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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 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period
from ______ to ____________
0-17619
(Commission File Number)
American Tax Credit Properties L.P.
(Exact name of registrant as specified in its governing instruments)
Delaware 13-3458875
(State or other jurisdiction of organization) (I.R.S. Employer
Identification No)
Richman Tax Credit Properties L.P.
599 West Putnam Avenue, 3rd floor
Greenwich, Connecticut 06830
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of each Class) (Name of each exchange on
which registered)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
- -------------------------------------------------------------------------------
(Title of Class)
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
requirement for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in a 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
Registrant has no voting stock.
Documents incorporated by reference:
Part I - pages 21 through 35 and 51 through 75 of the prospectus dated May 6,
1988, as supplemented by Supplement No. 1 and Supplement No. 2 dated August 11,
1988 and September 20, 1988, respectively, filed pursuant to Rule 424(b)(3)
under the Securities Act of 1933.
PART I
Item 1. Business
Formation
American Tax Credit Properties L.P. ("Registrant"), a Delaware limited
partnership, was formed on February 12, 1988 to invest primarily in leveraged
low-income multifamily residential complexes (the "Property" or "Properties")
which qualify for the low-income tax credit established by Section 42 of the Tax
Reform Act of 1986 (the "Low-income Tax Credit"), through the acquisition of
limited partnership equity interests in partnerships (the "Local Partnership" or
"Local Partnerships") that are the owners of the Properties. Registrant has
invested in nineteen such Properties including one Property which also qualifies
for the historic rehabilitation tax credit in accordance with Section 48(g) of
the Internal Revenue Code of 1986 (the "Historic Rehabilitation Tax Credit").
Registrant considers its activity to constitute a single industry segment.
Richman Tax Credit Properties L.P. (the "General Partner"), a Delaware limited
partnership, was formed on February 10, 1988 to act as the sole general partner
of Registrant. The general partners of the General Partner are Richard Paul
Richman and Richman Tax Credit Properties Inc. ("Richman Tax"), a Delaware
corporation which is wholly-owned by Richard Paul Richman. Richman Tax is an
affiliate of both The Richman Group, Inc. ("Richman Group"), a Delaware
corporation founded by Richard Paul Richman in 1988 and Wilder Richman
Corporation ("WRC"), a New York corporation co-founded by Richard Paul Richman
in 1979.
The Amendment No. 2 to the Registration Statement on Form S-11 was filed with
the Securities and Exchange Commission (the "Commission") on April 29, 1988
pursuant to the Securities Act of 1933 under Registration Statement No.
33-20391, which was declared effective on May 4, 1988. Reference is made to the
prospectus dated May 6, 1988, as supplemented by Supplement No. 1 and Supplement
No. 2 dated August 11, 1988 and September 20, 1988, respectively, filed with the
Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933 (the
"Prospectus"). Post-Effective Amendment No. 1 to the Registration Statement on
Form S-11 was filed with the Commission on November 21, 1988. Pursuant to Rule
12b-23 of the Commission's General Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
description of Registrant's business set forth under the heading "Investment
Objectives and Policies" at pages 51 through 75 of the Prospectus is
incorporated herein by reference.
On May 11, 1988, Registrant commenced, through Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), the offering of up to 50,000 units of
limited partnership interest ("Unit") at $1,000 per Unit. On August 19, 1988 and
November 15, 1988, the closings for 23,603 and 17,683 Units, respectively, took
place, amounting to aggregate limited partners' capital contributions of
$41,286,000.
Competition
Pursuant to Rule 12b-23 of the Commission's General Rules and Regulations
promulgated under the Exchange Act, the description of Registrant's competition,
general risks, tax risks and partnership risks set forth under the heading "Risk
Factors" at pages 21 through 35 of the Prospectus is incorporated herein by
reference.
Employees
Registrant employs no personnel and incurs no payroll costs. All management
activities of Registrant are conducted by the General Partner. An affiliate of
the General Partner employs individuals who perform the management activities of
Registrant. This entity also performs similar services for other affiliates of
the General Partner.
Item 1. Business (continued)
Tax Reform Act of 1986, Revenue Act of 1987, Technical and Miscellaneous Revenue
Act of 1988, Omnibus Budget Reconciliation Act of 1989, Omnibus Budget
Reconciliation Act of 1990, Tax Extension Act of 1991, Omnibus Budget
Reconciliation Act of 1993 and Uruguay Round Agreements Act (collectively the
"Tax Acts")
Registrant is organized as a limited partnership and is a "pass through" tax
entity which does not, itself, pay Federal income tax. However, the partners of
Registrant who are subject to Federal income tax may be affected by the Tax
Acts. Registrant will consider the effect of certain aspects of the Tax Acts on
the partners when making decisions regarding its investments. Registrant does
not anticipate that the Tax Acts will currently have a material adverse impact
on Registrant's business operations, capital resources and plans or liquidity.
Item 2. Properties
The executive offices of Registrant and the General Partner are located at 599
West Putnam Avenue, 3rd floor, Greenwich, Connecticut 06830. Registrant does not
own or lease any properties. Registrant pays no rent; all charges for leased
space are borne by an affiliate of the General Partner.
Registrant's primary objective is to provide Low-income Tax Credits to limited
partners generally over a ten year period. Each of Registrant's Local
Partnerships has been allocated by the relevant state tax credit agency an
amount of Low-income Tax Credits for ten years from the date the Property is
placed in service. The required holding period of each Property, in order to
avoid Low-income Tax Credit recapture, is fifteen years from the year in which
the Low-income Tax Credits commence on the last building of the Property (the
"Compliance Period"). The Properties must satisfy various requirements including
rent restrictions and tenant income limitations (the "Low-income Tax Credit
Requirements") in order to maintain eligibility for the recognition of the
Low-income Tax Credit at all times during the Compliance Period. Once a Local
Partnership has become eligible for the Low-income Tax Credit, it may lose such
eligibility and suffer an event of recapture if its Property fails to remain in
compliance with the Low-income Tax Credit Requirements. Through June 27, 1997,
one of the Local Partnerships, B & V, Ltd., has suffered an event of recapture
of Low-income Tax Credits, due to a hurricane which substantially damaged the
property owned by such Local Partnership and the failure of the property to be
fully-rebuilt, primarily due to the non-performance of the insurance company
(see Part II, Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations herein). These events led to (i) an eminent
domain proceeding, which became effective April 1996, whereby the City of
Homestead was awarded four buildings comprising 32 rental units in a quick-take
proceeding and (ii) the foreclosure of the mortgage encumbering the property in
April 1997. As a result of the quick-take proceeding, Registrant incurred a
recapture of Low-income Tax Credits taken through December 1995 of approximately
$5 per Unit and will forego Low-income Tax Credits associated with such rental
units of approximately $5 per Unit for the period January 1996 through 1998. As
a result of the foreclosure of the mortgage, Registrant anticipates a recapture
of Low-income Tax Credits taken through December 1996 of approximately $35 per
Unit for Unit holders of record as of April 1997 and will forego Low-income Tax
Credits associated with such rental units of approximately $10 per Unit for the
period January 1997 through 1998.
Although Registrant generally owns a 98.9%-99% limited partnership interest
("Local Partnership Interest") in the Local Partnerships, Registrant and
American Tax Credit Properties II L.P. ("ATCP II"), a Delaware limited
partnership and an affiliate of Registrant, together, in the aggregate, acquired
a 99% Local Partnership Interest in Santa Juanita Limited Dividend Partnership
L.P. (the "Santa Juanita Local Partnership"); the ownership percentages of
Registrant and ATCP II for the Santa Juanita Local Partnership are 34.64% and
64.36%, respectively.
