10KSB 1 tcp10k04.txt TCP10K04 June 30, 2004 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, 2004 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, 2004 ----------------------------------------------------- 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, 2004 -------------------------------- 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, 2004 TABLE OF CONTENTS
Page No. PART I Item 1 Business K-3 Item 2 Properties K-5 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-12 Item 6 Management's Discussion and Analysis of Financial Condition and Results of Operations K-12 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, Financial Statement Schedules and Reports on Form 8-K K-20 CONTROLS AND PROCEDURES K-21 ----------------------- SIGNATURES K-22 ---------- CERTIFICATIONS K-23 --------------
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 originally invested as a limited partner in twenty-nine 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") that were 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) provide annual tax benefits in the form of tax credits which Limited Partners may use to offset their Federal income tax liability; (ii) preserve and protect the Fund's capital committed to Local Limited Partnerships; (iii) provide cash distributions from operations of Local Limited Partnerships; (iv) provide cash distributions from Sale or Refinancing transactions with the possibility of long term capital appreciation; and (v) provide cash distributions derived from investment in Treasury STRIPS to Class B Limited Partners after a period of approximately thirteen to eighteen years equal to their Capital Contributions. 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 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, SD 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(1) 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 (1) The Fund no longer has an interest in the Local Limited Partnership which owns this Property.
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, 2004, 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 made to Local Limited Partnerships: (i) Tree Trail Apartments, A Limited Partnership and Meadow Wood Townhomes, A Limited Partnership, representing 14.60%, have Flournoy Development Company 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 5.20%, have Regency Investment Assoc. Inc. as Local General Partners; (iii) Phoenix Housing, L.P., Dakota Square Manor Limited Partnership and Duluth Limited Partnership II, representing 6.87%, have MetroPlains Acquisition Corporation as Local General Partners; and (iv) Pilot House Associates, L.P. and Preston Place Associates, L.P., representing 18.36%, 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 MMA Financial, LLC ("MMA"), 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-four 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 that have repayment terms that are based on a percentage of cash flow. The schedule on the following pages provides 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 2004 2004 2003 Subsidy* 2004 --------------------------- -------------- -------------------- ------------------------------ --------- ---------------- 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 $2,479,708 $2,479,708 $4,035,547 None 100% Jardines Limited Dividend Partnership, S.E., L.P. Jardines de Juncos Juncos, PR 60 604,781 604,781 2,581,374 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 2004 2004 2003 Subsidy* 2004 ------------------------- ------------- ------------------- ----------------- --------------------- ---------- --------------- 99 Livingston Associates, L.P. Livingston Arms Poughkeepsie, NY 25 1,114,686 1,114,686 389,183 None 96% Broadway Tower Limited Partnership Broadway Tower Revere, MA 92 2,350,000 2,350,000 5,262,109 Section 8 99% Phoenix Housing, L.P. Phoenix Housing Moorhead, MN 40 457,810 457,810 2,124,855 Section 8 100% Cottage Homesteads of Aspen Limited Partnership Cottages of Aspen Oakdale, MN 114 1,027,333 1,027,333 4,375,000 None 92% 45th & Vincennes Limited Partnership 45th & Vincennes Chicago, IL 19 689,080 689,080 586,143 Section 8 74% Long Creek Court Limited Partnership Long Creek Court Kittrell, NC 14 120,476 120,476 542,950 FmHA 86%
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 2004 2004 2003 Subsidy* 2004 ------------------------- -------------- --------------------- -------------------------------- ---------- --------------- Atkins Glen Limited Partnership Atkins Glen Stoneville, NC 24 205,574 205,574 943,512 FmHA 100% Tree Trail Apartments, A Limited Partnership Tree Trail Gainesville, FL 108 2,060,143 2,060,143 2,519,564 None 89% Meadow Wood Townhomes, A Limited Partnership Meadow Wood Smyrna, TN 88 1,742,671 1,742,671 2,429,317 None 97% Dakota Square Manor Limited Partnership Primrose Grand Forks, ND 48 674,557 674,557 1,023,127 None 96% Duluth Limited Partnership II Sycamore Sioux Falls, SD 48 657,000 657,000 1,217,658 None 88% Preston Place Associates, L.P. Preston Place Winchester, VA 120 2,300,000 2,300,000 3,946,705 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 2004 2004 2003 Subsidy* 2004 ------------------------- -------------- ------------------ ----------------- --------------------- ----------- --------------- Kings Grant Court Limited Partnership Kings Grant Court Statesville, NC 36 708,530 708,530 838,830 None 100% Chestnut Plains Limited Partnership Chestnut Plains Winston-Salem, NC 24 319,810 319,810 548,204 None 54% Prince Hall Housing Associates, Limited Partnership (1) Capitol Park Oklahoma City, OK Bancroft Street Limited Partnerships (1) Bankcroft Court Toledo, OH Hudson Square Apartments Company (A Limited Partnership) Hudson Square Baton Rouge, LA 82 554,670 554,670 475,127 Section 8 100% Walker Woods Partners, II, L.P. Walker Woods II Dover, DE 19 591,429 591,429 849,754 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 2004 2004 2003 Subsidy* 2004 ------------------------- --------------- ------------------ ---------------- ------------------- ---------- --------------- Vista Villa Limited Dividend Housing Association Limited Partnership Vista Villa Saginaw County, MI 100 1,204,762 1,204,762 3,584,407 None 95% Metropolitan Apartments Limited Partnership Metropolitan Chicago, IL 69 2,139,159 2,139,159 1,876,131 Section 8 83% Carolina Woods Associates II, Limited Partnership Carolina Woods II Greensboro, NC 40 750,238 750,238 755,508 None 80% Linden Square Limited Dividend Housing Association Limited Partnership Linden Square Genesee County, MI 120 1,299,774 1,299,774 4,237,991 None 99% New Garden Associates, Limited Partnership New Garden Place Gilmer, NC 76 1,269,794 1,269,794 2,190,543 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 2004 2004 2003 Subsidy* 2004 --------------------- -------------- --------------------- --------------- ---------------------- -------- ----------- Exodus/Lyndon/Windsor, Limited Partnership Findley Place Minneapolis, MN 89 716,000 716,000 4,320,000 None 100% ---- ------------ ------------ ------------ 1,587 $ 26,037,985 $ 26,037,985 $51,653,539 ====== ============ ============ ===========
