 4) a combination of any of the above. Section 8 This subsidy, which is authorized under Section 8 of Title II of the Housing and Community Development Act of 1974, allows qualified low-income tenants to pay 30% of their monthly income as rent with the balance paid by the federal government. (1) On January 1, 1994, Lorne Park merged into Strathern Park in a business combination accounted for as a pooling of interests. Lorne Park's total assets, liabilities and partners' equity were combined with Strathern Park at their existing book value, and neither partnership recognized a gain or loss on the merger. The combined Partnerships constructed a 241 Unit apartment project (Lorne Park: 72 Units, Strathern Park: 169 Units) for tenants whose income is very low to moderate. Two Local Limited Partnerships invested in by the Partnership each represent more than 10% of the total capital contributions to be made to Local Limited Partnerships by the Partnership. The first is Strathern Park/Lorne Park, a California Limited Partnership. Strathern Park/Lorne Park, representing 15.15% of the total capital contributions to Local Limited Partnerships, is a 241-unit apartment complex located in Los Angeles, California. Strathern Park/Lorne Park is financed by a combination of private and public sources, including a first mortgage at 9.41% interest and 30 year term with California Community Reinvestment Corporation, a consortium of private lenders. Secondary financing has a term of 40 years and is provided by the Community Redevelopment Agency of the City of Los Angeles and a U.S. Housing and Urban Development Action Grant, with payments made from the residual receipts of the project. The other Local Limited Partnership which represents more than 10% of the total capital contributions made to Local Limited Partnerships is Circle Terrace Associates Limited Partnership. Circle Terrace, representing 10.46% of the total capital contributions to Local Limited Partnerships, is a substantially renovated 303-unit apartment complex located in Lansdowne, Maryland with 23 garden-style buildings and a newly-constructed community building. All of the units at Circle Terrace benefit from Section 8 Loan Management Set Aside Program. Additionally, Circle Terrace assumed a HUD Section 236 mortgage and financing by Crestar of Richmond Virginia, Inc. and by Maryland's Department of Housing and Community Rental Housing Program. The Property also has a loan financed by Baltimore County's Community Development Block Grant program, and it received weatherization funds from the U.S. Department of Energy. The duration of the leases for occupancy in the Properties described above are six to twelve months. The Managing General Partner believes the Properties described herein are adequately covered by insurance. Additional information required under this Item, as it pertains to the Partnership, is contained in Items 1, 7 and 8 of this Report. Item 3. Legal Proceedings The Partnership is not a party to any pending legal or administrative proceeding. However, Tompkins/Rosecliff, Ltd. which owns a property in Sanford, Florida, is involved in certain litigation with an entity formerly affiliated with this Partnership and its previous local general partner. Recently, a tentative settlement agreement was agreed upon. Tompkins/Rosecliff and the Partnership will contribute a total of $150,000, of which the Partnership will contribute $100,000. In the opinion of Management, this is an appropriate settlement, which will eliminate the risk of foreclosure and recapture posed by this litigation. Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market for the Registrant's Units and Related Security Holder Matters There is no public market for the Units, and it is not expected that a public market will develop. If a Limited Partner desires to sell Units, the buyer of those Units will be required to comply with the minimum purchase and retention requirements and investor suitability standards imposed by applicable federal or state securities laws and the minimum purchase and retention requirements imposed by the Partnership. The price to be paid for the Units, as well as the commissions to be received by any participating broker-dealers, will be subject to negotiation by the Limited Partner seeking to sell his Units. Units will not be redeemed or repurchased by the Partnership. The Partnership Agreement does not impose on the Partnership or its General Partners any obligation to obtain periodic appraisals of assets or to provide Limited Partners with any estimates of the current value of Units. As of June 15, 1999, there were 3,234 record holders of Units of the Partnership. Cash distributions, when made, are paid annually. No cash distributions were paid for the years ended March 31, 1999, 1998 and 1997. In the Partnership's early years, cash available for distribution was derived from the interest earned on the temporary investment of funds held by the Partnership prior to paying capital contributions to Local Limited Partnerships. All cash distributions made to date have constituted a return of capital for generally accepted accounting principles. Item 6. Selected Financial Data The following table sets forth selected financial information regarding the Partnership's financial position and operating results. This information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements and Notes thereto, which are included in Items 7 and 8 of this Report.
March 31, March 31, March 31, March 31, March 31, 1999 1998 1997 1996 1995 Revenue (E) $ 400,484 $ 321,439 $ 204,683 $ 224,012 $ 171,863 Equity in losses of Local Limited Partnerships (E) (2,944,720) (4,777,460) (4,044,413) (4,695,617) (4,747,136) Net loss (3,383,033) (5,838,302) (4,337,761) (4,952,448) (5,110,677) Per Limited Partnership Unit (A) (48.59) (83.85) (62.30) (71.13) (73.40) Cash and cash equivalents (E) 450,450 239,932 449,567 243,644 72,535 Marketable securities 2,666,281 3,064,717 2,840,127 3,099,255 3,196,496 Investment in Local Limited Partnerships 21,538,791 24,775,767 30,531,768 34,878,562 39,667,730 Total assets (B) 25,653,434 28,905,668 33,871,495 38,246,869 42,985,386 Long-term debt (E) 706,873 707,659 - - - Total liabilities (E) 1,134,775 1,002,330 298,276 318,728 149,379 Cash Distributions - - - - - Other data: Passive loss (C) (5,120,476) (5,324,956) (5,154,301) (5,187,774) (5,204,384) Per Limited Partnership Unit (A,C) (73.54) (76.48) (74.03) (74.51) (74.75) Portfolio income (C) 340,850 361,519 281,707 350,417 233,083 Per Limited Partnership Unit (A,C) 4.90 5.19 4.05 5.03 3.35 Low-Income Housing Tax Credit (C) 10,405,744 10,512,076 10,512,996 10,506,229 10,519,636 Per Limited Partnership Unit (A,C) 150.97 150.98 150.99 150.90 151.09 Local Limited Partnership interests owned at end of period (D) 27 27 27 27 27
(A) Per Limited Partnership Unit data is based upon 68,929 outstanding Units. (B) Total assets include the net investment in Local Limited Partnerships. (C) Income tax information is as of December 31, the year end of the Partnership for income tax purposes. (D) On January 1, 1994, Strathern Park and Lorne Park merged. (E) Revenue for the year ended March 31, 1999 includes $119,443 of rental and other revenues from the Combined Entity that is included in the combined revenue on the Combined Statement of Operations. Equity in losses of Local Limited Partnerships in the year ended March 31, 1999 does not include $1,702 of income from the Combined Entity that has been combined with the Partnership's loss on the Combined Statement of Operations. Cash and cash equivalents at March 31, 1999 include $519 of cash and cash equivalents from the Combined Entity that has been combined with the Partnership in the Combined Balance Sheet. Long-term debt at March 31, 1999 is related to the Combined Entity. Total liabilities includes $730,296 that has been combined with the Partnership in the Combined Balance Sheet. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Partnership intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements, and are including this statement for purposes of complying with these safe harbor provisions. Although the Partnership believes the forward-looking statements are based on reasonable assumptions, the Partnership can give no assurance that their expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, general economic and real estate conditions, interest rates, and unanticipated delays or expenses on the part of the Partnership and their suppliers in achieving year 2000 compliance. Liquidity and Capital Resources At March 31, 1999, the Partnership (including the Combined Entity) had cash and cash equivalents of $450,450, compared with $239,932 at March 31, 1998. The decrease is attributable to net cash used for operations and purchases of marketable securities, partially offset by proceeds from sales and maturities of marketable securities and cash distributions received from Local Limited Partnerships. Approximately $2,553,000 of marketable securities has been designated as Reserves by the Managing General Partner. The Reserves were established to be used for working capital of the Partnership and contingencies related to the ownership of Local Limited Partnership interests. Management believes that the investment income earned on the Reserves, along with cash distributions received from Local Limited Partnerships, to the extent available, will be sufficient to fund the Partnership's ongoing operations and any contingencies that may arise. Reserves may be used to fund Partnership operating deficits, if the Managing General Partner deems funding appropriate. Since the Partnership invests as a limited partner, the Partnership has no contractual duty to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, at March 31, 1999, the Partnership had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Partnership might deem it in its best interests to provide such funds, voluntarily, in order to protect its investment. No such event has occurred to date. Cash Distributions No cash distributions were made during the year ended March 31, 1999. In prior years, cash available for distribution was derived from the interest earned on the temporary investment of the Partnership's funds, at money market rates, prior to the funds being contributed to the Partnership's Local Limited Partnership investments. Based on the results of 1998 operations, the Local Limited Partnerships are not expected to distribute significant amounts of cash to the Partnership because such amounts will be needed to fund Property operating costs. In addition, many of the Properties benefit from some type of federal or state subsidy and, as a consequence, are subject to restrictions on cash distributions. Therefore, it is expected that only a limited amount of cash will be distributed to investors from this source in the future. Results of Operations 1999 versus 1998 The Partnership's results of operations for the year ended March 31, 1999 resulted in a net loss of $3,383,033 as compared to a net loss of $5,838,302 for the same period in 1998. The decrease in net loss is primarily attributable to a decrease in equity in losses of Local Limited Partnerships and an increase in general and administrative expenses and due to provisions for valuation of Local Limited Partners and property impairment provisions in 1998 not required in 1999. Equity in losses of Local Limited Partnerships decreased primarily due to an increase in unrecognized losses for Local Limited Partnerships whose carrying values have been reduced to zero. Other revenue increased due to an increase in distributions received by the Partnership from the Local Limited Partnerships. 1998 versus 1997 The Partnership's results of operations for the year ended March 31, 1998 resulted in a net loss of $5,838,302 as compared to a net loss of $4,337,761 for the same period in 1997. The increase in net loss is primarily attributable to an increase in equity in losses of Local Limited Partnerships, a provision for valuation of rental property and a provision for valuation of Investment in Local Limited Partnership. Equity in losses of Local Limited Partnerships increased due to a general increase in operating expenses for the Local Limited Partnerships. Other revenue increased due to an increase in distributions received by the Partnership from the Local Limited Partnerships. Low-Income Housing Tax Credits The 1998, 1997 and 1996 Tax Credits per Unit were $150.97, $150.98 and $150.99, respectively. The Tax Credit per Limited Partnership Unit stabilized in 1993 at approximately $151.00 per Unit. The credits are expected to remain stable through the year 2000 and then they are expected to decrease as certain properties reach the end of the ten year credit period. However, because the compliance periods extend significantly beyond the tax credit periods, the Partnership is expected to retain most of its interests in the Local Limited Partnerships for the foreseeable future, which is well beyond 2000. On November 10, 1997, the Partnership transferred 50% of its interest in capital and profits of Westgate Apartments to the local general partner in order to protect the Partnership in the event of a foreclosure-induced recapture of these tax credits. Property Discussions Limited Partnership interests have been acquired in twenty-seven Local Limited Partnerships that are located in ten states and the Virgin Islands. Five of the properties, totaling 612 units, were existing properties that underwent rehabilitation and twenty-two properties, consisting of 1,762 units, were new construction. Most of the twenty-seven Local Limited Partnerships have stabilized operations. The majority of these stabilized properties are operating at break-even or generating positive operating cash flow. Historic New Center in Detroit, Michigan has been generating operating deficits due to low occupancy and collection problems. However, as previously reported, the Managing General Partner was successful in finalizing the negotiations with the lenders for a loan modification. This loan modification should allow the property to meet debt service coverage and provide capital for the physical improvements. In addition, a new site manager was hired in October 1998. The new site manager will focus on implementing a new marketing strategy and improving rent collections. As of December 31, 1998, occupancy for Historic New center improved slightly to 92%. The Managing General Partner will continue to closely monitor property operations. Westgate, located in North Dakota, has been experiencing declining occupancy. Occupancy as of December 31, 1998 was 84%. Affiliates of the Managing General Partner have been working with the Local General Partner who has raised some concerns over the long-term financial health of the property. In an effort to reduce possible future risk, the Managing General Partner consummated the transfer of 50% of the Partnership's interest in capital and profits in Westgate to the Local General Partner. The Managing General Partner has the right to transfer the Partnership's remaining interest to the Local General Partner any time after one year has elapsed. The Partnership will retain its full share of tax credits until such time as the remaining interest is put to the Local General Partner. In addition, the Local General Partner has the right to call the remaining interest after the tax credit period has expired. As previously reported, in 1997, the Local General Partner, of Wheeler House, located in Nashua, New Hampshire was removed due to financial insolvency and an affiliate of the Managing General Partner stepped-in as temporary Local General Partner. As the new Local General Partner, the affiliate of the Managing General Partner proceeded to negotiate with the lender on temporary debt restructuring to reduce interest rates and extend the due date of the loan to 1998. At the same time, the Managing General Partner began exploring refinancing opportunities. A potential lender was identified and performed an appraisal in March. The appraisal showed inadequate loan to value coverage. The Managing General Partner is currently negotiating with the lender and is exploring all measures to protect the remaining tax credits generated by the property. However, It is possible that the Partnership will not be able to retain its interest in Wheeler House through 1999. A foreclosure would result in recapture of credits, the allocation of taxable income to the Fund and loss of future benefits associated with this property. In accordance with Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", the Partnership has implemented policies and practices for assessing impairment of its real estate assets and investments in Local Limited Partnerships. Each asset is analyzed by real estate experts to determine if an impairment indicator exists. If so, the carrying value is compared to the undiscounted future cash flows expected to be derived from the asset and, if there is a significant impairment in value, a provision to write down the asset to fair value will be charged against income. Inflation and Other Economic Factors Inflation had no material impact on the operations or financial condition of the Partnership for the years ended March 31, 1999, 1998 and 1997. Since some of the properties benefit from some form of government assistance, the Partnership is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission for rent increases. In addition, any Tax Credits allocated to investors with respect to a property are subject to recapture to the extent that the property or any portion thereof ceases to qualify for the Tax Credits. Certain of the properties in which the Partnership invests may be located in areas suffering from poor economic conditions. Such conditions could have an adverse effect on rent or occupancy levels at such properties. Nevertheless, management believes that the generally high demand for below market rate housing will tend to negate such factors. However, no assurance can be given in this regard. Impact of Year 2000 The Managing General Partner's plan to resolve year 2000 issues involves the following four phases: assessment, remediation, testing and implementation. To date, the Managing General Partner has fully completed an assessment of all information systems that may not be operative subsequent to 1999 and has begun the remediation, testing and implementation phase on both hardware and software systems. Because the hardware and software systems of both the Partnership and Local Limited Partnerships are generally the responsibility of obligated third parties, the plan primarily involves ongoing discussions with and obtaining written assurances from these third parties that pertinent systems will be 2000 compliant. In addition, neither the Partnership nor the Local Limited Partnerships are incurring significant additional costs since such expenses are principally covered under the service contracts with vendors. As of June 1999, the General Partner is in the final stages of its Year 2000 remediation plan and believes all major systems are compliant; any systems still being updated are not considered significant to the Partnership's operations. However, despite the likelihood that all significant year 2000 issues are expected to be resolved in a timely manner, the Managing General Partner has no means of ensuring that all systems of outside vendors or other entities that impact operations will be 2000 compliant. The Managing General Partner does not believe that the inability of third parties to address their year 2000 issues in a timely manner will have a material impact on the Partnership. However, the effect of non-compliance by third parties is not readily determinable. Management has also evaluated a worst case scenario projection with respect to the year 2000 and expects any resulting disruption of either the Managing General Partner's activities or any Local Limited Partnership's operations to be short-term inconveniences. Such problems, however, are not likely to fully impede the ability to carry out necessary duties of the Partnership. Moreover, because expected problems under a worst case scenario are not extensively detrimental, and because the likelihood that all systems affecting the Partnership will be compliant before 2000, the Managing General Partner has determined that a formal contingency plan that responds to material system failures is not necessary. Item 7A. Quantitative and Qualitative Disclosures about Market Risk The Partnership has invested in marketable securities with a fair value of $2,666,281 at March 31, 1999; these securities, with rates ranging from 4.87% to 8.15%, do not subject the Partnership to significant market risk because of their short term maturities and high liquidity. In addition, the Partnership's debt obligation is currently due and payable and therefore does not expose the Partnership to future interest rate risk. The Partnership has no other exposure to market risk associated with activities in derivative financial instruments, derivative commodity instruments, or other financial instruments. Item 8. Financial Statements and Supplementary Data Information required under this Item is submitted as a separate section of this Report. See Index on page F-1 hereof. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant The Managing General Partner of the Partnership is Arch Street V, Inc., a Massachusetts corporation (the "Managing General Partner" or "Arch Street, Inc."), an affiliate of The Boston Financial Group Limited Partnership ("Boston Financial"), a Massachusetts limited partnership. George Fantini, Jr., a Vice President of the Managing General Partner, resigned his position effective June 30, 1995. Donna Gibson, a Vice President of the Managing General Partner, resigned from her position on September 13, 1996. Georgia Murray resigned as Managing Director, Treasurer and Chief Financial Officer of the General Partner on May 25, 1997. Fred N. Pratt, Jr. resigned as Managing Director of the General Partner on May 28, 1997. William E. Haynsworth resigned as Managing Director and Chief Operating Officer of the General Partner on March 23, 1998. Peter G. Fallon resigned as a Vice President of the General Partner on June 1, 1999. The Managing General Partner was incorporated in June 1989. Randolph G. Hawthorne is the Chief Operating Officer of the Managing General Partner and had the primary responsibility for evaluating, selecting and negotiating investments for the Partnership. The Investment Committee of the Managing General Partner approved all investments. The names and positions of the principal officers and the directors of the Managing General Partner are set forth below. Name Position Jenny Netzer Managing Director and President Michael H. Gladstone Managing Director, Vice President and Clerk Randolph G. Hawthorne Managing Director, Vice President and Chief Operating Officer James D. Hart Chief Financial Officer and Treasurer Paul F. Coughlan Vice President William E. Haynsworth Vice President The other General Partner of the Partnership is Arch Street V Limited Partnership, a Massachusetts limited partnership ("Arch Street L.P.") that was organized in June 1989. Arch Street, Inc. is the managing general partner of Arch Street L.P. The Managing General Partner provides day-to-day management of the Partnership. Compensation is discussed in Item 11 of this report. Such day-to-day management does not include the management of the Properties. The business experience of each of the persons listed above is described below. There is no family relationship between any of the persons listed in this section. Jenny Netzer, age 43, graduated from Harvard University (B.A., 1976) and received a Master's in Public Policy from Harvard's Kennedy School of Government in 1982. Ms. Netzer joined Boston Financial in 1987 and is a Senior Vice President leading the Institutional Tax Credit Team. She is also a member of the Senior Leadership Team, the firm's Executive Committee. Previously, Ms. Netzer led Boston Financial's new business initiatives and managed the firm's Asset Management division, which is responsible for the performance of 750 properties and providing service to 35,000 investors. Before joining Boston Financial, she was Deputy Budget Director for the Commonwealth of Massachusetts, where she was responsible for the Commonwealth's health care and public pension programs' budgets. Ms. Netzer was also Assistant Controller at Yale University and has been a member of the Watertown Zoning Board of Appeals. Michael H. Gladstone, age 42, graduated from Emory University (B.A., 1978) and Cornell University (J.D.; M.B.A., 1982). Mr. Gladstone joined Boston Financial in 1985, and is Vice President and General Counsel. He is also a member of the Senior Leadership Team. Prior to joining Boston Financial, Mr. Gladstone was associated with the Boston law firm of Herrick & Smith. Mr. Gladstone is on the Advisory Board of the Housing and Development Reporter. He is also a member of the Investment Program Association, The National Realty Committee, Cornell Real Estate Council, National Housing Conference, and the Massachusetts Bar. Randolph G. Hawthorne, age 49, is a graduate of Massachusetts Institute of Technology (S.B., 1971) and Harvard Graduate School of Business (M.B.A., 1973). Mr. Hawthorne joined Boston Financial in 1973 and is currently a Vice President responsible for structuring and acquiring real estate investments. Previously, Mr. Hawthorne served as Treasurer of Boston Financial. Mr. Hawthorne is Past Chairman of the Board of the National Multi Housing Council, having served on the board since 1989. He is a past president of the National Housing and Rehabilitation Association is a member of the Residential Development Council of the Urban Land Institute, as well as a member of the Advisory Board of the Berkeley Real Estate Center at the University of California. In addition to speaking at industry conferences, he is on the Editorial Advisory Boards of the Tax Credit Advisor and Multi-Housing News. James D. Hart, age 41, graduated from Trinity College (B.A.) and Amos Tuck School at Dartmouth College (M.B.A.). Mr. Hart joined Boston Financial in 1998 and serves as Chief Financial Officer and is a member of the Senior Leadership Team. Prior to joining Boston Financial, Mr. Hart was engaged in venture capital management on behalf of institutional investors, including the negotiation and structuring of private equity and mezzanine transactions as a Vice President of Interfid Ltd., and later in the operational management of a venture-backed software company, as Managing Director and Chief Financial Officer of Bitstream Inc. Mr. Hart has also served on the Board of Directors of several companies, including those that went on to complete initial public offerings. Paul F. Coughlan, age 55, is a graduate of Brown University (A.B., 1965). Mr. Coughlan joined Boston Financial in 1975 and is currently a Senior Vice President and a member of the Investment Management division with responsibility for marketing institutional investments. Previously, he was national sales manager for Boston Financial's retail tax credit funds. Prior to joining Boston Financial, Mr. Coughlan was an investment broker with Bache & Company and Reynolds Securities, Inc. William E. Haynsworth, age 59, is a graduate of Dartmouth College (A.B., 1961) and Harvard Law School (L.L.B., 1964; L.L.M., 1969). Mr. Haynsworth joined Boston Financial in 1977 and is a Senior Vice President responsible for the structuring of real estate investments and the acquisition of property interests. Prior to joining Boston Financial, Mr. Haynsworth was Acting Executive Director and General Counsel of the Massachusetts Housing Finance Agency. He was also the Director of Non-Residential Development of the Boston Redevelopment Authority and an associate of the law firm of Goodwin, Procter & Hoar. Mr. Haynsworth is a member of the Executive Committee and the Board of Directors of the Affordable Housing Tax Credit Coalition. He is a member of the Senior Leadership Team and the Board of Directors of Boston Financial. Mr. Haynsworth has over 25 years of real estate experience. Item 11. Management Remuneration Neither the directors nor officers of Arch Street, Inc., the partners of Arch Street L.P. nor any other individual with significant involvement in the business of the Partnership receives any current or proposed remuneration from the Partnership. Item 12. Security Ownership of Certain Beneficial Owners and Management As of March 31, 1999, the following is the only entity known to the Partnership to be the beneficial owner of more than 5% of the total number of Units outstanding: Amount Title of Name and Address Beneficially Percent of Class of Beneficial Owner Owned Class Limited Oldham Institutional Tax Credits LLC 8,024 Units 11.64% Partner 101 Arch Street Boston, MA Oldham Institutional Tax Credits LLC is an affiliate of Arch Street V, Inc., the Managing General Partner. The equity securities registered by the Partnership under Section 12(g) of the Act consist of 100,000 Units, 68,929 of which had been sold to the public as of March 31, 1999. The remaining Units were deregistered in Post-Effective Amendment No. 6, dated January 21, 1992, herein incorporated by this reference. Holders of Units are permitted to vote on matters affecting the Partnership only in certain unusual circumstances and do not generally have the right to vote on the operation or management of the Partnership. As of March 31, 1999, Arch Street L.P. owns five (unregistered) Units not included in the 68,929 Units sold to the public. Additionally, five registered Units were sold to an employee of an affiliate of the Managing General Partner of the Registrant. Such Units were sold at a discount of 7% of the Unit price for a total discount of $350 and a total purchase price of $4,650. Except as described in the preceding paragraphs, neither Arch Street, Inc., Arch Street L.P., Boston Financial nor any of their executive officers, directors, partners or affiliates is the beneficial owner of any Units. None of the foregoing persons possesses a right to acquire beneficial ownership of Units. The Partnership does not know of any existing arrangement that might at a later date result in a change in control of the Partnership. Item 13. Certain Relationships and Related Transactions The Partnership paid certain fees to and reimbursed certain expenses of the Managing General Partner or its affiliates (including Boston Financial) in connection with the organization of the Partnership and the offering of Units. The Partnership was also required to pay certain fees to and reimburse certain expenses of the Managing General Partner or its affiliates (including Boston Financial) in connection with the administration of the Partnership and its acquisition and disposition of investments in Local Limited Partnerships. In addition, the General Partners are entitled to certain Partnership distributions under the terms of the Partnership Agreement. Also, an affiliate of the General Partners will receive up to $10,000 from the sale or refinancing proceeds of each Local Limited Partnership if it is still a limited partner at the time of such a transaction. All such fees, expenses and distributions paid in the three years ending March 31, 1999 are described below and in the sections of the Prospectus entitled "Estimated Use of Proceeds", "Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions". Such sections are incorporated herein by reference. The Partnership is permitted to enter into transactions involving affiliates of the Managing General Partner, subject to certain limitations established in the Partnership Agreement. Information required under this item is contained in Note 5 to the financial statements presented as a separate section of this Report. The affiliates of the Managing General Partner which have received fee payments and expense reimbursements from the Partnership are as follows: Organizational fees and expenses and selling expenses In accordance with the Partnership Agreement, the Partnership was required to pay certain fees to and reimburse expenses of the General Partners and others in connection with the organization of the Partnership and the offering of its Limited Partnership Units. Selling commissions, fees and accountable expenses related to the sale of the Units totaling $9,499,984 have been charged directly to Limited Partners' equity. In connection therewith, $5,858,935 of selling expenses and $3,641,049 of offering expenses incurred on behalf of the Partnership have been paid to an affiliate of the General Partners. The Partnership was required to pay a non-accountable expense allowance for marketing expenses equal to a maximum of 1% of Gross Proceeds; this is included in total offering expenses. The Partnership has capitalized an additional $50,000 which was reimbursed to an affiliate of the General Partners. Total organization and offering expenses, exclusive of selling commissions, did not exceed 5.5% of the Gross Proceeds and organizational and offering expenses, inclusive of selling commissions did not exceed 14.0% of the Gross Proceeds. No organizational fees and expenses and selling expenses were paid during the three years ended March 31, 1999. Acquisition fees and expenses In accordance with the Partnership Agreement, the Partnership was required to pay acquisition fees to and reimburse acquisition expenses of the Managing General Partner or its affiliates for selecting, evaluating, structuring, negotiating and closing the Partnership's investments in Local Limited Partnerships. Acquisition fees totaled 7% of the gross offering proceeds. Acquisition expenses, which include such expenses as legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses, were expected to total 1.5% of the gross offering proceeds. As of March 31, 1999, acquisition fees totaling $4,825,005 for the closing of the Partnership's Local Limited Partnership Investments have been paid to an affiliate of the Managing General Partner. Acquisition expenses totaling $899,430 at March 31, 1999 were incurred and have been reimbursed to an affiliate of the Managing General Partner. No acquisition fees or expenses were paid during the three years ended March 31, 1999. Asset Management Fees In accordance with the Partnership Agreement, an affiliate of the Managing General Partner is paid an Asset Management Fee for services in connection with the administration of the affairs of the Partnership. The affiliate currently receives the base amount of .351% (as adjusted by the CPI factor) of Gross Proceeds annually as the Asset Management Fee. Asset Management Fees incurred in each of the three years ended March 31, 1999 are as follows: 1999 1998 1997 ---------- ---------- ---------- Asset Management Fees $ 243,169 $ 238,087 $ 231,035 Salaries and benefits expense reimbursements An affiliate of the Managing General Partner is reimbursed for the cost of the Partnership's salaries and benefits expenses. The reimbursements are based upon the size and complexity of the Partnership's operations. Reimbursements made in each of the three years ended March 31, 1999 are as follows: 1999 1998 1997 ---------- ---------- ----------- Salaries and benefits expense reimbursements $ 109,845 $ 127,926 $ 117,763 Cash distributions paid to the General Partners In accordance with the Partnership Agreement, the General Partners of the Partnership, Arch Street V, Inc. and Arch Street V Limited Partnership, receive 1% of cash distributions made to partners. No cash distributions were paid to the General Partners in each of the three years ended March 31, 1999. Additional information concerning cash distributions and other fees paid or payable to the Managing General Partner and its affiliates and the reimbursement of expenses paid or payable to Boston Financial and its affiliates during each of the three years ended March 31, 1999 is presented in Note 6 to the Financial Statements. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)(1) and (a)(2) Documents filed as a part of this Report In response to this portion of Item 14, the financial statements, financial statement schedule and the auditors' report relating thereto are submitted as a separate section of this Report. See Index on page F-1 hereof. The reports of auditors of the Local Limited Partnerships relating to the audits of the financial statements of such Local Limited Partnerships appear in Exhibit (28)(1) of this Report. All other financial statement schedules and exhibits for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under related instructions or are inapplicable and therefore have been omitted. (a)(3) See Exhibit Index contained herein. (a)(3)(b) Reports on Form 8-K: No reports on Form 8-K were filed during the year ended March 31, 1999. (a)(3)(c) Exhibits Number and Description in Accordance with Item 601 of Regulation S-K 27. Financial Data Schedule 28. Additional Exhibits (a) 28.1 Reports of Other Independent Auditors (b) Audited financial statements of Local Limited Partnerships Strathern Park/Lorne Park Circle Terrace (a)(3)(d) None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V By: Arch Street V, Inc. its Managing General Partner By: /s/Randolph G. Hawthorne Date: June 25, 1999 ------------------------ ------------- Randolph G. Hawthorne, Managing Director, Vice President and Chief Operating Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Managing General Partner of the Partnership and in the capacities and on the dates indicated: By: /s/William G. Haynsworth Date: June 25, 1999 ------------------------------ -------------- William G. Haynsworth, Managing Director, Vice President and Chief Operating Officer By: /s/Michael H. Gladstone Date: June 25, 1999 ----------------------- ------------- Michael H. Gladstone, A Managing Director Item 8. Financial Statements and Supplementary Data
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) Annual Report on Form 10-K For The Year Ended March 31, 1999 Index Page No. Report of Independent Accountants For the years ended March 31, 1999, 1998 and 1997 F-2 Combined Financial Statements Combined Balance Sheets - March 31, 1999 and 1998 F-3 Combined Statements of Operations - Years Ended March 31, 1999, 1998 and 1997 F-4 Statements of Changes in Partners' Equity (Deficiency) - Years Ended March 31, 1999, 1998 and 1997 F-5 Combined Statements of Cash Flows - Years Ended March 31, 1999, 1998 and 1997 F-6 Notes to the Combined Financial Statements F-7 Financial Statement Schedule Schedule III - Real Estate and Accumulated Depreciation F-22
See also Index to Exhibits on Page K-23 for the financial statement of the Local Limited Partnerships included as a separate exhibit in this Annual Report on Form 10-K. Other schedules have been omitted as they are either not required or the information required to be presented therein is available elsewhere in the financial statements and the accompanying notes and schedules. REPORT OF INDEPENDENT ACCOUNTANTS To the Partners Boston Financial Qualified Housing Tax Credits L.P. V: In our opinion, based on our audits and the reports of other auditors, the combined financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Boston Financial Qualified Housing Tax Credits L.P. V (the "Partnership") at March 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 1999, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related combined financial statements. These financial statements and financial statement schedule are the responsibility of the Partnership's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We did not audit the financial statements of certain local limited partnerships for which total assets of $22,064,425 and $25,246,134, are included in these financial statements as of March 31, 1999 and 1998, respectively, and for which net losses of $2,943,018, $4,967,607, and $4,044,413 are included in the accompanying financial statements as of March 31, 1999, 1998, 1997, respectively. Those statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for the Local Limited Partnerships, is based solely on the reports of the other auditors. We conducted our audits of these statements in accordance with generally accepted auditing standard, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for the opinions expressed above. /s/PricewaterhouseCoopers LLP June 18, 1999 Boston, Massachusetts BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) COMBINED BALANCE SHEETS - MARCH 31, 1999 and 1998
1999 1998 ------------- ------------- Assets Cash and cash equivalents $ 450,450 $ 239,932 Accounts receivable from affiliates 173,739 - Mortgagee escrow deposits - 382 Tenant security deposit escrow 3,758 3,017 Investments in Local Limited Partnerships, net of reserve for valuation of $590,197 (Note 4) 21,538,791 24,725,581 Marketable securities, at fair value (Notes 1 and 3) 2,666,281 3,064,717 Prepaid assets 1,489 - Rental property at cost, net of accumulated depreciation (Note 5) 778,843 829,110 Replacement reserve escrow 7,425 2,888 Other assets 32,658 40,041 ------------- ------------- Total Assets $ 25,653,434 $ 28,905,668 ============= ============= Liabilities and Partners' Equity Accounts payable to affiliates (Note 6) $ 143,443 $ 79,210 Accounts payable and accrued expenses 133,838 72,983 Mortgage note payable (Note 7) 706,873 707,659 Tenant security deposits payable 3,803 3,017 Deferred revenue (Note 8) 146,818 139,461 ------------- ------------- Total Liabilities 1,134,775 1,002,330 ------------- ------------- Minority interest in Local Limited Partnership 116,986 140,554 General, Initial and Investor Limited Partners' Equity 24,394,204 27,777,237 Net unrealized gains (losses) on marketable securities 7,469 (14,453) ------------- ------------- Total Partners' Equity 24,401,673 27,762,784 ------------- ------------- Total Liabilities and Partners' Equity $ 25,653,434 $ 28,905,668 ============= ============= The accompanying notes are an integral part of these combined financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) COMBINED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
