10-K 1 tcpq4fy0910k.txt TCPQ4FY0910K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (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, 2009 --------------------------------- 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 Identification No.) incorporation or organization) 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: Title of each class Name of each exchange on 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) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. |_| Yes |X| No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. |_| Yes |X| No 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. |X| Yes |_| No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). |_| Yes |_| No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b -2 of the Exchange Act. Large accelerated filer |_| Accelerated Filer |_| Non-accelerated filer |_| Smaller reporting company |X| (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Exchange Act). |_| Yes |X|No State the aggregate sales price of Fund units held by nonaffiliates of the registrant: $37,933,000 as of March 31, 2009. BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2009 TABLE OF CONTENTS Page No. PART I Item 1 Business K-4 Item 2 Properties K-6 Item 3 Legal Proceedings K-9 Item 4 Submission of Matters to a Vote of Security Holders K-9 PART II Item 5 Market for the Registrant's Units and Related Security Holder Matters K-9 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations K-9 Item 8 Financial Statements and Supplementary Data K-16 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-16 Item 9A Controls and Procedures K-16 Item 9B Other Information K-16 PART III Item 10 Directors and Executive Officers of the Registrant K-17 Item 11 Management Remuneration K-17 Item 12 Security Ownership of Certain Beneficial Owners and Management K-18 Item 13 Certain Relationships and Related Transactions K-18 Item 14 Principal Accountant Fees and Services K-20 Item 15 Exhibits, Financial Statement Schedules, and Director Independence K-20 SIGNATURES K-21 ---------- CERTIFICATIONS K-22 -------------- 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 qualified 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 investment 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 7 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
Date Properties owned by 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 (1) Poughkeepsie, NY 05/01/92 Broadway Tower (1) Revere, MA 06/02/92 45th & Vincennes (1) Chicago, IL 06/26/92 Phoenix Housing (1) Moorhead, MN 07/06/92 Cottages of Aspen (1) Oakdale, MN 07/02/92 Long Creek Court Kittrell, NC 07/01/92 Atkins Glen (1) Stoneville, NC 07/01/92 Tree Trail Gainesville, FL 10/30/92 Meadow Wood (1) Smyrna, TN 10/30/92 Primrose (1) Grand Forks, ND 12/09/92 Sycamore (1) Sioux Falls, SD 12/17/92 Preston Place Winchester, VA 12/21/92 Kings Grant Court Statesville, NC 12/23/92 Chestnut Plains (1) 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 (1) 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 (1) Greensboro, NC 10/11/93 Linden Square Genesee County, MI 10/29/93 New Garden Place (1) Gilmer, NC 06/24/94 Findley Place (1) 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, 2009, 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) Long Creek Court Limited Partnership and Kings Grant Court Limited Partnership representing 6.14%, have Third Renaissance Inc. as Local General Partner; and (ii) Pilot House Associates, L.P. and Preston Place Associates, L.P., representing 35.38%, 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 effect 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, Inc. ("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 10 of this Report. On June 26, 2009, Municipal Mortgage & Equity, LLC (the parent company of MMA Financial, Inc.) entered into a purchase and sale agreement with JEN I, L.P. for the sale of substantially all of its low-income housing tax credit business, including the Fund and its General Partners. Upon the consummation of the sale transaction (expected to occur on or before August 31, 2009), the General Partners will be owned or controlled by JEN I, L.P. The sale is not expected to impact the Limited Partners of the Fund. Item 2. Properties The Fund currently owns limited partnership interests in ten 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 Metropolitan, where the Fund's ownership interest is 98.75%. Each of the Local Limited Partnerships has received an allocation of Tax Credits from its relevant state tax credit agency. In general, the Tax Credits run 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 Code, in order to maintain eligibility for the Tax Credits 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 Total Paid Mtge. Loans Occupancy at Property Name Number of Committed at Through Payable at Type of March 31, Property Location Apt. Units March 31, 2009 March 31, 2009 December 31, 2008 Subsidy * 2009 --------------------------------------------- ------------ ----------- ---------------- ------------ ------------ Pilot House Associates, L.P Pilot House Newport News, VA 132 $ 2,479,708 $ 2,479,708 $ 3,819,137 None 95% Preston Place Associates, L.P. Preston Place Winchester, VA 120 2,300,000 2,300,000 3,575,484 None 95% Jardines Limited Dividend Partnership, S.E., L.P. Jardines de Juncos Juncos, PR 60 604,781 604,781 2,526,464 FmHA 100% Long Creek Court Limited Partnership Long Creek Court Kittrell, NC 14 120,476 120,476 527,229 FmHA 86% Tree Trail Apartments, A Limited Partnership Tree Trail Gainesville, FL 108 2,060,143 2,060,143 2,304,965 None 85% Kings Grant Court Limited Partnership Kings Grant Court Statesville, NC 36 708,530 708,530 751,715 None 100% Walker Woods Partners, II, L.P. Walker Woods II Dover, DE 19 591,429 591,429 699,758 None 100%
Capital Contributions Local Limited Partnership Total Paid Mtge. Loans Occupancy at Property Name Number of Committed at Through Payable at Type of March 31, Property Location Apt. Units March 31, 2009 March 31, 2009 December 31, 2008 Subsidy * 2009 --------------------------------------------- ------------- ------------- ---------------- ------------ ------------ Vista Villa Limited Dividend Housing Association Limited Partnership Vista Villa Saginaw County, MI 100 1,204,762 1,204,762 2,804,794 None 89% Metropolitan Apartments Limited Partnership Metropolitan Chicago, IL 69 2,139,159 2,139,159 1,573,093 Section 8 83% Linden Square Limited Dividend Housing Association Limited Partnership Linden Square Genesee County, MI 120 1,299,774 1,299,774 3,316,222 None 91% ----------- -------------- ------------- --------------- 778 $ 13,508,762 $ 13,508,762 $ 21,898,861 ====== ============== ============= ===============