* 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. None of the Local Limited Partnerships invested in by the Fund represent more than 10% of the total capital contributions made to Local Limited Partnerships by the Fund. The Fund does not guarantee any of the mortgages or other debt of the Local Limited Partnerships. 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 March 31, 2004, there were 1,903 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 ----------------------------------------------------------------------------- Executive Level Overview The Fund is a Massachusetts limited partnership organized to invest in 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, 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 annual tax benefits in the form of tax credits which Limited Partners may use to offset their Federal income tax liability; (ii) preserve and protect the Fund's capital committed to Local Limited Partnerships; (iii) provide cash distributions from operations of Local Limited Partnerships; (iv) provide cash distributions from Sale or Refinancing transactions with the possibility of long term capital appreciation; and (v) provide cash distributions derived from investment in Treasury STRIPS to Class B Limited Partners after a period of approximately thirteen to eighteen years equal to their Capital Contributions. Arch Street VIII, Inc., a Massachusetts corporation is the Managing General Partner of the Fund. Arch Street VI Limited Partnership, a Massachusetts limited partnership whose general partner consists of Arch Street, Inc., is also a General Partner. The Fund's investment portfolio consists of limited partnership interests in twenty-four Local Limited Partnerships, each of which owns and operates a multi-family apartment complex and each of which has generated Tax Credits. Since inception, the Fund has generated Tax Credits, net of recapture, of approximately $1,443 per Class A Unit, with approximately $27 of Tax Credits expected to be generated during 2004, with immaterial amounts expected from 2005 through 2010. Class B Unit investors have received Tax Credits, net of recapture, of approximately $1,038 per Limited Partner Unit, with approximately $19 of Tax Credits expected to be generated during 2004, with immaterial amounts expected from 2005 through 2010. Properties that receive low income housing Tax Credits must remain in compliance with rent restriction and set-aside requirements for at least 15 years from the date the property is completed. Failure to do so would result in the recapture of a portion of the property's Tax Credits. Between 2006 and continuing through 2010, the Compliance Period of the twenty-four Properties in which the Fund has an interest will expire. The Managing General Partner has negotiated agreements that will ultimately dispose of the Fund's interest in four Local Limited Partnerships. It is unlikely that the disposition of any of these Local Limited Partnership interests will generate any material cash distributions to the Fund. The Managing General Partner will continue to closely monitor the operations of the Properties during the Compliance Period and will formulate disposition strategies with respect to the Fund's remaining Local Limited Partnership interests. It is unlikely that the Managing General Partner's efforts will result in the Fund disposing of all of its remaining Local Limited Partnership interests concurrently with the expiration of each Property's Compliance Period. The Fund shall dissolve and its affairs shall be wound up upon the disposition of the final Local Limited Partnership interest and other assets of the Fund. Investors will continue to be Limited Partners, receiving K-1s and quarterly and annual reports, until the Fund is dissolved. 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. Other Development During the year ended March 31, 2004, Lend Lease Real Estate Investments, Inc. sold its interest in, and association with, the General Partner and its affiliated business unit, Housing and Community Investing ("HCI"), to Municipal Mortgage and Equity, LLC ("Muni Mae"). Muni Mae is in the business of originating, servicing and investing in multi-family housing. HCI was combined with Muni Mae's Midland subsidiary to operate under the name MMA Financial, LLC. Accounting Policies The Fund's accounting policies include those that relate to its recognition of investments in Local Limited Partnerships using the equity method of accounting. The Fund's policy is as follows: 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 net income or loss and for cash distributions from the Local Limited Partnerships; equity in income or loss of the Local Limited Partnerships is included currently in the Fund's operations. Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that equity in losses are incurred when the Fund's carrying value of the respective Local Limited Partnership has been reduced to a zero balance, the losses will be suspended and offset against future income. Income from Local Limited Partnerships, where cumulative equity in losses plus cumulative distributions have exceeded the total investment in Local Limited Partnerships, will not be recorded until all of the related unrecorded losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, that distribution is recorded as income on the books of the Fund and is included in "Other Revenue" in the accompanying financial statements. 