1999 1998 1997 ------------ ------------ ------------ Revenue: Rental $ 117,971 $ 98,473 $ - Investment (Note 3) 159,094 179,999 191,349 Other 123,419 42,967 13,334 ------------ ------------ ------------ Total Revenue 400,484 321,439 204,683 ------------ ------------ ------------ Expenses: General and administrative (includes reimbursements to an affiliate in the amounts of $109,845, $127,926 and $117,763 in 1999, 1998 and 1997, respectively) (Note 6) 453,057 237,092 237,545 Asset management fees, related party (Note 6) 243,169 238,087 231,035 Provision for valuation of investment in Local Limited Partnership - 590,197 - Rental operations, exclusive of depreciation 40,261 30,067 - Provision for valuation of rental property - 160,000 - Interest 73,899 64,148 - Depreciation 27,043 35,299 - Amortization 24,813 29,291 29,451 ------------ ------------ ------------ Total Expenses 862,242 1,384,181 498,031 ------------ ------------ ------------ Loss before minority interest in losses of Local Limited Partnership, equity in losses of Local Limited Partnerships and extraordinary item (461,758) (1,062,742) (293,348) Minority interest in losses of Local Limited Partnership (17) 1,900 - Equity in losses of Local Limited Partnerships (Note 4) (2,944,720) (4,777,460) (4,044,413) Extraordinary gain on cancellation of indebtedness 23,462 - - ------------ ------------ ------------ Net Loss $ (3,383,033) $ (5,838,302) $ (4,337,761) ============ ============ ============ Net Loss allocated: General Partners $ (33,830) $ (58,383) $ (43,378) Limited Partners (3,349,203) (5,779,919) (4,294,383) ------------ ------------ ------------ $ (3,383,033) $ (5,838,302) $ (4,337,761) ============ ============ ============ Net Loss per Limited Partnership Unit (68,929 Units) $ (48.59) $ (83.85) $ (62.30) =========== ============== ============== The accompanying notes are an integral part of these combined financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
Net Initial Investor Unrealized General Limited Limited Gains Partners Partner Partners (Losses) Total Balance at March 31, 1996 $ (212,573) $ 5,000 $ 38,160,873 $ (25,159) $ 37,928,141 ------------ ------------ ------------ ------------ ------------ Comprehensive Loss: Net change in net unrealized losses on marketable securities available for sale - - - (17,161) (17,161) Net Loss (43,378) - (4,294,383) - (4,337,761) ------------ ------------ ------------ ------------ ------------ Comprehensive Loss (43,378) - (4,294,383) (17,161) (4,354,922) ------------ ------------ ------------ ------------ ------------ Balance at March 31, 1997 (255,951) 5,000 33,866,490 (42,320) 33,573,219 ------------ ------------ ------------ ------------ ------------ Comprehensive Income (Loss): Net change in net unrealized losses on marketable securities available for sale - - - 27,867 27,867 Net Loss (58,383) - (5,779,919) - (5,838,302) ------------ ------------ ------------ ------------ ------------ Comprehensive Income (Loss) (58,383) - (5,779,919) 27,867 (5,810,435) ------------ ------------ ------------ ------------ ------------ Balance at March 31, 1998 (314,334) 5,000 28,086,571 (14,453) 27,762,784 ------------ ------------ ------------ ------------ ------------ Comprehensive Income (Loss): Net change in net unrealized losses on marketable securities available for sale - - - 21,922 21,922 Net Loss (33,830) - (3,349,203) - (3,383,033) ------------ ------------ ------------ ------------ ------------ Comprehensive Income (Loss) (33,830) - (3,349,203) 21,922 (3,361,111) ------------ ------------ ------------ ------------ ------------ Balance at March 31, 1999 $ (348,164) $ 5,000 $ 24,737,368 $ 7,469 $24,401,673 ============ ============ ============ ============ =========== The accompanying notes are an integral part of these combined financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) COMBINED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
1999 1998 1997 ------------ ------------- ------------- Cash flows from operating activities: Net loss $ (3,383,033) $ (5,838,302) $ (4,337,761) Adjustments to reconcile net loss to net cash used for operating activities: Equity in losses of Local Limited Partnerships 2,944,720 4,777,460 4,044,413 Provision for valuation of Investment in Local Limited Partnership - 590,197 - Provision for valuation of rental property - 160,000 - Depreciation and amortization 51,856 64,590 29,451 (Gain) Loss on sales and maturities of marketable securities 14,790 (1,154) (1,560) Gain on forgiveness of debt (23,462) - - Minority interest in income (losses) of Local Limited Partnership 17 (1,900) - Cash distribution income included in cash distribution from Local Limited Partnership (65,089) - - Increase (decrease) in cash arising from changes in operating assets and liabilities: Tenant security deposits (741) (131) - Prepaid assets (1,489) - - Mortgagee escrow deposits (2,041) 3,990 - Replacement reserve deposits (2,114) (739) - Other assets 6,383 10,992 (24,625) Accounts payable to affiliate 64,233 (25,605) 16,700 Accounts payable and accrued expenses 48,557 21,457 (32,191) Tenant security deposits payable 786 131 - Deferred revenue 7,357 (34,896) (4,961) ------------- ------------- ------------- Net cash used for operating activities (339,270) (273,910) (310,534) ------------- ------------- ------------- Cash flows from investing activities: Investments in Local Limited Partnerships (50,420) - - Purchases of marketable securities (2,523,829) (2,889,608) (755,442) Proceeds from sales and maturities of marketable securities 2,929,397 2,694,039 998,969 Additions to rental property (633) - - Cash distributions received from Local Limited Partnerships 368,798 241,893 272,930 Advance to affiliate (172,739) (1,000) - Cash received upon assumption of General Partner interest in a Combined Entity - 937 - ------------- ------------- ------------- Net cash provided by investing activities 550,574 46,261 516,457 ------------- ------------- ------------- Cash flows from financing activities: General Partner contribution - 23,462 - Payment of mortgage principal (786) (5,448) - ------------- ------------- ------------- Net cash provided by (used for) financing activities (786) 18,014 - ------------- ------------- ------------- Net increase (decrease) in cash and cash equivalents 210,518 (209,635) 205,923 Cash and cash equivalents, beginning 239,932 449,567 243,644 ------------- ------------- ------------- Cash and cash equivalents, ending $ 450,450 $ 239,932 $ 449,567 ============= ============= ============= The accompanying notes are an integral part of these combined financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS 1. Organization Boston Financial Qualified Housing Tax Credits L.P. V ("the Partnership") was formed on June 16, 1989 under the laws of the State of Massachusetts for the primary purpose of investing, as a limited partner, in other limited partnerships ("Local Limited Partnerships"), some of which own and operate apartment complexes benefiting from some form of federal, state or local assistance, and each of which qualifies for low-income housing tax credits. The Partnership's objectives are to: (i) provide current tax benefits in the form of tax credits which qualified investors may use to offset their federal income tax liability; (ii) preserve and protect the Partnership's capital; (iii) provide limited cash distributions from property operations which are not expected to constitute taxable income during Partnership operations; and (iv) provide cash distributions from sale or refinancing transactions. The General Partners of the Partnership are Arch Street V, Inc., a Massachusetts corporation, which serves as the Managing General Partner, and Arch Street V Limited Partnership, a Massachusetts Limited Partnership whose general partner consists of Arch Street V, Inc., which also serves as the Initial Limited Partner. Both of the General Partners are affiliates of the Boston Financial Group Limited Partnership ("Boston Financial"). The fiscal year of the Partnership ends on March 31. The Partnership's partnership agreement (the "Partnership Agreement") authorized the sale of up to 100,000 units of limited partnership interest ("Units") at $1,000 per Unit, adjusted for certain discounts. On August 31, 1991, the Partnership held its final investor closing. In total, the Partnership received $68,928,650 of capital contributions, net of discounts, from investors admitted as Limited Partners for 68,929 Units. Generally, profits, losses, tax credits and cash flows from operations are allocated 99% to the Limited Partners and 1% to the General Partners. Net proceeds from a sale or refinancing will be allocated 95% to the Limited Partners and 5% to the General Partners after certain priority payments. Under the terms of the Partnership Agreement, the Partnership initially designated 4% of the Gross Proceeds from the sale of Units as a reserve for working capital of the Partnership and contingencies related to ownership of Local Limited Partnership interests. The Managing General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. At March 31, 1999, the Managing General Partner has designated approximately $2,553,000 of marketable securities as such Reserves. 2. Significant Accounting Policies Basis of Presentation and Combination The Partnership accounts for its investments in Local Limited Partnerships, with the exception of the Combined Entity (defined below), using the equity method of accounting because the Partnership does not have a majority control over the major operating and financial policies of the Local Limited Partnerships in which it invests. Under the equity method, the investment is carried at cost, adjusted for the Partnership's share of income or loss of the Local Limited Partnerships, additional investments in and cash distributions from the Local Limited Partnerships. Equity in income or loss of the Local Limited Partnerships is included currently in the Partnership's operations. The Partnership has no obligation to fund liabilities of the Local Limited Partnerships beyond its investment and therefore a Local Limited Partnership's investment will not be carried below zero. To the extent that equity losses are incurred when a Local Limited Partnership's respective investment balance has been reduced to zero, the losses will be suspended to be used against future income. Distributions received from Local Limited Partnerships whose respective investment balance has been reduced to zero are included in income. Excess investment costs over the underlying net assets acquired have arisen from acquisition fees paid and expenses reimbursed to an affiliate of the Partnership. These fees and expenses are included in the Partnership's Investments in Local Limited Partnerships and are being amortized on a straight-line basis over 35 years. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) Basis of Presentation and Combination (continued) The Partnership recognizes a decline in the carrying value of its investments in Local Limited Partnerships when there is evidence of a non-temporary decline in the recoverable amount of the investment. There is a possibility that the estimates relating to reserves for non-temporary declines in carrying value of investments in Local Limited Partnerships may be subject to material near term adjustments. The Partnership, as a limited partner in the Local Limited Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance and continued eligibility for tax credits. If the cost of operating a property exceeds the rental income earned thereon, the Partnership may deem it in its best interest to voluntarily provide funds in order to protect its investment. On March 1, 1997, an affiliate of the Partnership's Managing General Partner, Boston Financial GP1-LLC, became the Local General Partner of Burbank Limited Partnership ("Burbank"), a Local Limited Partnership in which the Partnership has invested. Since the Local General Partner of Burbank is an affiliate of the Partnership and has a controlling financial interest in Burbank, as set forth in paragraph 22 of ARB 51, these combined financial statements include all activity at Burbank beginning on March 1, 1997. All significant intercompany balances and transactions have been eliminated. As used herein, the "Combined Entity" refers to Burbank. The General Partners have decided to report the results of the Local Limited Partnerships, including the Combined Entity, on a 90-day lag basis because the Local Limited Partnerships report their results on a calendar year basis. Accordingly, the financial information of the Local Limited Partnerships that is included in the accompanying combined financial statements is as of December 31, 1998, 1997 and 1996. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents Cash equivalents consist of short-term money market instruments with original maturities of 90 days or less at acquisition and approximate fair value. Marketable Securities Marketable securities consists primarily of U.S. Treasury instruments and various asset-backed investment vehicles. The Partnership's marketable securities are classified as "Available for Sale" securities and are reported at fair value as reported by the brokerage firm at which the securities are held. Realized gains and losses from the sales of securities are based on the specific identification method. Unrealized gains and losses are excluded from earnings and reported as a separate component of partners' equity. Income Taxes No provision for income taxes has been made as the liability for such taxes is an obligation of the partners of the Partnership. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) Effect of recently issued Accounting Standard The Financial Accounting Standards Board recently issued Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. The standard requires that changes in comprehensive income be shown in a financial statement that is displayed with the same prominence as other financial statements. The standard is effective for fiscal years beginning after December 15, 1997. The Partnership adopted the new standard effective April 1, 1998 and its adoption did not have a significant effect on the Partnership's financial position or results of operations. The only component of the Partnership's other accumulated comprehensive income is net unrealized gains and losses on marketable securities. Rental Property Real estate and personal property of the Combined Entity is recorded in accordance with SFAS 121. The Combined Entity provides for depreciation using primarily the straight-line method over its estimated useful lives. In accordance with Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", the Partnership has implemented policies and practices for assessing impairment of its real estate assets and investments in Local Limited Partnerships. Each asset is analyzed by real estate experts to determine if an impairment indicator exists. If so, the carrying value is compared to the undiscounted future cash flows expected to be derived from the asset and, if there is a significant impairment in value, a provision to write down the asset to fair value will be charged against income. Rental Income Rental income, principally from short-term leases on the Combined Entity's apartment units, is recognized as income under the accrual method as the rents become due. Fair Value of Financial Instruments Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"), Disclosures About Fair Value of Financial Instruments, requires disclosure for the fair value of most on- and off-balance sheet financial instruments for which it is practicable to estimate that value. The scope of SFAS No. 107 excludes certain financial instruments, such as trade receivables and payables when the carrying value approximates the fair value, investments accounted for under the equity method, and all nonfinancial assets such as real property. Unless otherwise described, the fair values of the Partnership's assets and liabilities which qualify as financial instruments under SFAS No. 107 approximate their carrying amounts in the accompanying balance sheets. Reclassifications Certain reclassifications have been made to prior years' financial statements to conform to the current year presentation. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 3. Marketable Securities A summary of marketable securities is as follows:
Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Debt securities issued by the US Treasury and other US government corporations and agencies $ 2,347,480 $ 11,715 $ (4,787) $ 2,354,408 Mortgage backed securities 311,332 1,865 (1,324) 311,873 ------------ ----------- ---------- ------------ Marketable securities at March 31, 1999 $ 2,658,812 $ 13,580 $ (6,111) $ 2,666,281 ============ =========== ========== ============ Debt securities issued by the US Treasury and other US governement corporations and agencies $ 2,934,294 $ 5,308 $ (21,353) $ 2,918,249 Mortgage backed securities 144,876 1,592 - 146,468 ------------ ----------- ---------- ------------ Marketable securities at March 31, 1998 $ 3,079,170 $ 6,900 $ (21,353) $ 3,064,717 ============ =========== ========== ============
The contractual maturities at March 31, 1999 are as follows:
Fair Cost Value Due in less the one year $ 399,788 $ 400,906 Due in one year to five years 1,947,692 1,953,502 Mortgage backed securities 311,332 311,873 ----------- ----------- $ 2,658,812 $ 2,666,281 =========== ===========
Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations. Proceeds from the sales and maturities of marketable securities were approximately $451,000, $1,792,000 and $804,000 during the fiscal years ended March 31, 1999, 1998 and 1997, respectively. Proceeds from the maturities of marketable securities were approximately $2,479,000, $902,000 and $195,000 during the fiscal years ended March 31, 1999, 1998 and 1997, respectively. Included in investment income are gross gains of $4,895, $7,205 and $2,951 and gross losses of $19,685, $6,051and $1,391 that were realized on the sales during the fiscal years ended March 31, 1999, 1998 and 1997, respectively. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships The Partnership uses the equity method to account for its limited partner interest in twenty six Local Limited Partnerships, excluding the Combined Entity in 1999. Each of these Local Limited Partnerships owns and operates multi-family housing complexes, most of which are government-assisted. The Partnership, as Investor Limited Partner pursuant to the various Local Limited Partnership Agreements, has generally acquired a 99% interest in the profits, losses, tax credits and cash flows from operations of each of the Local Limited Partnerships, with the exception of Strathern Park/Lorne Park Apartments, Westgate and Huguenot Park, which are 95%, 49.5% and 88.6%, respectively. Upon dissolution, proceeds will be distributed according to each respective partnership agreement. The following is a summary of Investments in Local Limited Partnerships, excluding the Combined Entity in 1999 and 1998, at March 31:
1999 1998 1997 ------------ ------------ ------------ Capital contributions paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 55,269,931 $55,219,511 $55,520,042 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $1,236,440 and $133,567 in 1999 and 1998, respectively) (32,603,028) (29,735,570) (25,141,481) Cumulative cash distributions received from Local Limited Partnerships (1,341,854) (973,056) (731,163) ------------ ------------ ------------ Investments in Local Limited Partnerships before adjustment 21,325,049 24,510,885 29,647,398 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 1,006,357 1,006,357 1,006,357 Accumulated amortization of acquisition fees and expenses (202,418) (201,464) (200,510) ------------ ------------ ------------ Investments in Local Limited Partnerships 22,128,988 25,315,778 30,453,245 Reserve for valuation of Investment in Local Limited Partnership (590,197) (590,197) - ------------ ------------ ------------ $ 21,538,791 $ 24,725,581 $ 30,453,245 ============ ============ ==============
The Partnership has provided a reserve for valuation for one of its investments in Local Limited Partnerships, Westgate Apartments, because there is evidence of a non-temporary decline in the recoverable amount of the investment. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships (continued) Summarized financial information as of December 31, 1998, 1997 and 1996 (due to the Partnership's policy of reporting the financial information of its Local Limited Partnership interests on a 90 day lag basis) of all Local Limited Partnerships accounted for on the equity method (excluding the Combined Entity beginning on the date of combination) in which the Partnership has invested as of that date is as follows: Summarized Balance Sheets - as of December 31,
1998 1997 1996 -------------- -------------- -------------- Assets: Investment property, net $ 108,683,329 $ 113,022,632 $ 119,404,292 Current assets 3,051,869 3,319,977 3,109,145 Other assets 5,864,260 5,949,514 5,944,574 -------------- -------------- -------------- Total Assets $ 117,599,458 $ 122,292,123 $ 128,458,011 ============== ============== ============== Liabilities and Partners' Equity: Long-term debt, net of current portion $ 82,067,318 $ 84,044,067 $ 85,520,204 Current liabilities (including current portion of long-term debt) 8,669,686 8,060,589 7,168,891 Other liabilities 2,206,860 1,456,872 1,389,432 -------------- -------------- -------------- Total Liabilities 92,943,864 93,561,528 94,078,527 Partnership's Equity 19,691,908 23,844,561 29,509,002 Other Partners' Equity 4,963,686 4,886,034 4,870,482 -------------- -------------- -------------- Total Liabilities and Partners' Equity $ 117,599,458 $ 122,292,123 $ 128,458,011 ============== ============== ============== Summarized Income Statements - for the years ended December 31, Rental and other income: $ 14,524,674 $ 14,309,317 $ 14,377,262 -------------- -------------- -------------- Expenses: Operating 7,835,920 7,622,343 7,389,143 Interest 5,842,850 5,919,806 6,159,027 Depreciation and amortization 4,913,928 5,786,902 4,970,595 -------------- -------------- -------------- Total Expenses 18,592,698 19,329,051 18,518,765 -------------- -------------- -------------- Net Loss $ (4,068,024) $ (5,019,734) $ (4,141,503) ============== ============== ============== Partnership's share of Net Loss $ (3,970,328) $ (4,908,884) $ (4,046,556) ============== ============== ============== Other partners' share of Net Loss $ (97,696) $ (110,850) $ (94,947) ============== ============== ==============
For the years ended March 31, 1999 and 1998, the Partnership has not recognized $1,102,873 and $131,424, respectively, of equity in losses of Local Limited Partnerships relating to two Local Limited Partnerships where cumulative equity in losses exceeded its total investments in these Local Limited Partnerships. The Partnership's equity as reflected by the Local Limited Partnerships of $19,610,329 differs from the Partnership's Investments in Local Limited Partnerships before adjustment of $21,325,049 principally because: a) the Partnership has not recognized $1,236,440 of equity in losses of five Local Limited Partnerships whose equity in losses exceeded its total investment; b) distributions made by Local Limited Partnerships during the quarter ended March 31, 1999 are not reflected in the December 31, 1998 balance sheets of the Local Limited Partnerships; and c) syndication costs charged to equity by a Local Limited Partnership are not reflected in the Partnership's investment in the Local Limited Partnership. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 5. Rental Property Real estate and personal property belonging to the Combined Entity are recorded at cost, the components of which, excluding certain acquisition costs of $26,329 and $50,186 as of December 31, 1998 and 1997, respectively, paid by the Partnership and included in basis, are as follows at December 31:
1998 1997 ----------- ----------- Land $ 42,000 $ 42,000 Building and improvements 1,005,572 1,004,939 ----------- ----------- 1,047,572 1,046,939 Less: accumulated depreciation (295,058) (268,015) ----------- ----------- Total $ 752,514 $ 778,924 =========== ===========
During the year ended December 31, 1997, an impairment loss of $160,000 was recognized on the real estate in the combined Entity, which decreased the carrying value to $1,046,939. 6. Transactions with Affiliates An affiliate of the Managing General Partner currently receives the base amount of 0.351% (as adjusted by the CPI factor) of Gross Proceeds annually as the Asset Management Fee for administering the affairs of the Partnership. Asset Management Fees of $243,169, $238,087 and $231,035 for the years ended March 31, 1999, 1998 and 1997, respectively, have been included in expenses. Included in accounts payable to affiliate at March 31, 1999 and 1998 are $122,057 and $60,556, respectively, of asset management fees due to an affiliate of the Managing General Partner. An affiliate of the Managing General Partner is reimbursed for the actual cost of the Partnership's operating expenses. Included in general and administrative expenses for the years ended March 31, 1999, 1998 and 1997 are $109,845, $127,926 and $117,763, respectively, that the Partnership has paid or is payable as reimbursement for salaries and benefits expenses. The amounts payable for salaries and benefits at March 31, 1999 and 1998 are $21,385 and $18,654, respectively. BF Lansing Limited Partnership ("BF Lansing"), an affiliate of the Managing General Partner, is the Administrative General Partner in two Local Limited Partnerships in which the Partnership has invested, St. Croix II, Limited Partnership ("Carib Villas II") and Christiansted Limited Partnership ("Carib Villas III"). BF Lansing's only responsibility in relation to the two Local Limited Partnerships is the selection of a management agent. BF Lansing selected Lansing Management Company ("LMC"), an affiliate of the Managing General Partner, as the management agent for Carib Villas II and III. The management fee charged to each property is equal to 5% of property gross revenues. Included in operating expenses in the summarized income statements in Note 4 to the financial statements are $21,120, $21,120 and $15,305, respectively, of fees paid to LMC for the years ended December 31, 1998, 1997 and 1996. LMC is also the management agent for Historic New Center, another Local Limited Partnership in which the Partnership invested. Included in operating expenses in the summarized income statements in Note 4 to the financial statements are $24,185, $21,986 and $24,561, respectively, of fees earned by LMC for the years ended December 31, 1998, 1997 and 1996. Boston Financial Property Management ("BFPM"), an affiliate of the Managing General Partner, is the management agent for Woodlake Hills, a Local Limited Partnership in which the Partnership is invested. The management fee charged to the property is 4% of property gross revenues. Included in operating expenses in the summarized income statements in Note 4 to the financial statements are $35,150, $34,752 and $37,497, respectively, of fees earned by BFPM for the years ended December 31, 1998, 1997 and 1996. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 7. Mortgage Notes Payable The Combined Entity has a mortgage note payable in the original amount of $750,000 amortized over 30 years at a rate of 11.5%. On December 27, 1997, the mortgage holder of the note reduced the interest rate to 10%; this reduction changed the monthly payment from $7,427 to $6,143. It was anticipated that by the end of 1998, the Combined Entity would have negotiated a new financing agreement with another lending institution. As of December 31, 1998, the remaining balance on this note is $706,873 and the Managing General Partner is negotiating with the lender to either refinance or obtain a time extension that will permit negotiations with another lending institution. It remains uncertain as to whether foreclosure can be avoided because the note is technically in default. 8. Deferred Revenue Under the terms of a Local Limited Partnership Agreement, the Partnership was required to fund a Supplemental Reserve in the amount of $196,000. The original purpose of the contribution was to fund the development expenses of the Local Limited Partnership. In lieu of transferring the Supplemental Reserve to the Local Limited Partnership, the Partnership designated $196,000 of its cash and cash equivalents for this purpose. Since the funds were not needed, the Local Limited Partnership Agreement allows that the established Supplemental Reserve, along with the interest earned, are available to pay the Partnership its annual priority distribution. As of March 31, 1999, $99,000 has been released to the Partnership. The balance of the Supplemental Reserve is included in cash and cash equivalents. This balance, along with the accrued interest thereon, has also been accounted for as deferred revenue, as it represents the future annual priority distributions to be released to the Partnership from this Reserve. 9. Litigation The Partnership is not a party to any pending legal or administrative proceeding. However, Tompkins/Rosecliff, Ltd. which owns a property in Sanford, Florida, is involved in certain litigation with an entity formerly affiliated with this Partnership and its previous local general partner. Recently, a tentative settlement agreement was agreed upon. Tompkins/Rosecliff and the Partnership will contribute a total of $150,000, of which the Partnership will contribute $100,000. In the opinion of Management, this is an appropriate settlement, which will eliminate the risk of foreclosure and recapture posed by this litigation. 10. Transfer of Interest in Local Limited Partnership On November 10, 1997, the Managing General Partner transferred 50% of its interest in capital and profits of Westgate to the local general partner. Included in this transfer is a put option. The put option grants the Managing General Partner the right to put the Partnership's remaining interest to the local general partner any time after one year has elapsed. For financial reporting purposes, the Partnership has written down the remaining carrying value of this investment in Local Limited Partnership to zero, because it is unknown as to whether the Partnership will be able to recover its remaining invested balance. The Partnership will retain its full share of tax credits until such time as the remaining interest is put to the local general partner. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 11. Federal Income Taxes A reconciliation of the loss reported in the Combined Statements of Operations for the fiscal years ended March 31, 1999, 1998 and 1997 to the loss reported for federal income tax purposes for the years ended December 31, 1998, 1997 and 1996 is as follows:
1999 1998 1997 ------------- ------------- ------------- Net Loss per Statement of Operations $ (3,383,033) $ (5,838,302) $ (4,337,761) Adjustment for equity in losses of Local Limited Partnerships for financial reporting purposes over (under) equity in losses for tax purposes (358,118) (1,419,314) (555,803) Equity in losses of Local Limited Partnerships not recognized for financial reporting purposes (1,102,873) (131,424) (2,143) Adjustment to reflect March 31, fiscal year-end to December 31, tax year-end 64,611 31,986 (46,742) Adjustment for expenses not currently deductible for tax purposes - - 114,572 Related party expenses paid in current year but expensed for book purposes in prior year - (114,572) (55,889) Adjustment for accelerated amortization for tax purposes over amortization for financial reporting purposes (12,749) (8,383) (10,828) Provision for valuation of Investment in Local Limited Partnership not deductible for tax purposes - 590,197 - Other 12,536 - 22,000 ------------- ------------- ------------- Net Loss for federal income tax purposes $ (4,779,626) $ (6,889,812) $ (4,872,594) ============= ============= =============
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 11. Federal Income Taxes (continued) The differences in the assets and liabilities of the Partnership for financial reporting purposes and tax reporting purposes for the year ended March 31, 1999 are as follows:
Financial Tax Reporting Reporting Purposes Purposes Differences Investments in Local Limited Partnerships $ 21,538,791 $ 18,320,798 $ 3,217,993 ============= ============== ============ Other assets $ 4,114,643 $ 13,039,165 $ (8,924,522) ============= ============= ============ Liabilities $ 1,134,775 $ 204,721 $ 930,054 ============= ============= ============
The differences in assets and liabilities of the Partnership for financial reporting purposes are primarily attributable to: (i) for financial reporting purposes, the Partnership combines the financial statements of one Local Limited Partnership with its financial statements; for tax reporting purposes, this entity is carried on the equity method (ii) the cumulative equity in loss from Local Limited Partnerships, including the Combined Entity, for tax reporting purposes is approximately $3,689,000 greater than for financial reporting purposes, including approximately $1,236,000 of losses the Partnership has not recognized relating to five Local Limited Partnerships whose cumulative equity in losses exceeded its total investment; (iii) the amortization of acquisition fees for tax reporting purposes exceeds financial reporting purposes by approximately $64,000; (iv) approximately $50,000 of cash distributions received from Local Limited Partnerships during the quarter ended March 31, 1999 are not included in the Partnership's Investments in Local Limited Partnerships for tax reporting purposes at December 31, 1998; and (v) organizational and offering costs of approximately $9,500,000 that have been capitalized for tax reporting purposes, are charged to Limited Partners' equity for financial reporting purposes. The differences in the assets and liabilities of the Partnership for financial reporting purposes and tax reporting purposes for the year ended March 31, 1998 are as follows:
Financial Tax Reporting Reporting Purposes Purposes Differences Investments in Local Limited Partnerships $ 24,775,767 $ 23,114,290 $ 1,661,477 ============= ============= ============ Other assets $ 4,129,901 $ 13,054,826 $(8,924,925) ============= ============= =========== Liabilities $ 1,002,330 $ 217,179 $ 785,151 ============= ============= ============
The differences in assets and liabilities of the Partnership for financial reporting purposes are primarily attributable to: (i) for financial reporting purposes, the Partnership combines the financial statements of one Local Limited Partnership with its financial statements; for tax reporting purposes, this entity is carried on the equity method; (ii) the Partnership has provided a reserve for valuation of approximately $590,000 against one of its investments in Local Limited Partnerships for financial reporting purposes; (iii) the cumulative equity in loss from Local Limited Partnerships, including the Combined Entity, for tax reporting purposes is approximately $2,163,000 greater than for financial reporting purposes, including approximately $134,000 of losses the Partnership has not recognized relating to two Local Limited Partnerships whose cumulative equity in losses exceeded its total investment; (iv) the amortization of acquisition fees for tax reporting purposes exceeds financial reporting purposes by approximately $51,000; (v) approximately $34,000 of cash distributions received from Local Limited Partnerships during the quarter ended March 31, 1999 are not included in the Partnership's Investments in Local Limited Partnerships for tax reporting purposes at December 31, 1998; and (vi) organizational and offering costs of approximately $9,500,000 that have been capitalized for tax reporting purposes, are charged to Limited Partners' equity for financial reporting purposes. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 12. Supplemental Combining Schedules
Balance Sheets Boston Financial Qualified Housing Wheeler Tax Credits House L.P V (A) (Burbank) (B) Eliminations Combined (A) Assets Cash and cash equivalents $ 449,931 $ 519 $ - $ 450,450 Accounts receivable from affiliates 174,739 - (1,000) 173,739 Tenant security deposit escrow - 3,758 - 3,758 Investments in Local Limited Partnerships, net 21,483,543 - 55,248 21,538,791 Marketable securities, at fair value 2,666,281 - - 2,666,281 Prepaid assets - 1,489 - 1,489 Rental property at cost, net of accumulated depreciation - 752,514 26,329 778,843 Replacement reserve escrow - 7,425 - 7,425 Other assets 32,658 - - 32,658 --------------- --------------- ------------- -------------- Total Assets $ 24,807,152 $ 765,705 $ 80,577 $ 25,653,434 =============== ================ ============== ============== Liabilities and Partners' Equity Accounts payable to affiliates $ 143,443 $ 1,000 $ (1,000) $ 143,443 Accounts payable and accrued expenses 115,218 18,620 - 133,838 Mortgage note payable - 706,873 - 706,873 Tenant security deposits payable - 3,803 - 3,803 Deferred revenue 146,818 - - 146,818 --------------- --------------- ------------- -------------- Total Liabilities 405,479 730,296 (1,000) 1,134,775 --------------- --------------- ------------- -------------- Minority interest in Local Limited Partnership - - 116,986 116,986 --------------- --------------- ------------- -------------- General, Initial and Investor Limited Partners' Equity 24,394,204 35,409 (35,409) 24,394,204 --------------- --------------- ------------- -------------- Net unrealized gains on marketable securities 7,469 - - 7,469 --------------- --------------- ------------- -------------- Total Partners' Equity 24,401,673 35,409 (35,409) 24,401,673 --------------- --------------- ------------- -------------- Total Liabilities and Partners' Equity$ 24,807,152 $ 765,705 $ 80,577 $ 25,653,434 =============== =============== ============= ============== (A) As of March 31, 1999. (B) As of December 31, 1998 - See Note 2.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 12. Supplemental Combining Schedules (continued)
Statements of Operations Boston Financial Qualified Housing Wheeler Tax Credits House L.P. V (A) (Burbank) (B) Eliminations Combined (A) Revenue: Rental $ - $ 117,971 $ - $ 117,971 Investment 158,954 140 - 159,094 Other 122,087 1,332 - 123,419 --------------- --------------- ------------- ------------ Total Revenue 281,041 119,443 - 400,484 --------------- --------------- ------------- ------------ Expenses: General and administrative 453,057 - - 453,057 Asset management fees, related party 243,169 - - 243,169 Rental operations, exclusive of depreciation - 40,261 - 40,261 Interest - 73,899 - 73,899 Depreciation - 27,043 - 27,043 Amortization 24,813 - - 24,813 --------------- --------------- ------------- ------------ Total Expenses 721,039 141,203 - 862,242 --------------- --------------- ------------- ------------ Loss before minority interest in losses of Local Limited Partnership, equity in losses of Local Limited Partnerships and extraordinary item (439,998) (21,760) - (461,758) Minority interest in losses of Local Limited Partnership - - (17) (17) Equity in losses of Local Limited Partnerships (2,943,035) - (1,685) (2,944,720) --------------- --------------- ------------- ------------ Extraordinary gain on cancellation of indebtedness - 23,462 - 23,462 --------------- --------------- ------------- ------------ Net Loss $ (3,383,033) $ 1,702 $ (1,702) $ (3,383,033) =============== =============== ============= ============ (A) For the year ended March 31, 1999. (B) For the year ended December 31, 1998 - See Note 2.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO COMBINED FINANCIAL STATEMENTS (continued) 12. Supplemental Combining Schedules (continued)
Statements of Cash Flows Boston Financial Qualified Housing Wheeler Tax Credits House L.P. V (A) (Burbank) (B) Eliminations Combined (A) Cash flows from operating activities: Net Loss $ (3,383,033) $ 1,702 $ (1,702) $ (3,383,033) Adjustments to reconcile net loss to net cash used for operating activities: Equity in losses of Local Limited Partnerships 2,943,035 - 1,685 2,944,720 Depreciation and amortization 24,813 27,043 - 51,856 Loss on sale and maturities of marketable securities 14,790 - - 14,790 Cash distribution income included in cash distributions from Local Limited Partnerships (65,089) - - (65,089) Gain on forgiveness of debt - (23,462) - (23,462) Minority interest in losses of Local Limited Partnership - - 17 17 Increase (decrease) in cash arising from changes in operating assets and liabilities: Tenant security deposits - (741) - (741) Prepaid assets - (1,489) - (1,489) Mortgagee escrow deposits - (2,041) - (2,041) Replacement reserve deposits - (2,114) - (2,114) Other assets 6,383 - - 6,383 Accounts payable to affiliates 64,233 - - 64,233 Accounts payable and accrued expenses 47,527 1,030 - 48,557 Tenant security deposits payable - 786 - 786 Deferred revenue 7,357 - - 7,357 --------------- --------------- ------------- -------------- Net cash used for operating activities (339,984) 714 - (339,270) --------------- --------------- ------------- -------------- Cash flows from investing activities: Investments in Local Limited Partnerships (50,420) - - (50,420) Purchases of marketable securities (2,523,829) - - (2,523,829) Proceeds from sales and maturities of marketable securities 2,929,397 - - 2,929,397 Additions to rental property - (633) - (633) Cash distributions received from Local Limited Partnerships 368,798 - - 368,798 Advance to affiliate from affiliates (173,739) 1,000 - (172,739) --------------- ------------- ------------ -------------- Net cash provided by investing activities 550,207 367 - 550,574 --------------- ------------- ------------ --------------
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. V (A Limited Partnership) NOTES TO THE COMBINED FINANCIAL STATEMENTS (continued) 12. Supplemental Combining Schedules (continued)
Statements of Cash Flows (continued) Boston Financial Qualified Housing Wheeler Tax Credits House L.P. V (A) (Burbank) (B) Eliminations Combined (A) Cash flows from financing activities: Payment of mortgage principal - (786) - (786) --------------- ------------- ------------ ---------------- Net cash used for financing activities - (786) - (786) --------------- ------------- ------------ ---------------- Net increase in cash and cash equivalents 210,223 295 - 210,518 Cash and cash equivalents, beginning 239,708 224 - 239,932 --------------- ------------- ------------ ---------------- Cash and cash equivalents, ending $ 449,931 $ 519 $ - $ 450,450 =============== ============= ============ ================ (A) For the year ended March 31, 1999. (B) For the year ended December 31, 1998 - See Note 2.
Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1999 GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, COST OF INTEREST AT ACQUISITION DATE 1998 ------------------------------------- -------------- NET IMPROVEMENTS NUMBER TOTAL CAPITALIZED OF ENCUM- BUILDING AND SUBSEQUENT TO DESCRIPTION UNITS BRANCES * LAND IMPROVEMENTS ACQUISITION LAND ----------- ----- --------- ---- ------------ ----------- ---- Low and Moderate Income Apartment Complexes Strathern Park/Lorne Park 241 $17,428,457 $4,369,500 $10,513,639 $10,997,952 $5,889,320 Los Angeles, CA Maidens Choice 101 4,021,395 807,791 2,013,769 3,430,551 807,791 Baltimore, MD Cedar Lane 36 1,108,259 40,000 1,375,512 11,854 40,000 London, KY Silver Creek 24 768,386 20,000 946,812 0 20,000 Berea, KY Rosecliff 168 5,562,595 1,200,000 3,304,950 4,578,797 1,120,000 Orlando, FL Brookwood 81 3,019,835 91,470 344,580 4,561,568 522,673 Ypsilanti Township, MI Water Oak 40 1,256,023 98,058 1,467,944 5,638 98,058 Orange City, FL Yester Oaks 44 1,286,809 47,105 1,574,145 2,489 47,105 Lafayette, GA Ocean View 42 1,366,353 112,620 1,600,421 7,347 112,620 Ferandina Beach, FL Wheeler House 17 706,873 42,000 1,139,412 (133,840) 42,000 Nashua, NH Archer Village 24 708,517 40,000 861,288 38,869 40,000 Archer, FL Oaks of Dunlop 144 4,428,393 631,959 6,492,444 148,134 631,959 Colonial Heights, VA Timothy House 112 2,500,426 11,638 6,344,664 434,139 11,638 Towson, MD Westover Station 108 2,661,411 305,645 4,299,613 8,089 305,645 Newport News, VA Carib Villas III 24 1,482,307 107,582 1,802,466 5,614 239,009 St. Croix, VI Carib Villas II 20 1,402,191 57,720 1,787,528 5,614 197,195 St. Croix, VI Whispering Trace 40 1,376,939 218,000 2,413,145 (467,706) 218,000 Woodstock, GA New Center 104 2,932,517 79,652 3,534,776 2,932,510 96,116 Detroit, MI
Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1999 (continued) GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, 1998 ------------------------------------------------ LIFE ON WHICH DEPRECIATION BUILDING AND ACCUMULATED DATE IS COMPUTED DATE DESCRIPTION IMPROVEMENTS TOTAL DEPRECIATION BUILT (YEARS) ACQUIRED ----------- ------------ ----- ------------ ----- ------- -------- Low and Moderate Income Apartment Complexes Strathern Park/Lorne Park $19,991,771 $25,881,091 $5,972,453 1991 various 07/05/90 Los Angeles, CA Maidens Choice 5,444,320 6,252,111 1,751,942 1991 various 08/17/90 Baltimore, MD Cedar Lane 1,387,366 1,427,366 335,526 1991 various 09/10/90 London, KY Silver Creek 946,812 966,812 235,121 1990 various 08/15/90 Berea, KY Rosecliff 7,963,747 9,083,747 2,437,766 1991 various 09/18/90 Orlando, FL Brookwood 4,474,945 4,997,618 1,141,319 1992 various 10/01/90 Ypsilanti Township, MI Water Oak 1,473,582 1,571,640 421,448 1991 various 01/01/91 Orange City, FL Yester Oaks 1,576,634 1,623,739 466,846 1991 various 01/01/91 Lafayette, GA Ocean View 1,607,768 1,720,388 491,142 1991 various 01/01/91 Ferandina Beach, FL Wheeler House 1,005,572 1,047,572 295,058 1991 various 01/01/91 Nashua, NH Archer Village 900,157 940,157 271,728 1991 various 01/01/91 Archer, FL Oaks of Dunlop 6,640,578 7,272,537 2,239,564 1991 various 01/01/91 Colonial Heights, VA Timothy House 6,778,803 6,790,441 1,347,329 1992 various 03/05/91 Towson, MD Westover Station 4,307,702 4,613,347 993,754 1991 various 03/30/91 Newport News, VA Carib Villas III 1,676,653 1,915,662 544,187 1992 various 03/21/91 St. Croix, VI Carib Villas II 1,653,667 1,850,862 526,156 1991 various 03/01/91 St. Croix, VI Whispering Trace 1,945,439 2,163,439 715,668 1990 various 05/01/91 Woodstock, GA New Center 6,450,822 6,546,938 1,640,913 1992 various 06/27/91 Detroit, MI
Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1999 (continued) GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, COST OF INTEREST AT ACQUISITION DATE 1998 ------------------------------------- -------------- NET IMPROVEMENTS NUMBER TOTAL CAPITALIZED OF ENCUM- BUILDING AND SUBSEQUENT TO DESCRIPTION UNITS BRANCES * LAND IMPROVEMENTS ACQUISITION LAND ----------- ----- --------- ---- ------------ ----------- ---- Low and Moderate Income Apartment Complexes Huguenot Park 24 1,400,000 83,000 2,088,664 0 83,000 New Paltz, NY Hillwood Pointe 100 2,926,844 454,185 5,103,711 79,106 454,185 Jacksonville, FL Pinewood Pointe 136 3,962,864 555,093 6,809,808 556,869 555,093 Jacksonville, FL Westgate 60 1,365,415 215,168 2,152,519 24,702 238,920 Bismark, ND Woodlake Hills 144 3,811,770 233,690 6,481,250 2,390,901 187,588 Pontiac, MI Bixel House 76 1,273,858 190,746 2,294,879 50,061 190,746 Los Angeles, CA Harmony 65 2,238,307 0 7,020,696 117,826 0 North Hollywood, CA Schumaker Place 96 2,913,267 531,776 1,627,716 3,603,531 1,023,027 Salisbury, MD Circle Terrace 303 8,872,936 0 7,884,733 8,635,332 1,104,269 Lansdown, MD ----------------------------------------------------------------------------------------------- SUBTOTAL 2,374 82,782,947 10,544,398 93,281,084 42,025,947 14,275,957 LESS: Combined Entity 17 706,873 42,000 1,139,412 (133,840) 42,000 ----------------------------------------------------------------------------------------------- TOTAL 2,357 $82,076,074 $10,502,398 $92,141,672 $42,159,787 $14,233,957 ===============================================================================================
(1) The aggregate cost for Federal Income Tax purposes is approximately $ 126,889,000. * Mortgage notes payable generally represent non-recourse financing of low-income housing projects payable with terms of up to 40 years with interest payable at rates ranging from 8.00% to 11%. The Partnership has not guaranteed any of these mortgage notes payable. Boston Financial Qualified Housing Tax Credits L. P. V Schedule III - Real Estate and Accumulated Depreciation of Property Owned by Local Limited Partnerships in which Registrant has invested at March 31, 1999 (continued) GROSS AMOUNT AT WHICH CARRIED AT DECEMBER 31, 1998 --------------------------------------------- LIFE ON WHICH DEPRECIATION BUILDING AND ACCUMULATED DATE IS COMPUTED DATE DESCRIPTION IMPROVEMENTS TOTAL DEPRECIATION BUILT (YEARS) ACQUIRED ----------- ------------ ----- ------------ ----- ------- -------- Low and Moderate Income Apartment Complexes Huguenot Park 2,088,664 2,171,664 587,767 1991 various 06/26/91 New Paltz, NY Hillwood Pointe 5,182,817 5,637,002 1,536,730 1991 various 07/19/91 Jacksonville, FL Pinewood Pointe 7,366,677 7,921,770 2,165,492 1991 various 07/31/91 Jacksonville, FL Westgate 2,153,469 2,392,389 588,342 1991 various 07/25/91 Bismark, ND Woodlake Hills 8,918,253 9,105,841 2,135,350 1992 various 08/01/91 Pontiac, MI Bixel House 2,344,940 2,535,686 895,823 1991 various 07/31/91 Los Angeles, CA Harmony 7,138,522 7,138,522 2,079,026 1991 various 07/31/91 North Hollywood, CA Schumaker Place 4,739,996 5,763,023 1,097,433 1992 various 09/20/91 Salisbury, MD Circle Terrace 15,415,796 16,520,065 3,501,702 1993 various 12/06/91 Lansdown, MD --------------------------------------------- SUBTOTAL 131,575,472 145,851,429 36,415,585 LESS: Combined Entity 1,005,572 1,047,572 295,058 --------------------------------------------- TOTAL $130,569,900 $144,803,857 $36,120,527 =============================================
Summary of property owned and accumulated depreciation: Property Owned December 31, 1998 Accumulated Depreciation December 31, 1998 - ------------------------------------------------------------------ ------------------------------------------------- Balance at beginning of period $145,480,348 Balance at beginning of period 31,410,776 Additions during Additions during period: period: Less current year Wheeler (1,047,572) Less current year Wheeler (295,058) House House Other acquisitions 95,346 5,004,809 Depreciation -------------- Improvements etc. 275,735 Balance at close of period $36,120,527 -------------- ============== (676,491) Deductions during period: Cost of real 0 estate sold Impairment of 0 Assets -------------- 0 ---------------- Balance at close of $144,803,857 period ================ Property Owned December 31, 1997 Accumulated Depreciation December 31, 1997 - ------------------------------------------------------------------ ------------------------------------------------- Balance at beginning of period $145,480,438 Balance at beginning of period 26,076,146 Additions during Additions during period: period: Less current year Wheeler (1,046,939) Less current year Wheeler (268,015) House House Other acquisitions 125,851 5,602,645 Depreciation -------------- Improvements etc. 34,059 Balance at close of period $31,410,776 -------------- ============== (887,029) Deductions during period: Cost of real 0 estate sold Impairment of Assets (1) (160,000) -------------- (160,000) ---------------- Balance at close of $144,433,409 period ================ Property Owned December 31, 1996 Accumulated Depreciation December 31, 1996 - ------------------------------------------------------------------ ------------------------------------------------- Balance at beginning of period $145,304,421 Balance at beginning of period 21,269,750 Additions during Additions during period: period: Other acquisitions 13,520 4,806,396 Depreciation -------------- Improvements etc. 162,497 Balance at close of period $26,076,146 -------------- ============== 176,017 Deductions during period: Cost of real 0 estate sold Reclassification to 0 intangible assets -------------- 0 ---------------- Balance at close of $145,480,438 period ================
(1) During the year ended December 31, 1997, Wheeler House recognized an impairment loss on its rental property in the net amount of $160,000 as a result of applying FASB 121, Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed of. BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS V (A Limited Partnership) Annual Report on form 10-K For The Year Ended March 31, 1999 Reports of Independent Auditors Woodlake Hills [Letterhead] [LOGO] JOHN J. LEHOTAN, C.P.A. 4385 W. Main Street Brown City, MI 48416 To The Partners of Woodlake Hills Limited Partnership Dearborn, Michigan 48124 Independent Auditor's Report I have audited the accompanying balance sheet of Woodlake Hills Limited Partnership, a Michigan limited partnership as of December 31, 1998 and the related statements of profit and loss, partners' equity and cash flow for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted our audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Woodlake Hills Limited Partnership as of December 31, 1998 and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/John J. Lehotan Certified Public Accountant February 10, 1999 Woodlake Hills [Letterhead] [LOGO] JOHN J. LEHOTAN, C.P.A. 4385 W. Main Street Brown City, MI 48416 To The Partners of Woodlake Hills Limited Partnership Detroit, Michigan Independent Auditor's Report I have audited the accompanying balance sheet of Woodlake Hills Limited Partnership, a Michigan limited partnership as of December 31, 1997 and the related statements of profit and loss, partners' equity and cash flow for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted our audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Woodlake Hills Limited Partnership as of December 31, 1997 and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/John J. Lehotan Certified Public Accountant, C.P.A. February 5, 1998 Woodlake Hills [Letterhead] [LOGO] JOHN J. LEHOTAN, C.P.A. Brown City, MI To The Partners of Woodlake Hills Limited Partnership Detroit, Michigan Independent Auditor's Report I have audited the accompanying balance sheet of Woodlake Hills Limited Partnership, a Michigan limited partnership as of December 31, 1996 and the related statements of profit and loss, partners' equity and cash flow for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted our audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Woodlake Hills Limited Partnership as of December 31, 1996 and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/John J. Lehotan Certified Public Accountants February 5, 1997 Strathern Park [Letterhead] [LOGO] NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP 9454 Wilshire Boulevard, Suite 405 Beverly Hills, California 90212-2907 Independent Auditors' Report The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1998 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Stern, Biers, Neinstein and Co., LLP NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP February 3, 1999 Strathern Park [LOGO] NANAS, STERN, BIERS, NEINSTEIN AND CO.LLP 9454 Wilshire Boulevard Beverly Hills, California 90212-2907 Independent Auditors' Report The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1997 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Stern, Biers, Neinstein and Co., LLP NANAS, STERN, BIERS, NEINSTEIN AND CO. January 28, 1998 Strathern Park [Letterhead] [LOGO] NANAS, STERN, BIERS, NEINSTEIN AND CO. , LLP 9454 Wilshire Boulevard Beverly Hills, California 90212-2907 Independent Auditors' Report The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1996 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Stern, Biers, Neinstein and Co. NANAS, STERN, BIERS, NEINSTEIN AND CO. January 14, 1997 Maiden Choice Limited Partnership [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Maiden Choice Limited Partnership We have audited the accompanying balance sheet of Maiden Choice Limited Partnership as of December 31, 1998, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maiden Choice Limited Partnership as of December 31, 1998, and the results of its operations, the changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 22 through 27 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 6, 1999, on our consideration of Maiden Choice Limited Partnership's internal control and on its compliance with specific requirements applicable to DHCD-assisted programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. January 6, 1999 Maiden Choice Limited Partnership [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Maiden Choice Limited Partnership We have audited the accompanying balance sheet of Maiden Choice Limited Partnership as of December 31, 1997, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maiden Choice Limited Partnership as of December 31, 1997, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 21 through 33 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 6, 1998, on our consideration of Maiden Choice Limited Partnership's internal control and on its compliance with specific requirements applicable to CDA programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. January 6, 1998 Maiden Choice Limited Partnership [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Maiden Choice Limited Partnership We have audited the accompanying balance sheet of Maiden Choice Limited Partnership as of December 31, 1996, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maiden Choice Limited Partnership as of December 31, 1996, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 20 through 34 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 6, 1997, on our consideration of Maiden Choice Limited Partnership's internal control structure and on its compliance with specific requirements applicable to CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer Identification Number: 52-1088612 Audit Principal: William T. Riley January 6, 1997 Cedar Lane I, Ltd. [Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Rural Development Cedar Lane I, Ltd. London, Kentucky We have audited the accompanying balance sheets of Cedar Lane I, Ltd., (a limited partnership) Case No. 20-063-621358072, as of December 31, 1998 and 1997 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cedar Lane I, Ltd. as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated February 11, 1999 on our consideration of Cedar Lane I, Lts.'s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens, LLP Lexington, Kentucky February 11, 1999 Cedar Lane I, Ltd [Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Rural Development Cedar Lane I, Ltd. London, Kentucky We have audited the accompanying balance sheets of Cedar Lane I, Ltd., (a limited partnership) Case No. 20-063-621358072, as of December 31, 1997 and 1996 and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards and the standards for financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cedar Lane I, Ltd. as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated January 27, 1998 on our consideration of Cedar Lane I, Lts.'s internal control structure and compliance with laws and regulations. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly, in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens Lexington, Kentucky January 27, 1998 Silver Creek II, Ltd. [Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Silver Creek II, Ltd. We have audited the accompanying balance sheets of Silver Creek II, Ltd., (a limited partnership), as of December 31, 1998 and 1997, and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Silver Creek II, Ltd. as of December 31, 1998 and 1997 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens, LLP Lexington, Kentucky January 2, 1999 Silver Creek II, Ltd. [Letterhead] [LOGO] Miller, Mayer, Sullivan & Stevens LLP INDEPENDENT AUDITORS' REPORT To the Partners Silver Creek II, Ltd. We have audited the accompanying balance sheets of Silver Creek II, Ltd., (a limited partnership), as of December 31, 1997 and 1996, and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Silver Creek II, Ltd. as of December 31, 1997 and 1996 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental data included in this report is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements, and in our opinion, is presented fairly in all material respects, in relation to the basic financial statements taken as a whole. /s/Miller, Mayerm Sullivan & Stevens Lexington, Kentucky January 27, 1998 Tomkins/Rosecliff, Ltd.: [Letterhead] [LOGO] Deloitte & Touche LLP Suite 1800 200 South Orange Avenue Orlando, Florida 32801 INDEPENDENT AUDITORS' REPORT To the General Partner and Limited Partners of Tomkins/Rosecliff, Ltd.: We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1998, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP January 29, 1999 Tomkins/Rosecliff, Ltd.: [Letterhead] [LOGO] Deloitte & Touche LLP Suite 1800 200 South Orange Avenue Orlando, Florida 32801 INDEPENDENT AUDITORS' REPORT To the General Partner and Limited Partners of Tomkins/Rosecliff, Ltd.: We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1997, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1997, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP January 24, 1998 Tomkins/Rosecliff, Ltd.: [Letterhead] [LOGO] Deloitte & Touche LLP Suite 1800 200 South Orange Avenue Orlando, Florida 32801 INDEPENDENT AUDITORS' REPORT To the General Partner and Limited Partners of Tomkins/Rosecliff, Ltd.: We have audited the accompanying balance sheet of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1996, and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Tomkins/Rosecliff, Ltd. (a Florida Limited Partnership) as of December 31, 1996, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP January 24, 1997 Brookwood L.D.H.A [Letterhead] [LOGO] Follmer, Rudzewicz & Co., P.C. INDEPENDENT AUDITORS' REPORT To the Partners of: Brookwood L.D.H.A. Limited Partnership 28388 Franklin Road Southfield, Michigan 48034 We have audited the accompanying balance sheet of Brookwood L.D.H.A. Limited Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of December 31, 1998 and the related statement of profit and loss, changes in accumulated earnings and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 as of December 31, 1998, and the results of its operations, the changes in its cumulative income and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. This additional information is the responsibility of the partnership's management. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 22, 1999 on our consideration of the partnership's internal control structure and on its compliance with laws and regulations. /s/Follmer, Rudzewicz & Co., P.C. Follmer,Rudzewicz & Co. P.C. Certified Public Accountants Southfield, Michigan 38-1910111 Brookwood L.D.H.A. [Letterhead] [LOGO] Follmer, Rudzewicz & Co., P.C. INDEPENDENT AUDITORS' REPORT To the Partners of: Brookwood L.D.H.A. Limited Partnership 28388 Franklin Road Southfield, Michigan 48034 We have audited the accompanying Balance sheet of Brookwood L.D.H.A. Limited Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of December 31, 1997 and the related Statement of Profit and Loss, changes in in accumulated earnings and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 as of December 31, 1997, and the results of its operations, the changes in its cumulative income and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. This additional information is the responsibility of the partnership's management. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 22, 1998 on our consideration of the partnership's internal control structure and a report dated January 22, 1998 on its compliance with laws and regulations. /s/Follmer, Rudzewicz & Co., P.C. Follmer,Rudzewicz & Co. P.C. Certified Public Accountants Southfield, Michigan 38-1910111 Brookwood L.D.H.A. [Letterhead] [LOGO] Follmer, Rudzewicz & Co., P.C. INDEPENDENT AUDITORS' REPORT To the Partners Brookwood L.D.H.A. Limited Partnership 28388 Franklin Road Southfield, Michigan 48034 We have audited the accompanying Balance sheet of Brookwood L.D.H.A. Limited Partnership (a Michigan limited partnership), MSHDA Development No. 832 as of December 31, 1996 and the related Statement of Profit and Loss, changes in in accumulated earnings and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 as of December 31, 1996, and the results of its operations, the changes in its cumulative income and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information of Brookwood L.D.H.A. Limited Partnership, MSHDA No. 832 on pages 11 through 14 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. This additional information is the responsibility of the partnership's management. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 30, 1997 on our consideration of the partnership's internal control structure and a report dated January 30, 1997 on its compliance with laws and regulations. /s/Follmer, Rudzewicz & Co., P.C. Follmer,Rudzewicz & Co. P.C. Certified Public Accountants Southfield, Michigan 38-1910111 Burbank Limited Partnership I [Letterhead] Otis, Atwell & Timberlake Professional Association The Partners Burbank Limited Partnership I I have audited the accompanying balance sheet of Burbank Limited Partnership I as of December 31, 1998, and the related statements of income, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Burbank Limited Partnership I as of December 31, 1998, and the results of its operations, changes in partners' equity (deficit) and cash flows for the year then ended, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 2 to the financial statements, the Partnership's first mortgage note has matured and has not yet been refinanced, which raises substantial doubt about the Partnership's ability to continue as a going concern. Management's plans regarding this matter are described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/Otis, Atwell & Timberlake, P.A. Certified Public Accountants January 25, 1999 Portland, Maine Burbank Limited Partnership I [Letterhead] BILLIE J. BURNETT,CPA 5 Benton Drive Nashua, NH 03060 (603) 883-4230 To The Partners Burbank Limited Partnership I I have audited the accompanying balance sheets of Burbank Limited Partnership I as of December 31, 1997 and 1996, and the related statements of income, partners' equity and cash flows for the years then ended. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits, provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Burbank Limited Partnership I as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Billie J. Burnett Billie J. Burnett January 8, 1998 Virginia Housing Development Authority [Letterhead] [LOGO] Wall Einhorn & Chernitzer., P.C. Certified Public Accountants First Virginia Bank Tower 555 Main Street Suite 1500 Post Office Box 3610 Norfolk, Virginia 23514 Alvin A. Wall, CPA Telephone (757)625-4700 Martin A. Einhorn, CPA, CVA Telephone (757)625-0527 Jeffrey S. Chernitzer, CPA INDEPENDENT AUDITORS' REPORT To the Partners Virginia Housing Development Authority The Oaks of Dunlop Farms, L. P. 601 South Belvidere Street (A Limited Partnership) Richmond, Virginia 23220 Norfolk, Virginia We have audited the accompanying balance sheets of The Oaks of Dunlop Farms, L.P. (A Limited Partnership), VHDA Project Number 90-0300-C, as of December 31, 1998 and 1997, and the related statements of operations , partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the project's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VHDA Project Number 90-0300-C as of December 31, 1998 and 1997, and the results of its operations, changes in partners' equity, and cash flows for the years then ended in conformity with generally accepted accounting principles. The accompanying supplementary information (shown on pages 10 to 17) is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Wall, Einhorn & Chernitzer, P.C. Norfolk, Virginia February 1, 1999 Virginia Housing Development Authority [Letterhead] [LOGO] Wall Einchorn & Chernitzer., P.C. Certified Public Accountants First Virginia Bank Towers 555 Main Street Suite 1500 Post Office Box 3610 Norfolk, Virginia 23514 Alvin A. Wall, CPA Telephone (757)625-4700 Martin A. Einhorn, CPA Telephone (757)625-0527 Jeffrey S. Chernitzer, CPA INDEPENDENT AUDITORS' REPORT To the Partners Virginia Housing Development Authority The Oaks of Dunlop Farms, L. P. 601 South Belvidere Street (A Limited Partnership) Richmond, Virginia 23220 Norfolk, Virginia We have audited the accompanying balance sheets of The Oaks of Dunlop Farms, L.P. (A. Limited Partnership), VHDA Project Number 90-0300-C, as of December 31, 1997 and 1996, and the related statements of operations , partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VHDA Project Number 90-0300-C as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity, and cash flows for the years then ended in conformity with generally accepted accounting principles. The accompanying supplementary information (shown on pages 9 to 12) is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Wall, Einhorn & Chernitzer, P.C. Norfolk, Virginia January 22, 1998 Timothy House Limited Partnership [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Timothy House Limited Partnership We have audited the accompanying balance sheet of Timothy House Limited Partnership as of December 31, 1998 and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Timothy House Limited Partnership as of December 31, 1998, and the results of its operations, the changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 22 through 27 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 13, 1999, on our consideration of Timothy House Limited Partnership's internal control structure and on its compliance with requirements applicable to DHCD-assisted programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 13, 1999 Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. Timothy House Limited Partnership [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Timothy House Limited Partnership We have audited the accompanying balance sheet of Timothy House Limited Partnership as of December 31, 1997 and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Timothy House Limited Partnership as of December 31, 1997, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 21 through 33 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 10, 1998, on our consideration of Timothy House Limited Partnership's internal control structure and on its compliance with requirements applicable to CDA programs, fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 10, 1998 Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. Timothy House Limited Partnership [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Timothy House Limited Partnership We have audited the accompanying balance sheet of Timothy House Limited Partnership as of December 31, 1996, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Timothy House Limited Partnership as of December 31, 1996, and the results of its operations, changes in partners' equity and its cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 20 through 34 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs, we have also issued reports dated January 14, 1997, on our consideration of Timothy House Limited Partnership's internal control structure and on its compliance with specific requirements applicable to CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 14, 1997 Identification Number: 52-1088612 Audit Principal: William T. Riley, Jr. Westover Station Associates, L.P. [Letterhead] Wilfore & Wynn A Professional Corporation Certified Public Accountants INDEPENDENT AUDITORS' REPORT The Partners Virginia Housing Development Westover Station Associates, L.P. Authority (A Limited Partnership) 601 South Belvidere Street Newport News, Virginia Richmond, Virginia 23220 We have audited the accompanying balance sheets of Westover Station Associates, L.P., VHDA Project Number 90-0303-C, as of December 31, 1998 and 1997 and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the Virginia Housing Development Authority's Mortgagor/Grantee's Audit Guide. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westover Station Associates, L.P. at December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules included in the report are presented for purposes of additional analysis and are not a required part of the basic financial statements of Westover Station Associates, L.P. Such information has been subjected to the auditing procedures applied in the audit of the basis financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/Wilfore & Wynn Wilfore & Wynn Virginia Beach, Virginia February 3, 1999 4530 Professional Circle Virginia Beach, Virginia 23455-6498 Telephone (757)456-0111 Fax (757)473-1095 Westover Station Associates, L.P. [Letterhead] Wilfore & Wynn A Professional Corporation Certified Public Accountants INDEPENDENT AUDITORS' REPORT The Partners Westover Station Associates, L.P. (A Limited Partnership) Newport News, Virginia We have audited the accompanying balance sheets of Westover Station Associates, L.P., VHDA Project Number 90,0303-C, as of December 31, 1997 and 1996 and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards and the Virginia Housing Development Authority's Mortgagor/Grantee's Audit Guide. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westover Station Associates, L.P. at December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules included in the report are presented for purposes of additional analysis and are not a required part of the basic financial statements of Westover Station Associates, L.P. Such information has been subjected to the auditing procedures applied in the audit of the basis financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. /s/Wilfore & Wynn Wilfore & Wynn Virginia Beach, Virginia February 5, 1998 4530 Professional Circle Virginia Beach, Virginia 23455-6498 Telephone (804)456-0111 Fax (804)473-1095 Christiansted Limited Dividend Housing [Letterhead] Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (248) 356-3880 Facsimile: (248) 356-3885 Independent Auditors' Report January 23, 1999 Partners Christiansted Limited Dividend Housing Association Limited Partnership We have audited the accompanying balance sheet of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1998 and 1997, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. Christiansted Limited Dividend Housing [Letterhead] Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (810) 356-3880 Facsimile: (810) 356-3885 Independent Auditors' Report Partners January 19, 1998 Christiansted Limited Dividend Housing Association Limited Partnership We have audited the accompanying balance sheet of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Christiansted Limited Dividend Housing Association Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. St. Croix II. Limited Partnership [Letterhead] Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (248) 356-3880 Facsimile: (248) 356-3885 Independent Auditors' Report January 20, 1999 Partners St. Croix II. Limited Partnership We have audited the accompanying balance sheet of St. Croix II, Limited Partnership as of December 31, 1998 and 1997, and the related statements of operations, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of St. Croix II, Limited Partnership as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. St. Croix II. Limited Partnership [Letterhead] Kirschner Hutton Perlin, P.C. Certified Public Accountants 26913 Northwestern Hwy. Suite 510 Southfield, Michigan 48034-8444 Telephone: (810) 356-3880 Facsimile: (810) 356-3885 Independent Auditors' Report Partners January 17, 1998 St. Croix II. Limited Partnership We have audited the accompanying balance sheet of St. Croix II, Limited Partnership as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of St. Croix II, Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Kirshner Huton Perlin, P.C. Kensignton Place Townhomes, Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Kensignton Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1998 and 1997, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 26, 1999 Kensignton Place Townhomes, [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Kensignton Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kensignton Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 16, 1998 Cobblestone Place Townhomes, [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Cobblestone Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1998 and 1997, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 26, 1999 Cobblestone Place Townhomes [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Cobblestone Place Townhomes, A Limited Partnership: We have audited the accompanying balance sheets of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the related statements of loss, partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cobblestone Place Townhomes, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 16, 1998 Whispering Trace Apartments [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Whispering Trace Apartments, A Limited Partnership: We have audited the accompanying balance sheets of Whispering Trace Apartments, A Limited Partnership as of December 31, 1998 and 1997, and the related statements of loss, partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Whispering Trace Apartments, A Limited Partnership as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 26, 1999 Whispering Trace Apartments [Letterhead] [LOGO] KPMG Peat Marwick LLP 303 Peachtree Street, N.E. Suite 2000 Atlanta, GA 30308 Independent Auditors' Report The Partners Whispering Trace Apartments, A Limited Partnership: We have audited the accompanying balance sheets of Whispering Trace Apartments, A Limited Partnership as of December 31, 1997 and 1996, and the related statements of loss, partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Whispering Trace Apartments, A Limited Partnership as of December 31, 1997 and 1996, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP February 16, 1998 Huguenot Park Associates, L.P. [letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Huguenot Park Associates, L.P. We have audited the accompanying balance sheet of Huguenot Park Associates, L.P. as of December 31, 1998 and 1997, and the related statements of operations, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Huguenot Park Associates, L.P. as of December 31, 1998 and 1997, and the results of its operations, the changes in partners' capital and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/Reznick Fedder & Silverman Bethesda, Maryland January 20, 1999 Huguenot Park Associates, L.P. [letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Huguenot Park Associates, L.P. We have audited the accompanying balance sheet of Huguenot Park Associates, L.P. as of December 31, 1997 and 1996, and the related statements of operations, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Huguenot Park Associates, L.P. as of December 31, 1997 and 1996, and the results of its operations, the changes in partners' capital and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/Reznick Fedder & Silverman Bethesda, Maryland January 20, 1998 Westgate Apartments Limited Partnesrhip [Letterhead] [LOGO] EideBailly LLP Consultants, Certified Public Accountants INDEPENDENT AUDITOR'S REPORT The Partners Westgate Apartments Limited Partnesrhip Wahpeton, North Dakota We have audited the accompanying balance sheets of Westgate Apartments Limited Partnership as of December 31, 1998 and 1997, and the related statements of operations, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westgate Apartments Limited Partnership as of December 31, 1998 and 1997, and the results of its operations, and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/EideBailly LLP Fargo, North Dakota January 22, 1999, except for Note 10, as to which the date is January 25, 1999 Westgate Apartments Limited Partnesrhip [Letterhead] [LOGO] Charles Bailly & Company P.L.L.P. INDEPENDENT AUDITOR'S REPORT The Partners Westgate Apartments Limited Partnesrhip Wahpeton, North Dakota We have audited the accompanying balance sheets of Westagate Apartments Limited Partnership as of December 31, 1997 and 1996, and the related statements of operations, partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westgate Apartments Limited Partnership as of December 31, 1997 and 1996, and the results of its operations, and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/Charles Bailly & Company P.L.L.P. Fargo, North Dakota January 21, 1998 Bixel House [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 90731 Richard Suarez, Jr., CPA Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Bixel House Los Angeles, California I have audited the accompanying balance sheet of Bixel House as of December 31, 1998, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bixel House at December 31, 1998, and the results of its operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation San Pedro, California February 28, 1999 Bixel House [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 90731 Richard Suarez, Jr., CPA Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Bixel House Los Angeles, California I have audited the accompanying balance sheet of Bixel House as of December 31, 1997, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bixel House at December 31, 1997, and the results of its operations and cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation San Pedro, California January 15, 1998 Bixel House [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Bixel House Los Angeles, California I have audited the accompanying balance sheet of Bixel House as of December 31, 1996, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bixel House at December 31, 1996, and the results of its operations and cash flows for the years then ended, in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation Certified Public Accountant San Pedro, California February 14, 1997 Harmony Apartments [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Harmony Apartments Los Angeles, California I have audited the accompanying balance sheet of Harmony Apartments as of December 31, 1998, and the related statements of operations, changes in partners' capital, and cash flows for the year ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harmony Apartments at December 31, 1998, and the results of its operations and cash flows for the year ended December 31, 1998 in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation San Pedro, California February 28, 1999 Harmony Apartments [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Harmony Apartments Los Angeles, California I have audited the accompanying balance sheet of Harmony Apartments as of December 31, 1997, and the related statements of operations, changes in partners' capital, and cash flows for the year ended December 31, 1997. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harmony Apartments at December 31, 1997, and the results of its operations and cash flows for the year ended December 31, 1997 in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation San Pedro, California February 11, 1998 Harmony Apartments [Letterhead] SUAREZ ACCOUNTANCY CORPORATION 150 W. Seventh Street Suite 100 San Pedro, CA 900731 Richard Suarez Telephone (310) 832-7887 Fax (310) 832-6563 Independent Auditor's Report To The Partners of Harmony Apartments Los Angeles, California I have audited the accompanying balance sheet of Harmony Apartments as of December 31, 1996, and the related statements of operations, changes in partners' capital, and cash flows for the year ended December 31, 1996. The financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Harmony Apartments at December 31, 1996, and the results of its operations and cash flows for the year ended December 31, 1996 in conformity with generally accepted accounting principles. /s/Suarez Accountancy Corporation Certified Public Accountant San Pedro, California February 14, 1997 Schumaker Place Associates, L.P. [Letterhead] [LOGO] Halbert, Katz & Co., P.C. 121 South Broad Street Philadelphia, Pennsylvania 19107 INDEPENDENT AUDITORS' REPORT To the Partners Schumaker Place Associates, L.P. Wilmington, Delaware We have audited the accompanying balance sheets of Schumaker Place Associates, L.P., as of December 31, 1998 and December 31, 1997, and the related statements of loss, partners' capital (capital deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Schumaker Place Associates, L.P., as of December 31, 1998 and December 31, 1997, and the results of its operations, changes in partners' capital (capital deficiency) and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information included in the report (shown on page 12) is presented for the purpose of additional analysis and is not a required part of the basic financial statements of Schumaker Place Associates, L.P. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Halbert Katz & Co., P.C. January 29, 1999 Schumaker Place Associates, L.P. [Letterhead] [LOGO] Halbert, Katz & Co., P.C. 121 South Broad Street Philadelphia, Pennsylvania 19107 INDEPENDENT AUDITORS' REPORT To the Partners Schumaker Place Associates, L.P. Wilmington, Delaware We have audited the accompanying balance sheets of Schumaker Place Associates, L.P., as of December 31, 1997 and December 31, 1996, and the related statements of loss, partners' capital (capital deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Schumaker Place Associates, L.P., as of December 31, 1997 and December 31, 1996, and the results of its operations, changes in partners' capital (capital deficiency) and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supporting information included in the report (shown on page 12) is presented for the purpose of additional analysis and is not a required part of the basic financial statements of Schumaker Place Associates, L.P. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Halbert Katz &Co January 30, 1998 Circle Terrace Associates [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1998, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle Terrace Associates Limited Partnership as of December 31, 1998, and the results of its operations, the changes in partners' equity (deficit) and cash flows for the year then ended, in conformity with generally accepted accounting principles. The Housing Assistance Payment contracts covering all 303 units expired on November 30, 1998 and November 30, 1997. It is uncertain whether HUD will renew these contracts under terms that are consistent with the successful operations of the project (see note G). Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 28 through 37 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 20, 1999 on our consideration of Circle Terrace Associates Limited Partnership's internal control and on its compliance with specific requirements applicable to Major HUD and DHCD-assisted programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Bethesda, Maryland Federal Employer January 20, 1999 Identification Number: 52-1088612 Audit Principal: Lester Kanis Circle Terrace Associates [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1997, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle TerraceAssociates Limited Partnership as of December 31, 1997, and the results of its operations, the changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 25 through 37 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 21, 1998, on our consideration of Circle Terrace Associates Limited Partnership's internal control and on its compliance with specific requirements applicable to Major HUD and CDA programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 21, 1998 Identification Number: 52-1088612 Audit Principal: Lester A. Kanis Circle Terrace Associates [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1996, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle TerraceAssociates Limited Partnership as of December 31, 1996, and the results of its operations, the changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 26 trough 40 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited," on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs", we have also issued reports dated January 18, 1997, on our consideration of Circle Terrace Associates Limited Partnership's internal control structure and on its compliance with specific requirements applicable to Major HUD and CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Baltimore, Maryland Federal Employer January 14, 1997 Identification Number: 52-1088612 Audit Principal: Lester A. Kanis Water Oaks [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Water Oaks Apartments, L.P. We have audited the accompanying balance sheets of Water Oaks Apartments, L.P., RHS Project No. 09-64-581801555 as of December 31, 1998 and 1997 and the related statements of operations, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Water Oaks Apartments, L.P., RHS Project No. 09-64-581801555 as of December 31, 1998 and 1997, and the results of its operations, the changes in partners' equity (deficit), and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 22 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 28, 1999, on our consideration of Water Oak Apartments, L.P.'s internal control and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 28, 1999 Water Oaks Apartments [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS REPORT To the Partners Water Oaks Apartments, Ltd. We have audited the accompanying balance sheets of Water Oaks Apartments, L.P., RHS Project No. 09-64-581801555 as of December 31, 1997 and 1996 and the related statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Water Oaks Apartments, L.P., RECD Project No. 09-64-581801555 as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 15 through 22 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information, has been subjected to the auditing procedures applied in the audit of the basic financial statements, and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 9, 1998, on our consideration of Water Oak Apartments L.P.'s internal control and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atalnta, Georgia January 9, 1998 Archer Village [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Archer Village, Ltd. We have audited the accompanying balance sheets of Archer Village, Ltd., RHS Project No.: 09-001-267869575, as of December 31, 1998 and 1997, and the related statements of operations, partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Archer Village, Ltd., RHS Project No.: 09-001-267869575 as of December 31, 1998 and 1997, and the results of its operations, the changes in partners' equity (deficit) and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 22 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 28, 1999, on our consideration of Archer Village, Ltd.'s internal control and its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 28, 1999 Archer Village [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Archer Village, Ltd. We have audited the accompanying balance sheets of Archer Village, Ltd., RHS Project No.: 09-001-267869575 as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Archer Village, Ltd., RHS Project No.: 09-001-267869575 as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 22 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 9, 1998, on our consideration of Archer Village, Ltd.'s internal control structure and its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 9, 1998 Ocean View Apartments [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Ocean View Apartments, L.P. We have audited the accompanying balance sheets of Ocean View Apartments, L.P., RHS Project No.: 09-45-581801553, as of December 31, 1998 and 1997, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ocean View Apartments, L.P., RHS Project No.: 09-45-581801553, as of December 31, 1998 and 1997, and the results of its operations, the changes in partners' equity (deficit) and cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 22 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 28, 1999 on our consideration of Ocean View Apartments, L.P.'s internal control structure and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 9, 1999 Ocean View Apartments [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Ocean View Apartments, L.P. We have audited the accompanying balance sheets of Ocean View Apartments, L.P.,RHS Project No.: 09-45-581801553, as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ocean View Apartments, L.P., RHS Project No.: 09-45-581801553, as of December 31, 1997 and 1996, and the results of its operations, the changes in partners' equity and cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 15 through 20 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards we have also issued reports dated January 9, 1998 on our consideration of Ocean View Apartments, L.P.'s internal control structure and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 9, 1998 Yester Oaks [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Yester Oaks, L.P. We have audited the accompanying balance sheets of Yester Oaks, L.P.,RHS Project No.: 11-046-0581814319, as of December 31, 1998 and 1997, and the related statements of operations, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yester Oaks, L.P., RHS Project No.: 11-046-0581814319 as of December 31, 1998 and 1997, and the results of its operations, the changes in partners' equity (deficit), and its cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 16 through 17 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 28, 1999, on our consideration of Yester Oaks L.P.'s internal control and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 28, 1999 Yester Oaks [Letterhead] [LOGO] Reznick Fedder & Silverman INDEPENDENT AUDITORS' REPORT To the Partners Yester Oaks, L.P. We have audited the accompanying balance sheets of Yester Oaks, L.P.,RHS Project No.: 11-046-0581814319, as of December 31, 1997 and 1996, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Yester Oaks, L.P., RHS Project No.: 11-046-0581814319 as of December 31, 1997 and 1996, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages ____ through ____ is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued reports dated January 9, 1998, on our consideration of Yester Oaks L.P.'s internal control and on its compliance with laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Atlanta, Georgia January 9, 1998 HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSH [letterhead] Haran & Associates Ltd. INDEPENDENT AUDITOR'S REPORT To the Partners HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP Detroit, Michigan We have audited the accompanying balance sheet of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP (a Limited Partnership) as of December 31, 1998, and the related statements of profit and loss, changes in partners' equity and statement of cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Haran & Associates Ltd. Certified Public Accountants Wilmette, Illinois Illnois Certificate No. 060-3097692 February 3, 1999 HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP [letterhead] Haran & Associates Ltd. INDEPENDENT AUDITOR'S REPORT To the Partners HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP Detroit, Michigan We have audited the accompanying balance sheet of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP as of December 31, 1997, and the related statements of profit and loss, changes in partners' equity and statement of cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Haran & Associates Ltd. Certified Public Accountants Wilmette, Illnois Illnois Certificate No. 060-3097692 January 29, 1998 HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP [letterhead] Haran & Associates Ltd. INDEPENDENT AUDITOR'S REPORT To the Partners HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP Detroit, Michigan We have audited the accompanying balance sheet of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP as of December 31, 1996, and the related statements of profit and loss, changes in partners' equity and statement of cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of HISTORIC NEW CENTER APARTMENTS LIMITED PARTNERSHIP as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/Haran & Associates Ltd. Certified Public Accountants Wilmette, Illnois Illnois Certificate No. 060-3097692 January 29, 1997 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CIRCLE TERRACE ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO.: 052-44056-LDP DECEMBER 31, 1996 TABLE OF CONTENTS Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP PAGE MORTGAGOR'S CERTIFICATION 4 MANAGING AGENT'S CERTIFICATION 5 INDEPENDENT AUDITORS' REPORT 6 FINANCIAL STATEMENTS BALANCE SHEET 8 STATEMENT OF PROFIT AND LOSS 10 STATEMENT OF PARTNERS' EQUITY 12 STATEMENT OF CASH FLOWS 13 NOTES TO FINANCIAL STATEMENTS 15 SUPPLEMENTAL INFORMATION ACCOUNTS AND NOTES RECEIVABLE 26 DELINQUENT TENANT ACCOUNTS RECEIVABLE 26 CONTRIBUTIONS DUE 26 MORTGAGE ESCROW DEPOSITS 26 TENANT SECURITY DEPOSITS 27 RESERVE FOR REPLACEMENTS 27 RESIDUAL RECEIPTS 27 PAINTING RESERVE 27 ACCOUNTS PAYABLE 28 ACCRUED TAXES 28 LETTERS OF CREDIT 28 LOANS AND NOTES PAYABLE 28 MORTGAGES PAYABLE 29 TABLE OF CONTENTS - CONTINUED Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP MORTGAGES PAYABLE FROM SURPLUS CASH 29 COMPENSATION OF PARTNERS 29 UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS 29 IDENTITY OF INTEREST COMPANIES AND ACTIVITIES 30 NON-REVENUE PRODUCING UNITS 30 DECLARATION OF OWNERSHIP - UNAUDITED 30 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS 31 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS AS OF JUNE 30, 1996 - UNAUDITED 32 SCHEDULE OF FUNDS IN FINANCIAL INSTITUTIONS 33 CHANGES IN FIXED ASSET ACCOUNTS 34 COMPARISON OF BUDGET TO ACTUAL INCOME AND EXPENSES 35 MONTHLY INCOME AND EXPENSE STATEMENT - CASH BASIS 38 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE 41 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND CDA PROGRAMS 43 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING 45 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS 46 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 48 ANNUAL AUDIT QUESTIONNAIRE 49 December 31, 1996 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP MORTGAGOR'S CERTIFICATION I hereby certify that I have examined the accompanying financial statements and supplemental data of Circle Terrace Associates Limited Partnership and, to the best of my knowledge and belief, the same is complete and accurate. GENERAL PARTNER /s/ Judith Siegel 2/24/97 - --------------------------------------- Judith Siegel Date Partnership Employer Identification Number: 05-0461953 MANAGING AGENT'S CERTIFICATION I hereby certify that I have examined the accompanying financial statements and supplemental data of Circle Terrace Associates Limited Partnership and, to the best of my knowledge and belief, the same is complete and accurate. MANAGING AGENT Rental Housing Management Partnership - --------------------------------------- Eric Richelson Date David Staley Managing Agent Employer Property Manager Identification Number: 13-3580730 INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1996, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle Terrace Associates Limited Partnership as of December 31, 1996, and the results of its operations, the changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 26 through 40 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited", on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs," we have also issued reports dated January 18, 1997 on our consideration of Circle Terrace Associates Limited Partnership's internal control structure and on its compliance with specific requirements applicable to major HUD and CDA programs, affirmative fair housing, and laws and regulations applicable to the financial statements. /s/ Reznick Fedder & Silverman Bethesda, Maryland Federal Employer January 18, 1997 Identification Number: 52-1088612 Audit Principal: Lester A. Kanis Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP BALANCE SHEET DECEMBER 31, 1996 ASSETS CURRENT ASSETS 1110 Petty cash $ 1,400 1120 Cash in bank 280,303 1121 Cash - partnership 109,693 1130 Tenant accounts receivable 37,113 1131 Accounts receivable - HUD 10,645 1133 Due from affiliates 600 1240 Prepaid property insurance 64,979 ----------------- Total current assets 504,733 DEPOSITS HELD IN TRUST - FUNDED 1191 Tenant security deposits 38,026 RESTRICITED DEPOSITS AND FUNDED RESERVES 1310 Mortgage escrow deposits $ 111,692 1320 Reserve for replacements 390,217 1330 Painting reserve 81,496 --------------- 583,405 RENTAL PROPERTY 1410 Land 1,104,269 1420 Buildings and improvements 15,214,660 1440 Building equipment - fixed 34,325 1440 Building equipment - portable 18,164 1460 Furnishings 8,378 -------------- 16,379,796 1495 Less accumulated depreciation 2,369,146 ----------- 14,010,650 OTHER ASSETS 1901 Mortgage costs, less accumulated amortization of $71,187 235,733 ----------- $ 15,372,547 =========== Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP BALANCE SHEET-Continued DECEMBER 31, 1996 LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES 2110 Accounts payable $ 32,827 2130 Accrued interest payable 34,889 2150 Accrued P.I.L.O.T. 32,813 2190 Accrued management fees 22,482 2350 Developer fee payable 34,554 2210 Rent deferred credits 1,793 2320 Current maturities of long term debt 260,332 ------- Total Current Liabilities 419,690 DEPOSITS LIABILITIES 2191 Tenant security deposits (contra) 29,470 LONG TERM LIABILITIES 2320 Long term debt, net of current maturities $ 9,702,438 2335 Accrued interest 81,029 ------------- 9,783,467 CONTINGENCY - 3130 PARTNERS' EQUITY 5,139,920 ---------- $ 15,372,547 ========== See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP STATEMENT OF PROFIT AND LOSS DECEMBER 31, 1996 RENTAL INCOME 5120 Apartments or member carrying charges (Coops) $ 264,754 5121 Tenant assistance payments 2,032,314 5190 Miscellaneous HAP Contract Billing Adjustment 192,753 ------- Total rent revenue potential at 100% occupancy $2,489,821 VACANCIES 5200 Apartments (32,041) -------------- Total vacancies (32,041) Net rental revenue 2,457,780 FINANCIAL REVENUE 5410 Interest Income -project operations 25,403 5440 Income from investments - reserve for replacement 2,148 5490 Income from investments - miscellaneous 1,254 ----- Total financial revenue 28,805 OTHER REVENUE 5910 Laundry and vending 12,031 5920 NSF and late charges 3,488 ----- Total other revenue 15,519 --------- Total revenue 2,502,104 ---------
Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP STATEMENT OF PROFIT AND LOSS (continued) DECEMBER 31, 1996 ADMINISTRATIVE EXPENSES 6210 Advertising and marketing 7,875 6250 Other renting expenses 3,404 6310 Office salaries 88,713 6311 Office Supplies 41,395 6320 Management fee 130,164 6331 Manager or superintendent rent free unit 7,868 6340 Legal expenses - project 8,991 6350 Auditing expenses - project 9,946 6351 Bookkeeping fees/accounting services 16,368 6360 Telephone and answering services 11,654 6370 Bad debts 1,538 6390 Miscellaneous administrative expenses 22,905 ------ Total administrative expenses 350,821 UTILITIES EXPENSE 6450 Electricity 46,261 6451 Water 19,300 6452 Gas 110,539 Total utilities expense 176,100 OPERATING AND MAINTENANCE EXPENSES 6515 Janitor and cleaning supplies 13,469 6517 Janitor and cleaning contract 3,510 6519 Exterminating payroll / contract 2,362 6520 Exterminating supplies 553 6525 Garbage and trash removal 40,836 6530 Security payroll/contract 145,421 6536 Grounds supplies 1,011 6537 Grounds contract 29,930 6540 Repairs payroll 111,325 6541 Repairs material 95,128 6542 Repairs contract 8,567 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP STATEMENT OF PROFIT AND LOSS (continued) DECEMBER 31, 1996 6546 Heating/cooling repairs and maintenance 9,313 6548 Snow removal 2,801 6560 Decorating payroll contract 11,945 6561 Decorating supplies 8,117 6570 Other 4,042 6590 Miscellaneous operating and maintenance expenses 698 ----------- Total operating and maintenance expenses 489,028 TAXES AND INSURANCE 6710 Real estate taxes 110,225 6711 Payroll taxes (FICA) 35,444 6719 Miscellaneous taxes, licenses and permits 441 6720 Property and liability insurance (Hazard) 92,000 6721 Fidelity bond insurance 934 6722 Workmen's compensation 14,378 6723 Heath insurance and other employee benefits 29,051 ------ Total taxes and insurance 282,473 FINANCIAL EXPENSES 6820 Interest on mortgage payable 456,888 6840 Interest on notes payable - short-term 411 6850 Mortgage insurance premium/service charge 47,116 ------ Total financial expenses 504,415 DEPRECIATION AND AMORTIZATION Total cost of operations before depreciation 1,802,837 Profit (Loss) before depreciation 699,267 Depreciation and amortization 578,028 Operating Profit or (Loss) 121,239 CORPORATE OR MORTGAGOR ENTITY EXPENSES 7190 Other (revenue)/expenses (910) Total corporate expenses (910) ---- Net Profit 122,149 See notes to financial statements =======
Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP STATEMENT OF PARTNER'S EQUITY DECEMBER 31, 1996 Special Investor General Limited Limited Partner Partner Partner Total Partners' equity, Beginning $405,549 - $4,802,276 $5,207,825 Distributions (190,054) - - (190,054) Net Profit 2,211 - 119,938 122,149 --------- ------------- --------- ----------- Partners' equity, End $ 217,706 - $ 4,922,214 $ 5,139,920 --------- ----------- ----------- See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Statement OF CASH FLOWS DECEMBER 31, 1996 Cash flows from operating activities Rental income received $ 2,462,268 HAP contract billing adjustment (391,217) Interest received 28,805 Other income received 15,519 Administrative expenses paid (116,065) Management fees paid (130,164) Utilities paid (176,100) Salaries and wages paid (359,766) Operating and maintenance paid (217,944) Real estate taxes paid (127,407) Payroll taxes paid (35,444) Property insurance paid (89,115) Other taxes and insurance paid (29,492) Interest paid on mortgage (459,610) Mortgage insurance premium paid (47,116) Increase in mortgage escrow deposits (3,819) Mortgagor entity income received, net 910 Net tenant security deposits received 1 -------------- Net cash provided by operating activities 324,244 -------------- Cash flows from investing activities Deposits to reserve for placement (86,687) Deposits to painting reserve (41,249) Investment in rental property (34,554) ------------- Net cash used in investing activities (162,490) ------------- Cash flow from financing activities Mortgage principal payments (242,054) Payments on note payable (3,434) Distributions to partners (190,054) ---------------- Net cash used in financing activities (435,542) NET DECREASE IN CASH (273,788) Cash, beginning 665,184 Cash, end $ 391,396 =============== See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP STATEMENT OF CASH FLOWS (CONTINUED) DECEMBER 31, 1996 Reconciliation of net profit to net cash provided by operating activities Net Profit $ 122,149 Adjustments to reconcile net profit to net cash provided by operating activities Depreciation 560,357 Amortization 17,671 Mortgagor entity income, net (910) Mortgagor entity income received, net 910 Changes in asset and liability accounts (Increase) decrease in assets Tenant accounts receivable (29,612) Accounts receivable H.U.D. 43,462 Prepaid property insurance 18,197 Tenant security deposits - net 1 Mortgage escrow accounts (3,819) Increase (decrease) in liabilities Accounts payable 5,138 Accrued payable - other 1,366 Accrued interest payable (2,311) Accrued P.I.L.O.T. (17,182) Rent deferred credits 44 HAP contract billing adjustment (391,217) -------------- Net cash provided by (used in) operating activities $ 324,244 --------- See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements December 31, 1996 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Circle Terrace Associates Limited Partnership was organized under the laws of the State of Maryland on March 28, 1990, for the purpose of acquiring and operating a rental housing project under Section 236 of the National Housing Act. The project consists of 303 units located in Lansdowne, Maryland, and is currently operating under the name of Circle Terrace Apartments. The property is managed by an affiliate of the general partner based on a fee of $35.80 per unit per month. Cash distributions are limited by agreements between the partnership and the United States Department of Housing and Urban Development (HUD) to an annual amount of $30,340 per year to the extent of surplus cash as defined by HUD. Undistributed amounts are cumulative and may be distributed in subsequent years if future operations provide surplus cash in excess of current requirements. Each building of the project has qualified and been allocated low-income housing credits pursuant to Internal Revenue Code Section 42 ("Section 42") which regulates the use of the project as to occupant eligibility and unit gross rent, among other requirements. Each building of the project must meet the provisions of these regulations during each of 15 consecutive years in order to remain qualified to receive the credits. In addition, Circle Terrace Associates Limited Partnership has executed an Extended Low-income Housing Agreement/Land Deed Restriction/Extended Use Commitment which requires the utilization of the project pursuant to Section 42 for a minimum of 30 years, even after the disposition of the project by the partnership. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Notes to Financial Statements - continued December 31, 1996 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Rental Property Rental property is recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight-line method over a 27.5-year life. Personal property is recorded at cost and is depreciated over its estimated service life of 5-7 years using accelerated methods. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statement of profit and loss. Amortization Mortgage costs are amortized over the term of the respective loan using the effective interest method. Provision for Doubtful Accounts The partnership considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations upon such determination. Income Taxes No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the partners individually. Rental Income Rental income is recognized as rentals become due. Rental payments received in advance are deferred until earned. All leases between the partnership and tenants of the property are operating leases. Notes to Financial Statements - continued December 31, 1996 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments Investments in U.S. Treasury bills are carried at amortized cost, which approximates fair market value, and are classified as held to maturity. Such investments are included in the reserve for replacements in the accompanying balance sheet. NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS The partnership has one general partner - Cooperative Associates Limited Partnership and two limited partners - SLP, Inc. (the special limited partner) and Boston Financial Qualified Housing Tax Credits L.P. V, a Limited Partnership (the investor limited partner). The general partner has made capital contributions of $413,562. SLP, Inc. is required to make a capital contribution of $10. The investor limited partner has made capital contributions totaling $5,615,234. NOTE C - LONG-TERM DEBT First Mortgage The partnership is obligated under the terms of a mortgage note which is insured by the Federal Housing Administration (FHA) and bears interest at the rate of 7%, less a varying interest subsidy in the current amount of $17,879 per month. Monthly payments of principal and interest in the reduced amount of $10,564 are due through maturity in February 2017. The total interest subsidy of $213,447 is reflected as a reduction of interest expense. Principal and accrued interest due at December 31, 1996 are $3,682,653 and $3,730, respectively. Under agreements with the mortgage lender and FHA, the partnership is required to make monthly escrow deposits for taxes, insurance and replacement of project assets, and is subject to restrictions as to operating policies, rental charges, operating expenditures and distributions to partners. The liability of the partnership under the mortgage note is limited to the underlying value of the real estate collateral plus other amounts deposited with the lender. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements - (continued) December 31, 1996 NOTE C - LONG-TERM DEBT (Continued) Second Mortgage The partnership is obligated under the terms of a mortgage note in the original amount of $4,000,000, which is insured by the Maryland Housing Fund (MHF) payable to Crestar of Richmond Virginia, Inc. The note bears interest at the rate of 8%. Monthly payments of principal and interest in the amount of $34,576 are due through maturity in December 2011. Principal and accrued interest due at December 31, 1996 are $3,614,775 and $24,099, respectively. The liability of the partnership under the terms of the mortgage is limited to the underlying value of the real estate collateral plus other amounts deposited with the lender. Third Mortgage The partnership is obligated under the terms of a mortgage note in the original amount of $2,227,330 payable to the Department of Housing and Community Development of the State of Maryland (CDA). The note bears interest at 4.5%. Monthly payments of principal and interest of $11,373 are due through July 1, 2023. Principal and accrued interest due at December 31, 1996 are $2,113,786 and $7,060, respectively. The liability of the partnership under the terms of the mortgage is limited to the underlying value of the real estate collateral. Promissory Note The partnership is obligated under the terms of an unsecured promissory note payable to Baltimore County, Maryland. Interest accrues at the rate of 4%. Annual interest payments commenced January 1, 1996. Annual payments of principal will be due commencing January 1, 2000 and will extend for 30 years through maturity on December 31, 2030. Payments may be made only to the extent of surplus cash as defined by HUD. Principal and accrued interest due at December 31, 1996 are $550,000 and $81,029, respectively. Note Payable The partnership is obligated under the terms of a note payable for the purchase of a truck. The note bears interest at 11.9% and requires monthly payments of principal and interest of $320 through maturity in May 1997. The principal due at December 31, 1996 is $1,556. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements - (continued) December 31, 1996 NOTE C - LONG-TERM DEBT (Continued) Note Payable (Continued) Management believes it is not practicable to estimate the fair value of the partnership's mortgages and promissory note because programs with similar characteristics are not currently available to the partnership. The carrying amount of the note payable for the purchase of the truck approximates fair value. Aggregate annual maturities of long-term debt for each of the next five years are as follows: - --------------------------------------------- -- ---------------- December 31, 1997 $ 260,332 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 1998 277,639 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 1999 298,056 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2000 320,024 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2001 343,653 - --------------------------------------------- -- ---------------- NOTE D - RELATED PARTY TRANSACTIONS Working Capital Advances The general partner is obligated to make working capital advances to the partnership as needed, up to an aggregate of $100,000. Such advances are noninterest bearing and can be repaid out of available net cash flow as defined in the partnership agreement. No such advances were required as of December 31, 1996. In the event cash flow does not provide sufficient funds to pay the investor limited partner its minimum distribution, such amount required will be advanced by the general partner and will be considered a project expense loan. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements - (continued) December 31, 1996 Note D - Related Party Transactions (continued) Management Agreement The property is managed by an affiliate of the general partner. The management fee is based on a charge of $35.80 per unit per month. The management agent also receives fees of $4.50 per unit per month for accounting services provided to the partnership. Management and accounting fees charged to operations during 1996 were $130,164 and $16,368, respectively, of which $22,482 of management fee is payable at December 31, 1996. Insurance The sole shareholder of an affiliate of the general partner provided debt financing for the capitalization of LaMere Associates, Inc. (LaMere). In connection with such debt financing, the shareholder received 20% of the stock of LaMere. LaMere was paid premiums in connection with the following insurance coverage provided to the partnership: property and liability, fidelity bond and auto. In connection with such insurance coverage, the partnership incurred $107,312 in premiums for the year ended December 31, 1996. Development Fee Based on final costs of the project and HUD and CDA's approval, an additional development fee was incurred by the partnership for services rendered by the general partner in a prior year. The balance payable of such fee as of December 31, 1996 is $34,554 and is payable from partnership cash. Due from Affiliates The partnership had advanced $1,570 out of development cash on behalf of two affiliates of the general partner. Such advances are noninterest bearing and due on demand. As of December 31, 1996, $600 is due on the advances. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements - (continued) December 31, 1996 NOTE E - CONTRACT WITH BALTIMORE COUNTY (IN LIEU OF TAXES) Computer Services In accordance with HUD Regulations 4381.5 Rev-2, Paragraph 6.38, the partnership uses the services of a computer consultant company to provide the following services: purchase and install personal computers and the related equipment and software for the project's rental office; provide training and technical support, and consult on software upgrades. Dynamic Information Services, Inc. (DIS), which is owned by a relative of an officer of the management company, is a licensed representative of Project Data Systems, Inc., a nationally known provider of computer system software for the subsidized housing industry. DIS derives 40% of its consulting service revenues from third-party clients not affiliated with the management company. In 1996, the partnership paid DIS $2,174 for equipment and software, representing actual cost, and $1,697 for technical support and training services based on billable hours. The partnership has entered into an agreement with Baltimore County, Maryland, whereby the partnership is to pay the County $162.50 per apartment unit per year (the minimum payment) in lieu of real estate taxes. To the extent there is net cash flow, as defined in the agreement, such amount is to be applied toward additional payments. The minimum payment has been increased 10% annually. The amount incurred during 1996 under the terms of this agreement was $53,025 of which $32,813 is unpaid at December 31, 1996. This amount is included with other city and county real estate taxes in the statement of profit and loss. NOTE F - HOUSING ASSISTANCE PAYMENT (HAP) CONTRACT AGREEMENTS HUD has contracted with the partnership under the United States Housing Act of 1937 to make housing assistance payments to the partnership on behalf of qualified tenants. The terms of the contract covering 142 units expires on November 30, 1998 and the contract covering 161 units expires on November 30, 1997. The contracts do not have renewal options. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements - (continued) December 31, 1996 NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS All profits and losses are allocated 1% to the general partner and 99% to the investor limited partner. Cash flow, as defined in the partnership agreement, is to be distributed as follows: 1. 99% to the investor limited partner and 1% to the general partner until the investor limited partner has received distributions, in the aggregate, equal to the cumulative priority distribution. 2. To the repayment of any project expense loans. 3. To the general partner until it has received cumulatively an amount equal to the cumulative amount paid to the investor limited partner as defined above. 4. 50% to the general partner and 50% to the investor limited partner. Gain, if any, from a sale, exchange or other disposition is allocable as follows: 1. To all partners having negative balances in their capital accounts prior to the distribution of any sale or refinancing proceeds, an amount of such gain to increase their negative balance to zero. 2. To each partner until the positive capital account balance is equal to the amount of cash available for distribution as a result of the transaction, as defined in the partnership agreement. Loss from a sale is allocable as follows: 1. To the partners in proportion to their positive capital account balances. In the event the loss is less than the sum of the positive capital accounts, the loss is to be allocated such that the resulting capital account balance is as near as possible to the amount of cash to be distributed as a result of the transaction. 2. 1% to the general partner and 99% to the investor limited partner. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements - (continued) December 31, 1996 NOTE H - TAXABLE LOSS A reconciliation of the financial statement net profit to the income tax net loss of the partnership for the year ended December 31, 1996 is as follows: ---------------------------------------------------------------------- Financial statement net profit $ 122,149 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Reduction in rents received in advance, net (391,219) ---------------------------------------------------------------------- ---------------------------------------------------------------------- Excess depreciation for income tax purposes (6,393) ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- Income net tax loss $ (275,463) ---------------------------------------------------------------------- NOTE I - INVESTMENT IN REAL ESTATE A reconciliation of the basis of the investment in real estate for financial reporting purposes to that for income tax purposes as of December 31, 1996 is as follows: ---------------------------------------------------------------------- Investment in real estate for financial reporting $ 14,010,650 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Excess accumulated depreciation for income tax purposes (45,094) ---------------------------------------------------------------------- ---------------------------------------------------------------------- Interest expense portion of subsidy capitalized for income tax purposes 177,337 ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- Investment in real estate for income tax purposes $ 14,142,893 ---------------------------------------------------------------------- NOTE J - CONCENTRATION OF CREDIT RISK The partnership maintains its cash balances in several banks. The balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 by the banks. As of December 31, 1996, the uninsured portion of the cash balances held at one bank was $172,788. NOTE K - CONTINGENCY The partnership has two HAP contracts which provide rental assistance for 303 units. One of the contracts covering 161 units is due to expire on November 30, 1997. No extension to this contract has been granted by HUD as of January 18, 1997. Payments received under this contract represent a significant portion of the partnership's revenue. Management's plan is to apply for an extension with HUD during 1997 to obtain an additional term for the HAP contract. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Notes to Financial Statements - (continued) December 31, 1996 NOTE K - CONTINGENCY (Continued) The partnership's low-income housing credits are contingent on its ability to maintain compliance with applicable sections of Section 42. Failure to maintain compliance with occupant eligibility and/or unit gross rent, or to correct noncompliance within a specified time period, could result in recapture of previously taken tax credits plus interest. In addition, such potential noncompliance may require an adjustment to the capital contributed by the investor limited partner. Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP SUPPLEMENTAL INFORMATION SUPPORTING DATA REQUIRED BY HUD December 31, 1996 ACCOUNTS AND NOTES RECEIVABLE (OTHER THAN FROM REGULAR TENANTS) -------------------------------------------------------------------------------------------------------------- Name of borrower Original Interest Terms Original amount Balance due date rate ------------------------------------------------------- ---------------------------------------------------- ------------------------------------------------------- ---------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- General partner 1993 N/A Demand $ 1,570 $ 600 affiliates --------------------------------------------------------------------------------------------------------------
DELINQUENT TENANT ACCOUNTS RECEIVABLE --------------------------------------------------------------------------------------------------------------- Number of Amount tenants past due ---------------------------------- ---------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 30 days 51 $ 6,080 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 31-60 days 36 1,761 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 61-90 days 28 7,731 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent over 90 days 46 21,541 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 161 $ 37,113 --------------------------------------------------------------------------------------------------------------- CONTRIBUTIONS DUE --------------------------------------------------------------------------------------------------------------- SLP, Inc. $ 10 --------------------------------------------------------------------------------------------------------------- MORTGAGE ESCROW DEPOSITS --------------------------------------------------------------------------------------------------------------- Estimated amount required as of December 31, 1996, for future payment of: City, state and county taxes (P.I.L.O.T) $ 35,367 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Property insurance 40,434 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Mortgage insurance 22,568 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 98,369 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Amount on deposit in excess of estimated requirements 13,323 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total confirmed by mortgagee $ 111,692 ---------------------------------------------------------------------------------------------------------------
Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD December 31, 1996 TENANT SECURITY DEPOSITS Tenant security deposits are held in a separate bank account in the name of the project. RESERVE FOR REPLACEMENTS In accordance with the provisions of the regulatory agreement, restricted cash is held by Mellon Mortgage Company to be used for replacement of property with the approval of HUD as follows: --------------------------------------------------------------------------------------------------------------- Balance at December 31, 1995 $ 303,529 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Monthly deposits --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- $7,045 x 12 84,540 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Interest earned 2,148 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------- --- -------------------------------------------------------------------------- --- Balance at December 31, 1996 $ 390,217 confirmed by mortgagee -------------------------------------------------------------------------- --------------------
RESIDUAL RECEIPTS NONE PAINTING RESERVE The partnership has established a reserve for painting of the property. The restricted cash is held by the partnership. --------------------------------------------------------------------------------------------------------------- Balance at December 31, 1995 $ 40,246 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Monthly deposits --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- $3,333 x 12 39,996 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Interest earned 1,254 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------- --- -------------------------------------------------------------------------- --- Balance at December 31, 1996 $ 81,496 -------------------------------------------------------------------------- --------------------
Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD December 31, 1996 ACCOUNTS PAYABLE (OTHER THAN TRADE CREDITORS) NONE ACCRUED TAXES -------------------------------------------------------------------------------------------------------------- Description of tax Basis for accrual Period covered Date due Amount accrued -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Baltimore County, Maryland P.I.L.O.T. 1996 12/31/96 $ 32,813 P.I.L.O.T. --------------------------------------------------------------------------------------------------------------
LETTERS OF CREDIT NONE LOANS AND NOTES PAYABLE (OTHER THAN THE INSURED MORTGAGE) ----------------------------------------------------------------------------------------------------------------------- Creditor Interest Collateral Date incurred Terms Original amount Balance due rate -------------------------------------------------------------------------------- ----------------- ---------------- -------------------------------------------------------------------------------- ----------------- ---------------- ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- GMAC 11.9% Truck 7/92 5 yr $ 14,437 $ 1,556 ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- Crestar of 8% Second trust 12/91 20 yr $ 4,000,000 $ 3,614,775 Richmond, Virginia, Inc. ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- State of 4.5% Third trust 12/91 20 yr $ 2,227,330 $ 2,113,786 Maryland CDA ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- ----------------------------------------------------------------------------------- Baltimore 4.0% Unsecured 11/90 40 yr $ 550,000 $ 550,000 County, Maryland -----------------------------------------------------------------------------------------------------------------------
Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD December 31, 1996 MORTGAGES PAYABLE --------------------------------------------------------------------------- Creditor Address of creditor --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- HUD Washington, D.C. --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Crestar of Richmond, Virginia, Inc. Richmond, Virginia --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Department of Housing and Community Crownsville, Maryland Development of the State of Maryland --------------------------------------------------------------------------- Servicer Address of servicer Mellon Mortgage Company Cleveland, Ohio Crestar of Richmond, Virginia, Inc. Richmond, Virginia Bogman, Inc. Bethesda, Maryland MORTGAGES PAYABLE FROM SURPLUS CASH NONE COMPENSATION OF PARTNERS NONE UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS NONE Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD December 31, 1996 IDENTITY OF INTEREST COMPANIES AND ACTIVITIES -------------------------------------------------------------------------------------------------------------- Company name Services rendered Amount paid Amount payable -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Rental Housing Management $ 130,164 $ 22,482 Partnership Property management -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Rental Housing Management $ 16,368 $ - Partnership Accounting fees -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- LaMere Associates, Inc. $ 107,312 $ - Insurance coverage -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Dynamic Information Equipment, software, technical support $ 3,871 $ - Services, Inc. and training services -------------------------------------------------------------------------------------------------------------- NON-REVENUE PRODUCING UNITS ------------------------------------------------------------------------------------------------------------ Name of occupant Connection with project ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ Willfred Chatterton Assistant Supervisor ------------------------------------------------------------------------------------------------------------ DECLARATION OF OWNERSHIP - UNAUDITED ---------------------------------------------------------------------------------------------------------------- Type of partner Name of partner Capital Ownership contributed percentage ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- General Partner Cooperative Associates Limited $ 1 1% Partnership ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Special Limited Partner SLP, Inc. $ 0 0% ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Limited Partner Boston Financial Qualified Housing $ 5,615,234 $ 99% Partnership ----------------------------------------------------------------------------------------------------------------
Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD December 31, 1996 SCHEDULE OF FUNDS IN FINANCIAL INSTITUTIONS --------------------------------------------------------------------------------------------------------------- Funds held by mortgagor, operating accounts --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 1. Citibank N.A., checking $ 8,043 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 2. Citibank N.A., money market 2.5% 38,175 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 3. Bank of New York, money market, 2.6% 22,968 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 4. Chase Manhattan Bank, money market, 2.6% 1,200 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 5. NationsBank, checking 3,737 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 6. Chemical Bank, money market, 2.75% 43,085 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 7. Fleet Bank, nominee checking 163,095 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total 280,303 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Funds held by mortgagor, development account --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 1. Fleet Bank, checking 4.6% 109,693 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Funds held by mortgagor, in trust - tenant security deposits --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 1. Citibank N.A., checking, 1.00% 38,026 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Funds held by mortgagor, in trust - painting reserve --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 1. Nat West Savings Bank, savings, 2.75% 81,496 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total funds held by mortgagor 509,518 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Funds held by mortgagee, (in trust) --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 1. Tax and insurance escrow, Chemical Mortgage Company 66,188 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 2. Reserve for replacements, Chemical Mortgage Company Money market account 3.67% 390,217 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 3. MIP reserve, Crestar of Richmond, Virginia, Inc. 45,504 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total funds held by mortgagee 501,909 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total funds in financial institutions $ 1,011,427 ---------------------------------------------------------------------------------------------------------------