* 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. 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, 7 and 8 of this report. Item 3. Legal Proceedings The Fund is not a party to any pending legal or administrate 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, 2009, there were 1,839 record holders of Units of the Fund. Cash distributions, when made, are paid annually. The Fund has made cash distributions of $1,417,000 and $532,669 during the years ended March 31, 2009 and 2008, respectively. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ---------------------------------------------------------------------------- Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words like "anticipate," "estimate," "intend," "project," "plan," "expect," "believe," "could," and similar expressions are intended to identify such forward-looking statements. 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 and current expectations, 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. 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, 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 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. Both of the General Partners are affiliates of MMA. The fiscal year of the Fund ends on March 31. On May 15, 2009, the Fund received $236,000, or approximately $71.73 per Class B Unit, as the Fund's investment in one U.S. Treasury STRIPS matured. The Managing General Partner distributed these funds to Class B Limited Partners in May 2009. On November 15, 2008, the Fund received $880,000, or approximately $267.47 per Class B Unit, as the Fund's investment in four U. S. Treasury STRIPS matured. The Managing General Partner distributed these funds to Class B Limited Partners in November 2008. On August 15, 2008 the Fund received $537,000, or $163.22 per Class B Unit, as the Fund's investment in four Treasury STRIPS matured. The Managing General Partner distributed these funds to Class B Limited Partners in August 2008. On August 15, 2007, the Fund received $342,000 or $103.95, per Class B Unit, as the Fund's second, in a series of sixteen, investment in Treasury STRIPS matured. The Managing General Partner distributed these funds to Class B Limited Partners in September 2007. On February 15, 2007 the Fund received $187,000 or $56.87 per Class B Unit, as the Fund's initial investment in Treasury STRIPS matured. The Managing General Partner distributed these funds to Class B Limited Partners in August 2007. The next scheduled maturity date is August 15, 2009, when one U.S. Treasury STRIP, in the amount of $183,000, or $55.62 per Class B Unit, will mature. The Managing General Partner will distribute these proceeds in August 2009, to the Limited Partners recognized as holders of the Class B Units on the date these Treasury STRIPS mature. Four additional securities, totaling $925,000, or about $281.15 per Class B Unit, are scheduled to mature between November 15, 2009 and May 15, 2010. As of March 31, 2009, the Fund's investment portfolio consisted of limited partnership interests in ten Local Limited Partnerships, each of which owns and operates a multi-family apartment complex and each of which has generated Tax Credits. As of July 10, 2009, the Fund's investment portfolio consisted of limited partnership interests in seven Local Limited Partnerships. 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. The Compliance Period for six of the remaining seven properties expired on or before December 31, 2008, while one property's Compliance Period ends December 31, 2009. The Fund disposed of nine Local Limited Partnership interests during the year ending March 31, 2009. In addition, the Managing General Partner disposed of three Local Limited Partnership interests in April, May, and July 2009. Currently, the Managing General Partner does not have any negotiated agreements to dispose of the Fund's interest in the Local Limited Partnerships in 2009. However, the Fund is in negotiations with potential buyers to dispose of its interest in three Local Limited Partnerships in 2009. 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. 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. The investments in the Local Limited Partnerships are made primarily to obtain tax credits on behalf of the Fund's investors. The general partners of the Local Limited Partnerships, who are considered to be the primary beneficiaries, control the day-to-day operations of the Local Limited Partnerships. The general partners are also responsible for maintaining compliance with the tax credit program and for providing subordinated financial support in the event operations cannot support debt and property tax payments. The Fund, through its ownership percentages, may participate in property disposition proceeds. The timing and amounts of these proceeds are unknown but can impact the Fund's financial position, results of operations or cash flows. 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 ($2,099,831 and $4,108,297 at March 31, 2009 and 2008, respectively). 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. A liability is recorded for delayed equity capital contributions to Local Limited Partnerships. 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. The Fund has implemented policies and practices for assessing other-than-temporary declines in the values of its investments in Local Limited Partnerships. Periodically, the carrying values of the investments are tested for other-than-temporary impairment. If an other-than-temporary decline in carrying value exists, a provision to reduce the investment to the sum of the estimated remaining benefits will be recorded in the Fund's financial statements. The estimated remaining benefits for each Local Limited Partnership consist of estimated future tax losses and tax credits over the estimated life of the investment and estimated residual proceeds at disposition. Included in the estimated residual proceeds calculation is current net operating income capitalized at a regional rate specific to each Local Limited Partnership less the debt of the Local Limited Partnership. During the year ended March 31, 2009, the Fund concluded that three of the Local Limited Partnerships had experienced other-than-temporary decline in their carrying values and impairment losses were recorded: Pilot House Associates, L.P., for approximately $162,000; Hudson Square Apartments Company for approximately $266,000; and Linden Square Limited Dividend for approximately $6,000. 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 March 31, 2009, the Fund had cash and cash equivalents of $4,400,689, as compared to $1,052,170 at March 31, 2008. The increase is primarily attributable to proceeds from the sale of investments in Local Limited Partnerships and cash distributions received from Local Limited Partnerships, partially offset by cash used for operating activities, payment of asset management fees, and advances to a 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, 2009 and 2008, $4,283,561 and $751,379, respectively, has been designated as Reserves. To date, professional fees relating to various Property issues totaling approximately $465,000 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, 2009, the Fund has advanced approximately $303,000 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 ongoing operations. Reserves may be used to fund operating deficits, if the Managing General Partner deems funding appropriate. To date, the Fund has not used any 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, 2009, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. Cash Distributions Cash distributions of $1,417,000 and $532,669 were made to the Investor Limited Partners, Class B, during the years ended March 31, 2009 and 2008, respectively. The Fund is currently working on disposing of its interest in certain Local Limited Partnerships during the next twelve months. These dispositions may result in cash available for distribution, but due to the uncertainty of the sales, no guarantees can be made as to the extent of their outcome on distributions to Limited Partners. 