Many of the Local Partnerships receive rental subsidy payments, including
payments under Section 8 of Title II of the Housing and Community Development
Act of 1974 ("Section 8") (see descriptions of subsidies on pages 5 and 6). The
subsidy agreements expire at various times during and after the Compliance
Periods of the Local Partnerships. The United States Department of Housing and
Urban Development ("HUD") has issued notices which implement provisions to renew
certain project based Section 8 contracts expiring during HUD's fiscal year
1997, where requested by an owner, for an additional one year term generally at
or below current rent levels, subject to certain guidelines. HUD has an
additional program (the "Restructuring Program") which, in general, provides for
restructuring rents and/or mortgages where rents may be adjusted to market
levels and mortgage terms may be adjusted based on the reduction in rents,
although there may
Item 2. Properties (continued)
be instances in which only rents, but not mortgages, are restructured.
Registrant cannot reasonably predict legislative initiatives and governmental
budget negotiations, the outcome of which could result in a reduction in funds
available for the various federal and state administered housing programs
including the Section 8 program. Such changes could adversely affect the future
net operating income and debt structure of any or all Local Partnerships
currently receiving such subsidy or similar subsidies. Two Local Partnerships,
whose Section 8 contracts expired during 1996 and were extended for one year,
have applied for treatment under the Restructuring Program during 1997.
Name of Local Partnership Number Mortgage loans
Name of apartment complex of payable as of
rental Capital December 31, Subsidy(see
Apartment complex location units contribution 1996 footnotes)
- -------------------------------- ----------- ------------ ---------------------------
4611 South Drexel Limited Partnership
South Drexel Apartments
Chicago, Illinois 44 $ 352,433 $ 1,369,445 (1d)
B & V, Ltd.
Homestead Apartments
Homestead, Florida 158 2,050,795 (3) 5,515,812 (1a)
B & V Phase I, Ltd.
Gardens of Homestead
Homestead, Florida 97 140,000 (3) 2,638,947 (1a)
Blue Hill Housing Limited Partnership
Blue Hill Housing
Grove Hall, Massachusetts 144 4,506,082 6,552,669 (1a)
Cityside Apartments, L.P.
Cityside Apartments
Trenton, New Jersey 126 6,098,990 7,865,491 (1a)
Cobbet Hill Associates Limited Partnership
Cobbet Hill Apartments
Lynn, Massachusetts 117 4,910,942 (4) 13,664,829 (1a&c)
Dunbar Limited Partnership
Spring Grove Apartments
Chicago, Illinois 100 1,518,229 4,007,852 (1a&e)
Dunbar Limited Partnership No. 2
Park View Apartments
Chicago, Illinois 102 1,701,849 4,589,191 (1a&e)
Erie Associates Limited Partnership
Erie Ventures Rental Infill
Springfield, Massachusetts 18 755,736 914,034 (1b)
Federal Apartments Limited Partnership
Federal Apartments
Fort Lauderdale, Florida 164 2,832,224 5,325,464 (1a)
Item 2. Properties (continued)
Name of Local Partnership Number Mortgage loans
Name of apartment complex of payable as of
rental Capital December 31, Subsidy (see
Apartment complex location units contribution 1996 footnotes)
- -------------------------------- ----------- ------------ ---------------------------
Golden Gates Associates
Golden Gates
Brooklyn, New York 85 $ 879,478 $ 4,656,086 (1c)
Grove Park Housing, A California Limited
Partnership Grove Park Apartments
Garden Grove, California 104 1,634,396 6,928,577 (1a)
Gulf Shores Apartments Ltd.
Morgan Trace Apartments
Gulf Shores, Alabama 50 352,693 1,492,554 (1c)
Hilltop North Associates, A Virginia Limited
Partnership Hilltop North Apartments
Richmond, Virginia 160 1,414,524 3,335,611 (1a)
Madison-Bellefield Associates
Bellefield Dwellings
Pittsburgh, Pennsylvania 158 1,047,744 3,652,737 (1a)
Pine Hill Estates Limited Partnership
Pine Hill Estates
Shreveport, Louisiana 110 613,499 2,472,686 (1a)
Santa Juanita Limited Dividend Partnership L.P.
Santa Juanita Apartments
Bayamon, Puerto Rico 45 313,887 (2) 1,521,268 (1a)
Vista del Mar Limited Dividend Partnership L.P.
Vista del Mar Apartments
Fajardo, Puerto Rico 152 3,097,059 5,376,868 (1a)
Winnsboro Homes Limited Partnership
Winnsboro Homes
Winnsboro, Louisiana 50 289,730 1,234,221 (1a)
--------------- -------------
$ 34,510,290 $ 83,114,342
============ ============
- ------------------------------------------------- --------- ------------------ ---------------- ----------
(1) Description of Subsidies:
(a) Section 8 of Title II of the Housing and Community Development
Act of 1974 allows qualified low-income tenants to pay thirty
percent of their monthly income as rent with the balance paid
by the federal government.
(b) Chapter 707 of the Acts of 1966 of the Commonwealth of
Massachusetts allows qualified low-income tenants to pay a
portion of their rent with the balance paid by Worcester
Housing Authority.
(c) The Local Partnership's debt structure includes a principal or
interest payment subsidy.
(d) The City of Chicago Housing Authority allows qualified
low-income tenants to receive rental certificates.
Item 2. Properties (continued)
(e) Applied for treatment under the Restructuring Program.
(2) The capital contribution reflects Registrant's obligation
only.
(3) In August 1992, the property sustained considerable damage by
Hurricane Andrew. See Part I, Item 3-Legal Proceedings and
Part II, Item 7-Management's Discussion and Analysis of
Financial Condition and Results of Operations included herein
for further information.
(4) The complex also qualifies for the historic rehabilitation tax
credit in accordance with Section 48 (g) of the Internal
Revenue Code of 1986.
Item 3. Legal Proceedings
As discussed in Part II, Item 8 - Financial Statements and Supplementary Data
and Part II, Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations included herein, B & V, Ltd. (the "B & V
Local Partnership") sustained substantial damage in August 1992 by Hurricane
Andrew. Although the complex was covered by property insurance and the B & V
Local Partnership was covered by rental interruption insurance, the insurance
company has not fully performed under its coverage obligation. Because of this
circumstance and due to its limited resources, the B & V Local Partnership filed
a voluntary petition of bankruptcy under Chapter 11 of the Bankruptcy Code on
November 21, 1994 in order to have a court address matters concerning the
insurance company, the contractor and the contractor's bonding company. The
petition was filed in the United States Bankruptcy Court, Southern District of
Florida, Miami. The B & V Local Partnership was authorized to continue in the
management and control of its business and property as debtor-in-possession
under the Bankruptcy Code. On August 27, 1996, the mortgage holder on the
property owned by the B & V Local Partnership filed its Complaint to Foreclose
Mortgage and Securities Interests (the "Complaint") in the Circuit Court for
Dade County, Florida. Shortly thereafter, the B & V Local Partnership filed its
response to the Complaint. In addition, the lender moved the Bankruptcy Court
for a complete dismissal of the bankruptcy proceeding. The Bankruptcy Court
denied this motion provided that a plan of reorganization was filed on behalf of
the B & V Local Partnership by September 17, 1996. On that date, both the lender
and Registrant filed proposed plans of reorganization and accompanying
disclosure statements. Subsequently, the Bankruptcy Court determined the value
of the property, which determination rendered the plan of reorganization filed
by Registrant infeasible. Therefore, only the lender filed an amended disclosure
statement and plan of reorganization on January 24, 1997. Subsequently, the
Bankruptcy Court determined that the plan filed by the lender was sufficient and
confirmed such plan, despite the objection of Registrant and the B & V Local
Partnership. As required by the confirmed plan, the B & V Local Partnership
transferred title to its property to the lender on or about April 9, 1997.