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 investment is analyzed to consider the Fund's ability to recover its carrying value. If an other than temporary impairment in carrying value exists, a provision to write down the asset to fair value will be recorded in the Fund's financial statements. Accounting Standard Update In January 2003, the FASB issued Interpretation No. 46 ("Interpretation"), "Consolidation of Variable Interest Entities", which provides new criteria for determining whether or not consolidation accounting is required. The Interpretation, which was modified in December 2003 by FIN46R in order to address certain technical and implementation issues, requires the Fund to consider consolidation or provide additional disclosures of financial information for Local Limited Partnerships meeting the definition of a Variable Interest Entity ("VIE"). The Fund is required to apply the Interpretation to the Local Limited Partnerships meeting the definition of a VIE on December 31, 2004. This Interpretation would require consolidation by the Fund of certain Local Limited Partnerships' assets and liabilities and results of operations if the Fund determined that the Local Limited Partnership was a VIE and that the Fund was the "Primary Beneficiary". Minority interests may be recorded for the Local Limited Partnerships' ownership share attributable to other investors. Where consolidation of Local Limited Partnerships is not required, additional financial information disclosures of Local Limited Partnerships may be required. The Fund has assessed the potential consolidation effects of the Interpretation and preliminarily concluded that it is not the Primary Beneficiary of any of the Local Limited Partnerships that meet the definition of a VIE. Prior to the effective date of FIN 46, the Fund is required to disclose its maximum exposure to economic and financial statement losses as a result of its involvement with the VIEs. The Fund's exposure to economic and financial statement losses from the VIEs is limited to its investment in the VIEs ($5,910,776 at March 31, 2004). Liquidity and capital resources At March 31, 2004, the Fund had cash and cash equivalents of $768,959, as compared to $173,210 at March 31, 2003. The increase is primarily attributable to cash distributions received from Local Limited Partnerships and maturities of marketable securities, partially offset by cash used for operating activities and advances made to one Local Limited Partnership. The Managing General Partner initially designated 4% of the Adjusted Gross Proceeds (which generally means Gross Proceeds minus the amounts committed to the acquisition of Treasury STRIPS) as Reserves, as defined in the Partnership Agreement. The Reserves were established to be used 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. At March 31, 2004, $770,573 of cash, cash equivalents and marketable securities has been designated as Reserves. To date, professional fees relating to various Property issues totaling approximately $441,000 have been paid from Reserves. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Fund's management might deem it in its best interest to voluntarily provide such funds in order to protect its investment. As of March 31, 2004, the Fund has advanced approximately $261,000 to Local Limited Partnerships to fund operating deficits. The Managing General Partner 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 on going operations. Reserves may be used to fund Fund operating deficits, if the Managing General Partner deems funding appropriate. To date, the Fund has used approximately $8,000 of Reserves to fund operations. If Reserves are not adequate to cover the Fund's operations, the Fund will seek other financing sources including, but not limited to, the deferral of Asset Management Fees paid to an affiliate of the Managing General Partner or working with Local Limited Partnerships to increase cash distributions. Since the Fund invests as a limited partner, the Fund has no contractual duty to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, as of March 31, 2004, 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 to Limited Partners were made during the two years ended March 31, 2004. In the event that distributions are received from Local Limited Partnerships, the Managing General Partner has decided that such amounts will be used to increase Reserves. No assurance can be given as to the amounts of future distributions from the Local Limited Partnerships since 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 For the year ended March 31, 2004, the Fund's operations resulted in a net loss of $1,298,145 as compared to a net loss of $1,217,012 for the same period in 2003. The increase in net loss is primarily attributable to an increase in provision for valuation of investments in Local Limited Partnerships, a decrease in recovery of provision for valuation of advances to Local Limited Partnerships and an increase in provision for valuation of advances to Local Limited Partnerships. These effects were partially offset by decreases in equity in losses of Local Limited Partnerships and general and administrative expenses, as well as an increase in other revenue. The increase in provision for valuation of investments in Local Limited Partnerships is the result of the Fund recording a reserve for valuation for its investments in certain Local Limited Partnerships in order to appropriately reflect the estimated net realizable value of these investments. The decrease in equity in losses of Local Limited Partnerships is primarily due to an increase in unrecognized losses by the Fund of Local Limited Partnerships with carrying values of zero. The decrease in general and administrative expenses is primarily due to decreased charges from an affiliate of the Managing General Partner for administrative expenses necessary for the operation of the Fund. The increase in other revenue relates to the timing of distributions received by the Fund from Local Limited Partnerships. Low-income housing tax credits The 2003 Tax Credits per Unit were $55.79 and $40.17 for Class A Unit and Class B Unit investors, respectively. The 2002 Tax Credits per Unit were $107.40 and $77.32 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 Tax Credit 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 A majority of the Properties in which the Fund has an interest have stabilized operations and operate above breakeven. 