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, 2009, the Fund's operations resulted in a net income of $1,580,302 as compared to a net loss of $1,778,386 for the same period in 2008. The decrease in net loss is primarily attributable to an increase in equity in income of Local Limited Partnerships and a decrease in provision for valuation allowance on investments in Local Limited Partnerships, partially offset by a decrease in gain on sale of investments in Local Limited Partnerships and a decrease in other income. The increase in equity in income of Local Limited Partnerships is primarily due to two Local Limited Partnerships recording a significant increase in net income. Provision for valuation allowance on investments in Local Limited Partnerships decreased primarily due to the Fund recording a significantly lower impairment allowance for its investment in a certain Local Limited Partnership. The decrease in gain on sale of investments in Local Limited Partnership is the result of a net loss related to the sale of nine Local Limited Partnerships during the year ended March 31, 2009. The decrease in other income is primarily attributable to a decrease in cash distributions received from previously-disposed Local Limited Partnerships, partially offset by an increase in distributions from Local Limited Partnerships with carrying values of zero. Low-Income Housing Tax Credits The Tax Credits per Limited Partner stabilized in 1995. The credits have ended as all properties have reached the end of the ten year credit period. Property Discussions A majority of the Properties in which the Fund has an interest had stabilized operations and operated above breakeven through December 31, 2008. Several 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, the Managing General Partner and Local General Partner of Meadow Wood, located in Smyrna, Tennessee, had reached an agreement that would result in the early 2007 sale of this Property. On January 23, 2007, the Property was sold, resulting in net proceeds to the Fund of $1,174,546, or $30.96 per Unit. During the three month period ending September 30, 2007, the Fund received additional sales proceeds of $75,000, or $1.98 per Unit, upon a reconciliation of tax and utility expenses. This sale resulted in 2007 taxable income of $1,165,374, or $30.72 per Unit. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, on March 21, 2007, the Managing General Partner exercised the Fund's put option and transferred its interest in the Local Limited Partnership that owned Broadway Tower, located in Revere, Massachusetts, for $50,000 or $1.32 per Unit. Proceeds related to this sale were received on April 18, 2007. The sale of this Local Limited Partnership resulted in 2007 taxable income of $749,398, or $19.76 per Unit. The Fund retained an economic interest in the transferred Property in the form of a contingent note equal to 10% of Related Party Payments, as defined in the contingent note agreement. 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 located in Grand Forks, North Dakota and Sycamore, located in Sioux Falls, South Dakota, the Managing General Partner developed a plan that would ultimately result in the transfer of the Fund's interests in each Local Limited Partnerships. Both 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 these 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 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. In July 2008, the Managing General Partner transferred the Fund's remaining interest in both Primrose and Sycamore to the Local General Partner. As expected, these transfers, effectively dated January 1, 2008, did not result in any proceeds to the Fund. The Managing General Partner reported a 2008 taxable loss of $116,401, or $3.07 per Unit, from Primrose, and taxable income of $105,906, or $2.79 per Unit, from Sycamore. As previously reported, with regard to Sycamore and Primrose, the Fund received its full share of Tax Credits. In addition, the Local General Partner had the right to call the remaining interest subsequent to the Compliance Period, which expired on December 31, 2007. The Fund no longer has an interest in these two Local Limited Partnerships. As previously reported, the Managing General Partner anticipated that the Fund's interest in the Local Limited Partnership that owns Cottages of Aspen, located in Oakdale, Minnesota, would be terminated upon the sale of the underlying Property in mid-2008. On June 4, 2008, the Fund's interest was transferred, resulting in net sales proceeds to the Fund of $2,570,481, or $67.76 per Unit. The Managing General Partner reported a 2008 taxable loss of $43,073, or $1.14, per Unit, as a result of the sale. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, the Fund's interest in the Local Limited Partnership that owns Livingston Arms, located in Poughkeepsie, New York, was transferred on September 1, 2008, resulting in net sales proceeds to the Fund of $10,000, or $0.26 per Unit. The Managing General Partner reported a 2008 loss of $347,141, or $8.38 per Unit. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, the Managing General Partner estimated a late 2008 disposition, via a transfer to the Local General Partner, of the Fund's interest in the Local Limited Partnership that owns Atkins Glen, located in Stoneville, South Carolina. On October 1, 2008, the Fund's interest was transferred. The Fund received $3,334, or $0.09 per Unit. The Managing General Partner reported a 2008 taxable income of $283,085, or $7.46 per Unit. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, occupancy for the three month period ending September 30, 2008, improved to 89%; however, working capital and debt service coverage levels remained below acceptable levels at 45th and Vincennes, located in Chicago, Illinois. A representative of the Managing General Partner visited the Property in December 2007 to reassess the management agent and physical condition of the Property and noted that the Property was in need of significant improvement. Although advances from the Local General Partner enabled the Property to remain current on its loan obligations, the Managing General Partner believed that the Local General Partner and its affiliated management company were not adequately performing their responsibilities with respect to the Property. The Managing General Partner expressed their concerns to the Local General Partner. Based on the results of a market valuation, which confirmed the Property's value to be less than its outstanding debt, the Managing General Partner assigned the Fund's interest to the Local General Partner, upon receipt of official documentation from HUD approving the Transfer of Physical Assets application. The Assignment was dated October 31, 2008, effectively terminating the Fund's interest in the Local Limited Partnership. The disposition did not result in any proceeds to the Fund. The Managing General Partner reported 2008 taxable income of $29,879, or $0.79 per Unit. The Property's Compliance Period ended on December 31, 2007. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, the Managing General Partner anticipated that the Fund's interest in the Local Limited Partnership that owns and operates Hudson Square, located in Baton Rouge, Louisiana, will be terminated either upon the sale of the underlying Property, or a sale of the Fund's interest, in early 2009. Based on a 2007 valuation, the Managing General Partner expected a sale to result in approximately $1,200,000, or $31.63 per Unit. However, due to current market conditions, the disposition resulted in net sales proceeds of $925,000, or $24.39 per Unit, and a 2008 loss of $931,590, or $24.56 per Unit. The sale took place on December 12, 2008. The Fund no longer has an interest in this Local Limited Partnership. 