10KSB 1 tcp4q01.txt TAX CREDIT FUND PLUS 4Q 2001 June 29 , 2001 Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549 Boston Financial Tax Credit Fund Plus, A Limited Partnership Annual Report on Form 10-KSB for the Year Ended March 31, 2001 File Number 0-22104 Dear Sir/Madam: Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of 1934, filed herewith is one copy of subject report. Very truly yours, /s/Stephen Guilmette Stephen Guilmette Assistant Controller TCP10K-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2001 ------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-22104 Boston Financial Tax Credit Fund Plus, A Limited Partnership ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-3105699 -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 Arch Street, Boston, Massachusetts 02110-1106 (Address of principal executive offices) (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: CLASS A AND CLASS B 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-KSB or any amendment to this Form 10-KSB. [ X ] State the aggregate sales price of partnership units held by nonaffiliates of the registrant. $37,933,000 as of March 31, 2001 -------------------------------- DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-KSB 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-KSB into Which the Document Documents incorporated by reference is Incorporated ----------------------------------- ----------------------- Post-effective amendment No. 5 to the Form S-11 Registration Statement, File # 33-38408 Part I, Item 1 Post-effective amendment No. 6 to the Form S-11 Registration Statement File # 33-38408 Part III, Item 11 Acquisition Reports Part I, Item 1 Prospectus - Sections Entitled: "Investment Objectives and Policies - Principal Investment Objectives" Part I, Item 1 "Investment Risks" Part I, Item 1 "Estimated Use of Proceeds" Part III, Item 12 "Management Compensation and Fees" Part III, Item 12 "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions" Part III, Item 12 BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED MARCH 31, 2001 TABLE OF CONTENTS Page No. PART I Item 1 Business K-3 Item 2 Properties K-5 Item 3 Legal Proceedings K-13 Item 4 Submission of Matters to a Vote of Security Holders K-13 PART II Item 5 Market for the Registrant's Units and Related Security Holder Matters K-13 Item 6 Management's Discussion and Analysis of Financial Condition and Results of Operations K-14 Item 7 Financial Statements and Supplementary Data K-17 Item 8 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-17 PART III Item 9 Directors and Executive Officers of the Registrant K-17 Item 10 Management Remuneration K-18 Item 11 Security Ownership of Certain Beneficial Owners and Management K-18 Item 12 Certain Relationships and Related Transactions K-18 Item 13 Exhibits and Reports on Form 8-K K-20 SIGNATURES K-21 ---------- PART I Item 1. Business Boston Financial Tax Credit Fund Plus, A Limited Partnership (the "Fund") is a Massachusetts limited partnership formed on December 10, 1990 under the laws of the Commonwealth of Massachusetts. The Fund's partnership agreement ("Partnership Agreement") authorized the sale of up to 100,000 Class A and Class B units of Limited Partnership Interest ("Class A Units" and "Class B Units"; Class A Units and Class B Units are collectively called "Units") at $1,000 per Unit, adjusted for certain discounts. The Fund raised $37,932,300 ("Gross Proceeds"), net of discounts of $700, through the sale of 34,643 Class A Units and 3,290 Class B 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 January 11, 1993. The Fund is engaged solely in the business of real estate investment. Accordingly, a presentation of information about industry segments is not applicable and would not be material to an understanding of the Fund's business taken as a whole. The Fund has invested as a limited partner in twenty-five 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 low-income housing tax credits ("Tax Credits") added to the Internal Revenue Code (the "Code") by the Tax Reform Act of 1986. The Fund also invested in, for the benefit of the Class B Limited Partners, United States Treasury obligations from which the interest coupons have been stripped or in such coupons themselves (collectively "Treasury STRIPS"). The Fund used approximately 28% of the Class B Limited Partners' capital contributions to purchase Treasury STRIPS with maturities of 13 to 18 years, with a total redemption amount equal to the Class B Limited Partners' capital contributions. The investment objectives of the Fund include the following: (i) to provide investors with annual tax credits which they may use to reduce their federal income taxes; (ii) to provide limited cash distributions from the operations of apartment complexes; (iii) to preserve and protect the Fund's capital with the possibility of realizing a profit through the sale or refinancing of apartment complexes; and (iv) to provide payments to Class B Limited Partners from Treasury STRIPS. There cannot be any assurance that the Fund will attain any or all of these investment objectives. A more detailed discussion of these investments objectives, along with the risk in achieving them, is contained in the sections of the Prospectus entitled "Investment Objectives and Policies - Principal Investment Objectives" and "Investment Risks", which are herein incorporated by this reference. Table A on the following page lists the Properties originally acquired by the Local Limited Partnerships in which the Fund has invested. Item 6 of this Report contains other significant information with respect to such Local Limited Partnerships. The terms of the acquisition of each Local Limited Partnership interest have been described in six supplements to the Prospectus and five Form 8-K filings which were collected in Post-effective Amendment No. 5 to the Registration Statement (collectively, the "Acquisition Reports"); such descriptions are incorporated herein by this reference. TABLE A SELECTED LOCAL LIMITED PARTNERSHIP DATA (Unaudited) Properties owned by Date Interest Local Limited Partnerships Location Acquired Leatherwood (formerly Village Oaks)(1) Yoakum, TX 12/23/91 Tamaric(1) Cedar Park, TX 12/23/91 Northwest(1) Georgetown, TX 12/23/91 Pilot House Newport News, VA 02/25/92 Jardines de Juncos Juncos, PR 04/14/92 Livingston Arms* Poughkeepsie, NY 05/01/92 Broadway Tower Revere, MA 06/02/92 45th & Vincennes Chicago, IL 06/26/92 Phoenix Housing * Moorhead, MN 07/06/92 Cottages of Aspen Oakdale, MN 07/02/92 Long Creek Court Kittrell, NC 07/01/92 Atkins Glen Stoneville, NC 07/01/92 Tree Trail Gainesville, FL 10/30/92 Meadow Wood Smyrna, TN 10/30/92 Primrose Grand Forks, ND 12/09/92 Sycamore Sioux Falls, ND 12/17/92 Preston Place Winchester, VA 12/21/92 Kings Grant Court Statesville, NC 12/23/92 Chestnut Plains Winston-Salem, NC 12/24/92 Bancroft Court Toledo, OH 12/31/92 Capitol Park(1) Oklahoma City, OK 02/10/93 Hudson Square Baton Rouge, LA 03/08/93 Walker Woods II Dover, DE 06/11/93 Vista Villa Saginaw County, MI 08/04/93 Metropolitan* Chicago, IL 08/19/93 Carolina Woods II Greensboro, NC 10/11/93 Linden Square Genesee County, MI 10/29/93 New Garden Place* Gilmer, NC 06/24/94 Findley Place * Minneapolis, MN 07/15/94 * The Fund's interest in profits and losses of each Local Limited Partnership arising from normal operations is 99%, except for an 82%, 0.2%, 98.75% and 97.9% interest in Livingston Arms, Phoenix Housing, Metropolitan and New Garden Place. Profits and losses arising from sale or refinancing transactions will be allocated in accordance with the respective Local Limited Partnership Agreements. (1) The Fund no longer has an interest in this Local Limited Partnership. As previously reported, due to construction and other problems at Villas de Montellano in Morovis, Puerto Rico, the Managing General Partner abandoned its interest in this Local Limited Partnership to the Local General Partner. Also, as previously reported, the Managing General Partner elected to exercise its rights under the Repurchase Agreement and requested from the Local General Partner and the Guarantor the repayment of the capital contributions advanced by the Fund and of certain expenses associated with this investment. However, the Local General Partner and the Guarantor filed for bankruptcy in May and August 1994, respectively, and it is unlikely that they will meet all of their obligations under the Repurchase Agreement. The Fund has engaged counsel to vigorously pursue the Fund's claim in the Bankruptcy Court. The Fund wrote off this investment in Fiscal 1996. Although the Fund's investments in Local Limited Partnerships are not subject to seasonal fluctuations, the Fund's equity in losses of Local Limited Partnerships, to the extent it reflects the operations of individual Properties, may vary from quarter to quarter based upon changes in occupancy and operating expenses as a result of seasonal factors. Each Local Limited Partnership has as its general partners ("Local General Partners") one or more individuals or entities not affiliated with the Fund or its General Partners. In accordance with the partnership agreements under which such entities are organized ("Local Limited Partnership Agreements"), the Fund depends on the Local General Partners for the