10QSB 1 tcpq206.txt TCPQ206 Microsoft Word 11.0.6502; November 14, 2006 Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549 Re: Boston Financial Tax Credit Fund Plus, A Limited Partnership Report on Form 10-QSB for the Quarter Ended September 30, 2006 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 TCP-10Q1.DOC UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2006 ---------------------------------- 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 ------------------------- 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 . BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership
TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Page No. ------------------------------ -------- Item 1. Financial Statements Balance Sheet (Unaudited) - September 30, 2006 1 Statements of Operations (Unaudited) - For the Three and Six Months Ended September 30, 2006 and 2005 2 Statement of Changes in Partners' Equity (Deficiency) (Unaudited) - For the Six Months Ended September 30, 2006 3 Statements of Cash Flows (Unaudited) - For the Six Months Ended September 30, 2006 and 2005 4 Notes to the Financial Statements (Unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II - OTHER INFORMATION Items 1-6 13 SIGNATURE 14 CERTIFICATIONS 15
BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership BALANCE SHEET September 30, 2006 (Unaudited)
Assets Cash and cash equivalents $ 132,106 Investment securities, at fair value 98,735 Investment in Local Limited Partnerships (Note 1) 5,060,623 Other investments (Note 2) 2,767,109 Other assets 1,737 --------------- Total Assets $ 8,060,310 =============== Liabilities and Partners' Equity Due to affiliate $ 301,046 Accrued expenses 55,216 --------------- Total Liabilities 356,262 --------------- General, Initial and Investor Limited Partners' Equity 7,704,812 Net unrealized loss on investment securities (764) --------------- Total Partners' Equity 7,704,048 --------------- Total Liabilities and Partners' Equity $ 8,060,310 =============== 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 Six Months Ended September 30, 2006 and 2005 (Unaudited)
Three Months Ended Six Months Ended September 30, September 30, September 30, September 30, 2006 2005 2006 2005 ---------------- ---------------- ---------------- --------------- Revenue Investment $ 2,630 $ 4,800 $ 5,812 $ 7,882 Accretion of Original Issue Discount (Note 2) 53,473 49,486 104,723 97,498 Other 3,644 35,503 7,499 40,410 ---------------- ---------------- ---------------- --------------- Total Revenue 59,747 89,789 118,034 145,790 ---------------- ---------------- ---------------- --------------- Expenses: Asset management fees, affiliate 43,203 43,682 86,406 86,921 Provision for valuation of investments in Local Limited Partnerships - 394,517 - 394,517 Recovery of prior years' provision for valuation of advances to Local Limited Partnerships (253) - (24,057) - General and administrative (includes reimbursements to an affiliate in the amounts of $80,410 and $81,411 for the six months ended September 30, 2006 and 2005, respectively) 86,967 76,878 215,995 162,307 Amortization 2,510 3,216 5,017 6,021 ---------------- ---------------- ---------------- --------------- Total Expenses 132,427 518,293 283,361 649,766 ---------------- ---------------- ---------------- --------------- Loss before equity in income of Local Limited Partnerships (72,680) (428,504) (165,327) (503,976) Equity in income of Local Limited Partnerships (Note 1) 266,034 80,250 318,605 69,657 ---------------- ---------------- ---------------- --------------- Net Income (Loss) $ 193,354 $ (348,254) $ 153,278 $ (434,319) ================ ================ ================ =============== Net Income (Loss) allocated: General Partners $ 1,399 $ (3,977) $ 486 $ (5,318) Class A Limited Partners 129,620 (368,562) 44,993 (492,803) Class B Limited Partners 62,335 24,285 107,799 63,802 ---------------- ---------------- ---------------- --------------- $ 193,354 $ (348,254) $ 153,278 $ (434,319) ================ ================ ================ =============== Net Income (Loss) Per Limited Partner Unit Class A Limited Partners (34,643 Units) $ 3.74 $ (10.64) $ 1.30 $ (14.23) ================ ================ ================ =============== Class B Limited Partners (3,290 Units) $ 18.95 $ 7.38 $ 32.77 $ 19.39 ================ ================ ================ ===============
The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) For the Six Months Ended September 30, 2006 (Unaudited)
Investor Investor Initial Limited Limited Net General Limited Partners, Partners, Unrealized Partners Partner Class A Class B Losses Total ------------ ------------ ------------ ------------ ------------ ------ Balance at March 31, 2006 $ (268,004) $ 5,000 $ 4,823,452 $ 2,991,086 $ (1,296) $7,550,238 ------------ ------------ ------------ ------------ ------------ ---------- Comprehensive Income: Change in net unrealized losses on investment securities available for sale - - - - 532 532 Net Income 486 - 44,993 107,799 - 153,278 ------------ ------------ ------------ ------------ ------------ ------------ Comprehensive Income 486 - 44,993 107,799 532 153,810 ------------ ------------ ------------ ------------ ------------ ------------ Balance at September 30, 2006 $ (267,518) $ 5,000 $ 4,868,445 $ 3,098,885 $ (764) $7,704,048 ============ ============ ============ ============ ============ ============ 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 Six Months Ended September 30, 2006 and 2005 (Unaudited)