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 had 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 had the right to call the remaining interest after the Compliance Period has expired, which was December 31, 2008. The Property operated below breakeven for the year ending December 31, 2008, due to maintenance and capital expenses. The disposition of the Fund's interest in Findley Place took place on January 16, 2009. This transaction resulted in net proceeds to the Fund of $5,000, or $0.13 per Unit. The Managing General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of sales proceeds in Reserves. The Managing General Partner currently estimates 2009 taxable income of $308,000, or $8.12 per Unit. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, New Garden Place, located in Gilmer, North Carolina, 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 payment 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 could 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, which ended on December 31, 2008. On March 26, 2009, the Managing General Partner exercised the Fund's put option and transferred its interest in the Local Limited Partnership that owned New Garden Place effective January 1, 2009. This transaction resulted in net proceeds to the Fund of $5,000, or $0.13 per Unit. The Managing General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of sales proceeds in Reserves. The Managing General Partner currently estimates 2009 taxable income of $244,000, or $6.43 per Unit. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, working capital and debt service coverage levels remained below acceptable standards at Metropolitan Apartments, located in Chicago, Illinois. In addition, occupancy decreased from 86% for the three months ending September 30, 2008 to 79% for the three months ending December 31, 2008. In addition to low occupancy levels, the decline in operations was attributable to the rising cost of natural gas and, more significantly, an increase in debt service caused by the Property's five year adjustable rate first mortgage being reset in late 2007. The deficit was funded by advances from the Management Agent, an affiliate of the Local General Partner. The Local General Partner, having exceeded their working capital obligation, would no longer continue to fund deficits. The Managing General Partner, as part of a disposition agreement with the Local General Partners to jointly fund operating deficits from Fund reserves, advanced $50,000 in 2007 and $32,223 more in 2008, to address the need for structural repairs as cited in the City of Chicago's report of recent building code violations. On April 16, 2009, the Managing General Partner disposed of its interest in the Local Limited Partnership that owned Metropolitan Apartments; however, benefits were transferred as of January 1, 2009. The Managing General Partner was able to recover a majority, $75,000, of its advances upon disposition. The Compliance Period for the Property ended December 31, 2008. The Managing General Partner currently estimates 2009 taxable income of $270,000, or $7.12 per Unit. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, the Managing General Partner and Local General Partner of Tree Trail, located in Gainesville, Florida, were exploring an exit strategy that would have allowed for a late summer 2008 disposal of the Fund's interest, via a sale of the underlying Property, in the Local Limited Partnership that owns and operates Tree Trail. Due to current market conditions, the Managing General Partner is reexamining the exit strategy for the Fund's interest in this Local Limited Partnership and anticipates a June 2010 disposition. As previously reported, the Managing General Partner estimates a 2009 disposition, via a transfer to the Local General Partner, of the Fund's interest in the Local Limited Partnership that owns Vista Villa, located in Saginaw County, Michigan. The Fund and the Local General Partner entered into a put agreement whereby the Fund could 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, which ended on December 31, 2008. An exercise of the put occurred on July 10, 2009, effective June 1, 2009. This transaction did not result in any net sales proceeds to the Fund. The Managing General Partner currently projects taxable income of approximately $280,000, or $7.38 per Unit. As previously reported the Managing General Partner and Local General Partner of Pilot House, located in Newport News, Virginia, were exploring an exit strategy that could have resulted in a mid-2008 disposal of the Fund's interest in the Local Limited Partnership that owns Pilot House, for approximately $1,650,000 or $43.50 per Unit. The Managing General Partner continues to negotiate the sale of the Fund's interest in this Local Limited Partnership. Terms of a possible disposition have not been agreed upon at this time. As previously reported, the Managing General Partner anticipated that the Fund's interest in the Local Limited Partnership that owns Walker Woods II, located in Dover, Delaware, would be terminated upon the sale of the Property in late 2008. Although no deal is pending at this time, the Managing General Partner will continue to explore an exit strategy that may lead to a 2009 disposition. As previously reported, the Managing General Partner is currently exploring an exit strategy for Jardines de Juncos, located in Juncos, Puerto Rico, that could lead to a 2009 disposition. Net sales proceeds to the Fund, if any, are unknown at this time. As previously reported, the Managing General Partner was exploring an exit strategy for Kings Grant Court, located in Statesville, North Carolina. The Managing General Partner agreed to sell its interest to an affiliate of the Local General Partner, originally expected for January 2009. A sale of the Fund's interest occurred on May 29, 2009. The sale resulted in $4,540, or $0.12 per Unit, in proceeds. The Managing General Partner currently estimates a 2009 loss of $97,000, or $2.56 per Unit. 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, 2009 and 2008. 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 8. Financial Statements and Supplementary Data Information required under this Item is submitted as a separate section of this Report. See Index on page F-1 hereof. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ------------------------------------------------------------------------ None. Item 9A. Controls and Procedures Disclosure Controls and Procedures We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure. Based on that evaluation, management has concluded that as of March 31, 2009, our disclosure controls and procedures were effective. Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management conducted an assessment of the effectiveness of our internal control over financial reporting. This assessment was based upon the criteria for effective internal control over financial reporting established in Internal Control -- Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Fund's internal control over financial reporting involves a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes the controls themselves, as well as monitoring of the controls and internal auditing practices and actions to correct deficiencies identified. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management assessed the Fund's internal control over financial reporting as of March 31, 2009. Based on this assessment, management concluded that, as of March 31, 2009, the Fund's internal control over financial reporting were designed effectively. Item 9B. Other Information None. PART III Item 10. 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. 