management of each Local Limited Partnership. As of March 31, 2001, 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) Tree Trail Apartments, A Limited Partnership and Meadow Wood Townhomes, A Limited Partnership, representing 14.12%, have Flournoy Development Company and John Flournoy as Local General Partners; (ii) Long Creek Court Limited Partnership, Atkins Glen Limited Partnership, Kings Grant Court Limited Partnership and Chestnut Plains Limited Partnership, representing 5.03%, have Gordon Blackwell and MBG Investment Inc. as Local General Partners; (iii) Phoenix Housing, L.P., Dakota Square Manor Limited Partnership and Duluth Limited Partnership II, representing 6.64%, have MetroPlains Acquisition Corporation as Local General Partners; and (iv) Pilot House Associates L.P., and Preston Place Associates, L.P., representing 17.74%, have Castle Development Corporation as Local General Partner. The Local General Partners of the remaining Local Limited Partnerships are identified in the Acquisition Reports, which are herein incorporated by reference. The Properties owned by Local Limited Partnerships in which the Fund 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 Fund will depend on many outside factors, most of which are beyond the control of the Fund and which cannot be predicted at this time. Such factors include general economic and real estate market conditions, both on a national basis and in those areas where the Properties are located, the availability and cost of borrowed funds, real estate tax rates, operating expenses, energy costs and government regulations. In addition, other risks inherent in real estate investment may influence the ultimate success of the Fund, including: (i) possible reduction in rental income due to an inability to maintain high occupancy levels or adequate rental levels; (ii) possible adverse changes in general economic conditions and adverse local conditions, such as competitive overbuilding, a decrease in employment or adverse changes in real estate laws, including building codes; and (iii) 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 suppresses 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 Fund is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission for rent increases. In addition, any Tax Credits allocated to investors with respect to a Property are subject to recapture to the extent that the Property or any portion thereof ceases to qualify for the Tax Credits. Other future changes in federal and state income tax laws affecting real estate ownership or limited partnerships could have a material and adverse affect on the business of the Fund. The Fund is managed by Arch Street VIII, Inc., the Managing General Partner of the Fund. The other General Partner of the Fund is Arch Street VI Limited Partnership. The Fund, which does not have any employees, reimburses Lend Lease Real Estate Investments, Inc. ("Lend Lease"), an affiliate of the General Partners, for certain expenses and overhead costs. A complete discussion of the management of the Fund is set forth in Item 9 of this Report. Item 2. Properties The Fund owns limited partnership interests in twenty-five Local Limited Partnerships, which own and operate Properties, some of which benefit from some form of federal, state or local assistance programs and all of which qualify for the Tax Credits added to the Code by the Tax Reform Act of 1986. The Fund's ownership interest in each Local Limited Partnership is 99%, except for Livingston Arms, Phoenix Housing, Metropolitan, New Garden Place and Findley Place, where the Fund's ownership interests are 82%, 0.2%, 98.75%, 97.9% and 98%, respectively, and Primrose and Sycamore, where the Fund's ownership is 49.5%. 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. 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 with repayment terms that are based on a percentage of cash flow. The schedule on the following pages provide certain key information on the Local Limited Partnership interests acquired by the Fund.
Capital Contributions Local Limited Partnership Number Total committed Paid through Mtge. loans payable Occupancy Property Name of at March 31, March 31, at December 31, Type of at March 31, Property Location Apt. Units 2001 2001 2000 Subsidy* 2001 --------------------------------- ------------------------------------------------------------------- -------------------------- Division of Boston Financial Texas Properties Limited Partnership VI (formerly, Yoakum-Village Oaks Housing Associates, LTD)(1) Leatherwood Terrace Yoakum, TX Tamaric Housing Associates, LTD. (1) Tamaric Cedar Park, TX Georgetown - Northwest Housing Associates, LTD. (1) Northwest Georgetown, TX Pilot House Associates, L.P. Pilot House Newport News, VA 132 $2,479,707 $2,479,707 $3,227,798 None 100% Jardines Limited Dividend Partnership, S.E., L.P. Jardines de Juncos Juncos, PR 60 604,781 604,781 2,604,268 FmHA 100% Capital Contributions Local Limited Partnership Number Total committed Paid through Mtge. loans payable Occupancy Property Name of at March 31, March 31, at December 31, Type of at March 31, Property Location Apt. Units 2001 2001 2000 Subsidy* 2001 --------------------------------- ------------------------------------------------------------------- -------------------------- 99 Livingston Associates, L.P. Livingston Arms Poughkeepsie, NY 25 1,114,686 1,114,686 467,200 None 100% Broadway Tower Limited Partnership Broadway Tower Revere, MA 92 2,350,000 2,350,000 5,861,927 Section 8 100% Phoenix Housing, L.P. Phoenix Housing Moorhead, MN 40 457,809 457,809 2,554,330 Section 8 98% Cottage Homesteads of Aspen Limited Partnership Cottages of Aspen Oakdale, MN 114 1,027,333 1,027,333 4,590,000 None 98% 45th & Vincennes Limited Partnership 45th & Vincennes Chicago, IL 19 689,080 689,080 630,660 Section 8 84% Long Creek Court Limited Partnership Long Creek Court Kittrell, NC 14 120,476 120,476 549,493 FmHA 93% Capital Contributions Local Limited Partnership Number Total committed Paid through Mtge. loans payable Occupancy Property Name of at March 31, March 31, at December 31, Type of at March 31, Property Location Apt. Units 2001 2001 2000 Subsidy* 2001 --------------------------------- ------------------------------------------------------------------- -------------------------- Atkins Glen Limited Partnership Atkins Glen Stoneville, NC 24 205,574 205,574 950,353 FmHA 100% Tree Trail Apartments, A Limited Partnership Tree Trail Gainesville, FL 108 2,060,143 2,060,143 2,609,772 None 95% Meadow Wood Townhomes, A Limited Partnership Meadow Wood Smyrna, TN 88 1,742,671 1,742,671 2,563,545 None 94% Dakota Square Manor Limited Partnership Primrose Grand Forks, ND 48 674,557 674,557 1,064,822 None 100% Duluth Limited Partnership II Sycamore Sioux Falls, ND 48 657,000 657,000 1,200,869 None 96% Preston Place Associates, L.P. Preston Place Winchester, VA 120 2,300,000 2,300,000 3,096,296 None 99% Capital Contributions Local Limited Partnership Number Total committed Paid through Mtge. loans payable Occupancy Property Name of at March 31, March 31, at December 31, Type of at March 31, Property Location Apt. Units 2001 2001 2000 Subsidy* 2001 --------------------------------- ------------------------------------------------------------------- -------------------------- Kings Grant Court Limited Partnership Kings Grant Court Statesville, NC 36 708,530 708,530 876,218 None 100% Chestnut Plains Limited Partnership Chestnut Plains Winston-Salem, NC 24 319,810 319,810 577,901 None 100% Prince Hall Housing Associates, Limited Partnership (1) Capitol Park Oklahoma City, OK Bancroft Street Limited Partnership Bancroft Court Toledo, OH 97 902,340 902,340 0 Section 8 N/A Hudson Square Apartments Company (A Limited Partnership) Hudson Square Baton Rouge, LA 82 554,670 554,670 710,097 Section 8 100% Walker Woods Partners, II, L.P. Walker Woods II Dover, DE 19 591,429 591,429 853,911 None 100% Capital Contributions Local Limited Partnership Number Total committed Paid through Mtge. loans payable Occupancy Property Name of at March 31, March 31, at December 31, Type of at March 31, Property Location Apt. Units 2001 2001 2000 Subsidy* 2001 --------------------------------- ------------------------------------------------------------------- -------------------------- Vista Villa Limited Dividend Housing Association Limited Partnership Vista Villa Saginaw County, MI 100 1,204,762 1,204,762 4,033,811 None 99% Metropolitan Apartments Limited Partnership Metropolitan Chicago, IL 69 2,139,159 2,139,159 2,002,047 Section 8 86% Carolina Woods Associates II, Limited Partnership Carolina Woods II Greensboro, NC 40 750,238 750,238 843,637 None 98% Linden Square Limited Dividend Housing Association Limited Partnership Linden Square Genesee County, MI 120 1,299,774 1,299,774 4,769,340 None 98% New Garden Associates, Limited Partnership New Garden Place Gilmer, NC 76 1,269,794 1,269,794 805,227 None 100% Capital Contributions Local Limited Partnership Number Total committed Paid through Mtge. loans payable Occupancy Property Name of at March 31, March 31, at December 31, Type of at March 31, Property Location Apt. Units 2001 2001 2000 Subsidy* 2001 --------------------------------- ------------------------------------------------------------------- -------------------------- Exodus/Lyndon/Windsor, Limited Partnership Findley Place Apartments Minneapolis, MN 89 716,000 716,000 3,001,170 None 100% ------ ------------ ------------ ------------ 1,684 $ 26,940,323 $ 26,940,323 $ 50,444,692 ====== ============ ============ ============