2006 2005 ---------------- ---------------- Net cash used for operating activities $ (99,237) $ (73,287) Net cash provided by investing activities 115,454 29,767 ---------------- ---------------- Net increase (decrease) in cash and cash equivalents 16,217 (43,520) Cash and cash equivalents, beginning 115,889 371,212 ---------------- ---------------- Cash and cash equivalents, ending $ 132,106 $ 327,692 ================ ================ 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 (Unaudited) The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included with the Fund's Form 10-KSB for the year ended March 31, 2006. In the opinion of the Managing General Partner, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Fund's financial position and results of operations. The results of operations for the periods may not be indicative of the results to be expected for the year. 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 June 30, 2006 and 2005. 1. Investments in Local Limited Partnerships The Fund has limited partnership interests in twenty-one 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, Metropolitan, New Garden Place and Findley Place, where the Fund's ownership interests are 82%, 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 Local Limited Partnerships at the end of the Compliance Period at nominal prices. In the event that Properties are sold to a third party, or upon dissolution of the Local Limited Partnerships, 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 September 30, 2006:
Capital contributions and advances paid to Local Limited Partnerships and purchase price paid to withdrawing partners of Local Limited Partnerships $ 24,793,397 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $3,591,015) (14,117,175) Cumulative cash distributions received from Local Limited Partnerships (3,726,869) --------------- Investments in Local Limited Partnerships before adjustments 6,949,353 Excess investment costs over the underlying assets acquired: Acquisition fees and expenses 1,054,870 Cumulative amortization of acquisition fees and expenses (302,057) --------------- Investments in Local Limited Partnerships before valuation allowance 7,702,166 Valuation allowance on investments in Local Limited Partnerships (2,641,543) --------------- Investments in Local Limited Partnerships $ 5,060,623 ===============
BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership NOTES TO THE FINANCIAL STATEMENTS (continued) (Unaudited) 1. Investments in Local Limited Partnerships (continued) The Fund has recorded a valuation allowance for its investments in certain Local Limited Partnerships in order to appropriately reflect the estimated net realizable value of these investments. The Fund's share of the net losses of the Local Limited Partnerships for the six months ended September 30, 2006 is $257,851. For the six months ended September 30, 2006, the Fund has not recognized $576,456 of equity in losses relating to certain Local Limited Partnerships in which cumulative equity in losses and cumulative distributions exceeded its total investment in these Local Limited Partnerships. 2. 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 September 30, 2006 is composed of the following:
Aggregate cost of Treasury STRIPS $ 918,397 Accumulated accretion of Original Issue Discount 1,848,712 ------------- $ 2,767,109
The fair value of these securities at September 30, 2006 is $2,966,821. Maturity dates for the STRIPS range from February 15, 2007 to May 15, 2010 with a final maturity value of $3,290,000. 3. Significant Subsidiaries The following Local Limited Partnerships invested in by the Fund represent more than 20% of the Fund's total assets or equity as of September 30, 2006 or 2005 or net losses for the three months ended either September 30, 2006 or 2005. The following financial information represents the performance of these Local Limited Partnerships for the three months ended June 30, 2006 and 2005:
Preston Place Associates Limited Partnership 2006 2005 -------------------------------------------- --------------- -------- Revenue $ 260,279 $ 228,195 Net Income $ 92,692 $ 7,640 Hudson Square Apartments Limited Partnership Revenue $ 333,206 $ 148,641 Net Income $ 217,108 $ 47,422 Metropolitan Apartments Limited Partnership Revenue $ 136,151 $ 146,860 Net Loss $ (58,610) $ (49,054)
BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Fund intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements and is 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 its 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. Critical 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 Local Limited Partnerships in which the Fund invests are Variable Interest Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling limited partner equity holder. Because the Fund is not the primary beneficiary of these VIEs, it accounts for its investments in the Local Limited Partnerships using the equity method of accounting. As a result of its involvement with the VIEs, the Fund's exposure to economic and financial statement losses is limited to its investments in the VIEs ($5,060,623 at September 30, 2006). The Fund may be subject to additional losses to the extent of any financial support that the Fund voluntarily provides in the future. 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 other-than-temporary declines in values of its investments in Local Limited Partnerships. Periodically, the carrying values of the investments are compared to their respective fair values. If an other-than-temporary decline in carrying value exists, a provision to reduce the asset to fair value, as calculated based primarily on remaining tax benefits, will be recorded in the Fund's financial statements. Generally, the carrying values of most Local Limited Partnerships will decline through losses and distributions in amounts sufficient to prevent other-than-temporary impairments. However, the Fund may record similar impairment losses in the future if the expiration of tax credits outpaces losses and distributions from any of the Local Limited Partnerships. Liquidity and Capital Resources At September 30, 2006, the Fund had cash and cash equivalents of $132,106, as compared with $115,889 at March 31, 2006. The increase is primarily attributable to cash distributions received from Local Limited Partnerships, partially offset by cash used for operating activities. 