B & V Phase I, Ltd., (the "B & V Phase I Local Partnership") was also damaged by
Hurricane Andrew in August 1992. Since May 1, 1996, all 97 of the rental units
were complete and occupied. Under an agreement with the lender, the B & V Phase
I Local Partnership was to commence paying debt service in January 1995 which
was to coincide with the completion of construction. However, due to
construction delays, the B & V Phase I Local Partnership had not commenced
making such payments. The lender declared a default under the terms of the
mortgage and, on December 9, 1996 the lender commenced a foreclosure action. On
January 14, 1997, by agreement of the B & V Phase I Local Partnership and the
lender, the Circuit Court for Dade County issued an order directing the B & V
Phase I Local Partnership to make mortgage payments to the lender accruing since
December 1996 and to thereafter make monthly mortgage payments to the lender.
The B & V Phase I Local Partnership has complied with this order and all
payments accruing during the period from December 1996 through June 1997 have
been made. On April 18, 1997, a motion for summary judgment in the lender's
foreclosure action was scheduled to be heard. However, on April 17, 1997, the B
& V Phase I Local Partnership filed a Chapter 11 Bankruptcy Petition with the
United States Bankruptcy Court, District of Connecticut, Bridgeport Division. As
of April 25, 1997, the lender filed a motion seeking to change the venue for
this case to the Southern District of Florida. Subsequently, hearings were held
in order for the Bankruptcy Court to consider the lender's motion. In the course
of these hearings, the lender and the B & V Phase I Local Partnership reached a
tentative agreement whereby the lender would withdraw its request to change
venue and the B & V Phase I Local Partnership would agree to submit to the
Bankruptcy Court a plan providing for, among other things, a schedule of buy-
Item 3. Legal Proceedings (continued)
out prices to be paid to the lender at future designated dates. As of June 27,
1997, the Bankruptcy Court has not yet ruled on either the requested relief or
the proposed settlement plan.
On March 5, 1990, Stonebridge Associates ("Stonebridge") filed a lawsuit against
Federal Apartments Limited Partnership (the "Federal Local Partnership") for
repayment of an unsecured, non-interest bearing note in the amount of $96,000.
The suit was filed in the First Judicial District Court in Caddo Parish,
Louisiana. The suit alleges that the defendant was required to pay down such
note upon the receipt of the second installment of the capital contribution
obligation from Registrant. Such capital contribution payment was made by
Registrant to the Federal Local Partnership on December 27, 1989. The Federal
Local Partnership contends that Stonebridge is not entitled to such payment.
On December 16, 1993, the Federal Local Partnership filed a lawsuit against
Henry Cisneros (in his capacity as Secretary of HUD and the Housing Authority of
the City of Fort Lauderdale, Florida ("FLHA") for violating the Administrative
Procedure Act. The suit was filed in the United States District Court, Southern
District of Florida (the "Court"). The suit alleges that the defendants used an
incorrect figure for debt service in determining the base rent component of the
Federal Local Partnership's Housing Assistance Payments Contract rents,
resulting in rents at a level insufficient to service the Federal Local
Partnership's co-insured first mortgage and, as a further result, the amount of
the maximum insurable first mortgage was reduced and the local general partner
of the Federal Local Partnership had to provide approximately $1,299,000 to the
Federal Local Partnership. The Federal Local Partnership seeks payment of the
difference in rents dating from 1988 to the present and recovery of all legal
fees. The local general partner of the Federal Local Partnership estimates that
the annual difference in rents resulting from the defendants' procedures is
approximately $180,000. The Court had previously ruled that HUD acted within its
authority in denying certain change orders incurred in connection with the
development of the property owned by the Federal Local Partnership, but remanded
HUD to review the rent computations used in determining the base rent component.
The Court has since ruled in favor of HUD and the local general partner of the
Federal Local Partnership has filed an appeal in both rulings. The Federal Local
Partnership is unable to determine at this time the final amounts that may be
recoverable from HUD and/or FLHA.
A former tenant of Gulf Shores Apartments Ltd. (the "Gulf Shores Local
Partnership") has brought suit against the Gulf Shores Local Partnership, among
others, in connection with an alleged wrongful eviction. The former tenant's
suit, which seeks damages of $13,000,000, was dismissed on April 22, 1997 as a
result of the former tenant not being present at a court proceeding. The former
tenant has the right to file for reinstatement of the suit within ninety days of
the dismissal.
Registrant is not aware of any other material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the limited partners of Registrant
during the fourth quarter of the fiscal year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity
and Related Security Holder Matters
Market Information and Holders
There is no established public trading market for Registrant's Units. There are
provisions in the Amended and Restated Agreement of Limited Partnership of
Registrant which are intended to prevent the development of a public secondary
market. Accordingly, accurate information as to the market value of a Unit at
any given date is not available. Since November 1992, Merrill Lynch has provided
its clients who wish to buy or sell partnership units with a limited partnership
secondary service available through Merrill Lynch's Limited Partnership
Secondary Transaction Department. The number of owners of Units as of May 20,
1997 was 2,625, holding 41,286 Units.
Beginning with the December 1994 Merrill Lynch client account statements,
Merrill Lynch implemented new guidelines for providing estimated values of
limited partnerships and other direct investments reported on client account
statements. As a result, Merrill Lynch no longer reports general partner
estimates of limited partnership net asset value on its client account
statements, although Registrant may continue to provide its estimate of limited
partnership value to Unit holders. Pursuant to the guidelines, estimated values
for limited partnership interests originally sold by Merrill Lynch (such as
Registrant's Units) will be provided two times per year to Merrill Lynch by
independent valuation services. These estimated values will be based on
financial and other information available to the independent services (1) on the
prior August 15th for reporting on December year-end and subsequent client
account statements through the following May's month-end client account
statements and (2) on the prior March 31st for reporting on June through
November month-end client account statements of the same year. Merrill Lynch
clients may contact their Merrill Lynch Financial Consultants or telephone the
number provided to them on their account statements to obtain a general
description of the methodology used by the independent valuation services to
determine their estimates of value. In addition, Registrant may provide an
estimate of limited partnership value to Unit holders from time to time in
Registrant's reports to limited partners. The estimated values provided by the
independent services and Registrant, which may differ, are not market values and
Unit holders may not be able to sell their Units or realize either amount upon a
sale of their Units. In addition, Unit holders may not realize such estimated
values upon the liquidation of Registrant's assets over its remaining life.
Distributions
Registrant owns a limited partnership interest in Local Partnerships that are
the owners of Properties which are leveraged and receive government assistance
in various forms of rental and debt service subsidies. The distribution of any
cash flow generated by the Local Partnerships may be restricted, as determined
by each Local Partnership's financing and subsidy agreements. Accordingly,
Registrant does not anticipate that it will provide significant annual cash
distributions to its partners. There were no cash distributions to the partners
during the years ended March 30, 1997 and 1996.
Low-income Tax Credits and Historic Rehabilitation Tax Credits (together, the
"Tax Credits"), which are subject to various limitations, may be used by
investors to offset federal income tax liabilities. The Tax Credits per Unit
generated by Registrant and allocated to the limited partners for the tax years
ended December 31, 1996 and 1995 and the cumulative Tax Credits allocated from
inception through December 31, 1996 are as follows:
Historic Net
Rehabilitation Low-income
Tax Credits Tax Credits
Tax year ended December 31, 1996 $ -- $ 139.27
Tax year ended December 31, 1995 -- 146.01
Cumulative totals $ 71.88 $ 1,199.28
Registrant expects to generate total Tax Credits from investments in Local
Partnerships of approximately $1,550 per Unit through December 31, 1999, net of
circumstances which have given rise to recapture and loss of future benefits
(see Part I, Item 2 - Properties and Part II, Item 7 - Management's Discussion
and Analysis of Financial Condition and Results of Operations, herein).
Item 6. Selected Financial Data
The information set forth below presents selected financial data of Registrant.