* FmHA This subsidy, which is authorized under Section 515 of the Housing Act of 1949, can be one or a combination of many different types. 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) The Fund no longer has an interest in this Local Limited Partnership. Duration of leases for occupancy in the Properties described above is generally 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 Fund, is contained in Items 1, 6 and 7 of this report. Item 3. Legal Proceedings Except for certain claims made by the Fund against the Local General Partner and the Guarantor of Villas De Montellano, Leatherwood, Tamaric and Northwest in connection with their bankruptcy proceedings, the Fund is not a party to any pending legal or administrative proceeding, and to the best of its knowledge, no legal or administrative proceeding is threatened or contemplated against it. Item 4. Submission of Matters to a Vote of Security Holders ------------------------------------------------------------ None. PART II Item 5. Market for the Registrant's Units and Related Security Holder Matters There is no public market for the Units, and it is not expected that a public market will develop. If a Limited Partner desires to sell Units, the buyer of those Units will be required to comply with the minimum purchase and retention requirements and investor suitability standards imposed by applicable federal or state securities laws and the minimum purchase and retention requirements imposed by the Fund. The price to be paid for the Units, as well as the commissions to be received by any participating broker-dealers, will be subject to negotiation by the Limited Partner seeking to sell his Units. Units will not be redeemed or repurchased by the Fund. The Partnership Agreement does not impose on the Fund or its General 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 18, 2001, there were 1,972 record holders of Units of the Fund. Cash distributions, when made, are paid annually. To date, the Fund has made no cash distributions. Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations -------------------------------------------------------------------------------- Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Fund intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements and are including this statement for purposes of complying with these safe harbor provisions. Although the Fund believes the forward-looking statements are based on reasonable assumptions, the Fund can give no assurance that their expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, general economic and real estate conditions and interest rates. Liquidity and capital resources At March 31, 2001, the Fund had cash and cash equivalents of $255,701 as compared with $216,088 at March 31, 2000. The increase is primarily attributable to proceeds from sales and maturities of marketable securities and cash distributions received from Local Limited Partnerships. These increases are partially offset by purchases of marketable securities, cash used for operating activities and investment in Local Limited Partnership. Under the terms of the Partnership Agreement, the Fund initially designated 4% of the Adjusted Gross Proceeds (which generally means Gross Proceeds minus the amounts committed to the acquisition of Treasury STRIPS) from the sale of Units as a reserve for working capital of the Fund and contingencies related to the ownership of Local Limited Partnership interests. The Managing General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. Funds totaling approximately $403,000 have been withdrawn from Reserves to pay legal and other fees relating to various property issues. At March 31, 2001, approximately $676,000 of cash, cash equivalents and marketable securities have been designated as Reserves. 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 Fund's ongoing operations. Reserves may be used to fund operating deficits, if the Managing General Partner deems funding appropriate. If Reserves are not adequate to cover Fund operations, the Fund will seek other funding sources including, but not limited to, the deferral of Asset Management Fees to an affiliate of the General Partner or working with Local Limited Partnerships to increase cash distributions. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Fund might deem it in its best interests to provide such funds, voluntarily, in order to protect its investment. The Fund has advanced approximately $224,000 to Local Limited Partnerships to fund operating deficits. Since the Fund invests as a limited partner, the Fund has no contractual duty to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, at March 31, 2001, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. Cash distributions No cash distributions were made during the years ended March 31, 2001 or 2000. It is not expected that cash available for distribution, if any, will be significant during the 2001 calendar year. Based on the results of 2000 operations, the Local Limited Partnerships are not expected to distribute significant amounts of cash to the Fund 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. Results of operations 2001 versus 2000 For the year ended March 31, 2001, the Fund's operations resulted in a net loss of $1,875,548 as compared to a net loss of $1,760,848 for the same period in 2000. The increase in net loss is primarily attributable to an increase in provision for valuation of investments in Local Limited Partnerships and an increase in general and administrative expenses. The increase in provision for valuation of investment in Local Limited Partnerships is due to additional non-temporary declines in the recoverable amounts of two investments. The increase in general and administrative expenses is primarily due to increased charges from an affiliate of the General Partner for operational and administrative expenses necessary for the operation of the Partnership. The increased charges pertained to higher levels of staffing and salary levels at the affiliate in addition to changes in the affiliate's allocation of operational and administrative expenses to more accurately reflect the actual cost of services provided to the Partnership. Low-income housing tax credits The 2000 Tax Credits per Unit were $139.64 and $104.13 for Class A Unit and Class B Unit investors, respectively. The 1999 Tax Credits per Unit were $144.63 and $104.13 for Class A Unit and Class B Unit investors, respectively. The tax credits stabilized in 1995, and are expected to continue to decrease as certain properties reach the end of the ten year period. However, because the compliance periods extend significantly beyond the tax credit periods, the Fund is expected to retain most of its interest in the Local Limited Partnerships for the foreseeable future. Property discussions The Fund's investment portfolio consists of limited partnership interests in 25 Local Limited Partnerships, each of which own and operate a multi-family apartment complex. A majority of the Properties have stabilized operations and operate above break-even. A few Properties generate cash flow deficits that the Local General Partners of those Properties fund through project expense loans, subordinated loans or operating escrows. However, some Properties have persistent operating difficulties that could either: i) have an adverse impact on the Partnership's liquidity; ii) result in their foreclosure; or iii) result in the Managing General Partner deeming it appropriate for the Partnership to dispose of its interest in the Local Limited Partnership. Also, the Managing General Partner may desire to dispose of interests in certain Local Limited Partnerships in the normal course of the Fund's business. The following Property discussions focus only on such Properties. As previously reported, Bancroft Street Apartments, located in Toledo, Ohio, had significant operating deficits due to occupancy issues and deteriorating market conditions. The Managing General Partner and Local General Partner negotiated with the lender to restructure the mortgage loan. However, the lender ultimately determined to hold a foreclosure on the Property on October 10, 2000. The foreclosure resulted in recapture of tax credits for investors of approximately $18.70 per Unit. In addition, the foreclosure resulted in the allocation of taxable income to the Fund as well as loss of future benefits associated with this Property. Although the neighborhood in which 45th & Vincennes (Chicago, Illinois) is located has improved in the last few years, potential tenants are reluctant to occupy the Property due to its location. As a result, maintaining occupancy, and therefore revenues, continues to be an issue. The Managing General Partner will continue to closely monitor Property operations. Metropolitan Apartments, located in Chicago, Illinois, continues to operate below break-even primarily due to occupancy issues. Occupancy has suffered primarily due to local market conditions, and as a result, the quality of tenant willing to occupy the Property is generally