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 Greg Judge Executive Vice President Michael H. Gladstone Principal, Member The other General Partner of the Fund 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 11 of this report. Such day-to-day management does not include the management of the Properties. The business experience of each of the persons listed above is described below. There is no family relationship between any of the persons listed in this section. Greg Judge, age 44, Executive Vice President, Head of the Affordable Housing Group of MMA Financial since February 2008. As head of the Company's Affordable Housing Group, Mr. Judge is responsible for both the affordable tax exempt and taxable lending and equity businesses. Prior to his appointment as EVP, Mr. Judge was responsible for tax credit equity investments and underwriting of equity and debt investments for the Affordable Housing Group. Mr. Judge joined MMA as a result of the Boston Financial and Lend Lease HCI acquisitions, starting with Boston Financial in 1989 as an asset manager. Mr. Judge is a frequent speaker on affordable housing and tax credit industry issues. Mr. Judge is a graduate of Colorado College (BA) and Boston University (MBA). Michael H. Gladstone, age 52, Senior Vice President. Mr. Gladstone is responsible for capital transactions work in the Asset Management group of MMA Financial. He joined MMA 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 has lectured at Harvard University and Cornell University on affordable housing matters and is a member of the Cornell Real Estate Council and the Massachusetts Bar. Mr. Gladstone is a graduate of Emory University (BA) and Cornell University (J.D. & MBA). The Fund is organized as a limited partnership solely for the purpose of real estate investment and does not have any employees. Therefore the Fund has not adopted a Code of Ethics. The Fund is structured as a limited partnership that was formed principally for real estate investment and is not "listed" issuer as defined by Rule 10A-3 of the Securities Exchange Act of 1934. Accordingly, neither an audit committee nor a financial expert to serve on such a committee has been established by the Fund. Item 11. 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 12. Security Ownership of Certain Beneficial Owners and Management As of March 31, 2009, 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 2,146.5 Units 6% 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 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 13. 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, 2009 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, 2009 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. Organization fees and expenses of $2,035,611 were 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, 2009. 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, 2009. 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, 2009 are as follows: 2009 2008 -------------- ---------- > Asset management fees $ 144,609 $ 166,625 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, 2009 are as follows: 2009 2008 -------------- ---------- Salaries and benefits expense reimbursements $ 157,666 $ 160,831
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, 2009. 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 and its affiliates for the two years ended March 31, 2009 is presented in Note 5 to the Financial Statements. Item 14. Principal Accountant Fees and Services The Fund paid or accrued fees for services rendered by the principal accountants for the two years ended March 31, 2009 as follows:
2009 2008 -------------- ------------- Audit fees $ 72,500 $ 84,322 Tax fees $ 2,500 $ 2,400
No other fees were paid or accrued to the principal accountants during the two years ended March 31, 2009. Item 15. Exhibits, Financial Statement Schedules, and Director Independence (a) Documents filed as a part of this Report In response to this portion of Item 15, 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 Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 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. 32.2 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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/Greg Judge Date: July 15, 2009 ---------------------------------- ------------- Greg Judge President Arch Street VIII, Inc. 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/Greg Judge Date: July 15, 2009 ---------------------------------- ------------- Greg Judge President Arch Street VIII, Inc. By: /s/Michael H. Gladstone Date: July 15, 2009 ----------------------------- ------------- Michael H. Gladstone Vice President Arch Street VIII, Inc. BOSTON FINANCIAL TAX CREDIT FUND PLUS, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2009 INDEX Page No. Report of Independent Registered Public Accounting Firm F-2 for the years ended March 31, 2009 and 2008 Financial Statements: Balance Sheets - March 31, 2009 and 2008 F-3 Statements of Operations - For the years ended March 31, 2009 and 2008 F-4 Statements of Changes in Partners' Equity - For the years ended March 31, 2009 and 2008 F-5 Statements of Cash Flows - For the years ended March 31, 2009 and 2008 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 We have audited the accompanying balance sheets of Boston Financial Tax Credit Fund Plus, A Limited Partnership as of March 31, 2009 and 2008, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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. The partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Boston Financial Tax Credit Fund Plus, A Limited Partnership as of March 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Reznick Group, P.C. Bethesda, Maryland July 15, 2009 BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) BALANCE SHEETS March 31, 2009 and 2008
2009 2008 ---------------- ----------------- Assets Cash and cash equivalents $ 4,400,689 $ 1,052,170 Investments in Local Limited Partnerships (Note 3) 2,099,831 4,108,297 Other investments (Note 4) 1,278,877 2,544,977 Accounts receivable (Note 3) 5,000 - ---------------- ---------------- Total Assets $ 7,784,397 $ 7,705,444 ================ ================ Liabilities and Partners' Equity Due to affiliate (Note 5) $ 84,843 $ 172,486 Accrued expenses 62,449 59,155 ---------------- ---------------- Total Liabilities 147,292 231,641 General, Initial and Investor Limited Partners' Equity 7,637,105 7,473,803 ---------------- ---------------- Total Liabilities and Partners' Equity $ 7,784,397 $ 7,705,444 ================ ================ 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, 2009 and 2008
2009 2008 ---------------- ----------------- Revenue: Investment $ 57,134 $ 60,132 Accretion of Original Issue Discount (Note 4) 150,902 199,689 Cash distribution income 57,675 140,421 ---------------- ---------------- Total Revenue 265,711 400,242 ---------------- ---------------- Expense: Asset management fees, affiliate (Note 5) 144,609 166,625 Provision for valuation allowance on advances to Local Limited Partnerships (Note 3) 7,233 - Impairment on investments in Local Limited Partnerships (Note 3) 434,000 1,997,881 General and administrative (includes reimbursements to an affiliate in the amount of $157,666 and $160,831 in 2009 and 2008, respectively) 294,680 327,443 Amortization 6,698 8,654 ---------------- ---------------- Total Expense 887,220 2,500,603 ---------------- ---------------- Loss before equity in income of Local Limited Partnerships and gain (loss) on sale of investments in Local Limited Partnerships (621,509) (2,100,361) Equity in income of Local Limited Partnerships (Note 3) 3,208,917 246,974 Gain (loss) on sale of investments in Local Limited Partnerships (Note 3) (1,007,106) 75,001 ----------------- ---------------- Net Income (Loss) $ 1,580,302 $ (1,778,386) ================ ================ Net Income (Loss) allocated: General Partners $ 1,633 $ (23,111) Class A Limited Partners 1,336,390 (1,829,846) Class B Limited Partners 242,279 74,571 ---------------- ---------------- $ 1,580,302 $ (1,778,386) ================ ================= Net Income (Loss) per Limited Partner Unit Class A Unit (34,643 Units) $ 38.58 $ (52.82) ================ =============== Class B Unit (3,290 Units) $ 73.64 $ 22.67 ================ ================ 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 For the Years Ended March 31, 2009 and 2008