Additional detailed financial information is set forth in the audited financial
statements included under Part II, Item 8 herein.
Years Ended March 30,
1997 1996 1995 1994 1993
---------------- ------------------------------------------------ ----------
Interest and other $ 259,193 $ 274,591 $ 289,248 $ 291,695 $ 268,884
============= ============= ============= ============ =============
revenue
Equity in loss of
investment $(2,049,756) $(2,240,958) $(2,319,646) $(3,817,612) $(4,077,150)
=========== =========== =========== =========== ===========
in local partnerships
Net loss $(2,384,219) $(2,425,508) $(2,498,880) $(4,002,184) $(4,257,366)
=========== =========== =========== =========== ===========
Net loss per unit of
limited partnership $ (57.17) $ (58.16) $ (59.92)$ (95.97) $ (102.09)
============== ============== ============== ============== =============
interest
As of March 30,
1997 1996 1995 1994 1993
---------------- ---------------- ------------ ---------------- ----------
Total assets $10,611,961 $13,040,183 $15,370,194 $17,766,222 $21,768,328
=========== =========== =========== =========== ===========
- ------------------------------------------------------------------------------------------------------------
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
Registrant registered 50,000 units of limited partnership interest ("Units") at
$1,000 per Unit with the Securities and Exchange Commission (the "Commission")
and on May 4, 1988, the Commission declared effective Amendment No. 2 to the
Registration Statement on Form S-11. Registrant admitted limited partners on
August 19, 1988 and November 15, 1988 in two closings with aggregate limited
partners' capital contributions amounting to $41,286,000.
Registrant acquired nineteen limited partnership interests (the "Local
Partnership Interests") in partnerships (the "Local Partnership" or "Local
Partnerships") representing capital contributions in the amount of $34,510,290.
The Local Partnerships own low-income multifamily residential complexes (the
"Property" or "Properties") which qualify for the low-income tax credit
established by Section 42 of the Tax Reform Act of 1986 (the "Low-income Tax
Credit"); one Local Partnership owns a Property which also qualifies for the
historic rehabilitation tax credit in accordance with Section 48(g) of the
Internal Revenue Code of 1986. The required holding period of each Property, in
order to avoid Low-income Tax Credit recapture, is fifteen years from the year
in which the Low-income Tax Credits commence on the last building of the
Property (the "Compliance Period"). The investments in Local Partnerships are
highly illiquid.
From the closing of Units, Registrant established a working capital reserve.
Registrant is not expected to have access to any source of financing.
Accordingly, if unforeseen contingencies arise that cause a Local Partnership to
require additional capital, in addition to that contributed by Registrant, the
source of such capital needs may be obtained from (i) limited working capital
reserves of Registrant (which may include distributions received from Local
Partnerships), (ii) debt financing at the Local Partnership level (which may not
be available) or (iii) additional equity contributions of the general partner of
a Local Partnership (the "Local General Partner"). In addition, the Local
Partnerships are generally expected to maintain escrow reserves over time in
addition to the reserves maintained by Registrant. There can be no assurance
that any of these sources would be readily available to provide for possible
additional capital requirements or be sufficient to remedy any such unforeseen
contingencies.
As of March 30, 1997, Registrant's working capital is comprised of cash and cash
equivalents of $284,108, investments in corporate bonds of $1,318,521,
investments in U.S. Treasury bonds of $1,389,516 and investments in U.S.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations(continued)
government agency bonds of $175,922. Registrant acquired such investments in
bonds with the intention of utilizing proceeds generated by such investments in
bonds to meet its annual obligations. Future sources of Registrant's funds are
expected primarily from interest earned on investments of working capital
reserves, retired investments in bonds and limited cash distributions from Local
Partnerships.
During the year ended March 30, 1997, Registrant received cash from interest
earnings and distributions from Local Partnerships and utilized cash for
operating expenses. In addition, Registrant received $135,000 from the maturity
of investments in bonds. Cash and cash equivalents and investments in bonds
available-for-sale decreased, in the aggregate, by approximately $341,000 during
the year ended March 30, 1997, which decrease includes a net unrealized loss on
investments in bonds of approximately $77,000, the amortization of net premium
on investments in bonds of approximately $32,000 and the accretion of zero
coupon bonds of approximately $16,000. During the year ended March 30, 1997, the
investment in Local Partnerships decreased as a result of Registrant's equity in
the Local Partnerships' net loss for the year ended December 31, 1996 of
$2,049,756 and cash distributions received from Local Partnerships of $32,500.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. The rents of the Properties, many of which receive rental subsidy
payments, including payments under Section 8 of Title II of the Housing and
Community Development Act of 1974 ("Section 8"), are subject to specific laws,
regulations and agreements with federal and state agencies. The subsidy
agreements expire at various times during and after the Compliance Periods of
the Local Partnerships. The United States Department of Housing and Urban
Development ("HUD") has issued notices which implement provisions to renew
certain project based Section 8 contracts expiring during HUD's fiscal year
1997, where requested by an owner, for an additional one year term generally at
or below current rent levels, subject to certain guidelines. HUD has an
additional program (the "Restructuring Program") which, in general, provides for
restructuring rents and/or mortgages where rents may be adjusted to market
levels and mortgage terms may be adjusted based on the reduction in rents,
although there may be instances in which only rents, but not mortgages, are
restructured. Registrant cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of any or all Local
Partnerships currently receiving such subsidy or similar subsidies. Two Local
Partnerships, whose Section 8 contracts expired during 1996 and were extended
for one year, have applied for treatment under the Restructuring Program during
1997. In addition, the Local Partnerships have various financing structures
which include (i) required debt service payments ("Mandatory Debt Service") and
(ii) debt service payments which are payable only from available cash flow
subject to the terms and conditions of the notes, which may be subject to
specific laws, regulations and agreements with appropriate federal and state
agencies ("Non-Mandatory Debt Service or Interest"). During the year ended
December 31, 1996, revenue from operations, Local General Partner advances and
reserves of the Local Partnerships have generally been sufficient to cover the
operating expenses and Mandatory Debt Service. Most of the Local Partnerships
are effectively operating at or near break even levels, although certain Local
Partnerships' accounting information reflects operating deficits that do not
represent cash deficits due to their mortgage and financing structure and the
required deferral of property management fees. However, as discussed below,
certain Local Partnerships' operating information indicates below break even
operations after taking into account their mortgage and financing structure and
required deferral of property management fees.
The terms of the partnership agreement of 4611 South Drexel Limited Partnership
(the "South Drexel Local Partnership") require the Local General Partner of the
South Drexel Local Partnership to cause the management agent to defer property
management fees in order to avoid a default under the mortgages. The South
Drexel Local Partnership incurred an operating deficit of approximately $22,000
for the year ended December 31, 1996 which includes property management fees of
approximately $15,000. Accordingly, the net operating deficit was approximately
$7,000. The Local General Partner of the South Drexel Local Partnership has
advances of approximately $35,000 outstanding. Of Registrant's total annual
Low-income Tax Credits, approximately 1% is allocated from the South Drexel
Local Partnership.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations(continued)
The operating information of Dunbar Limited Partnership No. 2 (the "Dunbar No. 2
Local Partnership") reflects a deficit of approximately $188,000 for the year
ended December 31, 1996 due to an unanticipated charge in connection with past
years' real estate taxes of approximately $260,000, of which $110,000 was paid
and $150,000 has been accrued. The Local General Partner of the Dunbar No. 2
Local Partnership has applied to HUD for treatment under the Restructuring
Program and is currently negotiating with the local tax authority in an effort
to reduce the charge. There can be no assurance that the Local General Partner
of the Dunbar No. 2 Local Partnership will be successful in either of these
efforts.