low. It is possible that Fund Reserves may be required to fund operating deficits. The Managing General Partner visited the Property in October 2000 and found it in poor condition with repairs needed. The Managing General Partner is working with the Local General Partner to develop a plan that addresses the Property's issues. Due to concerns over the long-term financial health of Primrose, Phoenix Housing and Sycamore, located in Grand Forks, North Dakota, Moorhead, Minnesota and Sioux Falls, South Dakota, respectively, the Managing General Partner developed a plan that will ultimately result in the transfer of the Fund's interest in each Local Limited Partnership. All three Local Limited Partnerships have the same Local General Partner. In 1997, in an effort to reduce possible future risk, the Managing General Partner consummated the transfer of 50% of the Fund's interest in capital and profits in the three Local Limited Partnerships to an affiliate of the Local General Partner. Subsequently, effective June 17, 1999, the Local General Partner transferred both its general partner interest and 48.5% of its interest in capital and profits in the three Local Limited Partnerships to a non-affiliated, non-profit general partner. Effective August 31, 2000, the former Local General Partner withdrew its remaining interest in each of the Local Limited Partnerships. The Managing General Partner will have the right to transfer the Fund's remaining interests after September 1, 2001. With regard to Sycamore and Primrose, the Fund 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, which is 2003. With regard to Phoenix Housing, the Fund approved the admission of an additional limited partner to the Local Limited Partnership effective November 1, 2000. As a result, the Fund's interest in the Local Limited Partnership was diluted to an immaterial amount. The Fund received a pro-rata share of the Property's tax credits during 2000. The Fund will not receive a material amount of the Property's future tax credits. However, the Fund received cash from the Local Limited Partnership of approximately $16,000 in April 2001 and will receive approximately $94,000 in April 2002 and $47,000 in April 2003. These amounts represent the Fund's share of the Property's prospective tax credits that it will not receive because of its diluted interest in the Local Limited Partnership. Findley Place Apartments, located in Minneapolis, Minnesota, experienced operating deficits due to significant capital needs in recent years. As a result of concerns regarding the long-term viability of the Property, the Managing General Partner developed a plan that will ultimately result in the transfer of the Fund's interest in the Local Limited Partnership. On March 1, 2000, the Managing General Partner consummated the transfer of 1% of the Fund's interest in losses, 48.5% of its interest in profits and 30% of its capital account to the Local General Partner. The Managing General Partner has the right to put the Fund's remaining interests to the Local General Partner any time after one year from the March 1, 2000 effective date. In addition, the Local General Partner has the right to call the remaining interest after the tax credit period has expired, which will occur in 2004. Currently, Property operations are improving and the Managing General Partner believes that it will operate above break-even in the future. The Fund has implemented policies and practices for assessing potential impairment of its investments in Local Limited Partnerships. Real estate experts analyze the investments to determine if impairment indicators exist. If so, the carrying value is compared to the undiscounted future cash flows expected to be derived from the asset. If a significant impairment in carrying value exists, a provision to write down the asset to fair value will be recorded in the Fund's financial statements. Inflation and other economic factors Inflation had no material impact on the operations or financial condition of the Fund for the years ended March 31, 2001 and 2000. Since most of the Properties benefit from some form of government assistance, the Fund is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission for rent increases. In addition, any Tax Credits allocated to investors with respect to a Property are subject to recapture to the extent that a Property or any portion thereof ceases to qualify for the Tax Credits. Certain of the Properties in which the Fund has invested are located in areas suffering from poor economic conditions. Such conditions could have an adverse effect on the rent or occupancy levels at such Properties. Nevertheless, management believes that the generally high demand for below market rate housing will tend to negate such factors. However, no assurance can be given in this regard. Item 7. 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 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ------------------------------------------------------------------------------- None. PART III Item 9. Directors and Executive Officers of the Registrant The Managing General Partner of the Fund is Arch Street VIII, Inc., a Massachusetts corporation (the "Managing General Partner"), an affiliate of Lend Lease. The Managing General Partner was incorporated in December, 1990. Jenny Netzer is a Principal of the Managing General Partner and had the primary responsibility for evaluating, selecting and negotiating investments for the Fund. 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 Principal, Head of Housing and Community Investment Michael H. Gladstone Principal, Member, Legal Lauren M. Guillette Principal, Member, Legal The other General Partner of the Partnership is Arch Street VI Limited Partnership, a Massachusetts limited partnership ("Arch Street VI L.P.") that was organized in December 1990. The General Partner of Arch Street VI L.P. is Arch Street VIII, Inc. The Managing General Partner provides day-to-day management of the Fund. Compensation is discussed in Item 10 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 45, Principal, Head of Housing and Community Investment Group - Ms. Netzer is responsible for tax credit investment programs to institutional clients. She joined Lend Lease as a result of the Boston Financial acquisition, starting with Boston Financial in 1987 leading Boston Financial's new business initiatives and managing the firm's Asset Management division. Prior to joining Boston Financial, Ms. Netzer served as Deputy Budget Director for the Commonwealth of Massachusetts where she was responsible for the Commonwealth's health care and public pension program's budgets. Ms. Netzer also served as Assistant Controller at Yale University, was a former member of Watertown Zoning Board of Appeals, the Officer of Affordable Housing Tax Credit Coalition and a frequent speaker on affordable housing and tax credit industry issues. Ms. Netzer is a graduate of Harvard University (BA) and Harvard's Kennedy School of Government (MPP). Michael H. Gladstone, age 44, Principal, Member, Legal - Mr. Gladstone is responsible for legal work in the areas of affordable and conventional housing and investment products and services. He joined Lend Lease as a result of the Boston Financial acquisition, starting with Boston Financial in 1985 as the firm's General Counsel. Prior to joining Boston Financial, Mr. Gladstone was associated with the law firm of Herrick & Smith and served on the advisory board of the Housing and Development Reporter. Mr. Gladstone lectured at Harvard University on affordable housing matters and is a member of the National Realty Committee, Cornell Real Estate Council, National Association of Real Estate Investment Managers and Massachusetts Bar. Mr. Gladstone is a graduate of Emory University (BA) and Cornell University (J.D. & MBA). Lauren M. Guillette, age 36, Principal, Member, Legal - Ms. Guillette is responsible for legal work in the areas of affordable and conventional housing and investment products and services. She joined Lend Lease as a result of the Boston Financial acquisition, starting with Boston Financial in 1996 as the firm's Assistant General Counsel. Prior to joining Boston Financial, Ms. Guillette was associated with the law firm of Peabody & Brown where she practiced real estate syndication and securities law. Ms. Guillette is a graduate of McGill University (BA) and Suffolk University (J.D.). Item 10. Management Remuneration Neither the directors nor officers of Arch Street VIII, Inc., the partners of Arch Street VI L.P. nor any other individual with significant involvement in the business of the Fund receives any current or proposed remuneration from the Fund. Item 11. Security Ownership of Certain Beneficial Owners and Management No person is known to the Fund to be the beneficial owner of more than 5% of the outstanding Units. The equity securities registered by the Fund under Section 12(g) of the Act consist of 100,000 Units, 37,933 (34,643 Class A Units and 3,290 Class B Units) of which have been sold to the public. The remaining Units were deregistered in Post-Effective Amendment No. 6, dated June 15, 1993, which is herein incorporated by reference. Holders of Units are permitted to vote on matters affecting the Fund only in certain unusual circumstances and do not