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 had persistent operating difficulties that could either: i) have an adverse impact on the Fund's liquidity; ii) result in their foreclosure; or iii) result in the Managing General Partner deeming it appropriate for the Fund to dispose of its interest in the Local Limited Partnership prior to the expiration of the Compliance Period. Also, the Managing General Partner, in the normal course of the Fund's business, may arrange for the future disposition of its interest in certain Local Limited Partnerships. The following Property discussions focus only on such Properties. As previously reported, 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 and curb appeal. As a result, maintaining occupancy, and therefore revenues, continues to be an issue and debt service coverage and working capital are below appropriate levels. A site visit by the Managing General Partner found the Property in need of some minor improvements but in overall fair condition. Even though advances from the Local General Partner have enabled the Property to remain current on its loan obligations, the Managing General Partner believes that the Local General Partner and its affiliated management company are not adequately performing their responsibilities with respect to the Property. The Managing General Partner has expressed these concerns to the Local General Partner and will continue to closely monitor the Property's operations. As previously reported, 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. 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 had the right to transfer the Fund's remaining interests after December 1, 2001. As previously reported, 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 subsequent to the Compliance Period, which expired on December 31, 2003. With regard to Phoenix Housing, the Fund approved the admission of an additional limited partner to the Local Limited Partnership effective February 1, 2000. As a result, the Fund's interest in the Local Limited Partnership was diluted to an immaterial amount. Because of its diluted interest in the Local Limited Partnership, the Fund will not receive a material amount of the Property's Tax Credits subsequent to February 1, 2000. Instead, the Fund will receive cash from the Local Limited Partnership in the approximate amount of the Property's Tax Credits that it would have received had its interest in the Property not been diluted. As previously reported, as a result of concerns regarding the then existing operating deficits and capital requirements of Findley Place, located in Minneapolis, Minnesota, 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 had the right to put the Fund's remaining interest 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 Compliance Period has expired, which will occur on December 31, 2004. Currently, the Property is experiencing stabilized operations. New Garden Place, located in Gilmer, North Carolina, has enjoyed strong operations for the past several years. In early 2004, the Local General Partner requested and the Fund provided its approval to a refinancing of the Property's first mortgage that lowered the interest rate and will increase the Property's cash flow. In connection with the Fund's approval of this refinancing, the Fund and the Local General Partner entered into a put agreement whereby the Fund can transfer its interest in the Local Partnership to the Local General Partner for a nominal amount any time after the Property's Compliance Period ends on December 31, 2008. 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, 2004 and 2003. 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 Tax Credits. Certain 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, the Managing General Partner 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 MMA Financial, LLC. The Managing General Partner was incorporated in December, 1990. 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 Executive Vice President, Tax Credit Equity Group Michael H. Gladstone Principal, Member 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 48, Executive Vice President, Tax Credit Equity Group - Ms. Netzer is responsible for tax credit investment programs to institutional clients. She joined MMA Financial, LLC as a result of the Boston Financial and subsequent Lend Lease HCI acquisitions, starting with Boston Financial in 1987 and 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 47, Principal, Member - Mr. Gladstone is responsible for capital transactions work in the Asset Management group of MMA Financial, LLC. He joined MMA Financial, LLC as a result of the Boston Financial and Lend Lease HCI acquisitions, 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. 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 As of March 31, 2004, the following is the only entity known to the Fund to be the beneficial owner of more than 5% of the Units outstanding:
Amount Title of Name and Address of Beneficially Class Beneficial Owner Owned Percent of Class ---------- ------------------------ -------------------- -------------------- Limited Everest Tax Credit Investors 2,705.5 Units 7% Partner 155 North Lake Avenue Suite 1000 Pasadena, CA 91101
The equity securities registered by the Fund under Section 12(g) of the Act of 1934 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., MMA Financial, LLC 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, 2004 are described below and in the sections of the Prospectus entitled "Estimated Use of Proceeds", "Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions". Such sections are incorporated herein by reference. The Fund is permitted to enter into transactions involving affiliates of the 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, 2004 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 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 Proceeds. There were no organization fees and offering expenses paid in the two years ended March 31, 2004. Acquisition fees and expenses In accordance with the Partnership Agreement, the Fund 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 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 were paid to an affiliate of the Managing General Partner. Acquisition expenses totaling $825,516 were incurred and were reimbursed to an affiliate of the Managing General Partner. There were no acquisition fees or expenses paid in the two years ended March 31, 2004. 