Investor Investor Initial Limited Limited General Limited Partners, Partners, Partners Partner Class A Class B Total Balance at March 31, 2007 $ 97,849 $ 5,000 $ 6,571,405 $ 3,110,604 $ 9,784,858 ------------ ------------ ------------ ------------ --------------- Cash distributions - - - (532,669) (532,669) Net Income (Loss) (23,111) - (1,829,846) 74,571 (1,778,386) ------------ ------------ ------------ ------------ ------------ Balance at March 31, 2008 74,738 5,000 4,741,559 2,652,506 7,473,803 Cash distributions - - - (1,417,000) (1,417,000) Net Income 1,633 - 1,336,390 242,279 1,580,302 ------------ ------------ ------------ ------------ ----------- Balance at March 31, 2009 $ 76,371 $ 5,000 $ 6,077,949 $ 1,477,785 $7,637,105 ============ ============ ============ ============ ============== 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, 2009 and 2008
2009 2008 ---------------- ----------------- Cash flows from operating activities: Net Income (Loss) $ 1,580,302 $ (1,778,386) Adjustments to reconcile net income (loss) to net cash used for operating activities: Equity in income of Local Limited Partnerships (3,208,917) (246,974) Loss (gain) on sale of investments in Local Limited Partnerships 1,007,106 (75,001) Provision for valuation allowance on advances to Local Limited Partnerships 7,233 - Impairment on investments in Local Limited Partnerships 434,000 1,997,881 Accretion of Original Issue Discount (150,902) (199,689) Amortization 6,698 8,654 Cash distributions included in net income (loss) (41,862) (3,258) Increase (decrease) in cash arising from changes in operating assets and liabilities: Due from affiliate - 50,000 Other assets 2 1 Due to affiliate (87,643) (42,598) Accrued expenses 3,294 24,090 ---------------- ---------------- Net cash used for operating activities (450,689) (265,280) ----------------- ---------------- Cash flows from investing activities: Release of restricted cash - 187,000 Proceeds from maturities of T-Strips 1,417,000 342,000 Advances to Local Limited Partnerships (32,223) (50,000) Cash distributions received from Local Limited Partnerships 317,616 164,108 Proceeds received from sale of investments in Local Limited Partnerships 3,513,815 75,001 ---------------- ---------------- Net cash provided by investing activities 5,216,208 718,109 ---------------- ---------------- Cash flows from financing activities: Cash distributions (1,417,000) (532,669) ----------------- ---------------- Net cash used for financing activities (1,417,000) (532,669) ----------------- ---------------- Net increase (decrease) in cash and cash equivalents 3,348,519 (79,840) Cash and cash equivalents, beginning of year 1,052,170 1,132,010 ---------------- ---------------- Cash and cash equivalents, end of year $ 4,400,689 $ 1,052,170 ================ ================ Non-cash investing activity: Accounts receivable from sale of investments in Local Limited Partnerships $ (5,000) $ - --------------- -------------- 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 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. Both of the General Partners are affiliates of MMA Financial, Inc. ("MMA"). The fiscal year of the Fund ends on March 31. On June 26, 2009, Municipal Mortgage & Equity, LLC (the parent company of MMA Financial, Inc.) entered into a purchase and sale agreement with JEN I, L.P. for the sale of substantially all of its low-income housing tax credit business, including the Fund and its General Partners. Upon the consummation of the sale transaction (expected to occur on or before August 31, 2009), the General Partners will be owned or controlled by JEN I, L.P. 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, 2009 and 2008, the Managing General Partner has designated approximately $4,284,000 and $751,000, respectively, 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 Partners may have an obligation to fund deficits in their capital accounts, subject to limits set forth in the Partnership Agreement. However, to the extent that the General Partners' capital accounts are in a deficit position, certain items of net income may be allocated to the General Partners in accordance with 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. Concentration of Credit Risk The Fund invests its cash primarily in money market funds with commercial banks. At times, cash balances at a limited number of banks and financial institutions may exceed federally insured amounts. Management believes it mitigates its credit risk by investing in major financial institutions. Other Investments 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 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. The investments in the Local Limited Partnerships are made primarily to obtain tax credits on behalf of the Fund's investors. The general partners of the Local Limited Partnerships, who are considered to be the primary beneficiaries, control the day-to-day operations of the Local Limited Partnerships. The general partners are also responsible for maintaining compliance with the tax credit program and for providing subordinated financial support in the event operations cannot support debt and property tax payments. The Fund, through its ownership percentages, may participate in property disposition proceeds. The timing and amounts of these proceeds are unknown but can impact the Fund's financial position, results of operations or cash flows. 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 ($2,099,831 and $4,108,297 at March 31, 2009 and 2008, respectively). 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. A liability is recorded for delayed equity capital contributions to Local Limited Partnerships. 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. 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. 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) 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 or 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, 2008 and 2007 and for the years then ended. 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 other-than-temporary declines in the values of its investments in Local Limited Partnerships. Periodically, the carrying values of the investments are tested for other-than-temporary impairment. If an other-than-temporary decline in carrying value exists, a provision to reduce the investment to the sum of the estimated remaining benefits will be recorded in the Fund's financial statements. The estimated remaining benefits for each Local Limited Partnership consist of estimated future tax losses and tax credits over the estimated life of the investment and estimated residual proceeds at disposition. Included in the estimated residual proceeds calculation is current net operating income capitalized at a regional rate specific to each Local Limited Partnership less the debt of the Local Limited Partnership. 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. 