generally have the right to vote on the operation or management of the Fund. Arch Street VI L.P. owns five (unregistered) Units not included in the 37,933 Units sold to the public. Additionally, ten 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 $700 and a total purchase price of $9,300. Except as described in the preceding paragraph, neither Arch Street VIII, Inc., Arch Street VI L.P., Lend Lease 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 Fund does not know of any existing arrangement that might at a later date result in a change in control of the Fund. Item 12. Certain Relationships and Related Transactions The Fund was required to pay certain fees to and reimburse certain expenses of the Managing General Partner or its affiliates in connection with the organization of the Fund and the offering of Units. The Fund is also required to pay certain fees to and reimburse certain expenses of the Managing General Partner or its affiliates in connection with the administration of the Fund and its acquisition and disposition of investments in Local Limited Partnerships. In addition, the General Partners are entitled to certain Fund 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 transaction. All such fees, expenses and distributions paid in the two years ending March 31, 2001 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. In addition, affiliates of the Managing General Partner are or were property management agents for Pilot House, Preston Place and Linden Square. The Fund is permitted to enter into transactions involving affiliates of the Managing General Partner, subject to certain limitations established in the Partnership Agreement. Information regarding the fees paid and expense reimbursements made in the two years ended March 31, 2001 is presented as follows: Organizational fees and expenses In accordance with the Partnership Agreement, affiliates of the General Partners were reimbursed by the Fund for organizational, offering and selling expenses advanced on behalf of the Fund by its affiliates and for salaries and direct expenses of certain employees of the Managing General Partner and its affiliates in connection with the registration and organization of the Fund. Such expenses include printing expenses and legal, accounting, escrow agent and depository fees and expenses. Such expenses also include a non-accountable expense allowance for marketing expenses equal to 1% of gross offering proceeds. $2,035,611 of organization fees and expenses incurred on behalf of the Fund were paid and reimbursed to an affiliate of the Managing General Partner. Total organization and offering expenses reimbursed by the Fund did not exceed 5.5% of the gross offering proceeds. There were no organization fees and offering expenses paid in the two years ended March 31, 2001. Acquisition fees and expenses In accordance with the Partnership Agreement, the Fund is required to pay acquisition fees to and reimburse acquisition expenses of the Managing General Partner or its affiliates for selecting, evaluating, structuring, negotiating and closing the Fund's investments in Local Limited Partnerships. Acquisition fees totaled 7% of Gross Proceeds. Acquisition expenses, which include such expenses as legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses did not exceed 1.5% of Gross Proceeds. Acquisition fees totaling $2,590,827 for the closing of the Fund's Local Limited Partnership Investments have been paid to an affiliate of the Managing General Partner. Acquisition expenses totaling $825,516 were incurred and have been reimbursed to an affiliate of the Managing General Partner. There were no acquisition fees or expenses paid in the two years ended March 31, 2001. Asset Management Fees In accordance with the Partnership Agreement, an affiliate of the Managing General Partner is paid an annual fee for services in connection with the administration of the affairs of the Fund. The affiliate currently receives the base amount of $6,600 per Local Limited Partnership (as adjusted by the CPI factor) annually as the Asset Management Fee. Asset Management Fees incurred in each of the two years ended March 31, 2001 are as follows: 2001 2000 ----------- ----------- Asset Management Fees $ 164,682 $ 163,750 Salaries and benefits expense reimbursements An affiliate of the Managing General Partner is reimbursed for the cost of the Fund's salaries and benefits expenses. The reimbursements are based upon the size and complexity of the Fund's operations. Reimbursements paid or payable in each of the two years ended March 31, 2001 are as follows: 2001 2000 ----------- ----------- Salaries and benefits expense reimbursements $ 265,985 $ 104,994 Property Management Fees Through December 31, 1999, affiliates of the Managing General Partner were management agents for three Local Limited Partnerships. During the year ended December 31, 2000, one of the Local Limited Partnerships changed management agents to a non-affiliate of the Fund. Fees earned in each of the two years ended December 31, 2000 are as follows: 2000 1999 ----------- ----------- Property Management Fees $ 84,280 $ 116,585 Cash distributions paid to the General Partners In accordance with the Partnership Agreement, the General Partners of the Fund, Arch Street VIII, Inc. and Arch Street VI L.P., receive 1% of cash distributions paid to partners. No cash distributions were paid to the General Partners in the two years ended March 31, 2001. 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 Lend Lease and its affiliates for the two years ended March 31, 2001 is presented in Note 6 to the Financial Statements. Item 13. Exhibits and Reports on Form 8-K (a) Documents filed as a part of this Report In response to this portion of Item 13, the financial statements and the auditors' reports relating thereto are submitted as a separate section of this Report. See Index to the Financial Statements on page F-1 hereof. 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. (b) Reports on Form 8-K: No Reports on Form 8-K were filed during the year ended March 31, 2001. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP By: Arch Street VIII, Inc. its Managing General Partner By: /s/Jenny Netzer Date: June 29 , 2001 --------------------------------------- ------------------- Jenny Netzer Principal, Head of Housing and Community Investment 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/Jenny Netzer Date: June 29 , 2001 --------------------------------------- ------------------- Jenny Netzer Director By: /s/Michael H. Gladstone Date: June 29 , 2001 ----------------------------- ---------------- Michael H. Gladstone Director BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED MARCH 31, 2001 INDEX Page No. -------- Report of Independent Accountants F-2 For the years ended March 31, 2001 and 2000 Financial Statements: Balance Sheet - March 31, 2001 F-3 Statements of Operations - For the years ended March 31, 2001 and 2000 F-4 Statements of Changes in Partners' Equity (Deficiency) - For the years ended March 31, 2001 and 2000 F-5 Statements of Cash Flows - For the years ended March 31, 2001 and 2000 F-6 Notes to the Financial Statements F-7 Report of Independent Accountants To the Partners of Boston Financial Tax Credit Fund Plus, A Limited Partnership: In our opinion, based upon our audits and the reports of other auditors, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Boston Financial Tax Credit Fund Plus, A Limited Partnership (the "Fund") as of March 31, 2001, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. The Fund accounts for its investment in Local Limited Partnerships, as discussed in Note 2 of the notes to the financial statements, using the equity method of accounting. We did not audit the financial statements of the Local Limited Partnerships, investments in which the Fund's investment in Local Limited Partnerships is stated at $11,316,463 at March 31, 2001, and the Fund's equity in earnings (losses) of Local Limited Partnerships is stated at $(1,261,705) and $(1,515,279) for the years ended March 31, 2001 and 2000, respectively. The financial statements of these Local Limited Partnerships were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to amounts included for Local Limited Partnerships, is based solely upon the reports of other auditors. We conducted our audits of the Fund's financial statements in accordance with auditing standards generally accepted in the United States of America 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 the other auditors provide a reasonable basis for our opinion. /s/PricewaterhouseCoopers LLP June 27, 2001 Boston, Massachusetts BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) BALANCE SHEET March 31, 2001 Assets Cash and cash equivalents $ 255,701 Marketable securities, at fair value (Note 3) 769,026 Investments in Local Limited Partnerships, net (Note 4) 11,316,463 Other investments (Note 5) 1,807,095 Other assets 9,873 ------------- Total Assets $ 14,158,158 ============== Liabilities and Partners' Equity Accounts payable to affiliate (Note 6) $ 1,336,819 Accrued expenses 32,967 ------------- Total Liabilities 1,369,786 ------------- General, Initial and Investor Limited Partners' Equity 12,775,648 Net unrealized gain on marketable securities 12,724 ------------- Total Partners' Equity 12,788,372 ------------- Total Liabilities and Partners' Equity $ 14,158,158 ============= The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) STATEMENTS OF OPERATIONS For the Years Ended March 31, 2001 and 2000