The amounts above have been confirmed Fleet Bank on January 5, 1997. Crestar of Richmond, Virginia, Inc. on January 5, 1997 Mellon Mortgage Company on January 15, 1997 all cash accounts held by mortgagor have been agreed to December 1996 bank statement. INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1996, and have issued our report thereon dated January 18, 1997. We have also audited Circle Terrace Associates Limited Partnership's compliance with requirements applicable to major HUD-assisted and CDA programs and have issued our report thereon dated January 18, 1997. We conducted our audits in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States; the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of Inspector General in July 1993; and the Maryland Department of Housing and Community Development, Community Development Audit Guide dated October 1996. Those standards and the two guides require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether Circle Terrace Associates Limited Partnership complied with laws and regulations, noncompliance with which would be material to a major HUD-assisted and CDA program. The management of the partnership is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that HUD-assisted and CDA programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audits of the partnership for the year ended December 31, 1996, we obtained an understanding of the design of the relevant internal control structure policies and procedures and determined whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinions on the partnership's financial statements and on its compliance with specific requirements applicable to major HUD-assisted and CDA programs and to report on the internal control structure in accordance with the provisions of the Guide and not to provide an opinion on the internal control structure. We performed tests of controls, as required by the Guide, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we considered relevant to preventing or detecting material noncompliance with specific requirements that are applicable to the partnership's HUD-assisted and CDA programs. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by The American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors, irregularities or instances of noncompliance with laws and regulations in amounts that would be material in relation to the financial statements being audited or a HUD-assisted and CDA program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. This report is intended for the information of the audit committee, management, and the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /s/ Reznick Fedder & Silverman Bethesda, Maryland January 18, 1997 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND CDA PROGRAMS To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1996, and have issued our report thereon dated January 18, 1997. We have also audited Circle Terrace Associates Limited Partnership's compliance with the specific program requirements governing federal financial reports; mortgage status; replacement reserve; residual receipts; security deposits; cash receipts and disbursements; distributions to owners; tenant application, eligibility, and recertification; and management functions that are applicable to its major HUD-assisted and CDA programs for the year ended December 31, 1996. The management of Circle Terrace Associates Limited Partnership is responsible for compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit of compliance with specific program requirements in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States; the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of Inspector General in July 1993; and the Maryland Department of Housing and Community Development, Community Development Audit Guide dated October 1996. Those standards and the two guides require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about Circle Terrace Associates Limited Partnership's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. The results of our audit procedures disclosed an immaterial instance of noncompliance with the requirements referred to above, which is described in the accompanying Schedule of Findings and Questioned Costs. We considered this instance of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. In our opinion, Circle Terrace Associates Limited Partnership complied, in all material respects, with the specific program requirements that are applicable to its major HUD-assisted and CDA programs for the year ended December 31, 1996. This report is intended for the information of the audit committee, management, the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /s/ Reznick Fedder & Silverman Bethesda, Maryland January 18, 1997 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO AFFIRMATIVE FAIR HOUSING To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1996, and have issued our report thereon dated January 18, 1997. We have also audited Circle Terrace Associates Limited Partnership's compliance with requirements applicable to major HUD-assisted and CDA programs and have issued our report thereon dated January 18, 1997. We have applied procedures to test Circle Terrace Associates Limited Partnership's compliance with the Affirmative Fair Housing requirements applicable to its HUD-assisted and CDA programs for the year ended December 31, 1996. Our procedures were limited to the applicable procedures described in the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of Inspector General in July 1993 and the Maryland Department of Housing and Community Development, Community Development Audit Guide dated October 1996. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on Circle Terrace Associates Limited Partnership's compliance with the Affirmative Fair Housing requirements. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under the Guide. This report is intended for the information of the audit committee, management, the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /s/ Reznick Fedder & Silverman Bethesda, Maryland January 18, 1997 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1996, and have issued our report thereon dated January 18, 1997. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to Circle Terrace Associates Limited Partnership is the responsibility of Circle Terrace Associates Limited Partnership's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of Circle Terrace Associates Limited Partnership's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards. However, the results of our tests disclosed a certain immaterial instance of noncompliance that is described in the accompanying Schedule of Findings and Questioned Costs. This report is intended for the information of the audit committee, management, the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /s/ Reznick Fedder & Silverman Bethesda, Maryland January 18, 1997 SCHEDULE OF FINDINGS AND QUESTIONED COSTS December 31, 1996 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP Finding In performing our lease tests on the tenant files, we noted the following findings: 1) One lease did not have the manager's signature. 2) One recertification did not have the manager's signature. Recommendation Management should strengthen procedures to ensure that all forms are signed by the appropriate individuals. - 52 - ANNUAL AUDIT QUESTIONNAIRE PROJECT NAME Circle Terrace Associates CDA PROJECT NUMBER 28.04.0010 FISCAL YEAR END 12/31/96 Answers to these questions should be based upon review of procedures and/or an actual test of transactions. "NO" answers are indicative of an adverse condition which must be described in the audit report unless the mortgagor has written permission from DHCD to deviate from the regular mortgage requirements. - ----------------------------------------------------------------------------------------------------------------------------------- EXAMINATION STATUS YES NO N/A WORKING PAPER REFERENCE - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1. Mortgage Status - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- a. Are payments on all mortgages current? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Position 1 X AA-1 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- --------------------------------------- - ------------------------------------------------------------------------------------- --------------------------------------- Position 2 X AA-4 - --------------------------------------------------------------------------------------------- ------------------------------------ - --------------------------------------------------------------------------------------------- ------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Position 3 X AA-2 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Position 4 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Position 5 - --------------------------------------------------------------------------------- ----------------------------------------------- - --------------------------------------------------------------------------------- ----------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- b. Has the mortgagor complied with the terms X AA- section and conditions of the Regulatory Agreement and/or workout arrangements? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------- -------------------------------------------------------------- - -------------------------------------------------------------- -------------------------------------------------------------- 2. Books and Records - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- a. Are a complete set of books and records X common file maintained in a satisfactory manner? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- b. Does the mortgagor make frequent postings X common file (at least monthly) to the ledger accounts? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 3. Cash Activities - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- a. Are the cash receipts deposited in the X common file name of the project in a bank whose deposits are federally insured? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- b. Are security deposits kept separate and X A-10 apart from all other funds of the project in an insured institution? - ---------------------------------------------------------------------- ----------------------------------------------------------- - ---------------------------------------------------------------------- ----------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- c. Does the mortgagor keep sufficient funds X DD-1 in the security deposit account to equal or exceed the aggregate of all outstanding obligations to the depositors? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ d. Does the owner or his management agent X common file have a fidelity bond in an amount at least equal to potential collections for two months plus the full security deposit liability which provides coverage for all employees handling assets of the project? - ----------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------- 3. Cash Activities (continued) - ---------------------------------------------------------- - ---------------------------------------------------------- - ---------------------------------------------------------- - ---------------------------------------------------------- e. Did cash disbursements exclude payments for items listed below: - ---------------------------------------------------------- - ---------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- I. Legal expenses incurred in the sale of X common file partnership interest? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- --------------------------------------- - ------------------------------------------------------------------------------------- --------------------------------------- ii. The fee for the preparation of a X partner's, shareholder's or individual's federal, state or local income tax returns? - --------------------------------------------------------------------------------------------- ------------------------------------ - --------------------------------------------------------------------------------------------- ------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- iii. Advice to an owner on tax consequences of X foreclosure? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- iv. Reimbursement to the owners of affiliates X while the mortgage is in default, or under workout arrangements for prior advances, capital expenditures and/or project acquisition costs? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- v. Letter of credit fees? X - --------------------------------------------------------------------------------- ----------------------------------------------- - --------------------------------------------------------------------------------- ----------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- f. Were distributions made to, or on behalf X A-8 of, the owners limited to those authorized by the Regulator Agreement or the distributions in accordance with prior written approval of CDA while the project was in a "surplus cash" position? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------- -------------------------------------------------------------- - -------------------------------------------------------------- -------------------------------------------------------------- I. Distribution to non-profit mortgagor X entities or principles may not be permitted by the Regulatory Agreement. - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- ii. The use of rental proceeds to pay for X costs included in the mortgagor's cost certification are unauthorized distributions of project income. - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- iii. Was surplus cash available for payment on cash flow debt per the Regulatory Agreement and Note? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- g. Were residual receipts deposited with the X mortgagee within ninety days after the close of the mortgagors annual account period? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- h. Were excess rental collections in section X common file 236 project remitted to HUD each month? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- I. Does the mortgagor have a formal X common file collection policy? - ---------------------------------------------------------------------- ----------------------------------------------------------- - ---------------------------------------------------------------------- ----------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- j. Is the collection policy enforced? X common file - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ k. Do tenant accounts receivable consist X B-1 exclusively of amounts due from other than employees? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------- ----- ---- - -------------------------------------------------------------- ----- ---- l. Have "write-offs" of tenants' accounts X 21 been less than one percent of the gross rent? ------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------- ---- ----- ---- - -------------------------------------------------------------- ---- ----- ---- - -------------------------------------------------------------- ---- ----- ---- - ----------------------------------------------------------------------------------------------------------------------------------- 3. Cash Activities (continued) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- m. Are accounts receivable other than X B-2 tenants' receivables composed exclusively of amounts due from unrelated persons or firms? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- n. Were there indications that payments for X common file services, supplies or materials were not in excess of amounts normally paid for such services? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- o. If applicable, were utility allowance X payments to residents paid on a monthly basis? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- ------------------------------------------- - --------------------------------------------------------------------------------- ------------------------------------------- 4. Management Compensation - ---------------------------------------------------------- ----- ---- - ---------------------------------------------------------- ----- ---- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- a. Was compensation to the management agent X 20 limited to the amounts prescribed in the management agreements written or amended? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 5. Rents and Occupancy - ---------------------------------------------------------- ----- ---- ----- - ---------------------------------------------------------- ----- ---- ----- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- a. Is the gross potential rental income X 10 from apartments equal to or less than that approved by DHCD? - ------------------------------------------------------------------------------ --------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- b. In subsidized projects, are dwelling X common file unit contract rental rates and Fair Market rental rates in Section 236 projects the same as those approved by DHCD? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------- ------------------------------------------------------------------ - ----------------------------------------------------------------------------------------------------------------------------------- 6. DHCD/HUD Subsidy Payments (Section 8/RAP Projects Only) - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- a. Were the amounts requested from DHCD/ X B-2 HUD adequately supported by the accounting records? - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- b. Were subsidy payments received recorded X B-2 in the prior proper accounts? - -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CIRCLE TERRACE ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO.: 052-44056-LDP CDA PROJECT NO.: 28.04.0010 DECEMBER 31, 1997 TABLE OF CONTENTS - CONTINUED Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 PAGE MORTGAGOR'S CERTIFICATION 4 MANAGING AGENT'S CERTIFICATION 5 INDEPENDENT AUDITORS' REPORT 6 FINANCIAL STATEMENTS BALANCE SHEET 8 STATEMENT OF PROFIT AND LOSS 10 STATEMENT OF PARTNERS' EQUITY 12 STATEMENT OF CASH FLOWS 13 NOTES TO FINANCIAL STATEMENTS 15 SUPPLEMENTAL INFORMATION ACCOUNTS AND NOTES RECEIVABLE 25 CONTRIBUTIONS DUE 25 MORTGAGE ESCROW DEPOSITS 25 TENANT SECURITY DEPOSITS 26 RESERVE FOR REPLACEMENTS 26 RESIDUAL RECEIPTS 26 PAINTING RESERVE 26 ACCOUNTS PAYABLE 27 ACCRUED TAXES 27 LETTERS OF CREDIT 27 LOANS AND NOTES PAYABLE 27 MORTGAGES PAYABLE 28 MORTGAGES PAYABLE FROM SURPLUS CASH 28 COMPENSATION OF PARTNERS 28 UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS 28 IDENTITY OF INTEREST COMPANIES AND ACTIVITIES 29 NON-REVENUE PRODUCING UNITS 29 DECLARATION OF OWNERSHIP - UNAUDITED 29 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS 30 CHANGES IN FIXED ASSET ACCOUNTS 31 COMPARISON OF BUDGET TO ACTUAL INCOME AND EXPENSES 32 MONTHLY INCOME AND EXPENSE STATEMENT - CASH BASIS 35 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL 38 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND CDA PROGRAMS 40 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION 42 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS 43 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 45 ANNUAL AUDIT QUESTIONNAIRE 46 December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 MORTGAGOR'S CERTIFICATION I hereby certify that I have examined the accompanying financial statements and supplemental data of Circle Terrace Associates Limited Partnership and, to the best of my knowledge and belief, the same is complete and accurate. GENERAL PARTNER --------------------------------------- Judith Siegel Date Partnership Employer Identification Number: 05-0461953 MANAGING AGENT'S CERTIFICATION I hereby certify that I have examined the accompanying financial statements and supplemental data of Circle Terrace Associates Limited Partnership and, to the best of my knowledge and belief, the same is complete and accurate. MANAGING AGENT Rental Housing Management Partnership --------------------------------------- Eric Richelson Date David Staley Managing Agent Employer Property Manager Identification Number: 13-3580730 INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1997, and the related statements of profit and loss (on HUD Form No. 92410), partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle Terrace Associates Limited Partnership as of December 31, 1997, and the results of its operations, the changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 25 through 37 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for that portion marked "unaudited", on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs," we have also issued reports dated January 21, 1998 on our consideration of Circle Terrace Associates Limited Partnership's internal control and on its compliance with specific requirements applicable to major HUD and CDA programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/ Reznick Fedder & Silverman Bethesda, Maryland Federal Employer January 21, 1998 Identification Number: 52-1088612 Audit Principal: Lester A. Kanis Circle Terrance Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 BALANCE SHEET DECEMBER 31, 1997 ASSETS CURRENT ASSETS 1110 Petty cash $ 1,400 1120 Cash in bank 143,737 1121 Cash - partnership 247,311 1130 Tenant accounts receivable 11,720 1131 Accounts receivable - HUD 178,313 1240 Prepaid property insurance 37,733 1250 Prepaid mortgage insurance 16,332 1270 Prepaid real estate taxes 34,169 ----------------- Total current assets 670,715 DEPOSITS HELD IN TRUST - FUNDED 1191 Tenant security deposits 40,834 RESTRICITAD DEPOSITS AND FUNDED RESERVES 1310 Mortgage escrow deposits $ 108,992 1320 Reserve for replacements 486,850 1330 Painting reserve 123,993 --------------- 719,835 RENTAL PROPERTY 1410 Land 1,104,269 1420 Buildings and improvements 15,214,660 1440 Building equipment - fixed 34,325 1440 Building equipment - portable 18,164 1450 Personal property 18,440 1460 Furnishings 8,378 -------------- 16,398,236 1495 Less accumulated depreciation 2,929,726 ----------- 13,468,510 OTHERASSETS 1901 Mortgage costs, less accumulated amortization of $85,191 221,729 -------- $ 15,121,623 ========== See Notes to Financial Statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 BALANCE SHEET-Continued DECEMBER 31, 1997 LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES 2110 Accounts payable $ 23,487 2130 Accrued interest payable 34,763 2150 Accrued P.I.L.O.T. 91,140 2190 Accrued management fees 22,482 2210 Rent deferred credits 675 2320 Current maturities of long term debt 283,526 ------- Total Current Liabilities 456,073 DEPOSITS LIABILITIES 2191 Tenant security deposits (contra) 34,440 LONG TERM LIABILITIES 2320 Long term debt, net of current maturities $ 9,435,867 2335 Accrued interest 103,030 ------------- 9,538,897 CONTINGENCY - 3130 PARTNERS' EQUITY 5,092,113 ------------- $15,121,523 ============= See notes to financial statements Circle Terrance Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 STATEMENT OF PROFIT AND LOSS DECEMBER 31, 1997 RENTAL INCOME 5120 Apartments or member carrying charges (Coops) $ 305,325 5121 Tenant assistance payments 1,988,739 ------- Total rent revenue potential at 100% occupancy $2,294,064 VACANCIES 5220 Apartments (7,223) -------------- Total vacancies (7,223) Net rental revenue 2,286,841 FINANCIAL REVENUE 5410 Interest Income -project operations 6,619 5440 Income from investments - reserve for replacement 12,093 ----- Total financial revenue 18,712 OTHER REVENUE 5910 Laundry and vending 9,482 5920 NSF and late charges 4,117 ----- Total other revenue 13,599 --------- Total revenue 2,319,152 =========
STATEMENT OF PROFIT AND LOSS (continued) DECEMBER 31, 1997 ADMINISTRATIVE EXPENSES 6210 Advertising and marketing 8,719 6250 Other renting expenses 5,778 6310 Office salaries 89,954 6311 Office Supplies 26,989 6320 Management fee 130,164 6331 Manager or superintendent rent free unit 7,548 6340 Legal expenses - project 13,711 6350 Auditing expenses - project 9,600 6351 Bookkeeping fees/accounting services 16,368 6360 Telephone and answering services 11,916 6370 Bad debts 4,749 6390 Miscellaneous administrative expenses 23,761 ------ Total administrative expenses 349,257 UTILITIES EXPENSE 6450 Electricity 17,224 6451 Water 14,777 6452 Gas 109,333 Total utilities expense 141,334 OPERATING AND MAINTENANCE EXPENSES 6515 Janitor and cleaning supplies 9,387 6517 Janitor and cleaning contract 3,843 6520 Exterminating supplies 734 6525 Garbage and trash removal 38,158 6530 Security payroll/contract 166,940 6536 Grounds supplies 893 6537 Grounds contract 35,980 6540 Repairs payroll 127,205 6541 Repairs material 102,277 6542 Repairs contract 11,242 STATEMENT OF PROFIT AND LOSS (continued) DECEMBER 31, 1997 6546 Heating/cooling repairs and maintenance 8,406 6548 Snow removal 1,275 6560 Decorating payroll contract 22,135 6561 Decorating supplies 7,557 6570 Other 9,544 6590 Miscellaneous operating and maintenance expenses 236 ----------- Total operating and maintenance expenses 545,812 TAXES AND INSURANCE 6710 Real estate taxes 123,445 6711 Payroll taxes (FICA) 29,527 6719 Miscellaneous taxes, licenses and permits 400 6720 Property and liability insurance (Hazard) 88,162 6721 Fidelity bond insurance 914 6722 Workmen's compensation 11,018 6723 Heath insurance and other employee benefits 28,951 ------ Total taxes and insurance 282,417 FINANCIAL EXPENSES 6820 Interest on mortgage payable 435,537 6840 Interest on notes payable - short-term 1,342 6850 Mortgage insurance premium/service charge 45,753 ------ Total financial expenses 482,632 DEPRECIATION AND AMORTIZATION Total cost of operations before depreciation 1,801,452 Profit (Loss) before depreciation 517,700 Depreciation and amortization 574,584 Operating Profit or (Loss) (56,884) CORPORATE OR MORTGAGOR ENTITY EXPENSES 7190 Other (revenue)/expenses (9,077) Total corporate expenses (9,077) ---- Net Profit (47,807) ======
Circle Terrance Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 STATEMENT OF PARTNER'S EQUITY DECEMBER 31, 1997 Special Investor General Limited Limited Partner Partner Partner Total Partners' equity, Beginning $217,706 - $4,922,214 $5,139,920 Net Loss (478) - (47,329) (47,807) --------- ------------ --------- ----------- Partners' equity, End $ 217,228 - $ 4,874,885 $ 5,092,113 --------- ----------- ----------- See notes to financial statements Statement OF CASH FLOWS DECEMBER 31, 1997 Cash flows from operating activities Rental income received $ 2,131,151 Interest received 18,709 Other income received 13,599 Administrative expenses paid (133,228) Management fees paid (130,164) Utilities paid (145,670) Salaries and wages paid (406,234) Operating and maintenance paid (217,547) Real estate taxes paid (65,118) Payroll taxes paid (29,527) Property insurance paid (124,576) Other taxes and insurance paid (29,351) Interest paid on mortgage (413,662) Interest paid on notes (1,342) Mortgage insurance premium paid (45,753) Decrease in mortgage escrow deposits 2,700 Mortgagor entity income received, net 9,077 Net tenant security deposits received 2,163 -------------- Net cash provided by operating activities 435,227 -------------- Cash flows from investing activities Deposits to reserve for replacement (96,633) Deposits to painting reserve (42,497) Payment of developer fees payable (34,554) Purchase of fixed assets (18,440) ------------- Net cash used in investing activities (192,124) ------------- Cash flow from financing activities Mortgage and note principal payments (261,217) Proceeds from note payable 17,940 ---------------- Net cash used in financing activities (243,277) NET DECREASE IN CASH (174) Cash, beginning 392,622 Cash, end $ 392,448 =============== See notes to Financial Statements NOTES TO FINANCIAL STATEMENTS December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Circle Terrace Associates Limited Partnership was organized under the laws of the State of Maryland on March 28, 1990, for the purpose of acquiring and operating a rental housing project under Section 236 of the National Housing Act. The project consists of 303 units located in Lansdowne, Maryland, and is currently operating under the name of Circle Terrace Apartments. The property is managed by an affiliate of the general partner based on a fee of $35.80 per unit per month. Cash distributions are limited by agreements between the partnership and the United States Department of Housing and Urban Development (HUD) to an annual amount of $30,340 per year to the extent of surplus cash as defined by HUD. Undistributed amounts are cumulative and may be distributed in subsequent years if future operations provide surplus cash in excess of current requirements. Each building of the project has qualified and been allocated low-income housing credits pursuant to Internal Revenue Code Section 42 ("Section 42") which regulates the use of the project as to occupant eligibility and unit gross rent, among other requirements. Each building of the project must meet the provisions of these regulations during each of 15 consecutive years in order to remain qualified to receive the credits. In addition, Circle Terrace Associates Limited Partnership has executed an Extended Low-income Housing Agreement/Land Deed Restriction/Extended Use Commitment which requires the utilization of the project pursuant to Section 42 for a minimum of 30 years, even after the disposition of the project by the partnership. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Rental Property Rental property is recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight-line method over a 27.5-year life. Personal property is recorded at cost and is depreciated over its estimated service life of 5-7 years using accelerated methods. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statement of profit and loss. Amortization Mortgage costs are amortized over the term of the respective loan using the straight-line method. Provision for Doubtful Accounts The partnership considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations upon such determination. Income Taxes No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the partners individually. Rental Income Rental income is recognized as rentals become due. Rental payments received in advance are deferred until earned. All leases between the partnership and tenants of the property are operating leases. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments Investments in U.S. Treasury bills are carried at amortized cost, which approximates fair market value, and are classified as held to maturity. Such investments are included in the reserve for replacements in the accompanying balance sheet. NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS The partnership has one general partner - Cooperative Associates Limited Partnership and two limited partners - SLP, Inc. (the special limited partner) and Boston Financial Qualified Housing Tax Credits L.P. V, a Limited Partnership (the investor limited partner). The general partner has made capital contributions of $413,562. SLP, Inc. is required to make a capital contribution of $10. The investor limited partner has made capital contributions totaling $5,615,234. NOTE C - LONG-TERM DEBT First Mortgage The partnership is obligated under the terms of a mortgage note which is insured by the Federal Housing Administration (FHA) and bears interest at the rate of 7%, less a varying interest subsidy in the current amount of $17,879 per month. Monthly payments of principal and interest in the reduced amount of $10,564 are due through maturity in February 2017. The total interest subsidy of $213,447 is reflected as a reduction of interest expense. Principal and accrued interest due at December 31, 1997 are $3,596,386 and $2,897, respectively. Under agreements with the mortgage lender and FHA, the partnership is required to make monthly escrow deposits for taxes, insurance and replacement of project assets, and is subject to restrictions as to operating policies, rental charges, operating expenditures and distributions to partners. The liability of the partnership under the mortgage note is limited to the underlying value of the real estate collateral plus other amounts deposited with the lender. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE C - LONG-TERM DEBT (Continued) Second Mortgage The partnership is obligated under the terms of a mortgage note in the original amount of $4,000,000, which is insured by the Maryland Housing Fund (MHF) payable to Crestar of Richmond, Virginia, Inc. The note bears interest at the rate of 8%. Monthly payments of principal and interest in the amount of $34,576 are due through maturity in December 2011. Principal and accrued interest due at December 31, 1997 are $3,483,497 and $24,099, respectively. The liability of the partnership under the terms of the mortgage is limited to the underlying value of the real estate collateral plus other amounts deposited with the lender. Third Mortgage The partnership is obligated under the terms of a mortgage note in the original amount of $2,227,330 payable to the Department of Housing and Community Development of the State of Maryland (CDA). The note bears interest at 4.5%. Monthly payments of principal and interest of $11,373 are due through July 1, 2023. Principal and accrued interest due at December 31, 1997 are $2,071,870 and $7,767, respectively. The liability of the partnership under the terms of the mortgage is limited to the underlying value of the real estate collateral. Promissory Note The partnership is obligated under the terms of an unsecured promissory note payable to Baltimore County, Maryland. Interest accrues at the rate of 4%. Annual interest payments commenced January 1, 1996. Annual payments of principal will be due commencing January 1, 2000 and will extend for 30 years through maturity on December 31, 2030. Payments may be made only to the extent of surplus cash as defined by HUD. Principal and accrued interest due at December 31, 1997 are $550,000 and $103,030, respectively. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE C - LONG-TERM DEBT (Continued) Note Payable The partnership is obligated under the terms of a note payable for the purchase of a truck. The note bears interest at 8.75% and requires monthly payments of principal and interest of $588 through maturity in October 2000. The amount payable at December 31, 1997 is $17,640. Aggregate annual maturities of long-term debt for each of the next five years are as follows: - --------------------------------------------- -- ---------------- December 31, 1998 $ 283,526 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 1999 304,471 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2000 325,839 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2001 343,827 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2002 369,264 - --------------------------------------------- -- ---------------- NOTE D - RELATED PARTY TRANSACTIONS Working Capital Advances The general partner is obligated to make working capital advances to the partnership as needed, up to an aggregate of $100,000. Such advances are noninterest bearing and can be repaid out of available net cash flow as defined in the partnership agreement. No such advances were required as of December 31, 1997. In the event cash flow does not provide sufficient funds to pay the investor limited partner its minimum distribution, such amount required will be advanced by the general partner and will be considered a project expense loan. Management Agreement The property is managed by an affiliate of the general partner. The management fee is based on a charge of $35.80 per unit per month. The management agent also receives fees of $4.50 per unit per month for accounting services provided to the partnership. Management and accounting fees charged to operations during 1997 were $130,164 and $16,368, respectively, of which $22,482 of management fee is payable at December 31, 1997. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE D - RELATED PARTY TRANSACTIONS (Continued) Insurance The sole shareholder of an affiliate of the general partner provided debt financing for the capitalization of LaMere Associates, Inc. (LaMere). In connection with such debt financing, the shareholder received 20% of the stock of LaMere. LaMere was paid premiums in connection with the following insurance coverage provided to the partnership: property and liability, fidelity bond and auto. In connection with such insurance coverage, the partnership incurred $100,094 in premiums for the year ended December 31, 1997. Computer Services In accordance with HUD Regulations 4381.5 Rev-2, Paragraph 6.38, the partnership uses the services of a computer consultant company to provide the following services: purchase and install personal computers and the related equipment and software for the project's rental office; provide training and technical support, and consult on software upgrades. Dynamic Information Services, Inc. (DIS), which is owned by a relative of an officer of the management company, is a licensed representative of Project Data Systems, Inc., a nationally known provider of computer system software for the subsidized housing industry. DIS derives 40% of its consulting service revenues from third-party clients not affiliated with the management company. In 1997, the partnership paid DIS $2,174 for equipment and software, representing actual cost, and $1,697 for technical support and training services based on billable hours. NOTE E - CONTRACT WITH BALTIMORE COUNTY (IN LIEU OF TAXES) The partnership has entered into an agreement with Baltimore County, Maryland, whereby the partnership is to pay the County $162.50 per apartment unit per year (the minimum payment) in lieu of real estate taxes. To the extent there is net cash flow, as defined in the agreement, such amount is to be applied toward additional payments. The minimum payment has been increased 10% annually. The amount incurred during 1997 under the terms of this agreement was $58,327. This amount is included with other city and county real estate taxes in the statement of profit and loss. As of December 31, 1997, $91,140 remains payable. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE F - HOUSING ASSISTANCE PAYMENT (HAP) CONTRACT AGREEMENTS HUD has contracted with the partnership under the United States Housing Act of 1937 to make housing assistance payments to the partnership on behalf of qualified tenants. The terms of the contract covering 142 units expires on November 30, 1998 and the contract covering 161 units expired on November 30, 1997. The contracts do not have renewal options. With Congressional passage in October 1997 of the Multifamily Assisted Housing and Reform and Affordability Act (the Act), HUD has been given budgetary authority to approve requests for one-year renewals on all Section 8 contracts expiring through September 30, 1998. Thus, one of the partnership's HAP agreements will be eligible for a one-year renewal through March 31, 1999. Under provisions of the Act, renewal of Section 8 contracts expiring after September 30, 1998 are subject to evaluation and assessment under a complex set of requirements as prescribed by this "mark-to-market" legislation. Further, implementing regulations by HUD affecting administration over the renewal process have not been finalized. As a result, it is uncertain whether HUD will renew these contracts under terms that are consistent with the successful operation of the project. The project is economically dependent upon the rental income received from both of its agreements. If HUD were not to extend either one, the project's operating cash flow would be adversely affected. NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS All profits and losses are allocated 1% to the general partner and 99% to the investor limited partner. Cash flow, as defined in the partnership agreement, is to be distributed as follows: 1. 99% to the investor limited partner and 1% to the general partner until the investor limited partner has received distributions, in the aggregate, equal to the cumulative priority distribution. 2. To the repayment of any project expense loans. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS (Continued) 3. To the general partner until it has received cumulatively an amount equal to the cumulative amount paid to the investor limited partner as defined above. 4. 50% to the general partner and 50% to the investor limited partner. Gain, if any, from a sale, exchange or other disposition is allocable as follows: 1. To all partners having negative balances in their capital accounts prior to the distribution of any sale or refinancing proceeds, an amount of such gain to increase their negative balance to zero. 2. To each partner until the positive capital account balance is equal to the amount of cash available for distribution as a result of the transaction, as defined in the partnership agreement. Loss from a sale is allocable as follows: 1. To the partners in proportion to their positive capital account balances. In the event the loss is less than the sum of the positive capital accounts, the loss is to be allocated such that the resulting capital account balance is as near as possible to the amount of cash to be distributed as a result of the transaction. 2. 1% to the general partner and 99% to the investor limited partner. NOTE H - TAXABLE LOSS A reconciliation of the financial statement net loss to the income tax net loss of the partnership for the year ended December 31, 1997 is as follows: ---------------------------------------------------------------------- Financial statement net loss $ (47,807) ---------------------------------------------------------------------- ---------------------------------------------------------------------- Excess depreciation for income tax purposes (5,750) ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- Income net tax loss $ (53,557) ---------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE I - INVESTMENT IN REAL ESTATE A reconciliation of the basis of the investment in real estate for financial reporting purposes to that for income tax purposes as of December 31, 1997 is as follows: - ------------------------------------------------------------------------------- Investment in real estate for financial reporting $ 13,468,510 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Excess accumulated depreciation for income tax purposes (50,844) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Interest expense portion of subsidy capitalized for income tax purposes 177,337 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Investment in real estate for income tax purposes $ 13,595,003 - ------------------------------------------------------------------------------- NOTE J - CONCENTRATION OF CREDIT RISK The partnership maintains its cash balances in several banks. The balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per bank. As of December 31, 1997, the uninsured portion of the partnership cash balances held at one bank was $147,311. NOTE K - CONTINGENCY The partnership's low-income housing credits are contingent on its ability to maintain compliance with applicable sections of Section 42. Failure to maintain compliance with occupant eligibility and/or unit gross rent, or to correct noncompliance within a specified time period, could result in recapture of previously taken tax credits plus interest. In addition, such potential noncompliance may require an adjustment to the capital contributed by the investor limited partner. NOTE L - OTHER MORTGAGOR ENTITY EXPENSES (ACCOUNT NO. 7190) Other mortgagor entity expenses consist of the following: ------------------------------------------------------------------------ Interest income - partnership accounts $ 9,077 ------------------------------------------------------------------------ SUPPLEMENTAL INFORMATION SUPPORTING DATA REQUIRED BY HUD AND CDA SUPPLEMENTAL INFORMATION SUPPORTING DATA REQUIRED BY HUD AND CDA December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 - 52 - ACCOUNTS AND NOTES RECEIVABLE (OTHER THAN FROM REGULAR TENANTS) --------------------------------------------------------------------------------------------------------------- Name of borrower Original date Terms Original amount Balance due --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- U.S. Department of Housing and Oct. - Dec. 1/98 $ 178,313 $ 178,313 Urban Development 1997 --------------------------------------------------------------------------------------------------------------- DELINQUENT TENANT ACCOUNTS RECEIVABLE --------------------------------------------------------------------------------------------------------------- Number of Amount tenants past due ---------------------------------- ---------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 30 days 56 $ 1,980 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 31-60 days 52 1,807 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 61-90 days 32 2,022 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent over 90 days 49 5,911 ----------------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------- -------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- $ 11,720 ----------------------------------------------------------------------------- -------------------- CONTRIBUTIONS DUE --------------------------------------------------------------------------------------------------------------- SLP, Inc. $ 10 --------------------------------------------------------------------------------------------------------------- MORTGAGE ESCROW DEPOSITS --------------------------------------------------------------------------------------------------------------- Estimated amount required as of December 31, 1997, for future payment of: --- --- City, state and county taxes (P.I.L.O.T) $ 37,836 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Property insurance 31,915 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Mortgage insurance 13,314 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- 83,065 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Amount on deposit in excess of estimated requirements 25,927 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Total confirmed by mortgagee $ 108,992 ---------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD AND CDA December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 TENANT SECURITY DEPOSITS Tenant security deposits are held in a separate bank account in the name of the project. RESERVE FOR REPLACEMENTS In accordance with the provisions of the regulatory agreement, restricted cash is held by Mellon Mortgage Company to be used for replacement of property with the approval of HUD as follows: ---------------------------------------------------------------------- Balance at December 31, 1996 $ 390,217 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Monthly deposits ---------------------------------------------------------------------- ---------------------------------------------------------------------- $7,045 x 12 84,540 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Interest earned 12,093 ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- Balance at December 31, 1997, confirmed by mortgagee $ 486,850 ---------------------------------------------------------------------- RESIDUAL RECEIPTS NONE PAINTING RESERVE The partnership has established a reserve for painting of the property. The restricted cash is held by the partnership. ---------------------------------------------------------------------- Balance at December 31, 1996 $ 81,496 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Monthly deposits ---------------------------------------------------------------------- ---------------------------------------------------------------------- $3,333 x 12 39,996 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Interest earned 2,501 ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- Balance at December 31, 1997 $ 123,993 ---------------------------------------------------------------------- SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD AND CDA December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 ACCOUNTS PAYABLE (OTHER THAN TRADE CREDITORS) NONE ACCRUED TAXES -------------------------------------------------------------------------------------------------------------- Description of tax Basis for accrual Period covered Date due Amount accrued -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Baltimore County, Maryland P.I.L.O.T. 1997 12/31/97 $ 91,140 P.I.L.O.T. -------------------------------------------------------------------------------------------------------------- LETTERS OF CREDIT NONE LOANS AND NOTES PAYABLE (OTHER THAN THE INSURED MORTGAGE) --------------------------------------------------------------------------------------------------------------- Creditor Interest Collateral Date Terms Original amount Balance due rate incurred -------------------------------------------------------------------------- ----------------- ----------------- -------------------------------------------------------------------------- ----------------- ----------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Crestar of 8% Second trust 12/91 20 yrs 4,000,000 $ 3,483,497 Richmond, Virginia, Inc. --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- State of Maryland 4.5% Third trust 12/91 20 yrs 2,227,330 $ 2,071,870 CDA --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Baltimore County, 4.0% Unsecured 11/90 40 yrs 550,000 $ 550,000 Maryland ---------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD AND CDA December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 MORTGAGES PAYABLE --------------------------------------------------------------------------- Creditor Address of creditor --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- HUD Washington, D.C. --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Crestar of Richmond, Virginia, Inc. Richmond, Virginia --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Department of Housing and Community Crownsville, Maryland Development of the State of Maryland --------------------------------------------------------------------------- Servicer Address of servicer Mellon Mortgage Company Cleveland, Ohio Crestar of Richmond, Virginia, Inc. Richmond, Virginia Bogman, Inc. Bethesda, Maryland MORTGAGES PAYABLE FROM SURPLUS CASH NONE COMPENSATION OF PARTNERS NONE UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS NONE SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD AND CDA December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 IDENTITY OF INTEREST COMPANIES AND ACTIVITIES -------------------------------------------------------------------------------------------------------------- Company name Services rendered Amount paid Amount payable -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Rental Housing Management $ 130,164 $ 22,482 Partnership Property management -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Rental Housing Management $ 16,368 $ - Partnership Accounting fees -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- LaMere Associates, Inc. $ 100,094 $ - Insurance coverage -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Dynamic Information Equipment, software, technical support $ 3,871 $ - Services, Inc. and training services -------------------------------------------------------------------------------------------------------------- NON-REVENUE PRODUCING UNITS ------------------------------------------------------------------------------------------------------------ Name of occupant Connection with project ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------ Willfred Chatterton Assistant Supervisor ------------------------------------------------------------------------------------------------------------ DECLARATION OF OWNERSHIP - UNAUDITED ---------------------------------------------------------------------------------------------------------------- Type of partner Name of partner Capital Ownership contributed percentage ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- General Partner Cooperative Associates Limited $ 413,562 1% Partnership ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Special Limited Partner SLP, Inc. $ 0 0% ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Limited Partner Boston Financial Qualified $ 5,615,234 $ 99% Housing Partnership ----------------------------------------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1997, and have issued our report thereon dated January 21, 1998. We have also audited Circle Terrace Associates Limited Partnership's compliance with specific requirements applicable to major HUD-assisted and CDA programs and have issued our report thereon dated January 21, 1998. We conducted our audits in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General and the Maryland Department of Housing and Community Development, Community Development Administration Audit Guide dated October 1997. Those standards and the two guides require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether Circle Terrace Associates Limited Partnership complied with laws and regulations, noncompliance with which would be material to major HUD-assisted and CDA programs. The management of the partnership is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that HUD-assisted and CDA programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in internal control, errors, fraud or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design of controls may deteriorate. In planning and performing our audits of the partnership for the year ended December 31, 1997, we obtained an understanding of the design of the relevant controls and determined whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinions on the partnership's financial statements and on its compliance with specific requirements applicable to major HUD-assisted and CDA programs and to report on internal control in accordance with the provisions of the Guide and not to provide an opinion on internal control. We performed tests of controls, as required by the Guide, to evaluate the effectiveness of the design and operation of controls that we considered relevant to preventing or detecting material noncompliance with specific requirements that are applicable to the partnership's HUD-assisted and CDA programs. Our procedures were less in scope than would be necessary to render an opinion on internal control. Accordingly, we do not express such an opinion. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the financial statements or that noncompliance with laws and regulations that would be material to a HUD-assisted or CDA program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving internal control and its operation that we consider to be material weaknesses as defined above. This report is intended for the information of the audit committee, management, the Department of Housing and Urban Development and the Maryland Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /S/Reznick Fedder & Silverman Bethesda, Maryland January 21, 1998 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND CDA PROGRAMS To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1997, and have issued our report thereon dated January 21, 1998. We have also audited Circle Terrace Associates Limited Partnership's compliance with specific program requirements governing federal financial reports; mortgage status; replacement reserve; residual receipts; security deposits; cash receipts and disbursements; distributions to owners; tenant application, eligibility, and recertification; and management functions that are applicable to its major HUD-assisted and CDA programs for the year ended December 31, 1997. The management of Circle Terrace Associates Limited Partnership is responsible for compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit of compliance with specific program requirements in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General and the Maryland Department of Housing and Community Development, Community Development Administration Audit Guide dated October 1997. Those standards and the two guides require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about Circle Terrace Associates Limited Partnership's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. The results of our audit procedures disclosed immaterial instances of noncompliance with the requirements referred to above, which are described in the accompanying Schedule of Findings and Questioned Costs. We considered these instances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. In our opinion, Circle Terrace Associates Limited Partnership complied, in all material respects, with the specific program requirements that are applicable to its major HUD-assisted and CDA programs for the year ended December 31, 1997. This report is intended for the information of the audit committee, management, the Department of Housing and Urban Development and the Maryland Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /S/Reznick Fedder & Silverman Bethesda, Maryland January 21, 1998 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1997, and have issued our report thereon dated January 21, 1998. We have also audited Circle Terrace Associates Limited Partnership's compliance with specific requirements applicable to major HUD-assisted and CDA programs and have issued our report thereon dated January 21, 1998. We have applied procedures to test Circle Terrace Associates Limited Partnership's compliance with the Fair Housing and Non-Discrimination requirements applicable to its HUD-assisted and CDA programs for the year ended December 31, 1997. Our procedures were limited to the applicable procedures described in the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on Circle Terrace Associates Limited Partnership's compliance with the Fair Housing and Non-Discrimination requirements. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under the Guide. This report is intended for the information of the audit committee, management, the Department of Housing and Urban Development and the Maryland Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /S/Reznick Fedder & Silverman Bethesda, Maryland January 21, 1998 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1997, and have issued our report thereon dated January 21, 1998. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to Circle Terrace Associates Limited Partnership is the responsibility of Circle Terrace Associates Limited Partnership's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of Circle Terrace Associates Limited Partnership's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards. However, the results of our tests disclosed certain immaterial instances of noncompliance that are described in the accompanying Schedule of Findings and Questioned Costs. This report is intended for the information of the audit committee, management, the Department of Housing and Urban Development and the Maryland Community Development Administration. However, this report is a matter of public record and its distribution is not limited. /S/Reznick Fedder & Silverman Bethesda, Maryland January 21, 1998 SCHEDULE OF FINDINGS AND QUESTIONED COSTS December 31, 1997 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 Finding In performing our lease tests on the tenant files, we noted the following findings: 1) One lease did not have the manager's signature. 2) One recertification did not have the manager's signature. Recommendation Management should strengthen procedures to ensure that all forms are signed by the appropriate individuals. CLIENT NAME Circle Terrace Apartments CLOSING DATE December 31, 1997 ANNUAL AUDIT QUESTIONNAIRE CDA PROJECTS Answers to these questions should be based upon a review of procedures and/or an actual test of transactions. "NO" answers are indicative of an adverse condition which must be described in the audit report unless the mortgagor has written permission from DHCD to deviate from the regular mortgage requirements. - -------------------------------------------------------------------------------------------------------------------- Examination Item Yes, No or N/A Working (Not Applicable) Paper Reference - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 1. Mortgage Status - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Are payments on all mortgages current? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 1 Yes AA-2 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 2 Yes AA-3 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 3 Yes AA-3 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 4 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 5 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Has the mortgagor complied with the terms and conditions of the Yes AA Regulatory Agreement and/or workout arrangements? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 2. Books and Records - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Are a complete set of books and records maintained in a Yes CF satisfactory manner? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Does the mortgagor make frequent postings (at least monthly) to the Yes CF ledger accounts? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 3. Cash Activities - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Are the cash receipts deposited in the name of the project in a Yes CF bank whose deposits are federally-insured? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Are security deposits kept separate and apart from all other funds Yes A-9 of the project in an insured institution? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- c. Does the mortgagor keep sufficient funds in the security deposit Yes DD-1 account to equal or exceed the aggregate of all outstanding obligations to the depositors? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- d. Does the owner or his/her management agent have a fidelity bond in Yes CF an amount at least equal to potential collections for two months plus the full security deposit liability which provides coverage for all employees handling assets of the project? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- e. Did cash disbursements exclude payments for items listed below: - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 1) Legal expenses incurred in the sale of partnership interest? Yes CF - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 2) The fee for the preparation of a partner's, shareholder's or Yes CF individual's federal, state or local income tax returns? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 3) Advice to an owner on tax consequences of foreclosure? Yes CF - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 4) Reimbursement to the owners or affiliates while the mortgage N/A is in default, or under workout arrangements for prior advances, capital expenditures and/or project acquisition costs? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 5) Letter of credit fees? N/A - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- f. Were distributions made to, or on behalf of, the owners limited to Yes A-1 those authorized by the Regulatory Agreement or the distributions in accordance with prior written approval of CDA while the project was in a "surplus cash" position? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- NOTE - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 1) Distribution to nonprofit mortgagor entities or principals may N/A not be permitted by the Regulatory Agreement. - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 2) The use of rental proceeds to pay for costs included in the N/A mortgagor's costs certification are unauthorized distributions of project income. - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- g. Was surplus cash available for payment on cash flow debt for the Regulatory Agreement and Note? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- h. Were residual receipts deposited with the mortgagee within 90 days N/A after the close of the mortgagor's annual accounting period? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- i. Were excess rental collections in Section 236 projects remitted to Yes CF HUD each month? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- j. Does the mortgagor have a formal collection policy? Yes CF - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- k. Is the collection policy enforced? Yes CF - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- l. Do tenant accounts receivable consist exclusively of amounts due Yes B-1 from other than employees? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- m. Have "write-offs" of tenants' accounts been less than 1% of the Yes B-1 gross rent? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- n. Are accounts receivable other than tenants' receivables composed Yes B-2 exclusively of amounts due from unrelated persons or firms? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- o. Were there indications that payments for services, supplies or Yes CF materials were not in excess of amounts normally paid for such services? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- p. If applicable, were utility allowance payments to residents paid on N/A a monthly basis? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 4. Management Compensation - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Was compensation to the management agent limited to the amounts Yes 25 prescribed in the management agreement or amendments thereto? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 5. Rents and Occupancy - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Is the gross potential income from apartments equal to or less than Yes 10 that approved by DHCD? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. In subsidized projects, are dwelling unit contract rental rates and Yes CF Fair Market rental rates in Section 236 projects the same as those approved by DHCD? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 6. DHCD/HUD Subsidy Payments (Section 8/RAP Projects Only) - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Were the amounts requested from DHCD/HUD adequately supported by Yes B-2 the accounting records? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Were subsidy payments received recorded in the proper accounts? Yes B-2 - --------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT CIRCLE TERRACE ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO.: 052-44056-LDP CDA PROJECT NO.: 28.04.0010 DECEMBER 31, 1998 TABLE OF CONTENTS - CONTINUED Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 PAGE MORTGAGOR'S CERTIFICATION 5 MANAGEMENT AGENT'S CERTIFICATION 6 INDEPENDENT AUDITORS' REPORT 7 FINANCIAL STATEMENTS BALANCE SHEET 9 STATEMENT OF OPERATIONS 11 STATEMENT OF PARTNERS' EQUITY (DEFICIT) 14 STATEMENT OF CASH FLOWS 15 NOTES TO FINANCIAL STATEMENTS 17 SUPPLEMENTAL INFORMATION ACCOUNTS AND NOTES RECEIVABLE 28 DELINQUENT TENANT ACCOUNTS RECEIVABLE 28 CONTRIBUTIONS RECEIVABLE 28 MORTGAGE ESCROW DEPOSITS 29 RESERVE FOR REPLACEMENTS 29 RESIDUAL RECEIPTS RESERVE 29 ACCOUNTS PAYABLE 30 ACCRUED EXPENSES 30 LETTERS OF CREDIT 30 LOANS AND NOTES PAYABLE 31 MORTGAGES PAYABLE 31 MORTGAGES PAYABLE FROM SURPLUS CASH 31 UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS 31 IDENTITY OF INTEREST COMPANIES AND ACTIVITIES 32 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS 33 CHANGES IN FIXED ASSET ACCOUNTS 34 DETAIL OF ACCOUNTS - STATEMENT OF OPERATIONS 35 OTHER INFORMATION 37 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL 38 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND DHCD-ASSISTED PROGRAMS 40 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION 42 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS 43 ANNUAL AUDIT QUESTIONNAIRE 44 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 December 31, 1998 MORTGAGOR'S CERTIFICATION I hereby certify that I have examined the accompanying financial statements and supplemental data of Circle Terrace Associates Limited Partnership and, to the best of my knowledge and belief, the same is complete and accurate. GENERAL PARTNER /s/Peter Siegel 3/30/99 --------------------------------------- Peter Siegel, Vice President Date Landex of Maryland, Inc. for Cooperative Associates Limited Partnership as General Partner of Circle Terrace Limited Partnership Partnership Employer Identification Number: 05-0461953 Telephone Number: (703) 516-6690 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 December 31, 1998 MANAGEMENT AGENT'S CERTIFICATION I hereby certify that I have examined the accompanying financial statements and supplemental data of Circle Terrace Associates Limited Partnership and, to the best of my knowledge and belief, the same is complete and accurate. MANAGING AGENT Rental Housing Management Partnership --------------------------------------- Eric Richelson Date David Staley Managing Agent Employer Property Manager Identification Number: 13-3580730 INDEPENDENT AUDITORS' REPORT To the Partners Circle Terrace Associates Limited Partnership We have audited the accompanying balance sheet of Circle Terrace Associates Limited Partnership as of December 31, 1998, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Circle Terrace Associates Limited Partnership as of December 31, 1998, and the results of its operations, the changes in partners' equity (deficit) and cash flows for the year then ended, in conformity with generally accepted accounting principles. The Housing Assistance Payment contracts covering all 303 units expired on November 30, 1998 and November 30, 1997. It is uncertain whether HUD will renew these contracts under terms that are consistent with the successful operations of the project (see note G). Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 28 through 37 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards and the "Consolidated Audit Guide for Audits of HUD Programs," we have also issued reports dated January 20, 1999 on our consideration of Circle Terrace Associates Limited Partnership's internal control and on its compliance with specific requirements applicable to major HUD and DHCD-assisted programs, fair housing and non-discrimination, and laws and regulations applicable to the financial statements. /s/Reznick Fedder & Silverman Bethesda, Maryland Federal Employer January 20, 1999 Identification Number: 52-1088612 Audit Principal: Lester Kanis Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 BALANCE SHEET DECEMBER 31, 1998 ASSETS CURRENT ASSETS 1120 Cash - Operstions $ 232,306 1125 Cash - Entity 80,337 1130 Tenant accounts receivable 15,651 1135 Accounts receivable - HUD 160,117 1140 Accounts and notes receivable - operations 9,477 1145 Accounts and notes receivable - entity 860 1200 Miscellaneous prepaid expenses 78,039 ------------------- Total current assets 576,787 DEPOSITS HELD IN TRUST - FUNDED 1191 Tenant deposits 42,824 RESTRICITAD DEPOSITS AND FUNDED RESERVES 1310 Escrow deposits 75,274 1320 Reserve for replacements 586,618 1330 Other reserves 233,968 895,860 RENTAL PROPERTY 1410 Land 1,104,269 1420 Buildings 15,271,257 1440 Building and equipment - portable 31,654 1460 Furnishings 8,378 1480 motor vehicles 18,340 1490 Miscellaneous fixed assets 86,167 ------ 16,520,065 1495 Less accumulated depreciation 3,501,702 --------- 13,018,363 OTHERASSETS 1520 Intangible assets, net of accumulated amortization of $99,195 207,725 ------- 14,741,559 ========== Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 December 31, 1998 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) CURRENT LIABILITIES 2110 Accounts payable 77,228 2121 Accrued payroll taxes payable 178 2123 Accrued management fee payable 22,482 2131 Accrued interest payable - first mortgage 2,393 2132 Accrued interest payable - second mortgage 22,275 2134 Accrued interest payable - other loans/notes 7,603 2160 Notes payable, current maturities 6,257 2170 Mortgage payable - first mortgage, current maturities 99,190 2172 Mortgage payable - second mortgage, current maturities 152,678 2174 Other loans/noted payable, current maturities 46,346 2190 Miscellaneous current liabilities 21,144 2210 Prepaid revenue 2,791 Total Current Liabilities 460,565 DEPOSITS LIABILITY 2191 Tenant deposits held in trust(contra) 39,580 LONG TERM LIABILITIES 2133 Accrued interest payable - other loans/notes(surplus cash) 103,030 2310 Notes payable, net of current maturities 5,648 2311 Notes payable - surplus cash 550,000 2320 Mortgage payable - first mortgage, net of current maturities 3,404,737 2322 Mortgage payable - second mortgage, net of current maturities 3,188,620 2324 Other loans/notes payable, net of current maturities 1,981,365 9,233,400 CONTINGENCY - 3130 PARTNERS' EQUITY (DEFICIT) 5,008,014 --------- $ 14,741,559 ========== See notes to the Financial Statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 Statement of Operations December 31, 1998 RENTAL REVENUE 5120 Rent revenue - gross potential $ 335,564 5121 Tenant assistance payments 1,958,686 --------- Total rental revenue $2,294,250 VACANCIES 5220 Apartments (13,871) 5250 Rental concessions (2,830) ------- Total vacancies (16,701) Net rental revenue 2,277,549 FINANCIAL REVENUE 5410 Financial revenue - project operations 8,469 5440 Revenue from investment - replacement reserve 15,228 ------ Total financial revenue 23,697 OTHER REVENUE 5910 Laundry and vending 12,848 5920 Tenant charges 5,917 5990 Miscellaneous revenue 1,575 ----- Total other revenue 20,340 ------ Total revenue 2,321,586 ========= Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 December 31, 1998 ADMINISTRATIVE EXPENSES 6210 Advertising and marketing 3,199 6250 Other renting expenses 1,749 6310 Office salaries 136,160 6311Office expenses 49,522 6320 Management fee 130,164 6331 Administrative rent free unit 5,661 6340 Legal expense - project 15,346 6350 Auditing expense 9,600 6351 Bookkeeping fees/accounting service 16,368 6370 Bad debts 10,697 6390 Miscellaneous administrative expenses 43,940 ------ Total administrative expenses 422,406 UTILITIES EXPENSE 6450 Electricity 28,145 6451 Water 25,465 6452 Gas 87,218 Total utility expense 140,828 OPERATING AND MAINTENANCE EXPENSES 6510 Payroll 142,202 6515 Supplies 35,595 6520 Contracts 88,217 6525 Garbage and trash removal 32,202 6530 Security payroll/contract 139,709 6546 Heating/cooling repairs and maintenance 13,319 6548 Snow removal 571 6570 Vehicle and maintenance equipment operation and repairs26,639 6590 Miscellaneous operating and maintenance expenses 70,148 ------ Total operating and maintenance expenses 548,602 TAXES AND INSURANCE 6710 Real estate taxes 126,078 6711 payroll taxes 26,199 6720 Property and liability insurance 83,542 6723 Heath insurance and other employee benefits 21,323 ------ Total taxes and insurance 257,142 FINANCIAL EXPENSES 6820 Interest on mortgage payable 395,638 6830 Interest on notes payable - long-term 1,317 6850 Mortgage insurance premium/service charge 43,848 ------ Total financial expenses 440,803 DEPRECIATION AND AMORTIZATION 6600 Depreciation expense 571,976 6610 Amortization expense 14,004 ------ Total depreciation and amortization 585,980 CORPORATE OR MORTGAGOR ENTITY REVENUE AND EXPENSES 7140 Interest income (12,945) 7141 Interest on notes payable 22,000 7190 Other (revenue)/expenses 870 --- Total corporate or mortgagor entity revenue and expenses 9,925 ----- Total expenses 2,405,686 --------- Net income (loss) (84,100) ========= See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 Statement of Partner's Equity/Deficit Year ended December 31, 1998 General partners Limited partners Total Partners' equity (deficit), December 31, 1997 $217,228 $4,874,886 $5,092,114 Net income (loss) (841) (83,259) (84,100) ----- ------- -------- Partners' equity (deficit), December 31, 1998 $ 216,387 $ 4,791,627 $ 5,008,014 --------- ----------- ----------- See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 Statement of Cash Flows Year ended December 31, 1998 Cash flows from operating activities Rental receipts $ 2,277,573 Interest receipts 23,697 Other operating receipts 10,003 Administrative expenses paid (129,954) Management fees paid (130,164) Utilities paid (140,167) Salaries and wages paid (418,071) Operating and maintenance paid (222,341) Real estate taxes paid (216,629) Property insurance paid (74,523) Net tenant security deposits received (paid) 3,150 Other operating expenses paid (27,240) Interest paid on mortgages (397,965) Interest paid on notes (1,482) Mortgage insurance premium paid (43,261) Entity expenses received (paid) Interest income 12,945 Professional fees (870) Interest expense (22,000) -------- Net cash provided by (used in) operating activities 502,701 Cash flows from investing activities Net withdrawals from mortgage escrows 33,718 Net deposits to reserve for replacements (99,768) Net deposits to other reserves (109,975) Net purchases of fixed assets (121,929) --------- Net cash provided by (used in) investing activities (297,954) Cash flow from financing activities Mortgage principal payments (284,552) --------- Net cash provided by (used in) financing activities (284,552) --------- NET INCREASE (DECREASE) IN CASH (79,805) Cash, beginning 392,447 ------- Cash, end $ 312,642 --------------- See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 Statement of Cash Flows (continued) Year ended December 31, 1998 Reconciliation of net income (loss) to net Cash provided by (used in) operating activities Net income (loss) $ (84,100) ------------- Adjustments to reconcile net income (loss) to net Cash provided by (used in) operating activities Depreciation 571,976 Amortization 14,004 Changes in asset and liability accounts (Increase) decrease in assets Tenant account receivable 3,929 Miscellaneous prepaid expenses 10,195 Tenant security deposits funded (1,990) Increase (decrease) in liabilities Accounts payable 65,069 Accrued liabilities (81,146) Accrued interest payable (2,492) Tenant security deposits held in trust 5,140 Prepaid revenue 2,116 ----- Total adjustments 586,801 Net cash provided by (used in) operating activities $ 502,701 --------- See notes to financial statements Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 Notes to Financial Statements December 31, 1998 NOTE A - ORGANIZATION Circle Terrace Associates Limited Partnership was organized under the laws of the State of Maryland on March 28, 1990, for the purpose of acquiring and operating a rental housing project under Section 236 of the National Housing Act. The project consists of 303 units located in Lansdowne, Maryland, and is currently operating under the name of Circle Terrace Apartments. Cash distributions are limited by agreements between the partnership and the United States Department of Housing and Urban Development (HUD) to an annual amount of $30,340 per year to the extent of surplus cash as defined by HUD. Undistributed amounts are cumulative and may be distributed in subsequent years if future operations provide surplus cash in excess of current requirements. Each building of the project has qualified and been allocated low-income housing credits pursuant to Internal Revenue Code Section 42 ("Section 42") which regulates the use of the project as to occupant eligibility and unit gross rent, among other requirements. Each building of the project must meet the provisions of these regulations during each of 15 consecutive years in order to remain qualified to receive the credits. In addition, Circle Terrace Associates Limited Partnership has executed an Extended Low-income Housing Agreement/Land Deed Restriction/Extended Use Commitment which requires the utilization of the project pursuant to Section 42 for a minimum of 30 years, even after the disposition of the project by the partnership. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Rental Property Rental property is recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight-line method over a 27.5-year life. Personal property is recorded at cost and is depreciated over its estimated service life of five to seven years using accelerated methods. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statement of operations. Intangible Assets and Amortization Mortgage costs are amortized over the term of the respective loan using the effective interest method. Provision for Doubtful Accounts The partnership considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations upon such determination. Income Taxes No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the partners individually. Rental Income Rental income is recognized as rentals become due. Rental payments received in advance are deferred until earned. All leases between the partnership and tenants of the property are operating leases. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) SFAS No. 121 The partnership has implemented Statement of Financial Accounting Standards No. 121 - Accounting for the Impairment of Long-Lives Assets which requires the partnership under certain circumstances to receive long-lived assets to determine if the carrying value exceeds the fair value. If the carrying value exceeds the fair value then recorded amounts of the assets will be reduced to their fair value. NOTE C - MORTGAGES PAYABLE First Mortgage The partnership is obligated under the terms of a mortgage note which is insured by the Federal Housing Administration (FHA) and bears interest at the rate of 7%, less a varying interest subsidy in the current amount of $18,052 per month. Monthly payments of principal and interest in the reduced amount of $10,564 are due through maturity in February 2017. The total interest subsidy of $216,628 is reflected as a reduction of interest expense. Principal and accrued interest due at December 31, 1998 are $3,503,927 and $2,393, respectively. Under agreements with the mortgage lender and FHA, the partnership is required to make monthly escrow deposits for taxes, insurance and replacement of project assets, and is subject to restrictions as to operating policies, rental charges, operating expenditures and distributions to partners. Second Mortgage The partnership is obligated under the terms of a mortgage note in the original amount of $4,000,000, which is insured by the Maryland Housing Fund (MHF) payable to Crestar of Richmond, Virginia, Inc. The note bears interest at the rate of 8%. Monthly payments of principal and interest in the amount of $34,645 are due through maturity in December 2011. Principal and accrued interest due at December 31, 1998 are $3,341,298 and $22,275, respectively. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE C - MORTGAGES PAYABLE (Continued) Third Mortgage The partnership is obligated under the terms of a mortgage note in the original amount of $2,227,330 payable to the Department of Housing and Community Development of the State of Maryland (CDA). The note bears interest at 4.5%. Monthly payments of principal and interest of $11,373 are due through July 1, 2023. Principal and accrued interest due at December 31, 1998 are $2,027,711 and $7,603, respectively. The liability of the partnership under the terms of all of these mortgages is limited to the underlying value of the real estate collateral plus deposits held by the lenders. Aggregate annual maturities of mortgages payable for each of the next five years and thereafter are as follows: - --------------------------------------------- -- ---------------- December 31, 1999 $ 298,214 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2000 318,873 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2001 343,827 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2002 369,264 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2003 396,638 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- Thereafter 7,146,120 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- $ 8,872,936 - --------------------------------------------- -- ---------------- NOTE D - NOTES PAYABLE The partnership is obligated under the terms of an unsecured promissory note payable to Baltimore County, Maryland. Interest accrues at the rate of 4%. Annual interest payments commenced January 1, 1996. Annual payments of principal will be due commencing January 1, 2000 and will extend for 30 years through maturity on December 31, 2030. Payments may be made only to the extent of surplus cash as defined by HUD. Principal and accrued interest due at December 31, 1998 are $550,000 and $103,030, respectively. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE D - NOTES PAYABLE (Continued) The partnership is obligated under the terms of a note payable for the purchase of a truck. The note bears interest at 8.75% and requires monthly payments of principal and interest of $588 through maturity in October 2000. The amount payable at December 31, 1998 is $11,905. Aggregate annual maturities of notes payable for each of the next five years and thereafter are as follows: - --------------------------------------------- -- ---------------- December 31, 1999 $ 6,257 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2000 5,648 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2001 - - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2002 - - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- 2003 - - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- Thereafter 550,000 - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- - --------------------------------------------- -- ---------------- $ 561,905 - --------------------------------------------- -- ---------------- NOTE E - RELATED PARTY TRANSACTIONS Working Capital Advances The general partner is obligated to make working capital advances to the partnership as needed, up to an aggregate of $100,000. Such advances are noninterest bearing and can be repaid out of available net cash flow as defined in the partnership agreement. No such advances were required as of December 31, 1998. In the event cash flow does not provide sufficient funds to pay the investor limited partner its minimum distribution, such amount required will be advanced by the general partner and will be considered a project expense loan to be paid from surplus cash after required distributions as defined in the partnership agreement. Insurance The sole shareholder of an affiliate of the general partner provided debt financing for the capitalization of LaMere Associates, Inc. (LaMere). In connection with such debt financing, the shareholder received 20% of the stock of LaMere. LaMere was paid premiums in connection with the following insurance coverage provided to the partnership: property and liability, fidelity bond and auto. In connection with such insurance coverage, the partnership incurred $83,542 in premiums for the year ended December 31, 1998. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE E - RELATED PARTY TRANSACTIONS (Continued) Shared Project Payroll Costs The site superintendent was shared with another project in the area and payroll costs were allocated based on time spent on each project. Computer Services In accordance with HUD Regulations 4381.5 Rev-2, Paragraph 6.38, the partnership uses the services of a computer consultant company to provide the following services: purchase and install personal computers and the related equipment and software for the project's rental office; provide training and technical support, and consult on software upgrades. Dynamic Information Services, Inc. (DIS), which is owned by a relative of an officer of the management company, is a licensed representative of Project Data Systems, Inc., a nationally known provider of computer system software for the subsidized housing industry. DIS derives 40% of its consulting service revenues from third-party clients not affiliated with the management company. In 1998, the partnership paid DIS $1,710 for technical support and training services based on billable hours. Laundry Lease The partnership has entered into a lease agreement with Moonbeam Equipment and Communications, LLC ("Moonbeam"), an affiliate of the general partner and management agent, which permits Moonbeam to install coin operated laundry equipment for use by the tenants. The partnership retains 55% of the income on the coin operated equipment as reimbursement of utility and janitorial expenses incurred by the partnership to maintain the common area laundry facilities; the balance is remitted to Moonbeam. The lease agreement expires in January 2023 and, among other terms, states that expenses relating to the maintenance and repair of the equipment are the obligation of Moonbeam. Moonbeam earned $9,591 from the proceeds of the laundry room collections during 1998. As of December 31, 1998, Moonbeam owes the partnership $860 for maintenance expenses relating to installed equipment, which was paid subsequent to December 31, 1998. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE G - HOUSING ASSISTANCE PAYMENT (HAP) CONTRACT AGREEMENTS HUD has contracted with the partnership under the United States Housing Act of 1937 to make housing assistance payments to the partnership on behalf of qualified tenants. The terms of the contract covering 142 units expired on November 30, 1998 and the contract covering 161 units expired on November 30, 1997. The contracts do not have renewal options. Under the Multifamily Assisted Housing and Reform and Affordability Act (MAHRAA) of 1997, Congress set forth the legislation for a permanent "mark-to-market" program and provided for permanent authority for the renewal of Section 8 contracts. On September 11, 1998, HUD issued an interim rule to provide clarification of the implementation of the mark-to-market program. Owners with Section 8 contracts expiring after September 30, 1998 are subject to the provisions of MAHRAA. As such, the partnership may choose to either opt out of the Section 8 program, request mortgage restructuring and renewal of the Section 8 contract, or request renewal of the Section 8 contract without mortgage restructuring. Each option contains a specific set of rules and procedures that must be followed in order to comply with the requirements of MAHRAA. As of the date of the report, the partnership has extended both contracts from October 1, 1998 through September 30, 1999. It is uncertain whether HUD will renew these contracts under terms that are consistent with the successful operation of the project. The project is economically dependent upon the rental income received from both of its agreements. If HUD were not to extend either one, the project's operating cash flow would be adversely affected. NOTE H - PARTNERS' CAPITAL CONTRIBUTIONS The partnership has one general partner - Cooperative Associates Limited Partnership and two limited partners - SLP, Inc. (the special limited partner) and Boston Financial Qualified Housing Tax Credits L.P. V, a Limited Partnership (the investor limited partner). The general partner has made capital contributions of $413,562. SLP, Inc. is required to make a capital contribution of $10. The investor limited partner has made capital contributions totaling $5,615,234. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE I - CONTRACT WITH BALTIMORE COUNTY (IN LIEU OF TAXES) The partnership has entered into an agreement with Baltimore County, Maryland, whereby the partnership is to pay the County $162.50 per apartment unit per year (the minimum payment) in lieu of real estate taxes. To the extent there is net cash flow, as defined in the agreement, such amount is to be applied toward additional payments. The minimum payment has been increased 10% annually. The amount incurred during 1998 under the terms of this agreement was $58,329. This amount is included with other city and county real estate taxes in the statement of operations. The County has advised the partnership that $239,359 is due for additional taxes and interest applicable to 1992 through 1995 and has placed a lien on the property. The partnership believes that such payments are not due in accordance with the P.I.L.O.T. agreement. Such amount has not been recorded until this matter is resolved. NOTE J - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS All profits and losses are allocated 1% to the general partner and 99% to the investor limited partner. Cash flow, as defined in the partnership agreement, is to be distributed as follows: 1. 99% to the investor limited partner and 1% to the general partner until the investor limited partner has received distributions, in the aggregate, equal to the cumulative priority distribution. 2. To the repayment of any project expense loans. 3. To the general partner until it has received cumulatively an amount equal to the cumulative amount paid to the investor limited partner as defined above. 4. 50% to the general partner and 50% to the investor limited partner. Gain, if any, from a sale, exchange or other disposition is allocable as follows: 1. To all partners having negative balances in their capital accounts prior to the distribution of any sale or refinancing proceeds, an amount of such gain to increase their negative balance to zero. 2. To each partner until the positive capital account balance is equal to the amount of cash available for distribution as a result of the transaction, as defined in the partnership agreement. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE J - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS (Continued) Loss from a sale is allocable as follows: 1. To the partners in proportion to their positive capital account balances. In the event the loss is less than the sum of the positive capital accounts, the loss is to be allocated such that the resulting capital account balance is as near as possible to the amount of cash to be distributed as a result of the transaction. 2. 1% to the general partner and 99% to the investor limited partner. NOTE K - TAXABLE LOSS A reconciliation of the financial statement net loss to the income tax net loss of the partnership for the year ended December 31, 1998 is as follows: Financial statement net loss $ (84,100) Excess depreciation for income tax purposes (13,329) Prepaid rent 2,791 Income net tax loss $ (94,638) ================== NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 NOTE L - INVESTMENT IN REAL ESTATE A reconciliation of the basis of the investment in real estate for financial reporting purposes to that for income tax purposes as of December 31, 1998 is as follows: Investment in real estate for financial reporting $ 13,018,363 Excess accumulated depreciation for income tax purposes (53,042) Interest expense portion of subsidy capitalized for income tax purposes 177,317 Investment in real estate for income tax purposes $ 13,142,638 ================== NOTE M - CONCENTRATION OF CREDIT RISK The partnership maintains its cash balances and escrow in several banks. The balances are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per bank. As of December 31, 1998, the uninsured portion of the cash balances held at two banks was $285,780. NOTE N - CONTINGENCY The partnership's low-income housing credits are contingent on its ability to maintain compliance with applicable sections of Section 42. Failure to maintain compliance with occupant eligibility and/or unit gross rent, or to correct noncompliance within a specified time period, could result in recapture of previously taken tax credits plus interest. In addition, such potential noncompliance may require an adjustment to the capital contributed by the investor limited partner. Baltimore County has advised the partnership that $239,359 is due for additional taxes and interest applicable to 1992 through 1995 and has placed a lien on the property. The partnership believes that such payments are not due in accordance with the P.I.L.O.T agreement. Such amount has not been recorded until this matter is resolved. NOTE O - YEAR 2000 ISSUE (UNAUDITED) The Managing Agent/General Partner has assessed the partnership's exposure to date sensitive computer software programs that may not be operative subsequent to 1999 and has implemented a requisite course of action to minimize Year 2000 risk and ensure that neither significant costs nor disruption of normal business operations are encountered. However, because there is no guarantee that all systems of outside vendors or other entities affecting the partnership's operation will be Year 2000 compliant, the partnership remains susceptible to consequences of the Year 2000 Issue. SUPPLEMENTAL INFORMATION SUPPORTING DATA REQUIRED BY HUD AND CDA SUPPLEMENTAL INFORMATION SUPPORTING DATA REQUIRED BY HUD AND CDA December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 - 54 - ACCOUNTS AND NOTES RECEIVABLE (OTHER THAN FROM REGULAR TENANTS) --------------------------------------------------------------------------------------------------------------- Name of borrower Original date Terms Original amount Balance due --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- U.S. Department of Housing and Oct. - Nov. 1998 Demand $ 160,117 $ 160,117 Urban Development --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- Travelers Sept. - Oct. 1998 Demand $ 28,312 $ 9,477 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- Moonbeam Dec. 1998 Demand $ 860 $ 860 --------------------------------------------------------------------------------------------------------------- DELINQUENT TENANT ACCOUNTS RECEIVABLE --------------------------------------------------------------------------------------------------------------- Number of Amount tenants past due ---------------------------------- ---------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 30 days 41 $ 6,775 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 31-60 days 9 1,356 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent 61-90 days 13 2,131 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Delinquent over 90 days 19 5,389 ----------------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------- -------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- $ 15,651 ----------------------------------------------------------------------------- -------------------- CONTRIBUTIONS RECEIVABLE --------------------------------------------------------------------------------------------------------------- SLP, Inc. $ 10 ---------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD AND CDA December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 MORTGAGE ESCROW DEPOSITS -------------------------------------------------------------------------- Estimated amount required as of December 31, 1998, for future payment of: --- --- City, state and county taxes (P.I.L.O.T) $ 38,632 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Property insurance 31,136 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Mortgage insurance 8,826 -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- 78,594 -------------------------------------------------------------------------- -------------------------------------------------------------------------- Amount on deposit in deficient of estimated requirements (3,320) -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total confirmed by mortgagee $ 75,274 -------------------------------------------------------------------------- RESERVE FOR REPLACEMENTS In accordance with the provisions of the regulatory agreement, restricted cash is held by Mellon Mortgage Company to be used for replacement of property with the approval of HUD as follows: ---------------------------------------------------------------------- Balance at December 31, 1997 $ 486,850 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Monthly deposits ---------------------------------------------------------------------- ---------------------------------------------------------------------- $7,045 x 12 84,540 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Interest earned 15,228 ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- ---------------------------------------------------------------------- Balance at December 31, 1998, confirmed by mortgagee $ 586,618 ---------------------------------------------------------------------- RESIDUAL RECEIPTS RESERVE NONE ACCOUNTS PAYABLE --------------------------------------------------------------------------- Payable within 30 days $ 77,228 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Payable within 31-60 days - --------------------------------------------------------------------------- --------------------------------------------------------------------------- Payable within 61-90 days - --------------------------------------------------------------------------- --------------------------------------------------------------------------- Payable more than 90 days - --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Balance $ 77,228 --------------------------------------------------------------------------- ACCRUED EXPENSES ---------------------------------------------------------------------------------------------------------------- Description Basis for Owed to Date due Amount accrued accrual ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Payroll taxes 12/98 F.W.I./FICA 1/99 $ 178 Rental Housing Management ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Management fee 12/98 Management Partnership 1/99 $ 22,482 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Interest - first mortgage 12/98 HUD 1/99 $ 2,393 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Interest - second mortgage 12/98 Crestar Bank 1/99 $ 22,275 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Interest - Baltimore County note 12/98 Baltimore County Surplus cash $ 103,030 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Interest - third mortgage 12/98 State of Maryland 1/99 $ 7,603 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Audit fee 12/98 Reznick, Fedder and 2/99 $ 3,536 Silverman ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Water and sewer 12/98 City of Baltimore 2/99 $ 6,392 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Utility reimbursement 12/98 Tenants 1/99 $ 10,821 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Payroll 12/98 Employees 1/99 $ 395 ----------------------------------------------------------------------------------------------------------------
LETTERS OF CREDIT NONE LOANS AND NOTES PAYABLE (OTHER THAN MORTGAGES) --------------------------------------------------------------------------------------------------------------- Creditor Interest Collateral Date incurred Terms Original amount Balance due rate ----------------------------------------------------------------------- ----------------- ----------------- ----------------------------------------------------------------------- ----------------- ----------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- Baltimore 4.0% Unsecured 11/90 40 yrs $ 550,000 $ 550,000 County, Maryland --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- GMAC 8.75% Truck 11/97 3 yrs $ 18,096 $ 11,905 --------------------------------------------------------------------------------------------------------------- MORTGAGES PAYABLE --------------------------------------------------------------------------------------------------------------- Creditor Terms Original amount Balance due ------------------------------------------------------------------------ ------------------ ----------------- ------------------------------------------------------------------------ ------------------ ----------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- HUD $10,564 per month $ 4,034,207 $ 3,503,927 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- ---- --------------------------------------------------------------------------- ---- Crestar of Richmond, Virginia, Inc. $34,645 per month $ 4,000,000 $ 3,341,298 --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------- ---- --------------------------------------------------------------------------- ---- Department of Housing and Community $11,373 per month $ 2,227,330 $ 2,027,711 Development of the State of Maryland ---------------------------------------------------------------------------------------------------------------