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 Fund's assets and liabilities which qualify as financial instruments under SFAS No. 107 approximate their carrying amounts in the accompanying balance sheets. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) Income Taxes No provision for income taxes has been made as the liability for such taxes is an obligation of the partners of the Fund. In December 2008, the Financial Accounting Standards Board (`FASB") issued Interpretation No. 48-3 "Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises" ("FIN48-3"). FIN48-3 deferred the effective date of FIN48 for certain nonpublic organizations. The deferred effective date is intended to give the FASB additional time to develop guidance on the application of FIN48 by pass-through and not-for-profit entities. The General Partner may modify the Fund's disclosures if the FASB's guidance regarding the application of FIN48 to pass-through entities changes. Effect of New Accounting Principles SFAS No. 157 In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"), which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 establishes a common definition of fair value, provides a framework for measuring fair value under U.S. generally accepted accounting principles and expands disclosure requirements about fair value measurements. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. In February 2008, the FASB issued FASB Staff Position 157-2, "Effective Date of FASB Statement No. 157", which delays the effective date of SFAS No. 157 for all nonfinancial assets and liabilities except those that are recognized or disclosed at fair value in the financial statements on at least an annual basis until November 15, 2008. The Fund adopted the provisions of SFAS No. 157 for financial assets and liabilities recognized at fair value on a recurring basis effective April 1, 2008. The partial adoption of SFAS No. 157 did not have a material impact on the Fund's financial statements. The Fund does not expect the adoption of the remaining provisions of SFAS No. 157 to have a material effect on the Fund's financial position, operations or cash flow. This standard requires that a Fund measure its financial assets and liabilities using inputs from the three levels of the fair value hierarchy. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs reflect the Fund's judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Fund develops these inputs based on the best information available, including the Fund's own data. Financial assets accounted for at fair value on a recurring basis at March 31, 2009 include cash equivalents of $4,400,689. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) Effect of New Accounting Principles (continued) SFAS No. 159 In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"), which permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Fund has not elected to measure any financial assets and financial liabilities at fair value under the provisions of SFAS No. 159. 3. Investments in Local Limited Partnerships The Fund currently owns limited partnership interests in ten 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 Metropolitan, where the Fund's ownership interest is 98.75%. 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 Partnership 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 March 31, 2009 and 2008:
2009 2008 ---------------- ----------------- Capital contributions and advances paid to Local Limited Partnerships and Purchase price paid to withdrawing partners of Local Limited Partnerships $ 13,590,985 $ 20,734,612 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $3,474,251 and $4,275,879 in 2009 and 2008, respectively) (6,025,254) (8,778,443) Cumulative cash distributions received from Local Limited Partnerships (3,534,918) (3,712,139) ---------------- ---------------- Investments in Local Limited Partnerships before adjustments 4,030,813 8,244,030 Excess investment costs over the underlying assets acquired: Acquisition fees and expenses 399,859 717,628 Cumulative amortization of acquisition fees and expenses (142,587) (230,050) ---------------- ---------------- Investments in Local Limited Partnerships before valuation allowance 4,288,085 8,731,608 Valuation allowance on investments in Local Limited Partnerships (2,188,254) (4,623,311) ---------------- ---------------- Investments in Local Limited Partnerships $ 2,099,831 $ 4,108,297 ================ ================
During the year ended March 31, 2009, the Fund advanced $32,223 to one of the Local Limited Partnerships, $7,233 of which was reserved. The Fund has also 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. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 3. Investments in Local Limited Partnerships (continued) Summarized combined financial information of the Local Limited Partnerships in which the Fund has invested as of December 31, 2008 and 2007 (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 Sheet - as of December 31, 2008 2007 ---------------- ---------------- Assets: Investment property, net $ 23,555,436 $ 40,618,263 Other assets 2,047,509 4,553,844 ---------------- ---------------- Total Assets $ 25,602,945 $ 45,172,107 ================ ================ Liabilities and Partners' Equity: Mortgage notes payable $ 21,898,861 $ 38,218,126 Other liabilities 2,744,409 3,934,931 ---------------- ---------------- Total Liabilities 24,643,270 42,153,057 ---------------- ---------------- Fund's equity 525,036 3,160,431 Other partners' equity (deficiency) 434,639 (141,381) ---------------- ---------------- Total Partners' Equity 959,675 3,019,050 ---------------- ---------------- Total Liabilities and Partners' Equity $ 25,602,945 $ 45,172,107 ================ ================
Summarized Statements of Operations - for the years ended December 31,
2008 2007 ---------------- ---------------- Rental and other income $ 9,055,899 $ 9,640,377 Expenses: Operating 1,892,363 5,434,988 Interest 1,514,261 1,898,993 Depreciation and amortization 2,041,545 2,233,064 ---------------- ---------------- Total Expenses 5,448,169 9,567,045 ---------------- ---------------- Net Income $ 3,607,730 $ 73,332 ================ ================ Fund's share of net income $ 2,239,559 $ (815,007) ================ ================ Other partners' share of net income $ 1,368,171 $ 888,339 ================ ================
For the years ended March 31, 2009 and 2008, the Fund has not recognized $1,153,572 and $1,061,981, 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 $184,214 were included in losses recognized in the year ended March 31, 2009. The Fund's equity as reflected by the Local Limited Partnerships of $525,036 and $3,160,431 at March 31, 2009 and 2008, respectively, differs from the Fund's investments in Local Limited Partnerships before adjustments of $4,030,813 and $8,244,030 at March 31, 2009 and 2008, respectively, primarily due to: (i) cumulative unrecognized losses as described above; (ii) syndication costs charged to equity by the Local Limited Partnerships that are not reflected in the Fund's investments in Local Limited Partnerships; and (iii) advances to Local Limited Partnerships that the Partnership included in investments in Local Limited Partnerships. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 3. Investments in Local Limited Partnerships (continued) For the year ended March 31, 2009, one of the Local Limited Partnerships with a carrying value of $167,515 was considered to have operating issues significant enough to warrant its independent auditor to issue an audit report that raised substantial doubt about the Local Limited Partnership's ability to continue as a going concern. However, the Fund believes that support from the Local General Partner and adequate Local Limited Partnership reserve levels will likely mitigate substantial risk to the Fund. During the year ended March 31, 2009, the Fund sold its interest in nine Local Limited Partnerships resulting in a net loss of $1,007,106. As of March 31, 2009, $5,000 is receivable related to the sale of one of these Local Limited Partnerships. 4. 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, 2009 and 2008 is composed of the following:
2009 2008 -------------- --------------- Aggregate cost of Treasury STRIPS $ 373,553 $ 754,734 Accumulated accretion of Original Issue Discount 905,324 1,790,243 --------------- --------------- $ 1,278,877 $ 2,544,977 =============== ===============
The fair value of these securities at March 31, 2009 is $1,340,213. As of March 31, 2009 and 2008, ten Treasury Strips matured yielding proceeds of $1,417,000 and $529,000, respectively. The next maturity date for the STRIPS is May 15, 2009 and the final maturity will take place on May 15, 2010. The total maturity value is $1,344,000. 5. 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 $144,609 and $166,625 for the years ended March 31, 2009 and 2008, respectively. During the years ended March 31, 2009 and 2008, $159,258 and $341,896, respectively, were paid out of available cash flow for Asset Management Fees. Included in due to affiliate at March 31, 2009 and 2008 were $25,164 and $39,813, respectively, of Asset Management Fees. An affiliate of the Managing General Partner is reimbursed for the actual cost of the Fund's salaries and benefits expenses. Included in general and administrative expenses for the years ended March 31, 2009 and 2008 is $157,666 and $160,831, respectively, that the Fund has incurred for these expenses. During the years ended March 31, 2009 and 2008, salaries and benefits of $191,481 and $80,488, respectively, were paid to the affiliate of the Managing General Partner. As of March 31, 2009 and 2008, $46,529 and $80,343, respectively, of reimbursements to an affiliate of the Managing General Partner remains unpaid. An affiliate of the General Partner is reimbursed for the actual cost of the Fund's operating expenses. As of March 31, 2009 and 2008, $13,150 and $52,330, respectively, were reimbursable to the affiliate. BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 6. Federal Income Taxes The following schedules reconcile the reported financial statement net income (loss) for the fiscal years ended March 31, 2009 and 2008 to the net income reported on the Form 1065, U. S. Partnership Return of Income for the years ended December 31, 2008 and 2007:
2009 2008 -------------- --------------- Net Income (Loss) per financial statements $ 1,580,302 $ (1,778,386) Equity in income (losses) of Local Limited Partnerships for tax purposes in excess of equity in income (losses) for financial reporting purposes 93,603 (88,360) Equity in losses of Local Limited Partnerships not recognized for financial reporting purposes (969,358) (1,061,981) Adjustment to reflect March 31 fiscal year end to December 31 taxable year end (12,846) 48,931 Amortization for tax purposes in excess of amortization for financial reporting purposes (10,240) (17,442) Provision for valuation allowance on advances to Local Limited Partnerships not deductible for tax purposes 7,233 - Impairment on investments in Local Limited Partnerships not deductible for tax purposes 434,000 1,997,881 Gain (loss) on sale of investments in Local Limited Partnerships for tax purposes in excess of gain (loss) recognized for financial reporting purposes (12,229) 2,234,086 Cash distributions included in net income (loss) for financial reporting purposes (41,862) (3,258) Other - (127,007) -------------- -------------- Net Income per tax return $ 1,068,603 $ 1,204,464 ============== ==============
The differences in the assets and liabilities of the Fund for financial reporting purposes and tax purposes as of March 31, 2009 and December 31, 2008, respectively, are as follows:
Financial Reporting Tax Purposes Purposes Differences Investments in Local Limited Partnerships $ 2,099,831 $ (2,898,707) $ 4,998,538 ============== ============== ============== Other assets $ 5,684,566 $ 10,848,298 $ (5,163,732) ============== ============== =============== Liabilities $ 147,292 $ 128,649 $ 18,643 ============== ============== ==============
BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 6. Federal Income Taxes (continued) 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 $5,810,000 greater than for financial reporting purposes including approximately $3,474,000 of losses the Fund has not recognized related to certain Local Limited Partnerships whose cumulative equity in losses exceeded their total investment; (ii) the Fund has provided an impairment allowance of approximately $2,181,000 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. The differences in the assets and liabilities of the Fund for financial reporting purposes and tax purposes as of March 31, 2008 and December 31, 2007, respectively are as follows:
Financial Reporting Tax Purposes Purposes Differences Investments in Local Limited Partnerships $ 4,108,297 $ (399,243) $ 4,507,540 ============== ============== ============== Other assets $ 3,597,147 $ 8,841,194 $ (5,244,047) ============== ============== ============== Liabilities $ 231,641 $ 272,612 $ (40,971) ============== ============== ==============
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 $4,603,000 greater than for financial reporting purposes including approximately $4,276,000 of losses the Fund has not recognized related to certain Local Limited Partnerships whose cumulative equity in losses exceeded their total investment; (ii) the Fund has provided an impairment allowance of approximately $5,261,000 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. 7. 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 March 31, 2009 or 2008 or net income (loss) for the years ended either March 31, 2009 or 2008. The following financial information represents the performance of these Local Limited Partnerships for the years ended December 31, 2008 and 2007:
2008 2007 --------------- --------------- Pilot House Associates Limited Partnership Total Assets $ 5,376,761 $ 5,514,231 Total Liabilities $ 3,921,313 $ 3,973,208 Revenue $ 1,171,055 $ 1,110,710 Net Income $ 69,977 $ 999,438 Cottage Homesteads of Aspen Limited Partnership Total Assets N/A $ 4,674,220 Total Liabilities N/A $ 4,271,009 Revenue $ 534,208 $ 1,236,565 Net Income (Loss) $ 3,803,483 $ (36,448)
BOSTON FINANCIAL TAX CREDIT FUND PLUS, (A Limited Partnership) NOTES TO THE FINANCIAL STATEMENTS (continued) 7. Significant Subsidiaries (continued)
2008 2007 --------------- --------------- Hudson Square Apartments Limited Partnership Total Assets N/A $ 895,617 Total Liabilities N/A $ 61,854 Revenue $ 1,528,000 $ 637,150 Net Income $ 1,071,415 $ 170,570 Linden Square Ltd. Div. Housing Assoc. Limited Partnership Total Assets $ 4,902,977 $ 5,134,487 Total Liabilities $ 3,474,734 $ 3,661,018 Revenue $ 703,541 $ 722,600 Net Income (Loss) $ (37,726) $ 34,001 8. Subsequent Events
On April 16, 2009, the Fund sold its interest in Metropolitan, resulting in the recovery of $75,000 of advances made by the Fund. On May 29, 2009, the Fund sold its interest in Kings Grant Court, resulting in net proceeds to the Fund of $4,540. On July 10, 2009, the Fund sold its interest in Vista Villa, which did not result in any net proceeds to the Fund.