Registrant acquired a 99% limited partnership interest in B & V, Ltd. (the "B &
V Local Partnership"), a 190-unit complex located in Homestead, Florida in
December 1988. In August 1992, much of Homestead, Florida was devastated by
Hurricane Andrew and the property owned by the B & V Local Partnership sustained
substantial damage. The damage to the complex was covered by property insurance
and the B & V Local Partnership was covered by rental interruption insurance. It
was the intention of the Local General Partner of the B & V Local Partnership to
reconstruct the complex, and thus preserve the Low-income Tax Credits. However,
delays in the rebuilding of the complex occurred due to disagreements with the
insurance company concerning selection of the contractor and the costs to
rebuild the complex. In addition, the insurance carrier ceased making rental
interruption insurance payments and subsequently the lender declared a default.
While conducting repairs, which included completing 52 rental units which were
placed in service, the B & V Local Partnership undertook significant litigious
efforts to effect a workout with the lender and cause the insurance company and
contractor to perform under their obligations to rebuild the complex, which
included reorganization plans, bankruptcy proceedings, binding arbitration and
voluntary nonbinding mediation. Despite such efforts, the complex lost 32 rental
units pursuant to a quick-take eminent domain proceeding in April 1996 and the
remainder of the complex was ultimately lost in April 1997 when the Bankruptcy
Court ordered title transfer of the property.
As a result of the eminent domain proceeding by the City of Homestead,
Registrant incurred a recapture of Low-income Tax Credits taken through December
1995 of approximately $5 per Unit and will forego future Low-income Tax Credits
associated with such rental units of approximately $5 per Unit for the period
January 1996 through 1998. As a result of the lender's foreclosure of the 158
rental units, Registrant anticipates a recapture of Low-income Tax Credits taken
through December 1996 of approximately $35 per Unit for Unit holders of record
as of April 1997 and will forego future Low-income Tax Credits associated with
the 158 rental units of approximately $10 per Unit for the period January 1997
through 1998. In December 1996, in connection with the bankruptcy and
foreclosure proceedings surrounding the B & V Local Partnership, the Bankruptcy
Court determined the value of the property owned by the B & V Local Partnership
whereby the appraised value of the property was $1,898,600, which resulted in
the recognition of an impairment loss of $3,910,599 included in the combined
statement of operations of the Local Partnerships for the year ended December
31, 1996. Registrant's investment balance in the B & V Local Partnership, after
the cumulative equity losses, became zero during the year ended March 30, 1995.
Accordingly, the aforementioned impairment had no effect on the financial
position, results of operations or cash flows of Registrant.
As part of the overall plan and arrangement with the Local General Partner of
the B & V Local Partnership (see discussion above), Registrant acquired a 98%
limited partnership interest in B & V Phase I, Ltd. (the "B & V Phase I Local
Partnership"), which owns a 97-unit, Section 8 assisted apartment complex
located in Homestead, Florida, from principals of the Local General Partner of
the B & V Local Partnership during the year ended March 30, 1995. The purpose of
acquiring an interest in the B & V Phase I Local Partnership was to mitigate
potential adverse consequences of a loss of Low-income Tax Credits in the event
that the rebuilding of the apartment complex owned by the B & V Local
Partnership was not completed. Under the terms of the limited partnership
agreement between Registrant and the B & V Phase I Local Partnership, Registrant
made its full capital contribution of $140,000 in October 1994 with total
Low-income Tax Credits expected to be allocated to Registrant over the period
1994 through 1998 of approximately $499,000. Prior to the acquisition, the B & V
Phase I Local Partnership was also damaged by Hurricane Andrew in August 1992.
Since May 1, 1996, all 97 of the rental units were complete and occupied. Under
an agreement with the lender, the B & V Phase I Local Partnership was to
commence paying debt service in January 1995 which was to coincide with the
completion of construction. However, due to construction delays, the B & V Phase
I Local Partnership had not commenced making such payments. The lender declared
a default under the terms of the mortgage and, on
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations(continued)
December 9, 1996 the lender commenced a foreclosure action. On January 14, 1997,
by agreement of the B & V Phase I Local Partnership and the lender, the Circuit
Court for Dade County issued an order directing the B & V Phase I Local
Partnership to make mortgage payments to the lender accruing since December 1996
and to thereafter make monthly mortgage payments to the lender. The B & V Phase
I Local Partnership has complied with this order and all payments accruing since
December 1996 through June 1997 have been made. On April 18, 1997, a motion for
summary judgment in the lender's foreclosure action was scheduled to be heard.
However, on April 17, 1997, the B & V Phase I Local Partnership filed a Chapter
11 Bankruptcy Petition with the United States Bankruptcy Court, District of
Connecticut, Bridgeport Division. As of April 25, 1997, the lender filed a
motion seeking to change the venue for this case to the Southern District of
Florida. Subsequently, hearings were held in order for the Bankruptcy Court to
consider the lender's motion. In the course of these hearings, the lender and
the B & V Phase I Local Partnership reached a tentative agreement whereby the
lender would withdraw its request to change venue and the B & V Phase I Local
Partnership would agree to submit to the Bankruptcy Court a plan providing for,
among other things, a schedule of buy-out prices to be paid to the lender at
future designated dates. As of June 27, 1997, the Bankruptcy Court has not yet
ruled on either the requested relief or the proposed settlement plan. Provided
that the Bankruptcy Court accepts the proposed settlement plan and the B & V
Phase I Local Partnership is not required to make debt service payments in
excess of current levels, Registrant does not anticipate an interruption in
Low-income Tax Credits allocated from the B & V Phase I Local Partnership
through December 31, 1997.
The Local General Partner of the B & V Phase I Local Partnership has transferred
its 1% general partner interest to an unrelated third party and transferred its
1% limited partner interest to Registrant. Registrant's investment balance in
the B & V Phase I Local Partnership, after the cumulative equity losses, became
zero during the year ended March 30, 1996. Of Registrant's total annual
Low-income Tax Credits (prior to the loss of the B & V Local Partnership)
approximately 1% is allocated from the B & V Phase I Local Partnership.
Although Cobbet Hill Associates Limited Partnership (the "Cobbet Local
Partnership") is current on its mortgage obligation and does not reflect
operating deficits for the year ended December 31, 1996, brick has fallen off
the parapet of the building and the first mortgage lender has declared a default
pending restoration of the brick. The Cobbet Local Partnership's property
management has met with the lender and presented a plan which has been orally
accepted by the lender. In order to effect the agreed plan of action with the
first mortgage lender, Registrant agreed to be contingently liable under a
standby letter of credit in the amount of $242,529 which was issued on June 18,
1997 for the purpose of covering potential operating deficits of the Cobbet
Local Partnership. The letter of credit expires on June 18, 1998 and is secured
by Registrant's investments in U.S. Treasury bonds in the amount of
approximately $255,000, purchased in June 1997. Although remediation is underway
and is expected to be completed during September 1997, the property will remain
in technical default until the work is completed.
The terms of the partnership agreement of Erie Associates Limited Partnership
(the "Erie Local Partnership") require the Local General Partners of the Erie
Local Partnership to cause the management agent to defer property management
fees in order to avoid a default under the mortgage. The Erie Local Partnership
is operating pursuant to an amended and restated note (the "Amended Note") dated
December 1, 1994 which matures on December 31, 1997. The original financing
called for Mandatory Debt Service of $7,647 per month, while the Amended Note
requires monthly Mandatory Debt Service of $5,883. The Local General Partners of
the Erie Local Partnership report that the Erie Local Partnership is several
months in arrears under the terms of the Amended Note, that a default has been
declared by the lender and that discussions are currently being held with the
lender in an attempt to restructure the loan. Of Registrant's total annual
Low-income Tax Credits, approximately 2% is allocated from the Erie Local
Partnership, which are scheduled to expire December 1998.
Results of Operations
Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting. Registrant accounts for its investment in Local Partnerships
in accordance with the equity method of accounting, under which the investment
is carried at cost and is adjusted for Registrant's share of the Local
Partnership's results of operations and by any cash distributions received.