MORTGAGES PAYABLE FROM SURPLUS CASH NONE UNAUTHORIZED DISTRIBUTIONS OF PROJECT INCOME TO PARTNERS NONE IDENTITY OF INTEREST COMPANIES AND ACTIVITIES -------------------------------------------------------------------------------------------------------------- Company name Services rendered Amount paid Amount payable -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Rental Housing Management $ 130,164 $ 22,482 Partnership Property management -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Rental Housing Management $ 16,368 $ - Partnership Accounting fees -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- LaMere Associates, Inc. $ 83,542 $ - Insurance coverage -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- Dynamic Information Equipment, software, technical $ 1,710 $ - Services, Inc. support and training services -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- Moonsbeam Equipment and Laundry equipment $ 8,731 $ - Communications, LLC --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION - CONTINUED SUPPORTING DATA REQUIRED BY HUD AND CDA Year ended December 31, 1998 Circle Terrace Associates Limited Partnership HUD Project No.: 052-44056-LDP CDA Project No.: 28.04.0010 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS - ------------------------------------------------------------------------------- Part A - Compute Surplus Cash --------------------- Cash (Accounts 1120, 1170 and 1191 less 2105) $ 275,130 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Tenant subsidy vouchers due for period covered by financial statements 160,117 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Other (describe in detail) - - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Total cash 435,247 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Accrued mortgage interest payable 32,271 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Delinquent mortgage principal payments - - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Delinquent deposits to reserve for replacements - - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Accounts payable (due within 30 days) 77,228 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Loans and notes payable (due within 30 days) - - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Deficient tax, insurance or MIP escrow deposits 3,320 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Accrued expenses (not escrowed) 43,804 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Prepaid revenue (Account 2210) 2,791 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Tenant security deposits liability (Account 2191) 39,580 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Other current obligations (describe in detail) - - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Contracted maintenance $ 208,950 - -------------------------------------------------------- ---- - ------------------------------------------------------------- ---- Required maintenance 61,410 270,360 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Less total current obligations 469,354 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Surplus cash (deficiency) $ (34,107) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------ Part B - Compute Distributions to Owners and Required Deposit to Residual Receipts Surplus cash $ NONE - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Limited dividend projects --------------------- --------------------- Annual distribution earned during fiscal period covered by the 30,340 statements - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Distribution accrued and unpaid as of the end of the prior fiscal period422,419 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Distributions and entity expenses or paid during fiscal period covered (22,000) by the statements - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Amount remaining as distribution earned but unpaid 430,759 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Amount available for distribution during next fiscal period $ - - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Deposit due residual receipts reserve $ NONE - ------------------------------------------------------------------------------- Facsimile form HUD-93486 CHANGES IN FIXED ASSET ACCOUNTS ---------------------------------------------------------------------------------------------------------------- Assets ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Balance 12/31/97 Additions Deductions Balance 12/31/98 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Land $ 1,104,269 $ - $ - $ 1,104,269 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Buildings 15,248,985 22,272 - 15,271,257 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Building equipment - portable 18,164 13,490 - 31,654 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Furnishings 8,378 - - 8,378 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Motor vehicles 18,340 - 18,340 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Miscellaneous fixed assets - 86,167 - 86,167 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- $ 16,398,136 $ 121,929 $ - $ 16,520,065 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- Accumulated depreciation $ 2,929,726 $ 571,976 $ - $ 3,501,702 ---------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------- ------------------------------------ ---- ---- ---- ------------------------------------ ---- ---- ---- Total net book value $ 13,018,363 ------------------------------------ ---- ---- ---------------------
Fixed Asset Detail Additions to Buildings Account -------------------------------------------------------------------- Item and quantity Amount -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Railings $ 5,304 -------------------------------------------------------------------- Lighting fixtures 9,373 -------------------------------------------------------------------- Drains 7,595 -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- $ 22,272 -------------------------------------------------------------------- CHANGES IN FIXED ASSET ACCOUNTS (Continued) Fixed Asset Detail (Continued) Additions to Building Equipment - Portable Account -------------------------------------------------------------------- Item and quantity Amount -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Security camera equipment $ 5,750 -------------------------------------------------------------------- -------------------------------------------------------------------- Computer cabinets 7,740 -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- $ 13,490 -------------------------------------------------------------------- Additions to Miscellaneous Fixed Assets Account -------------------------------------------------------------------- Item and quantity Amount -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- Landscaping shrubs, trees $ 33,944 -------------------------------------------------------------------- -------------------------------------------------------------------- Sidewalk replacement 52,223 -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- $ 86,167 -------------------------------------------------------------------- DETAIL OF ACCOUNTS - STATEMENT OF OPERATIONS MISCELLANEOUS ADMINISTRATIVE EXPENSES (ACCOUNT NO. 6390) ----------------------------------------------------------------------- Payroll preparation $ 1,668 ----------------------------------------------------------------------- ----------------------------------------------------------------------- License and fees 6,516 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Travel 3,129 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Resident services 19,000 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Miscellaneous 13,627 ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- $ 43,940 ----------------------------------------------------------------------- DETAIL OF ACCOUNTS - STATEMENT OF OPERATIONS (Continued) OTHER OPERATING AND MAINTENANCE EXPENSES (ACCOUNT NO. 6590) ----------------------------------------------------------------------- Extraordinary repairs $ 2,566 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Alterations and improvements 29,230 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Appliances 11,035 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Carpeting 26,017 ----------------------------------------------------------------------- ----------------------------------------------------------------------- Additional maintenance 1,300 ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- ----------------------------------------------------------------------- $ 70,148 ----------------------------------------------------------------------- OTHER INFORMATION --------------------------------------------------------------------------- Total mortgage principal payments required during the audit year (12 monthly payments). Applies to all direct loans and HUD-held and fully-insured mortgages. Any HUD-approved second mortgages are included. $284,552 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Total of 12 monthly deposits in the audit year made to the replacement reserve account, as required by the regulatory agreement, even if payments are temporarily suspended or reduced. $84,540 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- ---------------------------------------------------------------------------- Replacement reserve and residual receipts reserve releases which are included as expense items on the statement of operations. $ - --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Project improvement reserve releases under the flexible subsidy program which are included as expense items on the statement of operations. $ - --------------------------------------------------------------------------- --------------------------------------------------------------------------- Mortgage payable note detail (Section 236 only) --------------------------------------------------------------------------- --------------------------------------------------------------------------- Interest reduction payments from subsidy $ 216,628 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Related party transactions detail: --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Entity name Amount paid --------------------------------------------------------------------------- --------------------------------------------------------------------------- ---------------------- ---------------------- LaMere Associates, Inc. $ 83,542 -------------------------------------- ------------------------------------- ---------------------- ---------------------- Dynamic Information Systems, Inc. $ 1,710 -------------------------------------- ------------------------------------- ---------------------- ---------------------- Rental Housing Management Partnership $ 16,368 ------------------------------------- -------------------------------------- ---------------------- ---------------------- Rental Housing Management Partnership $ 130,164 ------------------------------------ -------------------------------------- ---------------------- ---------------------- Moonbeam Equipment and Communications, LLC $ 8,731 --------------------------------- INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 20, 1999. We have also audited Circle Terrace Associates Limited Partnership's compliance with specific requirements applicable to major HUD-assisted and DHCD-assisted programs and have issued our report thereon dated January 20, 1999. We conducted our audits in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General and the Audit Guide issued by the Maryland Department of Housing and Community Development. Those standards and the two guides require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether Circle Terrace Associates Limited Partnership complied with laws and regulations, noncompliance with which would be material to major HUD-assisted and DHCD-assisted programs. The management of the partnership is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that HUD-assisted and DHCD-assisted programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in internal control, errors, fraud or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design of controls may deteriorate. In planning and performing our audits of the partnership for the year ended December 31, 1998, we obtained an understanding of the design of the relevant controls and determined whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinions on the partnership's financial statements and on its compliance with specific requirements applicable to major HUD-assisted and DHCD-assisted programs and to report on internal control in accordance with the provisions of the Guide and not to provide any assurance on internal control. We performed tests of controls, as required by the Guide, to evaluate the effectiveness of the design and operation of controls that we considered relevant to preventing or detecting material noncompliance with specific requirements that are applicable to the partnership's HUD-assisted and DHCD-assisted programs. Our procedures were less in scope than would be necessary to render an opinion on internal control. Accordingly, we do not express such an opinion. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or fraud in amounts that would be material in relation to the financial statements or that noncompliance with laws and regulations that would be material to a HUD-assisted or DHCD-assisted program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving internal control and its operation that we consider to be material weaknesses as defined above. This report is intended solely for the information and use of the audit committee, management, others within the organization, the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development and is not intended to be and should not be used by anyone other than these specified parties. /s/Reznick Fedder & Silverman Bethesda, Maryland January 20, 1999 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD AND DHCD-ASSISTED PROGRAMS To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 20, 1999. We have also audited Circle Terrace Associates Limited Partnership's compliance with specific program requirements governing federal financial reports; mortgage status; replacement reserve; residual receipts; security deposits; cash receipts and disbursements; distributions to owners; tenant application, eligibility, and recertification; and management functions that are applicable to its major HUD-assisted and DHCD-assisted programs for the year ended December 31, 1998. The management of Circle Terrace Associates Limited Partnership is responsible for compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit of compliance with specific program requirements in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General and the Audit Guide issued by the Maryland Department of Housing and Community Development. Those standards and the two guides require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about Circle Terrace Associates Limited Partnership's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, Circle Terrace Associates Limited Partnership complied, in all material respects, with the specific program requirements that are applicable to its major HUD-assisted and DHCD-assisted programs for the year ended December 31, 1998. This report is intended solely for the information and use of the audit committee, management, others within the organization, the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development and is not intended to be and should not be used by anyone other than these specified parties. /s/Reznick Fedder & Silverman Bethesda, Maryland January 20, 1999 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 20, 1999. We have applied procedures to test Circle Terrace Associates Limited Partnership's compliance with the Fair Housing and Non-Discrimination requirements applicable to its HUD-assisted and DHCD-assisted programs for the year ended December 31, 1998. Our procedures were limited to the applicable procedures described in the "Consolidated Audit Guide for Audits of HUD Programs" (the Guide), issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on Circle Terrace Associates Limited Partnership's compliance with the Fair Housing and Non-Discrimination requirements. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under the Guide. This report is intended solely for the information and use of the audit committee, management, others within the organization, the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development and is not intended to be and should not be used by anyone other than these specified parties. /s/Reznick Fedder & Silverman Bethesda, Maryland January 20, 1999 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS APPLICABLE TO THE FINANCIAL STATEMENTS To the Partners Circle Terrace Associates Limited Partnership We have audited the financial statements of Circle Terrace Associates Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 20, 1999. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to Circle Terrace Associates Limited Partnership is the responsibility of Circle Terrace Associates Limited Partnership's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of Circle Terrace Associates Limited Partnership's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards. This report is intended solely for the information and use of the audit committee, management, others within the organization, the Department of Housing and Urban Development and the Maryland Department of Housing and Community Development and is not intended to be and should not be used by anyone other than these specified parties. /s/Reznick Fedder & Silverman Bethesda, Maryland January 20, 1999 CLIENT NAME Circle Terrace Associates Limited Partnership PROJECT NUMBER 28.04.0010 ANNUAL AUDIT QUESTIONNAIRE FISCAL YEAR END December 31, 1998 CDA PROJECTS ------------------------------------------------------- Answers to these questions should be based upon a review of procedures and/or an actual test of transactions. Answers indicative of an adverse condition must be described in the audit report unless the mortgagor has written permission from DHCD to deviate from the requirements of law, regulation, contract or grant. - -------------------------------------------------------------------------------------------------------------------- Examination Status Yes, No or N/A Working (Not Applicable) Paper Reference - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 1. Mortgage Status - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Are payments on all mortgages current? Yes AA-1 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 1 Yes AA-2 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 2 Yes AA-4 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 3 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 4 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Position 5 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Has the mortgagor complied with the terms and conditions of the Yes Regulatory Agreement and/or workout agreements? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 2. Books and Records - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Are a complete set of books and records maintained in a Yes CF satisfactory manner? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Does the mortgagor make frequent postings (at least monthly) to the Yes CF ledger accounts? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 3. Cash Activities - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Are the cash receipts deposited in the name of the project in a Yes A-1 bank whose deposits are federally-insured? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Are security deposits kept separate and apart from all other funds Yes A-10 of the project in an insured institution? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- c. Does the mortgagor keep sufficient funds in the security deposit Yes DD-1 account to equal or exceed the aggregate of all outstanding obligations to the tenants? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- d. Does the owner or his/her management agent have a fidelity bond in Yes CF an amount at least equal to the requirements of the Regulatory Agreement which provides coverage for all employees handling assets of the project? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- e. Did cash disbursements exclude payments for items listed below: - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 1) Legal expenses incurred in the sale of partnership interest? Yes - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 2) The fee for the preparation of a partner's, shareholder's or Yes individual's federal, state or local income tax returns? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 3) Advice to an owner on tax consequences of foreclosure? Yes - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 4) Reimbursement to the owners or affiliates while the mortgage Yes is in default, or under workout arrangements for prior advances, capital expenditures and/or project acquisition costs? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 5) Letter of credit fees? Yes - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- f. Were distributions made to, or on behalf of, the owners limited to those authorized by the Regulatory Agreement or the distributions in accordance with prior written approval of CDA while the project was in a "surplus cash" position? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- NOTE - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 1) Distribution to nonprofit mortgagor entities or principals may not be permitted by the Regulatory Agreement. - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 2) The use of rental proceeds to pay for costs included in the N/A mortgagor's costs certification are unauthorized distributions of project income. - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- g. Was surplus cash available for payment on cash flow debt per the N/A Deed of Trust and Note? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- h. Were residual receipts deposited with the mortgagee within 90 days N/A after the close of the mortgagor's fiscal year? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- i. Were excess rental collections in Section 236 projects remitted to N/A HUD each month? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- j. Does the mortgagor have a formal collection policy? Yes HUD-Q - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- k. Is the collection policy enforced? Yes HUD-Q - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- l. Do tenant accounts receivable consist exclusively of amounts due Yes B-1 from tenants? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- m. Have "write-offs" of tenants' accounts been less than 1% of the Yes 11 gross rents? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- n. Are accounts receivable other than tenants' receivables composed No B-3 exclusively of amounts due from unrelated persons or firms? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- o. Were there indications that payments for services, supplies or Yes materials were consistent with amounts normally paid for such services? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- p. If applicable, were utility allowance payments to residents paid on Yes Lease test a monthly basis? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 4. Management Compensation - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Was compensation to the management agent limited to the amounts Yes 20 prescribed in the management agreement as written or amended? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 5. Rents and Occupancy - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Is the gross potential income from apartments equal to or less than Yes 10 that approved by DHCD? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. In subsidized projects, are dwelling unit contract rental rates and Yes Fair Market rental rates in Section 236 projects the same as those approved by DHCD? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- 6. DHCD/HUD Subsidy Payments (Section 8/RAP Projects Only) - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- a. Were the amounts requested from DHCD/HUD adequately supported by Yes the accounting records? - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- b. Were subsidy payments received recorded in the proper accounts? Yes - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- ---- - --------------------------------------------------------------------------------- ---- 7. Ownership Interest - --------------------------------------------------------------------------------- ---- - --------------------------------------------------------------------------------- ---- - --------------------------------------------------------------------------------- ---- - --------------------------------------------------------------------------------- ---- a. Were any changes of stockholders or investors during the current N/A fiscal year approved by DHCD? (provide a schedule of significant changes) - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------- ---- - --------------------------------------------------------------------------------- ---- b. Were any dividends paid or other distribution made to owners or No stockholders including distribution, purchase or redemption of stock that is not reflected in the equity statement? (provide a schedule of payments or distributions) - --------------------------------------------------------------------------------------------------------------------
STRATHERN PARK DECEMBER 31, 1996 INDEPENDENT AUDITORS' REPORT The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1996 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Nanas, Sterns, Biers, Neinstein and Co. LLP NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP January 14, 1997 STRATHERN PARK BALANCE SHEET DECEMBER 31, 1996
ASSETS Cash (Note 5) $215,615 Receivables 38,582 Reserve for replacements (Note 5) 96,652 Tenant security deposits (Note 5) 122,015 Rental property - at cost (Note 2) Land 5,889,320 Buildings 19,042,548 Equipment and furnishings 944,597 -------------- 25,876,465 Less: accumulated depreciation (4,438,048) -------------- 21,438,417 Other assets Syndication fee (Net of accumulated amortization of $94,252) 624,415 -------------- TOTAL ASSETS $22,535,696 ============== LIABILITIES Accounts payable and accrued expenses $85,799 Security deposits 107,497 Accrued interest payable (Note 2) 3,316,184 Long term debt (Notes 2 and 5) 17,552,451 -------------- TOTAL LIABILITIES 21,061,931 DEFERRED INCOME 20,238 PARTNERS' EQUITY (NOTE 3) 1,453,527 -------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $22,535,696 ==============
See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF PARTNERS' EQUITY YEAR ENDED DECEMBER 31, 1996
Profit Balance Net Distri- Balance and Loss January Loss butions December Percentage 1, 1996 for the year Paid 31, 1996 ------------------------------------------------------------------------ GENERAL PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 1% $(44,808) $(12,443) $(788) $(58,039) CLASS A LIMITED PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 4% (181,046) (49,771) (3,140) (233,957) INVESTOR LIMITED PARTNER Boston Financial Qualified Housing Tax Credits L.P.V., A Massachusetts Limited Partnership 95% 3,002,218 (1,182,070) (74,625) 1,745,523 SPECIAL LIMITED PARTNER S L P 90, Inc. --- --- --- --- --- ------------------------------------------------------------ $2,776,364 $(1,244,284) $(78,553) $1,453,527 ============================================================
See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
INCOME Gross possible rents $1,524,672 (Vacancies) (7,097) Interest 11,370 Miscellaneous 34,321 --------------- TOTAL INCOME $1,563,266 EXPENSES (Note 4) Administrative expense 128,724 Management fees 118,048 Utilities 114,579 Operating and maintenance expense 227,504 Taxes and insurance 167,311 Interest expense - Mortgage note payable 569,657 Interest expense - Notes payable 684,796 Depreciation and amortization 796,931 --------------- 2,807,550 --------------- NET LOSS $(1,244,284) ===============
See accompanying auditors' report. The notes are an integral part of financial statements. STRATHERN PARK STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $(1,244,284) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization $796,931 Increases in - Miscellaneous receivables (4,079) Rent receivable (28,375) Accrued interest payable 684,796 Accounts payable and accrued expenses 4,781 Deferred income 20,238 Decreases in - Tenant security deposits 3,445 Security deposits (5,643) Total Adjustments 1,472,094 ----------------- Net Cash Provided by Operating Activities 227,810 CASH FLOWS FROM INVESTING ACTIVITIES Increase in reserve for replacements (24,336) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage (52,868) Interest payments on notes payable from residual receipts (52,368) Distributions paid (78,553) ------------ Net Cash Used in Financing Activities (183,789) ----------------- Net Increase in Cash and Cash Equivalents 19,685 Cash and cash equivalents at Janaury 1, 1996 195,930 ----------------- Cash and cash equivalents at December 31, 1996 $215,615 ================= SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION: Cash paid during the year for interest $622,453 ============ Cash paid during the year for taxes $800 ============
See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Organization Strathern Park (the partnership) was organized pursuant to a limited partnership agreement dated March 28, 1989 as amended. Effective June 1, 1990, the partnership agreement was amended with the admission of a new limited partner who purchased a 95% limited partnership interest for a total capital contribution of $5,963,067. On January 1, 1994 Lorne Park was merged into Strathern Park. The combined partnerships constructed a 241 unit apartment project (Lorne Park 72 unites, Strathern Park 169 units) located in Sun Valley, California for tenants whose income is very low to moderate. The project is regulated under the terms of certain of its loan agreements. Such agreements contain certain restrictions concerning rental charges, the number of units rented to tenants in the very low, low and moderate income levels and other matters. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies - Method of Accounting - The partnership books are maintained and its financial statements and tax returns are prepared on the accrual basis. Cash Equivalents - For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. Rental Property - The partnership records property, equipment and improvements at the cost of acquisition or construction. The cost of maintenance and repairs is charged to operations as incurred; significant renewals and betterments are capitalized. Depreciation is computed using the straight line method for financial statement purposes and accelerated methods for tax purposes. Estimated useful lives for financial statement purposes are as follows:
Classification Life - --------------- Buildings 27.5 Years Equipment and furnishings 7 Years
Amortization - amortization of syndication costs is computed using the straight line method over a period of 40 years. Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Cont.) Income Taxes - The project receives low-income tax credits provided under Section 42 of the Internal Revenue Code. Also, no provision for income taxes has been included since the income or loss of the partnership as well as the tax credits are required to be reported by the respective partners on their separate income tax returns. Note 2 LONG TERM DEBT
Mortgage note payable, secured by First Deed of Trust, requiring monthly payments of $51,913, including interest at 9.41% per annum, maturing February, 2022. $5,928,171 Note payable secured by Second Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles with interest at 7% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. The note was funded by a Housing Development Grant from the United States Department of Housing and Urban Development. The terms of the Grant agreement impose certain restrictions on the use of the Grant proceeds and operating policies of the partnership. Accrued interest on this note at December 31, 1996 amounted to $1,774,998. 5,179,105 Note payable secured by Third Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles, with interest at 5% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. Accrued interest on this note at December 31, 1996 amounted to $1,556,241. 6,445,175 ----------------- $17,552,451 =================
Note 2 LONG TERM DEBT (Contd.) Maturities of long term debt as of December 31, 1996 for the succeeding five years are as follows:
Years ended December 31, 1997 $59,816 1998 65,779 1999 72,337 2000 77,942 2001 87,318 Thereafter 17,189,259 ----------------- $17,552,451 =================
Note 3 DISTRIBUTION TO PARTNERS Pursuant to the terms of the partnership agreement, as amended, and the loan agreement with the Community Redevelopment Agency of the City of Los Angeles, distributions are payable only from residual receipts, as defined in the agreements. Distributions are apportioned as follows: 1) 40% to the Community Redevelopment Agency of the City of Los Angeles (CRA) 2) The remaining 60% is allocated as follows: a) The Investor Limited Partner (Boston) is to receive any cumulative return ($60,000 annually) in arrears; b) The next $63,158 is distributed 95% to Boston, 4% to the Class A Limited Partner (SAIP II) and 1% to the General Partner (SAIP II); c) Any additional cash is used to repay any partner advances to the partnership; d) The next $63,158 is distributed 5% to Boston, 94% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner); e) Thereafter, cash is distributed 50% to Boston, 49% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner). Note 4 RELATED PARTY TRANSACTIONS There were no direct compensation payments to the partners during the year. However, there were related party transactions which occurred which are set forth below:
(Income) Receivable Expense (Payable) Account for the At December Name Description No. Year 31, 1996 - --------------------------------------------------------------------------------- Thomas Safran and Associates, Inc. Management fee 6320 118,048 (73) ===========================
In addition, the project reimbursed the management company for allocated common costs such as office supplies and health insurance. The aggregate total of such reimbursements was $17,341 for the year. The general partner has a direct ownership interest in the management company listed above. Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and Short Term Investments - The carrying amount approximates fair value because of the short maturity of those investments. Long Term Debt (First Deed of Trust) - The project does not have the right to prepay this debt during the first ten years of the term of this note. Accordingly, the carrying amount approximates its fair value. Long Term Debt (Second & Third Deed of Trust) - The carrying amount approximates fair value because there is no ready market for such debt, repayment/refinancing is severely restricted by the CRA and HUD.
December 31, 1996 ----------------------------------- Carrying Fair Amount Value Cash and Short Term Investments $434,282 $434,282 Long Term Debt (First Deed of Trust) (5,928,171) (5,928,171) Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280)
STRATHERN PARK SCHEDULE I BOSTON FINANCIAL QUALIFIED HOUSING Page 1 of 2 BALANCE SHEET FORMAT DECEMBER 31, 1996
ASSETS CURRENT ASSETS Petty cash 500 Cash in bank 215,115 Rent receivables 35,940 Miscellaneous receivables 2,642 Tenant security deposits 122,015 ---------------- Total Current Assets 376,212 RESERVES AND DEPOSITS Reserve for replacements 96,652 FIXED ASSETS Land 5,889,320 Buildings 19,042,548 Equipment and furnishings 944,597 ---------------- 25,876,465 Less: accumulated depreciation (4,438,048) ---------------- Total Fixed Assets 21,438,417 OTHER ASSETS Syndication fee (Net of accumulated amortization of $94,252) 624,415 ---------------- TOTAL ASSETS 22,535,696 ================
STRATHERN PARK SCHEDULE I BOSTON FINANCIAL QUALIFIED HOUSING Page 2 of 2 BALANCE SHEET FORMAT DECEMBER 31, 1996
LIABILITIES AND PARTNERS' EQUITY CURRENT LIABILITIES Accounts payable 37,750 Accrued interest payable - 1st mortgage 48,049 Tenant security deposit liability 107,497 ---------------- Total Current Liabilities 193,296 MORTGAGE NOTE PAYABLE CURRENT PORTION 1st mortgage note payable current portion 59,816 LONG TERM LIABILITIES Accrued interest payable - notes 2nd mortgage note payable 1,818,646 3rd mortgage note payable 1,497,538 Mortgage notes payable 1st mortgage note payable 5,868,355 2nd mortgage note payable 5,179,105 3rd mortgage note payable 6,445,175 Deferred income 20,238 ---------------- Total Long Term Liabilities 20,829,057 OWNERS' EQUITY Limited partners' equity 1,511,566 General partners' equity (58,039) ---------------- Total Owners' Equity 1,453,527 ---------------- TOTAL LIABILITIES AND PARTNERS' EQUITY 22,535,696 ================
STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 1 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
REVENUE Rent revenue Apartments 1,465,438 Tenant assistance payments 46,529 Furniture and equipment --- Stores and commercial 12,705 Garage and parking spaces --- Flexible subsidy income --- Miscellaneous --- ------------- Total rent revenue 1,524,672 Vacancies Apartments (7,097) Stores and commercial --- Garage and parking spaces --- Miscellaneous --- ------------- Total Vacancies (7,097) --------------- Net Rental Revenue 1,517,575 Financial Revenue Interest Income - operations 2,973 Interest Income - residual receipts --- Interest income - reserve for replacements 3,835 Interest income - miscellaneous 4,562 ------------- Total Financial Revenue 11,370 Other Revenue Laundry and vending 21,534 NSF and late charges 2,848 Damages and cleaning fees 2,168 Forfeited tenant security deposits 2,486 Other revenue 5,285 Non-cash revenue --- ------------- Total Other Revenue 34,321 --------------- NET REVENUE 1,563,266 ===============
STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 2 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
EXPENSES Administrative Expenses Advertising 469 Other renting expense --- Office salaries 6,815 Office supplies 48,699 Management fee 118,048 Manager or superintendent salary 47,125 Manager's rent free unit --- Legal expenses (project) 3,183 Auditing expenses (project) 9,500 Bookkeeping fees/accounting services --- Telephone and answering services 6,159 Bad debts 6,774 Miscellaneous administrative expenses --- ------------- Total Administrative Expenses 246,772 Utilities Expenses Fuel oil/coal --- Electricity 37,754 Water 43,777 Gas 5,686 Sewer 27,362 ------------- Total Utilities Expenses 114,579 Operating & Maintenance Janitor and cleaning payroll --- Janitor and cleaning supplies 8,164 Janitor and cleaning contract --- Exterminating payroll/contract 1,484 Exterminating supplies --- Garbage and trash removal 12,035 Security payroll/contract 4,295
STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 3 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
EXPENSES (Cont.) Operating & Maintenance (Cont.) Grounds payroll --- Grounds supplies 3,481 Grounds contract 27,060 Repairs payroll 59,020 Repairs material 23,635 Repairs contract 73,340 Elevator maintenance/contract --- Heating/cooling repairs and maintenance 403 Swimming pool maintenance/contract --- Snow removal --- Decorating payroll/contract 2,804 Decorating supplies 11,783 Other, gasoline --- Miscellaneous operating and maintenance --- ------------- Total Operating and Maintenance 227,504 Taxes and Insurance Real estate taxes 116,658 Payroll taxes (FICA) 11,306 Miscellaneous taxes, licenses 765 Property and liability insurance 22,635 Fidelity bond insurance 149 Workmen's compensation 5,698 Health insurance and other benefits 10,100 Other insurance --- Miscellaneous taxes and insurance --- ------------- Total Taxes and Insurance 167,311 Interest on Mortgage Notes Interest on 1st mortgage 569,657
STRATHERN PARK SCHEDULE II BOSTON FINANCIAL QUALIFIED HOUSING - Page 4 of 4 STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1996
EXPENSES (Cont.) Other Financial Expenses Amortization 17,967 Interest on notes payable (long term) 684,796 Mortgage insurance premium --- Miscellaneous financial expenses --- Non-cash expense --- ------------- Total Financial Expenses 702,763 --------------- TOTAL EXPENSES BEFORE DEPRECIATION 2,028,586 --------------- PROFIT (LOSS) BEFORE DEPRECIATION (465,320) Depreciation 778,964 --------------- OPERATING PROFIT (LOSS) (1,244,284) Other Expenses Prior Period (Entity) --- --------------- NET PROFIT (LOSS) (1,244,284) =============== 1st mortgage principal payment 52,868 2nd mortgage principal payment --- 3rd mortgage principal payment --- --------------- Total mortgage principal payments 52,868 =============== Actual replacement reserve deposits 75,836 Replacement or painting reserve releases (51,500) Cash subsidies --- Capital improvements not expensed --- Capital contribution or disbursement 78,553
STRATHERN PARK SCHEDULE III COMPUTATION OF RESIDUAL RECEIPTS DECEMBER 31, 1996
Net income (loss) as of December 31, 1996 (1,244,284) ADD: Depreciation 778,964 Amortization 17,967 Community Redevelopment Agency loan interest 322,259 Housing Development Grant loan interest 362,537 Releases from reserve for replacements 51,500 1,533,227 ---------------- ---------------- 288,943 LESS: Principal payments on mortgage (52,868) Deposits to reserve for replacements (75,836) Payments for capital expenditures --- (128,704) ---------------- ---------------- RESIDUAL RECEIPTS, as defined in the partnership agreement 160,239 ================
STRATHERN PARK DECEMBER 31, 1997 Nanas, Stern, Biers, Neinstein & Co. LLP Certified Public Accountants 9454 Wilshire Boulevard Beverly Hills, California 90212-2901 Tel (310) 273-2501 Fax (310) 859-0374 INDEPENDENT AUDITORS' REPORT The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1997 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s?Nanas, Stern, Biers, Neinstein and Co. LLP January 28, 1998 STRATHERN PARK BALANCE SHEET DECEMBER 31, 1997
ASSETS Cash and cash equivalents (Note 5) $ 75,050 Receivables 28,003 Reserve for replacements (Note 5) 138,827 Tenant security deposits (Note 5) 120,342 Rental property - at cost (Note 2) Land $ 5,889,320 Buildings 19,042,548 Equipment and furnishings 949,223 -------------- 25,881,091 Less: accumulated depreciation (5,213,507) 20,667,584 -------------- Other assets Syndication fee (Net of accumulated amortization of $112,219) 606,448 ------------------ TOTAL ASSETS $ 21,636,254 ================== LIABILITIES Accounts payable and accrued expenses $ 72,821 Security deposits 106,609 Accrued interest payable (Note 2) 3,940,215 Long term debt (Notes 2 and 5) 17,482,959 ------------------ TOTAL LIABILITIES 21,602,604 DEFERRED INCOME 20,604 PARTNERS' EQUITY (Note 3) 13,046 ------------------ TOTAL LIABILITIES AND PARTNERS' EQUITY $ 21,636,254 ==================
See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF PARTNERS' EQUITY YEAR ENDED DECEMBER 31, 1997
Profit Balance Net Distri- Balance and Loss January Loss butions December Percentage 1, 1997 for the year Paid 31, 1997 -------------- -------------- -------------- -------------- -------------- GENERAL PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 1% $ (58,039) $ (13,443) $ (702) $ (72,184) CLASS A LIMITED PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 4% (233,957) (53,774) (9,110) (296,841) INVESTOR LIMITED PARTNER Boston Financial Qualified Housing Tax Credits L.P.V., A Massachusetts Limited Partnership 95% 1,745,523 (1,277,121) (86,331) 382,071 SPECIAL LIMITED PARTNER S L P 90, Inc. --- --- --- --- --- -------------- -------------- -------------- -------------- $ 1,453,527 $ (1,344,338) $ (96,143) $ 13,046 ============== ============== ============== ==============
See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997
INCOME Gross potential - rents $ 1,547,419 (Vacancies) (12,686) Interest 13,651 Miscellaneous 41,426 -------------- TOTAL INCOME $ 1,589,810 EXPENSES (Note 4) Administrative expense 143,310 Management fees 123,995 Utilities 134,201 Operating and maintenance expense 321,412 Taxes and insurance 180,032 Interest expense - Mortgage note payable 552,976 Interest expense - Notes payable 684,796 Depreciation and amortization 793,426 -------------- 2,934,148 --------------- NET LOSS $ (1,344,338) ===============
See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1997 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (1,344,338) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization $ 793,426 (Increase)/Decrease in - Receivables 10,579 Tenant security deposits 1,673 (Decrease)/Increase in - Accounts payable and accrued expenses (12,978) Accrued interest payable 624,031 Security deposits (888) Deferred income 366 ------------ Total Adjustments 1,416,209 -------------- Net Cash Provided by Operating Activities 71,871 CASH FLOWS FROM INVESTING ACTIVITIES Deposits to reserve for replacements (82,055) Releases from reserve for replacements 39,880 Purchase of equipment (4,626) ------------ Net Cash Used in Investing Activities (46,801) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage (69,492) Distributions paid (96,143) ------------ Net Cash Used in Financing Activities (165,635) -------------- Net Decrease in Cash and Cash Equivalents (140,565) Cash and cash equivalents at January 1, 1997 215,615 -------------- Cash and cash equivalents at December 31, 1997 $ 75,050 ============== SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION: Cash paid during the year for interest $ 617,557 ============
See accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES Organization - Strathern Park (the partnership) was organized pursuant to a limited partnership agreement dated March 28, 1989 as amended. Effective June 1, 1990, the partnership agreement was amended with the admission of a new limited partner who purchased a 95% limited partnership interest for a total capital contribution of $5,963,067. On January 1, 1994 Lorne Park was merged into Strathern Park. The combined partnerships constructed a 241 unit apartment project (Lorne Park 72 units, Strathern Park 169 units) located in Sun Valley, California for tenants whose income is very low to moderate. The project is regulated under the terms of certain of its loan agreements. Such agreements contain certain restrictions concerning rental charges, the number of units rented to tenants in the very low, low and moderate income levels and other matters. Those restrictions of rent and income shall remain in effect for a minimum of 30 years. Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies - Method of Accounting - The partnership books are maintained and its financial statements and tax returns are prepared on the accrual basis. Cash Equivalents - For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. Rental Property - The partnership records property, equipment and improvements at the cost of acquisition or construction. The cost of maintenance and repairs is charged to operations as incurred; significant renewals and betterments are capitalized. Depreciation is computed using the straight line method for financial statement purposes and accelerated methods for tax purposes. Estimated useful lives for financial statement purposes are as follows: Classification Life --------------------- --------------- Buildings 27.5 Years Equipment and furnishings 5-7 Years Amortization - amortization of syndication costs is computed using the straight line method over a period of 40 years. STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICES (Cont.) Income Taxes - The project receives low-income tax credits provided under Section 42 of the Internal Revenue Code. Also, no provision for income taxes has been included since the income or loss of the partnership as well as the tax credits are required to be reported by the respective partners on their separate income tax returns.