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 $5,500 (annually adjusted by the CPI factor) per Local Limited Partnership as the annual Asset Management Fee. Asset Management Fees incurred in each of the two years ended March 31, 2004 are as follows: 2004 2003 ----------- ----------- Asset management fees $ 175,831 $ 168,608 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, 2004 are as follows: 2004 2003 --------- ----------- Salaries and benefits expense reimbursements $ 215,939 $ 276,321 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, 2004. 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 MMA Financial, LLC and its affiliates for the two years ended March 31, 2004 is presented in Note 6 to the Financial Statements. Item 13. Exhibits, Financial Statement Schedules 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) Exhibits 31.1 Certification of Jenny Netzer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Jenny Netzer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (c) Reports on Form 8-K No Reports on Form 8-K were filed during the year ended March 31, 2004. CONTROLS AND PROCEDURES Controls and Procedures Based on the Fund's evaluation within 120 days prior to filing this Form 10-KSB, the Fund's director has concluded that the Fund's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Fund files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. There have been no significant changes in the Fund's internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation. 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 30, 2004 --------------------------------------- ------------- Jenny Netzer Executive Vice President MMA Financial, LLC 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 30 , 2004 --------------------------------------- -------------- Jenny Netzer Executive Vice President MMA Financial, LLC By: /s/Michael H. Gladstone Date: June 30, 2004 ----------------------------- ------------- Michael H. Gladstone Principal MMA Financial, LLC BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED MARCH 31, 2004
INDEX Page No. Report of Independent Registered Public Accounting Firm F-2 For the years ended March 31, 2004 and 2003 Financial Statements: Balance Sheet - March 31, 2004 F-3 Statements of Operations - For the years ended March 31, 2004 and 2003 F-4 Statements of Changes in Partners' Equity (Deficiency) - For the years ended March 31, 2004 and 2003 F-5 Statements of Cash Flows - For the years ended March 31, 2004 and 2003 F-6 Notes to the Financial Statements F-7
Report of Independent Registered Public Accounting Firm 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 Qualified Tax Credit Fund Plus, A Limited Partnership (the "Fund") at March 31, 2004, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2004 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 $5,910,776 at March 31, 2004, and the Fund's equity in earnings (losses) of Local Limited Partnerships is stated at $(535,656) and $(726,958) for the years ended March 31, 2004 and 2003, 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 the standards of the Public Company Accounting Oversight Board (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, 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 our opinion. /s/PricewaterhouseCoopers LLP June 24, 2004 BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) BALANCE SHEET March 31, 2004
Assets Cash and cash equivalents $ 768,959 Marketable securities, at fair value (Note 3) 1,614 Investments in Local Limited Partnerships (Note 4) 5,910,776 Other investments (Note 5) 2,279,818 Other assets 137 ------------- Total Assets $ 8,961,304 ============= Liabilities and Partners' Equity Due to affiliate (Note 6) $ 89,215 Accrued expenses 20,588 ------------- Total Liabilities 109,803 ------------- General, Initial and Investor Limited Partners' Equity 8,851,490 Net unrealized gains on marketable securities 11 ------------- Total Partners' Equity 8,851,501 ------------- Total Liabilities and Partners' Equity $ 8,961,304 ============= 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, 2004 and 2003
2004 2003 ------------- ------------- Revenue: Investment $ 12,969 $ 23,176 Accretion of Original Issue Discount (Note 5) 170,154 157,141 Recovery of provision for valuation of advances to Local Limited Partnerships (Note 4) - 49,732 Other 100,073 71,091 ------------- ------------- Total Revenue 283,196 301,140 ------------- ------------- Expenses: Asset management fees, affiliate (Note 6) 175,831 168,608 Provision for valuation of advances to Local Limited Partnerships (Note 4) 29,688 - Provision for valuation of investments in Local Limited Partnerships (Note 4) 520,042 217,438 General and administrative (includes reimbursements to an affiliate in the amount of $215,939 and $276,321 in 2004 and 2003, respectively) (Note 6) 304,946 386,282 Amortization 15,178 18,866 ------------- ------------- Total Expenses 1,045,685 791,194 ------------- ------------- Loss before equity in losses of Local Limited Partnerships (762,489) (490,054) Equity in losses of Local Limited Partnerships (Note 4) (535,656) (726,958) ------------- ------------- Net Loss $ (1,298,145) $ (1,217,012) ============= ============= Net Loss allocated: General Partners $ (14,683) $ (13,742) Class A Limited Partners (1,360,585) (1,273,345) Class B Limited Partners 77,123 70,075 ------------- ------------- $ (1,298,145) $ (1,217,012) ============= ============= Net Income (Loss) per Limited Partner Unit: Class A Unit (34,643 Units) $ (39.27) $ (36.76) ============= ============= Class B Unit (3,290 Units) $ 23.44 $ 21.30 ============= ============= 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, 2004 and 2003