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 September 30, 2006, $230,841 of cash, cash equivalents, and investment securities has been designated as Reserves. To date, professional fees relating to various Property issues totaling approximately $454,000 have been paid from Reserves. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Liquidity and Capital Resources (continued) Fund's management might deem it in its best interest to voluntarily provide such funds in order to protect its investment. As of September 30, 2006, the Fund has advanced approximately $237,000 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 operating deficits, if the Managing General Partner deems funding appropriate. 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. To date, the Fund has used approximately $559,000 of operating funds to replenish Reserves. 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 September 30, 2006, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. Cash Distributions No cash distributions were made during the six months ended September 30, 2006. Results of Operations Three Month Period For the three months ended September 30, 2006, the Fund's operations resulted in a net income of $193,354 as compared to a net loss of $348,254 for the same period in 2005. The increase in net income is primarily attributable to a decrease in equity in losses and a decrease in provision for valuation allowance of investments in Local Limited Partnerships, offset by a decrease in other income. 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. Provision for valuation of investments in Local Limited Partnerships decreased due to a valuation allowance for its investments in certain Local Limited Partnerships recorded in the prior year. The decrease in other income is due to a decrease in distributions from Local Limited Partnerships with carrying value of zero. Six Month Period For the six months ended September 30, 2006, the Fund's operations resulted in a net income of $153,278 as compared to a net loss of $434,319 for the same period in 2005. The increase in net income is primarily attributable to an increase in recovery of provision for valuation of advances to Local Limited Partnerships, a decrease in provision for valuation of investments in Local Limited Partnerships and a decrease in equity in losses, offset by a decrease in other revenue, and an increase in general and administrative expenses. The increase in recovery of provision for valuation of advances to Local Limited Partnerships relates to reimbursement of previously reserved for advances made to Local Limited Partnerships. Provision for valuation of investments in Local Limited Partnerships decreased due to a valuation allowance for its investments in certain Local Limited Partnerships recorded in the prior year. The decrease in other revenue is primarily attributable to a decrease in distributions from Local Limited Partnerships with carrying values of zero. The increase in general and administrative expenses is primarily due to increased legal expenses associated with litigation in which the Fund is currently involved. The decrease in equity in losses of Local Limited Partnerships is primarily due to the Fund not recognizing losses relating to Local Limited Partnerships where cumulative equity in losses and cumulative distributions have exceeded its total investment. BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Portfolio Update 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, 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. The fiscal year of the Fund ends on March 31. As of September 30, 2006, the Fund's investment portfolio consisted of limited partnership interests in twenty-one 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 generated Tax Credits, net of recapture, of approximately $1,467 per Class A Unit. Class B Unit investors have received Tax Credits, net of recapture, of approximately $1,056 per Limited Partner Unit. Properties that receive low income housing Tax Credits must remain in compliance with rent restriction and set-aside requirements for at least 15 calendar years from the date the Property is placed in service. Failure to do so would result in the recapture of a portion of the Property's Tax Credits. Starting in 2006 and continuing through 2010, the Compliance Period of the twenty-one 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 Partnership has not disposed of any Local Limited Partnership interests during the six months ended September 30, 2006. The Managing General Partner will continue to closely monitor the operations of the Properties during their Compliance Periods 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. On or about July 13, 2004, Park G.P., Inc. ("Park") commenced litigation against Boston Financial Qualified Housing Tax Credits L.P. IV ("QH IV") and its purported general partners (collectively, the "Defendants") in Clay County, Missouri, claiming that the Defendants breached QH IV's partnership agreement and their fiduciary duties owed to Park by, among other things, failing to permit inspection of certain alleged "books and records" of QH IV. On or about October 7, 2004, Park sought leave of the court to amend its Petition to include claims for inspection of the alleged "books and records" against the Fund, Boston Financial Qualified Housing Limited Partnership, Boston Financial Qualified Housing Tax Credits L.P. II, Boston Financial Qualified Housing Tax Credits L.P. III, Boston Financial Qualified Housing Tax Credits L.P. V, Boston Financial Tax Credit Fund VII, A Limited Partnership, BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Portfolio Update (continued) and their purported general partners (collectively, the "New Defendants"). On or about October 8, 2004, Park moved the court for entry of a temporary restraining order compelling the Defendants and the New Defendants to turn over the alleged "books and records" in conjunction with a transaction Park was proposing entering into. On October 12, 2004, the court denied Park's request for a temporary restraining order, and on November 15, 2004 it granted the request to amend the Petition. In October 2005, Park again sought leave of the court in the Missouri action to amend its Petition, claiming that the Defendants were in violation of the Partnership Agreement by disposing of interests in Local Limited Partnerships following expiration of the Compliance Period(s) without first obtaining Limited Partner consent. On or about October 11, 2005, Park moved the court for a temporary restraining order prohibiting the Defendants from entering into any agreement to sell, transfer, or otherwise convey any interest in Local Limited Partnerships. On October 14, 2005, the court denied Park's request for a temporary restraining order. In December 2005, the court granted Park's request to amend its Petition to include the alleged claim regarding disposition of Local Limited Partnership interests. The Defendants and New Defendants have filed a motion to dismiss the second amended petition. The motion to dismiss has not yet been decided. The originally scheduled final hearings in August and October 2006 were adjourned at the request of the parties as discussions concerning a possible negotiated resolution of the matter are ongoing. If a settlement is not reached, the final hearing likely will take place in December 2006 or January 2007. The Defendants and the New Defendants maintain that Park is not entitled to review the materials requested and/or use the materials in secondary market transactions because, among other things: (i) they are not "books and records" of the Partnerships; (ii) Park does not seek to review them for a proper purpose; and (iii) selective disclosure of the information to Park would give it an unfair informational advantage in secondary market transactions and may violate federal and/or state securities laws. The Defendants and New Defendants accordingly intend on defending against the claims vigorously. The Defendants and New Defendants have not formed an opinion that an unfavorable outcome is either probable or remote, and their counsel refrains from expressing an opinion as to the likely outcome of the case or the range of any loss. On August 24, 2004, the Fund, Boston Financial Qualified Housing Limited Partnership, Boston Financial Qualified Housing Tax Credits L.P. II, Boston Financial Qualified Housing Tax Credits L.P. III, Boston Financial Qualified Housing Tax Credits L.P. IV, Boston Financial Qualified Housing Tax Credits L.P. V, A Limited Partnership, Boston Financial Tax Credit Fund VII, A Limited Partnership, and Boston Financial Tax Credit Fund VIII, A Limited Partnership (collectively, the "Partnerships"), and their general partners commenced litigation against Everest Housing Investors 2, LLC ("Everest 2") and several other Everest-related entities (collectively, the "Everest Entities") in Massachusetts state court, seeking a declaratory judgment that certain materials the Everest Entities sought to inspect are not "books and records" of the Partnerships and that the Everest Entities are in any case not entitled to inspect said information under applicable partnership agreements, partnership law or otherwise. On October 7, 2004, the Everest Entities filed an answer and counterclaim against the Partnerships and their purported general partners, claiming that they breached applicable partnership agreements, partnership law and their fiduciary duties to the Everest Entities by failing to make the purported "books and records" available. On January 12, 2005, the Partnerships and the general partners moved to amend their complaint to, among other things, add a claim based on Everest 2's breach of a November 24, 2003 letter agreement which compelled Everest 2 to keep confidential certain information contemporaneously disseminated by four of the Partnerships to Everest 2. The Court granted this Motion. Discovery is continuing in this matter, but no activity has taken place in recent months as the parties have been discussing whether a negotiated resolution of the matter is possible. The Partnerships and their general partners maintain that the Everest Entities are not entitled to review the materials requested and/or use the materials in secondary market transactions because, among other things: (i) they are not BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Portfolio Update (continued) "books and records" of the Partnerships; (ii) the Everest Entities do not seek to review them for a proper purpose; and (iii) selective disclosure of the information to the Everest Entities would give them an unfair informational advantage in secondary market transactions and may violate federal and/or state securities laws. The Partnerships and their general partners