Note 2 LONG TERM DEBT Mortgage note payable, secured by First Deed of Trust, requiring monthly payments of $51,913, including interest at 9.41% per annum, maturing February, 2022. $ 5,858,679 Note payable secured by Second Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles with interest at 7% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. The note was funded by a Housing Development Grant from the United States Department of Housing and Urban Development. The terms of the Grant agreement impose certain restrictions on the use of the Grant proceeds and operating policies of the partnership. Accrued interest on this note at December 31, 1997 amounted to $2,128,864. 5,179,105 Note payable secured by Third Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles, with interest at 5% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. Accrued interest on this note at December 31, 1997 amounted to $1,811,351. 6,445,175 ----------------- $ 17,482,959 =================
STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBR 31, 1997 Note 2 LONG TERM DEBT (Contd.) Maturities of long term debt as of December 31, 1997 for the succeeding five years are as follows: Years ended December 31, 1998 65,779 1999 72,337 2000 77,942 2001 87,318 2002 96,023 Thereafter 17,083,560 --------------- $ 17,482,959 =============== Note 3 DISTRIBUTION TO PARTNERS Pursuant to the terms of the partnership agreement, as amended, and the loan agreement with the Community Redevelopment Agency of the City of Los Angeles, distributions are payable only from residual receipts, as defined in the agreements. Distributions are apportioned as follows: 1) 40% to the Community Redevelopment Agency of the City of Los Angeles (CRA) 2) The remaining 60% is allocated as follows: a) The Investor Limited Partner (Boston) is to receive any cumulative return ($60,000 annually) in arrears; b) The next $63,158 is distributed 95% to Boston, 4% to the Class A Limited Partner (SAIP II) and 1% to the General Partner (SAIP II); c) Any additional cash is used to repay any partner advances to the partnership; d) The next $63,158 is distributed 5% to Boston, 94% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner); e) Thereafter, cash is distributed 50% to Boston, 49% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner). STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 Note 4 RELATED PARTY TRANSACTIONS There were no direct compensation payments to the partners during the year. However, there were related party transactions which occurred which are set forth below:
(Income) Receivable Expense (Payable) Account for the At December Name Description No. Year 31, 1997 ---------------------------------- --------------------- --------------- --------------- ----------------- Thomas Safran and Associates, Inc.(TS&A, Inc.) Management fee 6320 $ 111,491 $ --- =============== =================
In addition, the project reimbursed TS&A, Inc. for allocated common costs such as office supplies, salaries, payroll taxes, and insurance. The aggregate total of such reimbursements was $92,671 for the year. The general partner has a direct ownership interest in the management company listed above. Thomas Safran & Associates, Inc. (TS&A, Inc.) has subcontracted certain accounting and supervisory functions to Insignia Residential Group of California, Inc. (IRG) for a period of two years commencing August 1, 1997. TS&A, Inc. will continue to be the managing agent and IRG will report to them on a monthly basis. The agreement among TS&A, Inc., IRG and the Project provides a portion of the approved management fees to be paid to IRG for their services. Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and Short Term Investments - The carrying amount approximates fair value because of the short maturity of those investments. Long Term Debt (First Deed of Trust) - The project does not have the right to prepay this debt during the first ten years of the term of this note. Accordingly, the carrying amount approximates its fair value. Long Term Debt (Second & Third Deed of Trust) - The carrying amount approximates fair value because there is no ready market for such debt, repayment/refinancing is severely restricted by the CRA and HUD.
December 31, 1997 ---------------------------------- Carrying Fair Amount Value Cash and Short Term Investments $ 334,219 $ 334,219 Long Term Debt (First Deed of Trust) (5,858,679) (5,858,679) Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280)
STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1997 SCHEDULE I Page 1 of 2 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1997
ASSETS CURRENT ASSETS 1110 Petty cash $ 500 1120 Cash in bank 74,550 1130 Rent receivables 25,655 1140 Miscellaneous receivables 2,348 1191 Tenant security deposits 120,342 -------------- Total Current Assets $ 223,395 RESERVES AND DEPOSITS 1320 Reserve for replacements 138,827 FIXED ASSETS 1410 Land 5,889,320 1420 Buildings 19,042,548 1450 Equipment and furnishings 949,223 -------------- 25,881,091 4100 Less: accumulated depreciation (5,213,507) -------------- Total Fixed Assets 20,667,584 OTHER ASSETS 1820 Syndication fee (Net of accumulated amortization of $112,219) 606,448 --------------- TOTAL ASSETS $ 21,636,254 ===============
SCHEDULE I Page 2 of 2 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING BALANCE SHEET FORMAT DECEMBER 31, 1997 LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES 2110 Accounts payable $ 25,256 Accrued interest payable - 1st mortgage 47,565 2191 Tenant security deposit liability 106,609 -------------- Total Current Liabilities $ 179,430 MORTGAGE NOTE PAYABLE CURRENT PORTION 1st mortgage note payable current portion 65,779 LONG TERM LIABILITIES Accrued interest payable - notes 2nd mortgage note payable 2,128,864 3rd mortgage note payable 1,811,351 Mortgage notes payable 2321 1st mortgage note payable 5,792,900 2322 2nd mortgage note payable 5,179,105 2323 3rd mortgage note payable 6,445,175 2210 Deferred income 20,604 -------------- Total Long Term Liabilities 21,377,999 PARTNERS' EQUITY 3130 Limited partners' equity 85,230 3131 General partners' equity (72,184) -------------- Total Owners' Equity 13,046 --------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 21,636,254 ===============
SCHEDULE II Page 1 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997
REVENUE Rent revenue 5120 Apartments $ 1,482,095 5121 Tenant assistance payments 52,472 5130 Furniture and equipment --- 5140 Stores and commercial 12,852 5170 Garage and parking spaces --- 5180 Flexible subsidy income --- 5190 Miscellaneous --- -------------- Total rent revenue $ 1,547,419 Vacancies 5220 Apartments (12,686) 5240 Stores and commercial --- 5270 Garage and parking spaces --- 5290 Miscellaneous --- -------------- Total Vacancies (12,686) -------------- Net Rental Revenue 1,534,733 Financial Revenue 5410 Interest Income - operations 3,254 5430 Interest Income - residual receipts --- 5440 Interest income - reserve for replacements 4,692 5490 Interest income - miscellaneous 5,705 -------------- Total Financial Revenue 13,651 Other Revenue 5910 Laundry and vending 26,400 5920 NSF and late charges 6,725 5930 Damages and cleaning fees 2,782 5940 Forfeited tenant security deposits 2,129 5990 Other revenue 3,390 5991 Non-cash revenue --- -------------- Total Other Revenue 41,426 -------------- NET REVENUE $ 1,589,810 ==============
SCHEDULE II Page 2 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997
EXPENSES Administrative Expenses 6210 Advertising $ 1,482 6250 Other renting expense --- 6310 Office salaries 15,299 6311 Office supplies 46,028 6320 Management fee 123,995 6330 Manager or superintendent salary 44,382 6331 Manager's rent free unit --- 6340 Legal expenses (project) 2,581 6350 Auditing expenses (project) 9,500 6351 Bookkeeping fees/accounting services --- 6360 Telephone and answering services 10,282 6370 Bad debts 13,756 6390 Miscellaneous administrative expenses --- -------------- Total Administrative Expenses $ 267,305 Utilities Expenses 6420 Fuel oil/coal --- 6450 Electricity 38,537 6451 Water 56,476 6452 Gas 7,061 6453 Sewer 32,127 -------------- Total Utilities Expenses 134,201 Operating & Maintenance 6510 Janitor and cleaning payroll --- 6515 Janitor and cleaning supplies 5,449 6517 Janitor and cleaning contract --- 6519 Exterminating payroll/contract 1,527 6520 Exterminating supplies --- 6525 Garbage and trash removal 13,379 6530 Security payroll/contract 18,611 SCHEDULE II Page 3 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 EXPENSES (Cont.) Operating & Maintenance (Cont.) 6535 Grounds payroll $ --- 6536 Grounds supplies 10,648 6537 Grounds contract 27,910 6540 Repairs payroll 71,622 6541 Repairs material 40,743 6542 Repairs contract 81,225 6545 Elevator maintenance/contract --- 6546 Heating/cooling repairs and maintenance 2,518 6547 Swimming pool maintenance/contract --- 6548 Snow removal --- 6560 Decorating payroll/contract 27,775 6561 Decorating supplies 20,005 6570 Other, gasoline --- 6590 Miscellaneous operating and maintenance --- -------------- Total Operating and Maintenance $ 321,412 Taxes and Insurance 6710 Real estate taxes 124,522 6711 Payroll taxes (FICA) 13,155 6719 Miscellaneous taxes, licenses --- 6720 Property and liability insurance 21,402 6721 Fidelity bond insurance --- 6722 Workmen's compensation 8,563 6723 Health insurance and other benefits 8,281 6729 Other insurance --- 6790 Miscellaneous taxes and insurance --- -------------- Total Taxes and Insurance 175,923 Interest on Mortgage Notes 6821 Interest on 1st mortgage 552,976 SCHEDULE II Page 4 of 4 STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 EXPENSES (Cont.) Other Financial Expenses 6690 Amortization $ 17,967 6830 Interest on notes payable (long term) 684,796 6850 Mortgage insurance premium --- 6890 Miscellaneous financial expenses 4,109 6895 Non-cash expense --- -------------- Total Financial Expenses $ 706,872 -------------- TOTAL EXPENSES BEFORE DEPRECIATION 2,158,689 -------------- PROFIT (LOSS) BEFORE DEPRECIATION (568,879) 6600 Depreciation 775,459 -------------- OPERATING PROFIT (LOSS) (1,344,338) Other Expenses Prior Period (Entity) --- -------------- NET PROFIT (LOSS) $ (1,344,338) ============== 1st mortgage principal payment $ 69,492 2nd mortgage principal payment --- 3rd mortgage principal payment --- -------------- Total mortgage principal payments $ 69,492 ============== Actual replacement reserve deposits $ 82,055 Replacement or painting reserve releases $ (39,880) Cash subsidies --- Capital improvements not expensed --- Capital contribution or disbursement $ 96,143
SCHEDULE III STRATHERN PARK COMPUTATION OF RESIDUAL RECEIPTS DECEMBER 31, 1997
Net income (loss) as of December 31, 1997 $ (1,344,338) ADD: Depreciation $ 775,459 Amortization 17,967 Community Redevelopment Agency loan interest 322,259 Housing Development Grant loan interest 362,537 Approved releases from reserve for replacements 38,067 Releases from reserve for replacements 39,880 1,556,169 -------------- --------------- 211,831 LESS: Principal payments on mortgage (69,492) Deposits to reserve for replacements (82,055) Payments for capital expenditures (4,626) (156,173) -------------- --------------- RESIDUAL RECEIPTS, as defined in the partnership agreement at December 31, 1997 $ 55,658 ===============
STRATHERN PARK DECEMBER 31, 1998 INDEPENDENT AUDITORS' REPORT The Partners Strathern Park Los Angeles, California We have audited the accompanying balance sheet of Strathern Park (a California limited partnership), as of December 31, 1998 and the related statements of operations, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Strathern Park as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information on Schedules I, II and III is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP NANAS, STERN, BIERS, NEINSTEIN AND CO. LLP February 3, 1999 STRATHERN PARK BALANCE SHEET DECEMBER 31, 1998
ASSETS Cash and cash equivalents (Note 5) $ 89,129 Receivables 24,068 Reserve for replacements (Note 5) 187,249 Tenant security deposits (Note 5) 113,365 Rental property - at cost (Note 2) Land $ 5,889,320 Buildings 19,042,548 Equipment and furnishings 949,223 ------------------- 25,881,091 Less: accumulated depreciation (5,972,453) 19,908,638 ------------------- Other assets Syndication fee (Net of accumulated amortization of $130,186) 588,481 ------------------- TOTAL ASSETS $ 20,910,930 =================== Accounts payable and accrued expenses $ 66,386 Tenant security deposits 112,707 Accrued interest payable (Note 2) 4,609,113 Long term debt (Notes 2 and 5) 17,428,457 ------------------- TOTAL LIABILITIES 22,216,663 15,419 (1,321,152) ------------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 20,910,930 =================== See Accompanying auditors' report. The notes are an integral part of these financial statements.
STRATHERN PARK STATEMENT OF PARTNERS' EQUITY YEAR ENDED DECEMBER 31, 1998 Profit Balance Net Distri- Balance and Loss January Loss butions December Percentage 1, 1998 for the year Paid 31, 1998 -------------- -------------- -------------- -------------- -------------- GENERAL PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 1% $ (72,184) $ (13,008) $ (334) $ (85,526) CLASS A LIMITED PARTNER Safran Associates Investment Partnership II, A California Limited Partnership 4% (296,841) (52,032) (1,336) (350,209) INVESTOR LIMITED PARTNER Boston Financial Qualified Housing Tax Credits L.P.V., A Massachusetts Limited Partnership 95% 382,071 (1,235,763) (31,725) (885,417) SPECIAL LIMITED PARTNER S L P 90, Inc. --- --- --- --- --- -------------- -------------- -------------- -------------- $ 13,046 $ (1,300,803) $ (33,395) $ (1,321,152) ============== ============== ============== ==============
See Accompanying auditors' report. The notes are an integral part of these financial statements. STRATHERN PARK STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998 INCOME Gross potential - rents $ 1,574,908 (Vacancies) (28,013) Interest 8,845 Miscellaneous 45,666 -------------- TOTAL INCOME $ 1,601,406 EXPENSES (Note 4) Administrative expense 187,108 Management fees 124,605 Utilities 154,049 Operating and maintenance expense 223,717 Taxes and insurance 183,784 Interest expense - Mortgage note payable 567,918 Interest expense - Notes payable 684,115 Depreciation and amortization 776,913 -------------- TOTAL EXPENSES 2,902,209 -------------- NET LOSS $ (1,300,803) ==============
See Accompanying auditors' report. The notes are an integral part of these financial statements.
STRATHERN PARK STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1998 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ (1,300,803) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization $ 776,913 (Increase)/Decrease in - Receivables 3,935 Tenant security deposits 6,977 (Decrease)/Increase in - Accounts payable and accrued expenses (6,435) Accrued interest payable 668,898 Security deposits 6,098 Deferred income (5,185) ---------------- Total Adjustments 1,451,201 ---------------- Net Cash Provided by Operating Activities 150,398 CASH FLOWS FROM INVESTING ACTIVITIES Deposits to reserve for replacements (86,489) Releases from reserve for replacements 38,067 ---------------- Net Cash Used in Investing Activities (48,422) CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on mortgage (54,502) Distributions paid (33,395) ---------------- Net Cash Used in Financing Activities (87,897) ---------------- Net Increase in Cash and Cash Equivalents 14,079 Cash and cash equivalents at January 1, 1998 75,050 ---------------- Cash and cash equivalents at December 31, 1998 $ 89,129 ================ SUPPLEMENTAL DISCLOSURE OF CASH FROM INFORMATION: Cash paid during the year for interest $ 590,181 ================ See Accompanying auditors' report. The notes are an integral part of these financial statements.
STRATHERN PARK NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - Strathern Park (the partnership) was organized pursuant to a limited partnership agreement dated March 28, 1989 as amended. Effective June 1, 1990, the partnership agreement was amended with the admission of a new limited partner who purchased a 95% limited partnership interest for a total capital contribution of $5,963,067. On January 1, 1994 Lorne Park was merged into Strathern Park. The combined partnerships constructed a 241 unit apartment project (Lorne Park 72 units, Strathern Park 169 units) located in Sun Valley, California for tenants whose income is very low to moderate. The project is regulated under the terms of certain of its loan agreements. Such agreements contain certain restrictions concerning rental charges, the number of units rented to tenants in the very low, low and moderate income levels and other matters. Those restrictions of rent and income shall remain in effect for a minimum of 30 years. Use of Estimates in the Preparation of Financial Statements - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies - Method of Accounting - The partnership books are maintained and its financial statements and tax returns are prepared on the accrual basis. Cash Equivalents - For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. Rental Property - The partnership records property, equipment and improvements at the cost of acquisition or construction. The cost of maintenance and repairs is charged to operations as incurred; significant renewals and betterments are capitalized. Depreciation is computed using the straight line method for financial statement purposes and accelerated methods for tax purposes. Estimated useful lives for financial statement purposes are as follows: Classification Life --------------------- --------------- Buildings 27.5 Years Equipment and furnishings 5-7 Years Amortization - amortization of syndication costs is computed using the straight line method over a period of 10 years. Strathern Park Notes to Financial Statements December 31, 1998 Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.) Income Taxes - The project receives low-income tax credits provided under Section 42 of the Internal Revenue Code. Also, no provision for income taxes has been included since the income or loss of the partnership as well as the tax credits are required to be reported by the respective partners on their separate income tax returns. Note 2 LONG TERM DEBT Mortgage note payable, secured by First Deed of Trust, requiring monthly payments of $51,913, including interest at 9.41% per annum, maturing
February, 2022. $ 5,804,177 Note payable secured by Second Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles with interest at 7% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. The note was funded by a Housing Development Grant from the United States Department of Housing and Urban Development. The terms of the Grant agreement impose certain restrictions on the use of the Grant proceeds and operating policies of the partnership. Accrued interest on this note at December 31, 1998 amounted to $2,456,728. 5,179,105 Note payable secured by Third Deed of Trust, payable to the Community Redevelopment Agency of the City of Los Angeles, with interest at 5% per annum. Interest accrues from the date of issuance of the first certificate of occupancy which is December 26, 1991. Unpaid principal together with all accrued and unpaid interest are due and payable in full upon the maturity of the primary permanent loan, but not later than 40 years from date of issuance. Principal and interest payments may be made in annual installments from the residual receipts of the project, as the term residual receipts is defined in the loan agreement. Accrued interest on this note at December 31, 1998 amounted to $2,152,385. 6,445,175 --------------- $ 17,428,457 ===============
Strathern Park Notes to Financial Statements December 31, 1998 Note 2 LONG TERM DEBT (Cont.) Maturities of long term debt as of December 31, 1998 for the succeeding five years are as follows: Years ended December 31, 1999 72,337 2000 77,942 2001 87,318 2002 96,023 2003 105,596 Thereafter 16,989,241 --------------- $ 17,428,457 =============== Note 3 DISTRIBUTION TO PARTNERS Pursuant to the terms of the partnership agreement, as amended, and the loan agreement with the Community Redevelopment Agency of the City of Los Angeles, distributions are payable only from residual receipts, as defined in the agreements. Distributions are apportioned as follows: 1) 40% to the Community Redevelopment Agency of the City of Los Angeles(CRA) 2) The remaining 60% is allocated as follows: a) The Investor Limited Partner (Boston) is to receive any cumulative return ($60,000 annually) in arrears; b) The next $63,158 is distributed 95% to Boston, 4% to the Class A Limited Partner (SAIP II) and 1% to the General Partner (SAIP II); c) Any additional cash is used to repay any partner advances to the partnership; d) The next $63,158 is distributed 5% to Boston, 94% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner); e) Thereafter, cash is distributed 50% to Boston, 49% to SAIP II (Limited Partner) and 1% to SAIP II (General Partner). Strathern Park Notes to Financial Statements December 31, 1998 Note 4 RELATED PARTY TRANSACTIONS There were no direct compensation payments to the partners during the year. However, there were related party transactions which occurred which are set forth below:
(Income) Receivable Expense (Payable) Account for the At December Name Description No. Year 31, 1998 --------------------------------- -------------------- --------------- --------------- --------------- Thomas Safran and Associates, Inc.(TS&A) Management fee 6320 $ 95,685 $ (1,648) Apartment Investment and Managemet Company (AIMCO)/Insignia Residential Group, Inc. (IRG) Management fee 6320 28,920 --- --------------- --------------- $ 124,605 $ (1,648) =============== ===============
The general partner has a direct ownership interest in TS&A listed above. Thomas Safran & Associates, Inc. (TS&A) has subcontracted certain accounting and supervisory functions to Insignia Residential Group (IRG) for a period of two years commencing August 1, 1997. On October 1, 1998, IRG merged with Apartment Investment and Management Company (AIMCO) which took over IRG's management function. TS&A will continue to be the managing agent and AIMCO will report to them on a monthly basis. The agreement among TS&A, AIMCO and the Project provides a portion of the approved management fees to be paid to AIMCO for their services. Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and Short Term Investments - The carrying amount approximates fair value because of the short maturity of those investments. Long Term Debt (First Deed of Trust) - The project does not have the right to prepay this debt during the first ten years of the term of this note. Accordingly, the carrying amount approximates its fair value. Long Term Debt (Second & Third Deed of Trust) - The carrying amount approximates fair value because there is no ready market for such debt, repayment/refinancing is severely restricted by the CRA and HUD. Strathern Park Notes to Financial Statements December 31, 1998 Note 5 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont.)
December 31, 1998 ----------------------------------- Carrying Fair Amount Value Cash and Short Term Investments $ 389,743 $ 389,743 Long Term Debt (First Deed of Trust) (5,804,177) (5,804,177) Long Term Debt (Second & Third Deed of Trust) (11,624,280) (11,624,280)
Note 6 YEAR 2000 ISSUE The General Partner has assessed the Partnership's exposure to date sensitive computer software programs that may not be operative subsequent to 1999 and has implemented a requisite course of action to minimize Year 2000 risk and ensure that neither significant costs nor disruption of normal business operations are encountered. However, because there is no guarantee that all systems of outside vendors or other entities affecting the partnership's operations will be 2000 compliant, the Partnership remains susceptible to consequences of the Year 2000 issue.
- ---------------------------------------------------------------------------------------------------------------------------- STRATHERN PARK - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- BOSTON FINANCIAL QUALIFIED HOUSING - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET FORMAT - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1998 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- ASSETS - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- CURRENT ASSETS - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1110 Petty cash $ 800 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1120 Cash in bank 88,329 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1130 Tenant accounts receivable 23,200 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1140 Other accounts receivable 868 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1191 Tenant security deposits 113,365 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Total Current Assets $ 226,562 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- RESERVES AND DEPOSITS - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1320 Reserve for replacements 187,249 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- FIXED ASSETS - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1410 Land 5,889,320 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1420 Buildings 19,042,548 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1450 Furniture 949,223 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 25,881,091 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 4100 Less: accumulated depreciation (5,972,453) - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Total Fixed Assets 19,908,638 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1820 Syndication fee (Net of accumulated amortization - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- of $130,186) 588,481 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 20,910,930 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------
See Accompanying auditors' report.
- ---------------------------------------------------------------------------------------------------------------------------- STRATHERN PARK - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- BOSTON FINANCIAL QUALIFIED HOUSING - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET FORMAT - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1998 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND PARTNERS' EQUITY - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 2110 Accounts payable $ 19,354 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1st mortgage accrued interest payable 47,032 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 2191 Tenant security deposits 112,707 $ 179,093 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- MORTGAGE NOTE PAYABLE CURRENT PORTION - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 1st mortgage note payable current portion 72,337 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 251,430 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- LONG TERM LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Accrued interest payable - notes - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 2nd mortgage note payable 2,456,728 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 3rd mortgage note payable 2,152,385 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Mortgage notes payable - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 2321 1st mortgage note payable 5,731,840 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 2322 2nd mortgage note payable 5,179,105 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 2323 3rd mortgage note payable 6,445,175 17,356,120 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- OTHER LONG TERM LIABILITIES - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 2210 Deferred income 15,419 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Total Long Term Liabilities 21,980,652 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 3130 Limited partners' equity (1,235,626) - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- 3131 General partners' equity (85,526) - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Total Partners' Equity (1,321,152) - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 20,910,930 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------
See Accompanying auditors' report. STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
REVENUE Rent revenue 5120 Apartments $ 1,500,682 5121 Tenant assistance payments 61,056 5130 Furniture and equipment - 5140 Stores and commercial 13,170 5170 Garage and parking - 5180 Flexible subsidy income - 5190 Miscellaneous - ---------------- Total rent revenue $ 1,574,908 Vacancies 5220 Apartments (28,013) 5240 Stores and commercial - 5270 Garage and parking - 5290 Miscellaneous - ---------------- Total Vacancies (28,013) ---------------- Net Rental Revenue 1,546,895 Financial Revenue 5410 Interest Income - operations 2,589 5430 Interest Income - residual receipts - 5440 Interest income - replacement reserve 4,403 5490 Interest income - miscellaneous 1,853 ---------------- Total Financial Revenue 8,845 Other Revenue 5910 Laundry and vending 31,897 5920 NSF and late charges 7,667 5930 Damages and cleaning fees 3,522 5940 Forfeited tenant security deposit 406 5990 Other revenue 2,174 5991 Non-cash revenue - ---------------- Total Other Revenue 45,666 ---------------- NET REVENUE $ 1,601,406 ================
See Accompanying auditors' report. STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
EXPENSES Administrative Expenses 6210 Advertising $ 4,739 6250 Other renting expense 6,368 6310 Office salaries 20,650 6311 Office supplies 47,953 6320 Management fee 124,605 6330 Manager or superintendent salary 55,737 6331 Manager's rent free unit - 6340 Legal expenses (project) 9,498 6350 Auditing expenses (project) 9,500 6351 Bookkeeping fees/accounting services - 6360 Telephone and answering service 11,496 6370 Bad debts 21,167 6390 Miscellaneous administrative expenses - ---------------- Total Administrative Expenses $ 311,713 Utilities Expenses 6420 Fuel oil/coal - 6450 Electricity 44,769 6451 Water 69,736 6452 Gas 7,411 6453 Sewer 32,133 ---------------- Total Utilities Expenses 154,049 Operating & Maintenance 6510 Janitor and cleaning payroll - 6515 Janitor and cleaning supplies 7,998 6517 Janitor and cleaning contract - 6519 Exterminating payroll/contract 1,106 6520 Exterminating supplies - 6525 Garbage and trash removal 16,500 6530 Security payroll/contract 19,673
See Accompanying auditors' report. STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
EXPENSES (Cont.) Operating & Maintenance (Cont.) 6535 Grounds payroll $ - 6536 Grounds supplies 5,015 6537 Grounds contract 30,839 6540 Repairs payroll 66,955 6541 Repairs material 23,209 6542 Repairs contract 23,117 6545 Elevator maintenance/contract - 6546 Heating/cooling repairs and maintenance 3,321 6547 Swimming pool maintenance/contract - 6548 Snow removal - 6560 Decorating payroll/contract 18,677 6561 Decorating supplies 7,307 6570 Other, gasoline - 6590 Miscellaneous operating and maintenance - ---------------- Total Operating and Maintenance $ 223,717 Taxes and Insurance 6710 Real estate taxes 122,658 6711 Payroll taxes (FICA) 11,399 6719 Miscellaneous taxes, licenses 3,872 6720 Property and liability insurance 27,431 6721 Fidelity bond insurance - 6722 Workmen's compensation 5,686 6723 Health insurance and other benefits 12,238 6729 Other insurance - 6790 Miscellaneous taxes and insurance - ---------------- Total Taxes and Insurance 183,284 Interest on Mortgage Notes 6821 Interest on 1st mortgage 567,918
See Accompanying auditors' report. STRATHERN PARK BOSTON FINANCIAL QUALIFIED HOUSING - STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
EXPENSES (Cont.) Other Financial Expenses 6690 Amortization $ 17,967 6830 Interest on notes payable (long term) 684,115 6850 Mortgage insurance premium - 6890 Miscellaneous financial expenses 500 6895 Non-cash expense - ---------------- Total Financial Expenses $ 702,582 --------------- TOTAL EXPENSES BEFORE DEPRECIATION 2,143,263 --------------- PROFIT (LOSS) BEFORE DEPRECIATION (541,857) 6600 Depreciation 758,946 --------------- OPERATING PROFIT (LOSS) (1,300,803) Other Expenses Prior Period (Entity) --- --------------- NET PROFIT (LOSS) $ (1,300,803) =============== 1st mortgage principal payment $ 54,502 2nd mortgage principal payment --- 3rd mortgage principal payment --- --------------- Total mortgage principal payments $ 54,502 =============== Actual replacement reserve deposits $ 86,489 Replacement or painting reserve releases $ (38,067) Cash subsidies --- Capital improvements not expensed --- Capital contribution or disbursement $ 33,395 See Accompanying auditors' report.
STRATHERN PARK COMPUTATION OF RESIDUAL RECEIPTS DECEMBER 31, 1998
Net income (loss) as of December 31, 1998 $ (1,300,803) ADD: Depreciation $ 758,946 Amortization 17,967 Community Redevelopment Agency loan interest 322,258 Housing Development Grant loan interest 361,857 Approved releases from reserve for replacements --- Releases from reserve for replacements 38,067 1,499,095 -------------- --------------- 198,292 LESS: Principal payments on mortgage (54,502) Deposits to reserve for replacements (86,489) Payments for capital expenditures --- (140,991) -------------- --------------- RESIDUAL RECEIPTS, as defined in the partnership agreement at December 31, 1998 $ 57,301 ===============
See Accompanying auditors' report. EX-27 2 QH5 FINANCIAL DATA SCHEDULE FOR FY 99
5 12-MOS MAR-31-1999 MAR-31-1999 450,450 2,666,281 000 000 000 000 000 000 25,653,434 000 000 000 000 000 24,401,673 25,653,434 000 400,484 000 000 788,343 000 73,899 000 000 000 000 000 000 (3,383,033) (48.59) 000 Included in Total assets is Accounts receivable from affiliates of $173,739, Tenant security deposit escrow of $3,758, Investments in Local Limited Partnerships of $21,538,791, Rental property of $778,843, Replacement reserve escrow of $7,425, Other assets of $32,658 and Prepaid assets of $1,489. Included in Total liabilities and equity is Deferred revenue of $146,818, Accounts payable to affiliates of $143,443, Accounts payable and accrued expenses of $133,838, Mortgage note payable of $706,873, Tenant security deposits payable of $3,803 and minority interest in Local Limited Partnership of $116,986. Total revenue includes Investment of $159,094, Rental of $117,971 and Other revenue of $123,419. Included in Other expenses are General and administrative of $453,057, Asset management fees of $243,169, Rental operations of $73,899, Depreciation of $27,043 and Amortization of $24,813. Net Loss includes Minority interest in losses of Local Limited Partnership of $(17) and Equity in losses of Local Limited Partnerships of $(2,944,720).
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