Equity in loss of each investment in Local Partnership
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations(continued)
allocated to Registrant is recognized to the extent of Registrant's investment
balance in each Local Partnership. Any equity in loss in excess of Registrant's
investment balance in a Local Partnership is allocated to other partners'
capital in each such Local Partnership. As a result, the equity in loss of
investment in Local Partnerships is expected to decrease as Registrant's
investment balances in the respective Local Partnerships become zero. However,
the combined statements of operations of the Local Partnerships reflected in
Note 5 to Registrant's financial statements include the operating results of all
Local Partnerships, regardless of Registrant's investment balances.
Cumulative losses and cash distributions in excess of investment in Local
Partnerships may result from a variety of circumstances, including a Local
Partnership's accounting policies, subsidy structure, debt structure and
operating deficits, among other things. Accordingly, cumulative losses and cash
distributions in excess of the investment are not necessarily indicative of
adverse operating results of a Local Partnership. See discussion above under
Capital Resources and Liquidity regarding certain Local Partnerships currently
operating below economic break even levels.
Year Ended March 30, 1997
For the year ended March 30, 1997, Registrant had a net loss of approximately
$2,384,000, which included an equity in loss of investment in Local Partnerships
of approximately $2,050,000 for the year ended December 31, 1996. Nonrecognition
of losses in excess of Registrant's investment in certain Local Partnerships
during the year was approximately $7,715,000. Registrant's loss from operations
for the year ended March 30, 1997 of approximately $334,000 was attributable to
interest revenue of approximately $256,000 and other income from Local
Partnerships of approximately $4,000, exceeded by operating expenses of
approximately $594,000, which includes professional fees incurred in connection
with the B & V and B & V Phase I Local Partnerships of approximately $148,000.
Interest revenue for future periods is expected to decline as investments in
bonds mature and are utilized for Registrant's operating expenses.
The Local Partnerships' net loss of approximately $9,901,000 for the year ended
December 31, 1996 was attributable to rental and other revenue of approximately
$16,357,000, exceeded by operating and interest expenses of approximately
$17,327,000, approximately $4,122,000 of depreciation and amortization expenses
and approximately $4,809,000 incurred by the B & V Local Partnership in
connection with the quick-take eminent domain proceeding and the recorded
adjustment of the property to its estimated fair market value. The Local
Partnerships' net loss for the year ended December 31, 1996 includes (i) the
recorded loss of the B & V Local Partnership, inclusive of the amount described
above, of approximately $5,456,000 and (ii) accrued Non-Mandatory Interest
charges of approximately $647,000, and does not include the receipt of the
subsidy of the Cobbet Local Partnership under the Massachusetts State Housing
Assistance for Rental Production program ("SHARP") (which is recorded as debt
rather than revenue) in the amount of approximately $366,000 or the principal
amortization on mortgage loans payable of approximately $577,000.
Year Ended March 30, 1996
For the year ended March 30, 1996, Registrant had a net loss of approximately
$2,426,000, which included an equity in loss of investment in Local Partnerships
of approximately $2,241,000 for the year ended December 31, 1995. Nonrecognition
of losses in excess of Registrant's investment in certain Local Partnerships
during the year was approximately $2,521,000. Registrant's loss from operations
for the year ended March 30, 1996 of approximately $185,000 was attributable to
interest revenue of approximately $269,000 and other income from Local
Partnerships of $5,000, exceeded by operating expenses of approximately
$459,000.
The Local Partnerships' net loss of approximately $4,837,000 for the year ended
December 31, 1995 was attributable to rental and other revenue of approximately
$15,977,000, exceeded by operating and interest expenses of approximately
$16,664,000 and approximately $4,150,000 of depreciation and amortization
expenses. The Local Partnerships' net loss for the year ended December 31, 1995
includes (i) the recorded loss of the B & V Local Partnership of approximately
$659,000 and (ii) accrued Non-Mandatory Interest charges of approximately
$492,000, and does not include the receipt of the SHARP subsidy of the Cobbet
Local Partnership in the amount of approximately $314,000 or the principal
amortization on mortgage loans payable of approximately $568,000.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations(continued)
Year Ended March 30, 1995
For the year ended March 30, 1995, Registrant had a net loss of approximately
$2,499,000, which included an equity in loss of investment in Local Partnerships
of approximately $2,320,000 for the year ended December 31, 1994. Nonrecognition
of losses in excess of Registrant's investment in certain Local Partnerships
during the year was approximately $2,088,000. Registrant's loss from operations
for the year ended March 30, 1995 of approximately $179,000 was attributable to
interest revenue of approximately $287,000 and other income from Local
Partnerships of approximately $2,000, exceeded by operating expenses of
approximately $468,000.
The Local Partnerships' net loss of approximately $4,570,000 for the year ended
December 31, 1994 was attributable to rental and other revenue of approximately
$15,255,000, exceeded by operating and interest expenses of approximately
$15,837,000 and approximately $3,988,000 of depreciation and amortization
expenses. The Local Partnerships' net loss for the year ended December 31, 1994
includes (i) the recorded loss of the B & V Local Partnership of approximately
$913,000 and (ii) accrued Non-Mandatory Interest charges of approximately
$384,000, and does not include the receipt of the SHARP subsidy of the Cobbet
Local Partnership in the amount of approximately $348,000 or the principal
amortization on mortgage loans payable of approximately $626,000.
Year Ended March 30, 1997 v. 1996
Registrant's operations for the year ended March 30, 1997 resulted in a net loss
of approximately $2,384,000 as compared to a net loss of approximately
$2,426,000 for the year ended March 30, 1996. The decrease in net loss is
primarily attributable to (i) a decrease in the equity in loss of investment in
Local Partnerships of approximately $191,000, which is primarily the result of
an increase in the nonrecognition of losses in excess of Registrant's investment
in Local Partnerships of approximately $386,000 (exclusive of the losses
incurred from the eminent domain proceeding and the market value adjustment in
connection with the B & V Local Partnership) in accordance with the equity
method of accounting, partially offset by (ii) an increase in the expenses of
the Local Partnerships, which in the aggregate is partially offset by an
increase in professional fees which is primarily the result of expenses incurred
in connection with the B & V and the B & V Phase I Local Partnerships (see
earlier discussion).
Year Ended March 30, 1996 v. 1995
Registrant's operations for the year ended March 30, 1996 resulted in a net loss
of approximately $2,426,000 as compared to a net loss of approximately
$2,499,000 for the year ended March 30, 1995. The decrease in net loss is
primarily attributable to (i) a decrease in the equity in loss of investment in
Local Partnerships of approximately $79,000, which is primarily the result of an
increase in the nonrecognition of losses in excess of Registrant's investment in
Local Partnerships of approximately $433,000, in accordance with the equity
method of accounting, partially offset by (ii) an increase in repairs and
maintenance expenses and (iii) an increase in amortization expense resulting
from the write-off of particular intangible assets in connection with the
mortgage refinancing of certain Local Partnerships.
Inflation
Inflation is not expected to have a material adverse impact on Registrant's
operations during its period of ownership of the Local Partnership Interests.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations(continued)
Recent Accounting Statements Not Yet Adopted
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share"
and SFAS No. 129, "Disclosure of Information about Capital Structure." SFAS
No. 128 provides accounting and reporting standards for the amount of
earnings per share. SFAS No. 129 requires the disclosure in summary form
within the financial statements of the pertinent rights and privileges of
the various securities outstanding. SFAS No. 128 and SFAS No. 129 are
effective for fiscal years ending after December 15, 1997 and earlier
application is not permitted.
The implementation of SFAS No. 128 and SFAS No. 129 is not expected to
materially impact Registrant's financial statements because Registrant's
earnings per share would not be significantly affected and the disclosures
regarding the capital structure in the financial statements would not be
significantly changed.