Investor Investor Initial Limited Limited Net General Limited Partners, Partners, Unrealized Partners Partner Class A Class B Gains Totals ------------ -------- --------- ---------- ------- --------------- Balance at March 31, 2002 $ (222,754) $ 5,000 $ 9,016,476 $ 2,567,925 $ 10,767 $ 11,377,414 ----------- --------- ------------ ------------ ----------- --------------= Comprehensive Income (Loss): Change in net unrealized gains on marketable securities available for sale - - - - (4,257) (4,257) Net Income (Loss) (13,742) - (1,273,345) 70,075 - (1,217,012) ----------- --------- ------------ ------------ ----------- -------------- Comprehensive Income (Loss) (13,742) - (1,273,345) 70,075 (4,257) (1,221,269) ----------- --------- ------------ ------------ ----------- -------------- Balance at March 31, 2003 (236,496) 5,000 7,743,131 2,638,000 6,510 10,156,145 ----------- --------- ------------ ------------ ----------- --------------= Comprehensive Income (Loss): Change in net unrealized gains on marketable securities available for sale - - - - (6,499) (6,499) Net Income (Loss) (14,683) - (1,360,585) 77,123 - (1,298,145) ----------- --------- ------------ ------------ ----------- -------------- Comprehensive Income (Loss) (14,683) - (1,360,585) 77,123 (6,499) (1,304,644) ----------- --------- ------------ ------------ ----------- -------------- Balance at March 31, 2004 $ (251,179) $ 5,000 $ 6,382,546 $ 2,715,123 $ 11 $ 8,851,501 =========== ========= ============ ============ =========== =============== 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, 2004 and 2003
2004 2003 ------------- ------------- Cash flows from operating activities: Net Loss $ (1,298,145) $ (1,217,012) Adjustments to reconcile net loss to net cash used for operating activities: Equity in losses of Local Limited Partnerships 535,656 726,958 Provision for valuation of advances to Local Limited Partnerships 29,688 - Recovery of provision for valuation of advances to Local Limited Partnerships - (49,732) Provision for valuation of investments in Local Limited Partnerships 520,042 217,438 Accretion of Original Issue Discount (170,154) (157,141) Amortization 15,178 18,866 Net gain on maturities of marketable securities (800) (3,134) Cash distributions included in net loss (64,883) (62,323) Increase (decrease) in cash arising from changes in operating assets and liabilities: Other assets 2,396 4,922 Due to affiliate (238,659) (925,881) Accrued expenses (10,517) 1,181 ------------- ------------- Net cash used for operating activities (680,198) (1,445,858) ------------- ------------- Cash flows from investing activities: Purchases of marketable securities - (400,086) Proceeds from maturities of marketable securities 204,536 687,858 Advances to Local Limited Partnerships (29,688) - Reimbursement of advances to Local Limited Partnerships - 60,532 Cash distributions received from Local Limited Partnerships 1,101,099 1,131,316 ------------- ------------- Net cash provided by investing activities 1,275,947 1,479,620 ------------- ------------- Net increase in cash and cash equivalents 595,749 33,762 Cash and cash equivalents, beginning of year 173,210 139,448 ------------- ------------- Cash and cash equivalents, end of year $ 768,959 $ 173,210 ============= =============
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 annual tax benefits in the form of tax credits which Limited Partners may use to offset their Federal income tax liability; (ii) preserve and protect the Partnership's capital committed to Local Limited Partnerships; (iii) provide cash distributions from operations of Local Limited Partnerships; (iv) provide cash distributions from Sale or Refinancing transactions with the possibility of long term capital appreciation; and (v) provide cash distributions derived from investment in Treasury STRIPS to Class B Limited Partners after a period of approximately thirteen to eighteen years equal to their Capital Contributions. Arch Street VIII, Inc., a Massachusetts corporation is the Managing General Partner of the Fund. Arch Street VI Limited Partnership, 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 MMA Financial, LLC ("MMA"). The fiscal year of the Fund ends on March 31. During the year ended March 31, 2004, Lend Lease Real Estate Investments, Inc. sold its interest in, and association with, the General Partner and its affiliated business unit, Housing and Community Investing ("HCI"), to Municipal Mortgage and Equity, LLC ("Muni Mae"). Muni Mae is in the business of originating, servicing and investing in multi-family housing. HCI was combined with Muni Mae's Midland subsidiary to operate under the name MMA Financial, LLC. 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. 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. 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. At March 31, 2004, the Managing General Partner has designated $770,573 of cash, cash equivalents and marketable securities as such Reserves. Generally, profits, losses, tax credits and cash flow 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. The General Partner has an obligation to fund deficits in its capital account, subject to limits set forth in the Partnership Agreement. 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. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies Cash Equivalents Cash equivalents represent short-term, highly liquid instruments with original maturities of 90 days or less. At times, cash and cash equivalents exceed federally insurable limits. The Fund mitigates this risk by investing in major financial institutions. Marketable Securities and Other Investments 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. All marketable securities have fixed maturities. 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 net income or loss and for cash distributions from the Local Limited Partnerships; equity in income or loss of the Local Limited Partnerships is included currently in the Fund's operations. Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that equity in losses are incurred when the Fund's carrying value of the respective Local Limited Partnership has been reduced to a zero balance, the losses will be suspended and offset against future income. Income from Local Limited Partnerships, where cumulative equity in losses plus cumulative distributions have exceeded the total investment in Local Limited Partnerships, will not be recorded until all of the related unrecorded losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, that distribution is recorded as income on the books of the Fund and is included in "Other Revenue" in the accompanying financial statements. The Tax Credits generated by Local Limited Partnerships are not reflected on the books of the Fund as such credits are allocated to partners for use in offsetting their Federal income tax liability. 