have not formed an opinion that an unfavorable outcome is either probable or remote, and their counsel refrains from expressing an opinion as to the likely outcome of the case or the range of any loss. Property Discussions A majority of the Properties in which the Fund has an interest had stabilized operations and operated above breakeven at June 30, 2006. A few Properties generated cash flow deficits that the Local General Partners of those Properties funded 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, Carolina Woods II, located in Greensboro, North Carolina, was under agreement to be sold during the first half of 2006. On March 22, 2006, Carolina Woods II was sold, effecting the Fund's disposition of its interest in this Local Limited Partnership. As expected, the Property's sales price was insufficient to produce any net proceeds to the Fund. This sale will result in a 2006 taxable loss projected to be approximately $133,000 or $4 per Unit. The Fund no longer has an interest in this Local Limited Partnership. 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 has 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 expires on December 31, 2007. 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 (0.2%). Because of its diluted interest in the Local Limited Partnership, the Fund did not receive a material amount of the Property's Tax Credits subsequent to February 1, 2000. The Fund transferred its remaining interest in Phoenix Housing on September 15, 2005. This transfer, in its entirety, has resulted in taxable income of $360,815, or approximately $9 per Unit. The Property's Compliance Period ended on December 31, 2005. The Fund no longer has an interest in this Local Limited Partnership. BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Property Discussions (continued) As previously reported, although occupancy has stabilized at 45th and Vincennes, located in Chicago, Illinois, debt service coverage and working capital were well below appropriate levels as of June 30, 2006. A site visit by a representative of the Managing General Partner in October 2005 found the Property in need of some improvements. Although 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. The Managing General Partner and Local General Partner have begun to explore an exit strategy that will allow for the Fund's disposition of its interest in this Local Limited Partnership subsequent to the end of the Property's Compliance Period on December 31, 2007. As previously reported, as a result of concerns regarding the then-existing operating deficits and capital requirements of Findley Place, located in Minneapolis, Minnesota, in 1999 the Managing General Partner developed a plan that will ultimately result in the transfer of the Fund's interest in the Local Limited Partnership. On March 1, 2000, the Managing General Partner consummated the transfer of 1% of the Fund's interest in losses, 48.5% of its interest in profits and 30% of its capital account to the Local General Partner. The Managing General Partner has the right to put the Fund's remaining interest to the Local General Partner any time after March 1, 2001. 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, 2008. The Property operated at above break even for the six- month period ending June 30, 2006. As previously reported, New Garden Place, located in Gilmer, North Carolina, has enjoyed strong operations for many years. In early 2004, the Local General Partner requested and the Fund provided its approval to a refinancing of the Property's first mortgage. The new first mortgage, which closed in April 2004, had a lower interest rate and lower annual debt service payments than the original mortgage, thereby increasing 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 Limited Partnership to the Local General Partner for a nominal amount any time after the Property's Compliance Period ends on December 31, 2008. As previously reported, Metropolitan Apartments, located in Chicago, Illinois, continues to incur operating deficits. Although occupancy improved to 87% as of June 30, 2006, a reduction in Federal Section 8 rental subsidy income throughout the same period outweighed occupancy improvements, resulting in the below breakeven status at June 30, 2006. The deficit was funded by advances from the Management Agent, an affiliate of the Local General Partner. The Property remains current on its debt service obligations. As previously reported, the Managing General Partner and Local General Partner of Meadow Wood, located in Smyrna, Tennessee have reached an agreement that would result in the early 2007 sale of this Property. Under the current terms, this sale would result in net proceeds to the Fund of approximately $1,200,000, or $31 per Unit. If a sale in this amount were consummated, it would result in taxable income projected to be approximately $1,000,000, or $26 per Unit. The Managing General Partner and Local General Partner of Tree Trail, located in Gainesville, Florida, are currently exploring an exit strategy that would allow for a 2007 disposal of the Fund's interest in the Local Limited Partnership. Net sales proceeds and taxable income are unknown at this time. BOSTON FINANCIAL TAX CREDIT FUND PLUS, A Limited Partnership PART II OTHER INFORMATION Items 1-5 Not applicable Item 6 Exhibits and reports on Form 8-K (a) Exhibits 31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter ended September 30, 2006. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATED: November 14, 2006 BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP By: Arch Street VIII, Inc., its Managing General Partner /s/Gary Mentesana Gary Mentesana President Arch Street VIII, Inc.