2001 2000 ------------ ------------- Revenue: Investment $ 71,257 $ 72,855 Accretion of Original Issue Discount (Note 5) 134,588 124,882 Other 44,321 115,960 ------------ ------------- Total Revenue 250,166 313,697 ------------ ------------- Expenses: Asset management fees, affiliate (Note 6) 164,682 163,750 General and administrative (includes reimbursements to an affiliate in the amount of $265,985 and $104,994, respectively) (Note 6) 363,972 216,657 Provision for valuation of investments in Local Limited Partnerships 315,944 150,000 Amortization 19,411 28,859 ------------ ------------- Total Expenses 864,009 559,266 ------------ ------------- Loss before equity in losses of Local Limited Partnerships (613,843) (245,569) Equity in losses of Local Limited Partnerships (Note 4) (1,261,705) (1,515,279) ------------ ------------- Net Loss $ (1,875,548) $ (1,760,848) ============ ============= Net Loss allocated: General Partners $ (20,101) $ (18,857) Class A Limited Partners (1,862,673) (1,747,393) Class B Limited Partners 7,226 5,402 ------------ ------------- $ (1,875,548) $ (1,760,848) ============ ============= Net Income (Loss) per Limited Partnership Unit: Class A Unit (34,643 Units) $ (53.77) $ (50.44) ============ ============= Class B Unit (3,290 Units) $ 2.20 $ 1.64 ============ =============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) For the Years Ended March 31, 2001 and 2000
Investor Investor Net Initial Limited Limited Unrealized General Limited Partners, Partners, Gains Partners Partner Class A Class B (Losses) Totals ---------- ------------- ------------- ----------- -------------- Balance at March 31, 1999 $ (168,252) $ 5,000 $ 14,066,938 $ 2,508,358 $ 4,665 $ 16,416,709 ---------- --------- -------------- ----------- ----------- -------------- Comprehensive Income (Loss): Change in net unrealized gains on marketable securities available for sale - - - - (17,077) (17,077) Net Income (Loss) (18,857) - (1,747,393) 5,402 - (1,760,848) ---------- --------- -------------- ----------- ----------- -------------- Comprehensive Income (Loss) (18,857) - (1,747,393) 5,402 (17,077) (1,777,925) ---------- --------- -------------- ----------- ----------- -------------- Balance at March 31, 2000 (187,109) 5,000 12,319,545 2,513,760 (12,412) 14,638,784 ---------- --------- -------------- ----------- ----------- -------------- Comprehensive Income (Loss): Change in net unrealized losses on marketable securities available for sale - - - - 25,136 25,136 Net Income (Loss) (20,101) - (1,862,673) 7,226 - (1,875,548) ---------- --------- -------------- ----------- ----------- -------------- Comprehensive Income (Loss) (20,101) - (1,862,673) 7,226 25,136 (1,850,412) ---------- --------- -------------- ----------- ----------- -------------- Balance at March 31, 2001 $ (207,210) $ 5,000 $ 10,456,872 $ 2,520,986 $ 12,724 $ (12,788,372) ========== ========= ============== =========== =========== ==============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) STATEMENTS OF CASH FLOWS For the Years Ended March 31, 2001 and 2000
2001 2000 ------------- ------------- Cash flows from operating activities: Net Loss $ (1,875,548) $ (1,760,848) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Equity in losses of Local Limited Partnerships 1,261,705 1,515,279 Provision for valuation of investments in Local Limited Partnerships 315,944 150,000 Accretion of Original Issue Discount (134,588) (124,882) Amortization 19,411 28,859 Gain on sales and maturities of marketable securities, net (2,068) (1,788) Cash distributions included in net loss (3,577) - Increase (decrease) in cash arising from changes in operating assets and liabilities: Other assets 4,850 534 Accounts payable to affiliate (69,334) 194,937 Accrued expenses 3,368 4,003 ------------- ------------- Net cash provided by (used for) operating activities (479,837) 6,094 ------------- ------------- Cash flows from investing activities: Investment in Local Limited Partnership (82,805) - Advances to Local Limited Partnerships (11,552) (120,000) Reimbursement of advances to Local Limited Partnership 10,000 - Purchases of marketable securities (677,356) (598,892) Proceeds from sales and maturities of marketable securities 1,018,183 684,859 Cash distributions received from Local Limited Partnerships 262,980 156,893 ------------- ------------- Net cash provided by investing activities 519,450 122,860 ------------- ------------- Net increase in cash and cash equivalents 39,613 128,954 Cash and cash equivalents, beginning of year 216,088 87,134 ------------- ------------- Cash and cash equivalents, end of year $ 255,701 $ 216,088 ============= =============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS 1. Organization Boston Financial Tax Credit Fund Plus, A Limited Partnership (the "Fund") is a Massachusetts limited partnership organized to invest in other limited partnerships ("Local Limited Partnerships") which own and operate apartment complexes which are eligible for low income housing tax credits that may be applied against the federal income tax liability of an investor. The Fund also invests in, for the benefit of the Class B Limited Partners, United States Treasury obligations from which the interest coupons have been stripped or in such interest coupons themselves (collectively "Treasury STRIPS"). The Fund used approximately 28% of the Class B Limited Partners' capital contributions to purchase Treasury STRIPS with maturities of 13 to 18 years, with a total redemption amount equal to the Class B Limited Partners' capital contributions. The Fund's objectives are to: (i) provide current tax benefits which qualified investors may use to offset their federal income tax liability; ii) provide limited cash distributions from Local Limited Partnership operations; and iii) preserve and protect the Fund's capital; (iv) provide cash distributions from sale or refinancing transactions; and (v) provide payments to Class B Limited Partners from Treasury STRIPS. Arch Street VI, Inc., a Massachusetts corporation ("Arch Street, Inc."), is the Managing General Partner of the Fund. Arch Street VI Limited Partnership ("Arch Street L.P."), a Massachusetts limited partnership whose general partner consists of Arch Street, Inc., is also a General Partner. Both of the General Partners are affiliates of Lend Lease Real Estate Investments, Inc. ("Lend Lease"). An affiliate of the General Partners ("SLP Affiliate") is a special limited partner in each Local Limited Partnership in which the Fund invests, with the right to become a general partner under certain circumstances. The fiscal year of the Fund ends on March 31. The Fund offered two classes of Limited Partnership Interests - Class A Limited Partnership Interests, represented by Class A Units, and Class B Limited Partnership Interests, represented by Class B Units. The capital contributions of Class A Limited Partners available for investment by the Fund are invested entirely in Local Limited Partnerships. The capital contributions of Class B Limited Partners available for investment by the Fund are invested partially in Local Limited Partnerships and partially in Treasury STRIPS. The Partnership Agreement authorized the sale of up to 100,000 Units of limited partnership interests ("Units") at $1,000 per Unit. Boston Financial Securities, Inc., an affiliate of the General Partners, received selling commissions and underwriting advisory fees in the amount of 7.0% and 1.5%, respectively, of the Class A Gross Proceeds and 5.04% and 1.08%, respectively, of the Class B Gross Proceeds for Units sold by the entity as a soliciting dealer. On January 11, 1994, the Fund held its final investor closing. In total, the Fund received $34,642,300 of capital contributions, net of discounts, from investors admitted as Class A Limited Partners for 34,643 Units and $3,290,000 of capital contributions, net of discounts, from investors admitted as Class B Limited Partners for 3,290 Units. The Partnership Agreement provides that all cash available for distribution will be allocated 99% to the Limited Partners and 1% to the General Partners. Sale or refinancing proceeds generally will be distributed first to the Limited Partners in an amount equal to their adjusted capital contributions, second to the General Partners in an amount equal to their capital contributions, third to the General Partners (after payment of the 6% return as set forth in Section 4.2.3 of the Partnership Agreement and of any accrued but unpaid Subordinated Disposition Fee) in such amount as is necessary to cause the General Partners to have received 5% of all distributions to the Partners and lastly, 95% to the Limited Partners and 5% to the General Partners. Profits and losses for tax purposes arising from general operations and tax credits generally will be allocated 99% to the Limited Partners and 1% to the General Partners. However, as set forth in the Partnership Agreement, profits and losses for tax purposes arising from a sale or refinancing generally will be allocated among the Partners in such manner as is necessary to cause their respective capital accounts to reflect the amount that would be distributable to them in accordance with the priorities set forth in the preceding paragraph, if all of the Fund's assets were sold for their federal adjusted basis and the Fund were then liquidated. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 1. Organization (continued) ----------------------- All distributions of cash available for distribution or distributions of sale or refinancing proceeds, and all allocations of profits and losses for tax purposes from normal operations and from a sale or refinancing or of tax credits, which are distributed or allocated to the General Partners, will be allocated 1% to Arch Street, Inc. and 99% to Arch Street L.P. Because each class of Limited Partners had a different amount of its capital contribution available for investment by the Fund in Local Limited Partnerships (100% for Class A Limited Partners and approximately 72% for Class B Limited Partners), the two classes of Limited Partners have different percentage participation as to cash distributions, sale or refinancing proceeds and allocation of profits, losses and credits attributable to investments in Local Limited Partnerships. As such, profits and losses for financial reporting purposes are allocated 1% to the General Partners, 92.66% to the Class A Limited Partners and 6.34% to the Class B Limited Partners. All profits and losses and cash distributions attributable to Treasury STRIPS are allocable only to Class B Limited Partners. Under the terms of the Partnership Agreement, the Fund originally designated 4% of the Adjusted Gross Proceeds (which generally means Gross Proceeds minus the amounts committed to the acquisition of Treasury STRIPS) from the sale of Units as a reserve for working capital of the Fund and contingencies related to ownership of Local Limited Partnership interests. The Managing General Partner may increase or decrease such amounts from time to time, as it deems appropriate. Funds totaling approximately $403,000 have been withdrawn from Reserves to pay legal and other fees relating to various property issues. At March 31, 2001, the Managing General Partner has designated approximately $676,000 of cash, cash equivalents and marketable securities as such Reserve. 2. Significant Accounting Policies Cash Equivalents Cash equivalents consist of short-term highly liquid money market instruments with original maturities of 90 days or less at acquisition and approximate fair value. Marketable Securities and Other Investments Marketable securities consist primarily of U. S. Treasury instruments and various assets backed investment vehicles. The Fund's marketable securities are classified as "Available for Sale" securities and reported at fair value as reported by the brokerage firm at which the securities are held. Realized gains and losses from the sales of securities are based on the specific identification method. Unrealized gains and losses are excluded from earnings and reported as a separate component of partners' equity. The Fund accounts for its investments in Treasury STRIPS, which are included in other investments in the balance sheet, using the effective interest method of accretion for the original issue discount. The Fund has the ability and it is its intention to hold the Treasury STRIPS until maturity. Therefore, they are classified as "Held to Maturity" and are carried at cost plus the adjustments for the discount using the effective interest method. Investments in Local Limited Partnerships The Fund accounts for its investments in Local Limited Partnerships using the equity method of accounting because the Fund does not have control over the major operating and financial policies of the Local Limited Partnerships in which it invests. Under the equity method, the investment is carried at cost, adjusted for the Fund's share of income or loss of the Local Limited Partnership, additional investments in and cash distributions from the Local Limited Partnerships. Equity in income or loss of the Local Limited Partnerships is included in the Fund's operations. The Fund has no obligation to fund liabilities of the Local Limited Partnership beyond its investment, therefore a Local BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) ------------------------------------------ Investments in Local Limited Partnerships (continued) ---------------------------------------------------- Limited Partnership's investment will not be carried below zero. To the extent that equity losses are incurred or distributions received when a Local Limited Partnership's respective investment balance has been reduced to zero, the losses will be suspended to be used against future income and distributions will be 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 Fund. These fees and expenses are included in investments in Local Limited Partnerships and are being amortized on a straight-line basis over 35 years until a Local Limited Partnership's respective investment balance has been reduced to zero. The Fund recognizes a decline in the carrying value of its investments in Local Limited Partnerships when there is evidence of a non-temporary decline in the recoverable amount of the investment. There is a possibility that the estimates relating to reserves for non-temporary declines in carrying value of investments in Local Limited Partnerships may be subject to material near term adjustments. The Fund, as a limited partner in the Local Limited Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance and continued eligibility for tax credits. If the cost of operating a property exceeds the rental income earned thereon, the Fund may deem it in its best interest to voluntarily provide funds in order to protect its investment. The General Partner has elected to report results of the Local Limited Partnerships on a 90-day lag basis because the Local Limited Partnerships report their results on a calendar year basis. Accordingly, the financial information of the Local Limited Partnerships that is included in the accompanying financial statements is as of December 31, 2000 and 1999. The Fund has implemented policies and practices for assessing potential impairment of its investments in Local Limited Partnerships. Real estate experts analyze the investments to determine if impairment indicators exist. If so, the carrying value is compared to the undiscounted future cash flows expected to be derived from the asset. If a significant impairment in carrying value exists, a provision to write down the asset to fair value will be recorded in the Fund's financial statements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Fair Value of Financial Instruments Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"), Disclosures About Fair Value of Financial Instruments, requires disclosure of 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 and investments accounted for under the equity method, and all nonfinancial assets, such as real property. The fair values of the Fund's assets and liabilities, which qualify as financial instruments under SFAS No. 107, approximate their carrying amounts in the accompanying balance sheets. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) ------------------------------------------ Income Taxes No provision for income taxes has been made, as the liability for such taxes is an obligation of the partners of the Fund. 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 corporation and agencies $ 595,668 $ 9,237 $ - $ 604,905 Mortgage backed securities 160,634 3,555 (68) 164,121 ----------- --------- ---------- ----------- Marketable securities at March 31, 2001 $ 756,302 $ 12,792 $ (68) $ 769,026 =========== ========= ========== ===========
The contractual maturities at March 31, 2001 are as follows: Fair Cost Value ----------- ----------- Due in less than one year $ 198,867 $ 202,281 Due in one year to five years 396,801 402,624 Mortgage backed securities 160,634 164,121 ----------- ----------- $ 756,302 $ 769,026 =========== =========== Actual maturities for asset backed securities may differ from contractual maturities because some borrowers have the right to call or prepay obligations. Proceeds from sales of marketable securities were approximately $593,000 and $263,000 during the years ended March 31, 2001 and 2000, respectively. Proceeds from the maturities of marketable securities were approximately $425,000 and $422,000 during the years ended March 31, 2001 and 2000, respectively. Included in investment income are gross gains of $2,823 and $1,924 and gross losses of $755 and $136 that were realized on these sales during the years ended March 31, 2001 and 2000, respectively. 4. Investments in Local Limited Partnerships The Fund uses the equity method to account for its limited partnership interests in twenty-five Local Limited Partnerships which own and operate multi-family housing complexes, most of which are government assisted. Upon dissolution of the Local Limited Partnerships, proceeds will be distributed according to each respective partnership agreement. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships (continued) ----------------------------------------------------