AMERICAN TAX CREDIT PROPERTIES L.P.
Item 8. Financial Statements and Supplementary Data
Table of Contents
Independent Auditors' Report.................................................
Balance Sheets as of March 30, 1997 and 1996.................................
Statements of Operations for the years ended March 30, 1997, 1996 and 1995...
Statements of Changes in Partners' Equity (Deficit) for the years ended
March 30, 1997, 1996 and 1995...........................................
Statements of Cash Flows for the years ended March 30, 1997, 1996 and 1995...
Notes to Financial Statements as of March 30, 1997, 1996 and 1995............
No financial statement schedules are included because of the absence of the
conditions under which they are required or because the information is included
in the financial statements or the notes thereto.
Independent Auditors' Report
To the Partners
American Tax Credit Properties L.P.
We have audited the accompanying balance sheets of American Tax Credit
Properties L.P. as of March 30, 1997 and 1996, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for each of the
three years in the period ended March 30, 1997. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American Tax Credit
Properties L.P. as of March 30, 1997 and 1996, and the results of its operations
and cash flows for each of the three years in the period ended March 30, 1997,
in conformity with generally accepted accounting principles.
/s/ Reznick Fedder and Silverman
Bethesda, Maryland May 8, 1997 (except for Note 10, as to which the date is June
18, 1997)
AMERICAN TAX CREDIT PROPERTIES L.P.
BALANCE SHEETS
MARCH 30, 1997 AND 1996
Notes 1997 1996
----- -----------------------------
ASSETS
Cash and cash equivalents 3,9,10 $ 284,108 $ 397,120
Investments in bonds available-for-sale 4,9 2,883,959 3,112,049
Investment in local partnerships 5,8 7,382,178 9,464,434
Interest receivable 9 61,716 66,580
---------------- ----------------
$ 10,611,961 $ 13,040,183
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses 8,9 $ 91,237 $ 57,961
Payable to general partner 6,8,9 43,861 43,861
---------------- ----------------
135,098 101,822
--------------- ---------------
Commitments and contingencies 8,10
Partners' equity (deficit) 2,4
General partner (262,065) (238,223)
Limited partners, $1,000 stated value per unit (41,286
units of limited partnership interest outstanding) 10,625,435 12,985,812
Unrealized gain on investments in bonds 113,493 190,772
--------------- ---------------
available-for-sale, net
10,476,863 12,938,361
$ 10,611,961 $ 13,040,183
============ ============
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
Notes 1997 1996 1995
----- ---------------- ---------------- ----------
REVENUE
Interest $ 255,496 $ 269,591 $ 286,748
Other income from local partnerships 3,697 5,000 2,500
-------------- --------------- ---------------
TOTAL REVENUE 259,193 274,591 289,248
------------ ------------- -------------
EXPENSES
Administration fees 8 183,723 183,723 183,723
Management fee 6,8 175,466 175,466 175,466
Professional fees 202,897 72,855 81,932
Printing, postage and other 31,570 27,097 27,361
--------------- --------------- --------------
TOTAL EXPENSES 593,656 459,141 468,482
------------- ------------- -------------
Loss from operations (334,463) (184,550) (179,234)
Equity in loss of investment in local 5 (2,049,756) (2,240,958) (2,319,646)
----------- ----------- -----------
partnerships
NET LOSS $(2,384,219) $(2,425,508) $(2,498,880)
=========== =========== ===========
NET LOSS ATTRIBUTABLE TO 2
General partner $ (23,842) $ (24,255) $ (24,989)
Limited partners (2,360,377) (2,401,253) (2,473,891)
----------- ----------- -----------
$(2,384,219) $(2,425,508) $(2,498,880)
=========== =========== ===========
NET LOSS per unit of limited partnership
interest (41,286 units of limited
partnership interest) $ (57.17) $ (58.16) $ (59.92)
============= ============== =============
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
Unrealized Gain
(Loss) on
Investments in
Bonds
General Partner Limited Available-For-Sale Total
Partners Net
Partners' equity (deficit), March 30, $ (188,979) $ 17,860,956 $ $ 17,671,977
1994
Net loss (24,989) (2,473,891) (2,498,880)
Unrealized gain on investments in
bonds available-for-sale, net 101,740 101,740
---------------------------------------------- --------------
Partners' equity (deficit), March 30, (213,968) 15,387,065 101,740 15,274,837
1995
Net loss (24,255) (2,401,253) (2,425,508)
Change in unrealized gain on
investments in bonds 89,032 89,032
----------------------------------------------- ---------------
available-for-sale, net
Partners' equity (deficit), March 30, (238,223) 12,985,812 190,772 12,938,361
1996
Net loss (23,842) (2,360,377) (2,384,219)
Change in unrealized gain on
investments in bonds (77,279) (77,279)
----------------------------------------------- ---------------
available-for-sale, net
Partners' equity (deficit), March 30, $ (262,065) $ 10,625,435 $ 113,493 $ 10,476,863
========== ============ ============ ============
1997
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
1997 1996 1995
-------------- -------------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 276,171 $ 286,108 $ 309,993
Other income from local partnerships 3,697 5,000 2,500
Cash paid for
administration fees (183,723) (183,723) (183,723)
management fee (175,466) (175,466) (175,466)
professional fees (184,832) (66,611) (78,176)
printing, postage and other expenses (16,359) (26,876) (30,005)
------------ ------------ ------------
Net cash used in operating activities (280,512) (161,568) (154,877)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 32,500 82,000 86,973
Maturity/redemption of bonds 135,000 134,000 427,000
Investment in local partnership (140,000)
---------------------------------------------
Net cash provided by investing activities 167,500 216,000 373,973
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (113,012) 54,432 219,096
Cash and cash equivalents at beginning of year 397,120 342,688 123,592
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 284,108 $ 397,120 $ 342,688
=========== =========== ===========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain (loss) on investments in bonds $ (77,279) $ 89,032 $ 101,740
============ ============ ===========
available-for-sale, net
- ----------------------------------------------------------- ---------------- ---------------- ---------------
See reconciliation of net loss to net cash used in operating activities on page
22.
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CASH FLOWS - (Continued)
YEARS ENDED MARCH 30, 1997, 1996 AND 1995
1997 1996 1995
---------------- ---------------- ----------
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES
Net loss $ (2,384,219) $ (2,425,508) $ (2,498,880)
Adjustments to reconcile net loss to net cash used
in operating activities
Equity in loss of investment in local partnerships 2,049,756 2,240,958 2,319,646
Gain on redemption of investments in bonds (2,008) (7,339)
available-for-sale
Amortization of net premium on investments in bonds 32,114 33,043 61,286
Accretion of zero coupon bonds (16,303) (16,303) (37,008)
Increase in accounts payable and accrued expenses 33,276 6,465 1,112
Decrease in interest receivable 4,864 1,785 6,306
---------------- ---------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES $ (280,512) $ (161,568) $ (154,877)
============= ============= =============
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 1997, 1996 AND 1995
1. Organization, Purpose and Summary of Significant Accounting Policies
American Tax Credit Properties L.P. (the "Partnership") was formed on
February 12, 1988 and the Certificate of Limited Partnership of the
Partnership was filed under the Delaware Revised Uniform Limited Partnership
Act. There was no operating activity until admission of the limited partners
on August 19, 1988. The Partnership was formed to invest primarily in
leveraged low-income multifamily residential complexes (the "Property" or
"Properties") which qualify for the low-income tax credit established by
Section 42 of the Tax Reform Act of 1986 (the "Low-income Tax Credit"),
through the acquisition of limited partnership equity interests (the "Local
Partnership Interests") in partnerships (the "Local Partnership" or "Local
Partnerships") that are the owners of the Properties. The Partnership has
invested in one Property which also qualifies for the historic
rehabilitation tax credit in accordance with Section 48(g) of the Internal
Revenue Code of 1986. Richman Tax Credit Properties L.P. (the "General
Partner") was formed on February 10, 1988 to act as the sole general partner
of the Partnership.