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 may provide advances to the Local Limited Partnerships to finance operations or to make debt service payments. The Fund assesses the collectibility of any advances at the time the advance is made and records a reserve if collectibility is not reasonably assured. The Fund does not guarantee any of the mortgages or other debt of the Local Limited Partnerships. The Managing 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, 2003 and 2002. 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) 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 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 investment is analyzed to consider the Fund's ability to recover its carrying value. If an other then temporary 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 of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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 and 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. 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 Mortgage backed securities $ 1,603 $ 11 $ - $ 1,614 ----------- ----------- ----------- ----------- Marketable securities at March 31, 2004 $ 1,603 $ 11 $ - $ 1,614 =========== =========== =========== ===========
BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 3. Marketable Securities (continued) The contractual maturities at March 31, 2004 are as follows:
Fair Cost Value Mortgage backed securities $ 1,603 $ 1,614 =========== ===========-
Actual maturities for asset backed securities may differ from contractual maturities because some borrowers have the right to call or prepay obligations. Proceeds from the maturities of marketable securities were approximately $205,000 and $688,000 during the years ended March 31, 2004 and 2003, respectively. Included in investment income are gross gains of $849 and $3,303 and gross losses of $49 and $169 that were realized on the maturities during the years ended March 31, 2004 and 2003, respectively. 4. Investments in Local Limited Partnerships The Fund has limited partnership interests in twenty-four Local Limited Partnerships which were organized for the purpose of owning and operating multi-family housing complexes, all of which are government-assisted. 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%. The Fund may have negotiated or may negotiate options with the local general partners to purchase or sell the Fund's interests in the Properties at the end of the tax credit compliance period at nominal prices. In the event that Properties are sold to third parties, proceeds will be distributed according to the terms of each Local Limited Partnership agreement. The following is a summary of investments in Local Limited Partnerships at March 31, 2004:
Capital contributions and advances paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 26,345,310 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $2,348,914) (14,998,889) Cumulative cash distributions received from Local Limited Partnerships (3,347,146) ------------- Investments in Local Limited Partnerships before adjustments 7,999,275 Excess investment cost over the underlying assets acquired: Acquisition fees and expenses 1,097,216 Cumulative amortization of acquisition fees and expenses (282,871) ------------- Investments in Local Limited Partnerships before impairment allowance 8,813,620 Impairment allowance on investments in Local Limited Partnerships (2,902,844) ------------- Investments in Local Limited Partnerships $ 5,910,776 =============
BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships (continued) For the year ended March 31, 2004, the Fund advanced $29,688 to one of the Local Limited Partnerships, all of which was impaired. The Fund has recorded an impairment allowance for its investments in certain Local Limited Partnerships in order to appropriately reflect the estimated net realizable value of these investments. Summarized combined financial information of the Local Limited Partnerships in which the Fund has invested as of December 31, 2003 and 2002 (due to the Fund's policy of reporting the financial information of its Local Limited Partnership interests on a 90 day lag basis) is as follows: Summarized Balance Sheets - as of December 31,
2003 2002 ------------- ------------- Assets: Investment property, net $ 58,499,842 $ 60,864,159 Other assets 6,242,738 6,227,549 ------------- ------------- Total Assets $ 64,742,580 $ 67,091,708 ============= ============= Liabilities and Partners' Equity: Mortgage notes payable $ 51,653,539 $ 51,076,163 Other liabilities 6,159,015 5,805,642 ------------- ------------- Total Liabilities 57,812,554 56,881,805 ------------- ------------- Fund's Equity 4,747,055 7,705,931 Other partners' equity 2,182,971 2,503,972 ------------- ------------- Total Partners' Equity 6,930,026 10,209,903 ------------- ------------- Total Liabilities and Partners' Equity $ 64,742,580 $ 67,091,708 ============= ============= Summarized Income Statements - for the years ended December 31, 2003 2002 ------------- ------------- Rental and other revenue $ 11,469,959 $ 11,290,796 ------------- ------------- Expenses: Operating 6,721,342 6,429,585 Interest 2,928,879 3,190,901 Depreciation and amortization 2,806,093 2,974,490 ------------- ------------- Total Expenses 12,456,314 12,594,976 ------------- ------------- Net Loss $ (986,355) $ (1,304,180) ============= ============= Fund's share of Net Loss $ (908,686) $ (1,255,996) ============= ============= Other partners' share of Net Loss $ (77,669) $ (48,184) ============= =============
For the years ended March 31, 2004 and 2003, the Fund has not recognized $406,874 and $534,930, respectively, of equity in losses relating to certain Local Limited Partnerships in which cumulative equity in losses and distributions exceeded its total investment in these Local Limited Partnerships. Previously unrecognized losses of $33,844 and $5,892 were included in losses recognized in the years ended March 31, 2004 and 2003, respectively. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships (continued) The Fund's equity as reflected by the Local Limited Partnerships of $4,747,055 differs from the Fund's investments in Local Limited Partnerships before adjustments of $7,999,275 primarily due to: i) cumulative unrecognized losses as described above; ii) advances to Local Limited Partnerships which the Fund included in investments in Local Limited Partnerships and; iii) 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, 2004 is composed of the following:
Aggregate cost of Treasury STRIPS $ 918,397 Accumulated accretion of Original Issue Discount 1,361,421 ------------ $ 2,279,818
The fair value of these securities at March 31, 2004 is $2,875,212. 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 Affiliate An affiliate of the Managing General Partner receives the base amount of $5,500 (annually adjusted by the CPI factor) per Local Limited Partnership as the annual Asset Management Fee for administering the affairs of the Fund. Included in the Statements of Operations are Asset Management Fees of $175,831 and $168,608 for the years ended March 31, 2004 and 2003, respectively. At March 31, 2004, $476 is reimbursable from an affiliate of the Managing General Partner for Asset Management Fees. During the years ended March 31, 2004 and 2003, $420,429 and $1,020,000, respectively, were paid out of available cash flow for Asset Management Fees. An affiliate of the Managing General Partner is reimbursed for the cost of the Fund's salaries and benefits expenses. Included in general and administrative expenses for the years ended March 31, 2004 and 2003 is $215,939 and $276,321, respectively, that the Fund has incurred for these expenses. As of March 31, 2004, $89,691 is payable to an affiliate of the Managing General Partner for salaries and benefits. BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 7. Federal Income Taxes The following schedules reconcile the reported financial statement net loss for the fiscal years ended March 31, 2004 and 2003 to the net loss reported on the Form 1065, U. S. Partnership Return of Income for the years ended December 31, 2003 and 2002:
2004 2003 -------------- ------------- Net Loss per financial statements $ (1,298,145) $ (1,217,012) Equity in losses of Local Limited Partnerships for tax purposes in excess of equity in losses for financial reporting purposes (165,127) (107,494) Equity in losses of Local Limited Partnerships not recognized for financial reporting purposes (373,030) (529,038) Adjustment to reflect March 31 fiscal year end to December 31 taxable year end 65,173 2,998 Amortization for tax purposes in excess of amortization for financial reporting purposes (32,363) (21,033) Provision for valuation of advances to Local Limited Partnerships not deductable for tax purposes 29,688 - Recovery of provision for valuation of advances to Local Limited Partnerships not deductable for tax purposes - (49,732) Provision for valuation of investments in Local Limited Partnerships not deductible for tax purposes 520,042 217,438 Gain on liquidation of investments in Local Limited Partnerships recognized for tax purposes 325,378 - Cash distributions included in net loss for financial reporting purposes (109,573) (3,258) -------------- ------------- Net Loss per tax return $ (1,037,957) $ (1,707,131) ============== =============
BOSTON FINANCIAL TAX CREDIT FUND PLUS (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 7. Federal Income Taxes (continued) The differences in the assets and liabilities of the Fund for financial reporting purposes and tax purposes as of March 31, 2004 and December 31, 2003, respectively are as follows:
Financial Reporting Tax Purposes Purposes Differences ------------- ------------- ---------------- Investments in Local Limited Partnerships $ 5,910,776 $ 2,601,358 $ 3,309,418 ============= ============= ================= Other assets $ 3,050,528 $ 8,160,686 $ (5,110,158) ============= ============= ================ = Liabilities $ 109,803 $ (2,874) $ 112,677 ============= ============= =================
The differences in the assets and liabilities of the Fund for financial reporting and tax purposes are primarily attributable to: i) the cumulative equity in losses from Local Limited Partnerships for tax purposes is approximately $5,598,000 greater than for financial reporting purposes including approximately $2,349,000 of losses the Fund has not recognized related to certain Local Limited Partnerships whose cumulative equity in losses exceeded their total investments; ii) the Fund has provided an impairment allowance of approximately $2,903,000 against its investments in Local Limited Partnerships for financial reporting purposes; and iii) organizational and offering costs of approximately $5,132,000 that have been capitalized for tax purposes are charged to Limited Partners' equity for financial reporting purposes. 8. Accounting Standard Update In January 2003, the FASB issued Interpretation No. 46 ("Interpretation"), "Consolidation of Variable Interest Entities", which provides new criteria for determining whether or not consolidation accounting is required. The Interpretation, which was modified in December 2003 by FIN46R in order to address certain technical and implementation issues, requires the Fund to consider consolidation or provide additional disclosures of financial information for Local Limited Partnerships meeting the definition of a Variable Interest Entity ("VIE"). The Fund is required to apply the Interpretation to the Local Limited Partnerships meeting the definition of a VIE on December 31, 2004. This Interpretation would require consolidation by the Fund of certain Local Limited Partnerships' assets and liabilities and results of operations if the Fund determined that the Local Limited Partnership was a VIE and that the Fund was the "Primary Beneficiary". Minority interests may be recorded for the Local Limited Partnerships' ownership share attributable to other investors. Where consolidation of Local Limited Partnerships is not required, additional financial information disclosures of Local Limited Partnerships may be required. The Fund has assessed the potential consolidation effects of the Interpretation and preliminarily concluded that it is not the Primary Beneficiary of any of the Local Limited Partnerships that meet the definition of a VIE. Prior to the effective date of FIN 46, the Fund is required to disclose its maximum exposure to economic and financial statement losses as a result of its involvement with the VIEs. The Fund's exposure to economic and financial statement losses from the VIEs is limited to its investment in the VIEs ($5,910,776 at March 31, 2004).