The following is a summary of investments in Local Limited Partnerships at March 31, 2001: Capital contributions and advances paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 27,263,271 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $988,681) (13,596,427) Cash distributions received from Local Limited Partnerships (1,045,877) ------------- Investments in Local Limited Partnerships before adjustments 12,620,967 Excess of investment cost over the underlying net assets acquired: Acquisition fees and expenses 1,122,226 Accumulated amortization of acquisition fees and expenses (234,610) ------------- Investments in Local Limited Partnerships prior to reserve for valuation 13,508,583 Reserve for valuation of investments in Local Limited Partnerships (2,192,120) ------------- Investments in Local Limited Partnerships $ 11,316,463 =============
The Fund has provided a reserve for valuation for its investments in Local Limited Partnerships because there is evidence of non-temporary declines in the recoverable amount of the investments. Summarized financial information as of December 31, 2000 and 1999 (due to the Fund's policy of reporting the financial information of its Local Limited Partnership interests on a 90-day lag basis) of all Local Limited Partnerships in which the Fund has invested as of that date is as follows: Summarized Balance Sheets - as of December 31, 2000 1999 ------------ ----------- Assets: Investment property, net $ 64,091,338 $ 66,735,658 Other assets 5,506,953 5,541,902 ------------ ------------ Total Assets $ 69,598,291 $ 72,277,560 ============ ============ Liabilities and Partners' Equity: Mortgage notes payable $ 50,444,692 $ 52,811,951 Other debt 7,075,281 5,321,899 ------------ ------------ Total Liabilities 57,519,973 58,133,850 Fund's Equity 10,355,959 12,720,698 Other Partners' Equity 1,722,359 1,423,012 ------------ ------------ Total Liabilities and Partners' Equity $ 69,598,291 $ 72,277,560 ============ ============ BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships (continued) ---------------------------------------------------- Summarized Income Statements - for the years ended December 31, 2000 1999 ------------ ------------ Rental and other income $ 10,467,514 $ 10,212,301 ------------ ------------ Expenses: Operating 6,137,532 5,818,020 Interest 3,384,975 3,464,002 Depreciation and amortization 2,756,212 2,748,464 ------------ ------------ Total Expenses 12,278,719 12,030,486 ------------ ------------ Net Loss $ (1,811,205) $ (1,818,185) ============ ============ Fund's share of Net Loss $ (1,772,878) $ (1,782,829) ============ ============ Other partners' share of Net Loss $ (38,327) $ (35,356) ============ ============ For the years ended March 31, 2001 and 2000, the Fund has not recognized $511,173 and $267,550, respectively, of equity in losses relating to Local Limited Partnerships in which cumulative equity in losses have exceeded their total investment. The Fund's equity as reflected by the Local Limited Partnerships of $10,355,959 differs from the Fund's investments in Local Limited Partnerships before adjustment of $12,620,967 primarily because of cumulative unrecognized losses of $988,681 described above and differences in the accounting treatment of miscellaneous items. 5. Other Investments Other investments consists of the aggregate cost of the Treasury STRIPS purchased by the Fund for the benefit of the Class B Limited Partners. The amortized cost at March 31, 2001 is composed of the following: Aggregate cost of Treasury STRIPS $ 918,397 Accumulated accretion of Original Issue Discount 888,698 ------------ $ 1,807,095 The fair value of these securities at March 31, 2001 is $2,248,054. Maturity dates for the STRIPS range from February 15, 2007 to May 15, 2010 with a final maturity value of $3,290,000. 6. Transactions with Affiliates An affiliate of the Managing General Partner currently receives the base amount of $6,600 per Local Limited Partnership (as adjusted by the CPI factor) annually as the Asset Management Fee for administering the affairs of the Fund. Included in the statements of operations for the years ended March 31, 2001 and 2000 is $164,682 and $163,750, respectively, of fees earned by the affiliate. At March 31, 2001, the affiliate is due $1,024,247 for these fees. An affiliate of the Managing General Partner is reimbursed for the actual cost of the Fund's operating expenses. Included in general and administrative expenses for the years ended March 31, 2001 and 2000 is $265,985 and $104,994, respectively, that has been paid or is payable by the Fund as reimbursements for salaries and benefits expenses. At March 31, 2001, $312,572 is payable to an affiliate of the Managing General Partner. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 6. Transactions with Affiliates (continued) --------------------------------------- Through December 31, 1999, affiliates of the Managing General Partner managed three Properties in which the Fund has invested. During the year ended December 31, 2000, one of the Local Limited Partnerships changed management agents to a non-affiliate of the Fund. Included in operating expenses in the summarized income statements in Note 4 to the Financial Statements is $84,280 and $116,585 of fees earned by these affiliates for the years ended December 31, 2000 and 1999, respectively. 7. Transfer of Interests in Local Limited Partnerships As previously reported, Bancroft Street Apartments had significant operating deficits due to occupancy issues and deteriorating market conditions. The Managing General Partner and Local General Partner negotiated with the lender to restructure the mortgage loan. However, the lender ultimately determined to hold a foreclosure on the property on October 10, 2000. The Fund plans to maintain its legal interest in the Local Limited Partnership until the receipt of the final tax return. As previously reported, the Managing General Partner of Phoenix Housing consummated a transfer and put option in 1997. At that time, the Fund transferred 50% of its limited partnership interest to the Managing General Partner and wrote down the remaining carrying value of its investment to zero. Effective November 1, 2000, the Local Limited Partnership admitted an additional investor limited partner through a partial transfer that resulted in the Fund transferring all but 0.2% ownership interest in the Local Limited Partnership as of March 31, 2001. On March 1, 2000, the Managing General Partner consummated the transfer of 1% of the Fund's interest in losses, 48.5% of its interest in profits and 30% of its capital account of Findley Place Apartments to the Local General Partner. The Managing General Partner has the right to put the Fund's remaining interests to the Local General Partner any time after one year from the March 1, 2000 effective date. In addition, the Local General Partner has the right to call the remaining interest after the tax credit period has expired, which will occur in 2004. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 8. Federal Income Taxes The following schedule reconciles the reported financial statement net loss for the fiscal years ended March 31, 2001 and 2000 to the net loss reported on the Form 1065, U. S. Partnership Return of Income for the years ended December 31, 2000 and 1999:
2001 2000 -------------- ------------- Net Loss per financial statements $ (1,875,548) $ (1,760,848) Adjustment for equity in losses of Local Limited Partnerships for tax purposes in excess of equity in losses for financial reporting purposes (547,024) (342,700) Equity in losses of Local Limited Partnerships not recognized for financial reporting purposes (511,173) (267,550) Adjustment to reflect March 31 fiscal year end to December 31 tax year end 8,581 36,275 Provision for valuation of investments in Local Limited Partnerships not deductible for tax purposes 325,944 150,000 Amortization for tax purposes in excess of amortization for financial reporting purposes (21,397) (11,949) Related party expenses for financial reporting (tax) purposes in excess of related party expenses for tax (financial reporting) purposes (1,318,636) 163,332 -------------- ------------- Net Loss per tax return $ (3,939,253) $ (2,033,440) ============== =============
The differences in the assets and liabilities of the Fund for financial reporting purposes and tax reporting purposes for the year ended March 31, 2001 are as follows:
Financial Tax Reporting Reporting Purposes Purposes Differences ------------- ------------- ---------------- Investments in Local Limited Partnerships $ 11,316,463 $ 8,299,056 $ 3,017,407 ============== ============= ================= Other assets $ 2,841,695 $ 7,985,441 $ (5,143,746) ============= ============= ================ = Liabilities $ 1,369,786 $ 1,236,731 $ 133,055 ============= ============= =================
The differences in the assets and liabilities of the Fund for financial reporting purposes are primarily attributable to: i) the cumulative equity in losses from Local Limited Partnerships for tax purposes is approximately $4,893,000 greater than for financial reporting purposes including approximately $989,000 of losses the Fund has not recognized for financial reporting purposes; ii) organizational and offering costs of approximately $5,132,000 have been capitalized for tax purposes but are charged to Limited Partners' equity for financial reporting purposes.