Basis of Accounting and Fiscal Year
The Partnership's records are maintained on the accrual basis of accounting
for both financial reporting and tax purposes. For financial reporting
purposes, the Partnership's fiscal year ends March 30 and its quarterly
periods end June 29, September 29 and December 30. The Local Partnerships
have a calendar year for financial reporting purposes. The Partnership and
the Local Partnerships each have a calendar year for income tax purposes.
The Partnership accounts for its investment in Local Partnerships in
accordance with the equity method of accounting (see Note 5), under which
the investment is carried at cost and is adjusted for the Partnership's
share of the Local Partnership's results of operations and by any cash
distributions received. Equity in loss of each investment in Local
Partnership allocated to the Partnership is recognized to the extent of the
Partnership's investment balance in each Local Partnership. Any equity in
loss in excess of the Partnership's investment balance in a Local
Partnership is allocated to other partners' capital in each such Local
Partnership. Previously unrecognized equity in loss of any Local Partnership
is recognized in the fiscal year in which equity in income is earned by such
Local Partnership. Distributions received subsequent to the elimination of
an investment balance for any such Local Partnership are recorded as other
income from Local Partnerships.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Adoption of Accounting Standard
On March 31, 1996, the Partnership adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of." SFAS No. 121 requires that
long-lived assets and certain indentifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The adoption of SFAS No. 121 has not materially affected the
Partnership's reported earnings, financial condition or cash flows.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
1. Organization, Purpose and Summary of Significant Accounting Policies
(continued)
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Partnership considers all
highly liquid investments purchased with an original maturity of three
months or less at the date of acquisition to be cash equivalents. Cash and
cash equivalents are stated at cost which approximates market value.
Investments in Bonds Available-For-Sale
Investments in bonds classified as available-for-sale represent investments
in bonds that the Partnership intends to hold for an indefinite period of
time but not necessarily to maturity. Any decision to sell an investment
classified as available-for-sale would be based on various factors,
including significant movements in interest rates and liquidity needs.
Investments in bonds available-for-sale are carried at estimated fair value
and unrealized gains or losses are reported as a separate component of
partners' equity (deficit).
Premium/Discount on Investments
Premiums and discounts on investments in bonds available-for-sale are
amortized (accreted) using the straight-line method over the life of the
investment. Amortized premiums offset interest revenue, while the accretion
of discounts and zero coupon bonds are included in interest revenue.
Unamortized premiums and unaccreted discounts of investments redeemed prior
to maturity are offset against, or included in, interest revenue.
Gain (Loss) on Redemption or Sale of Investments
Realized gain (loss) on redemption or sale of investments in bonds
available-for-sale are included in, or offset against, interest revenue on
the basis of the adjusted cost of each specific investment redeemed or sold.
Income Taxes
No provision for income taxes has been made because all income, losses and
tax credits are allocated to the partners for inclusion in their respective
tax returns. In accordance with SFAS No. 109, "Accounting for Income Taxes,"
the Partnership has included in Note 7 certain disclosures related to
differences in the book and tax bases of accounting.
Reclassifications
Certain reclassifications of amounts have been made to conform to the
current year presentation.
2. Capital Contributions
On May 11, 1988, the Partnership commenced the offering of units (the
"Units") through Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Selling Agent"). On August 19, 1988 and November 15, 1988, under the terms
of the Amended and Restated Agreement of Limited Partnership of the
Partnership (the "Partnership Agreement"), the General Partner admitted
limited partners to the Partnership in two closings. At these closings,
subscriptions for a total of 41,286 Units representing $41,286,000 in
limited partners' capital contributions were accepted. In connection with
the offering of Units, the Partnership incurred registration costs of
$1,478,372, of which $75,000 was capitalized as organization costs and
$1,403,372 was charged to the limited partners' equity. The Partnership
received a capital contribution of $100 from the General Partner.
Net loss is allocated 99% to the limited partners and 1% to the General
Partner in accordance with the Partnership Agreement.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
3. Cash and Cash Equivalents
As of March 30, 1997, the Partnership has $284,108 in cash and cash
equivalents deposited in interest-bearing accounts, of which $140,675 is
deposited with an institution which is not insured by the Federal Deposit
Insurance Corporation.
4. Investments in Bonds Available-For-Sale
The Partnership carries its investments in bonds as available-for-sale
because such investments are used to facilitate and provide flexibility for
the Partnership's obligations, including resolving unforeseen contingencies
which may arise in connection with the Local Partnerships. Investments in
bonds available-for-sale are reflected in the accompanying balance sheets at
estimated fair value.
As of March 30, 1997, certain information concerning investments in bonds
available-for-sale is as follows:
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair
value
Corporate debt securities
Within one year $ 75,000 $ 774 $ -- $ 75,774
After one year through five 183,352 91 (280) 183,163
years
After five years through ten 985,179 170 (20,292) 965,057
years
After ten years 101,467 -- (6,940) 94,527
-------------- --------------------------- ---------------
1,344,998 1,035 (27,512) 1,318,521
------------- ------------- ----------- -------------
U.S. Treasury debt securities
Within one year 53,000 182 -- 53,182
After one year through five 510,635 57,915 -- 568,550
years
After five years through ten 663,945 103,839 -- 767,784
-------------- ------------- ----------------------------
years
1,227,580 161,936 -- 1,389,516
------------- ------------- ----------------------------
U.S. government and agency
securities
After ten years 197,888 -- (21,966) 175,922
-------------- ---------------------------- --------------
$ 2,770,466 $ 162,971 $ (49,478) $ 2,883,959
============= ========== ============ ============
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
4. Investments in Bonds Available-For-Sale (continued)
As of March 30, 1996, certain information concerning investments in bonds
available-for-sale is as follows:
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair
value
Corporate debt securities
Within one year $ 90,548 $ 898 $ (506) $ 90,940
After one year through five 263,344 2,397 -- 265,741
years
After five years through ten 641,984 1,052 (22,167) 620,869
years
After ten years 454,720 7,664 (7,444) 454,940
------------- ------------- ------------ -------------
1,450,596 12,011 (30,117) 1,432,490
------------ ------------ ----------- ------------
U.S. Treasury debt securities
Within one year 44,998 100 -- 45,098
After one year through five 185,574 10,973 -- 196,547
years
After five years through ten 1,058,525 208,372 -- 1,266,897
------------ ------------ ----------------------------
years
1,289,097 219,445 -- 1,508,542
------------ ------------ ----------------------------
U.S. government and agency
securities
After ten years 181,584 -- (10,567) 171,017
------------- --------------------------- -------------
$ 2,921,277 $ 231,456 $ (40,684) $ 3,112,049
=========== =========== =========== ===========
5. Investment in Local Partnerships
As of March 30, 1997, the Partnership owns a limited partnership interest in
the following Local Partnerships:
1. 4611 South Drexel Limited Partnership;
2. B & V, Ltd. (the "B & V Local Partnership");
3. B & V Phase I, Ltd. (the "B & V Phase I Local Partnership");
4. Blue Hill Housing Limited Partnership;
5. Cityside Apartments, L.P.;
6. Cobbet Hill Associates Limited Partnership (the "Cobbet Local Partnership");
7. Dunbar Limited Partnership;
8. Dunbar Limited Partnership No. 2;
9. Erie Associates Limited Partnership (the "Erie Local Partnership");
10. Federal Apartments Limited Partnership;
11. Golden Gates Associates;
12. Grove Park Housing, A California Limited Partnership;
13. Gulf Shores Apartments Ltd.;
14. Hilltop North Associates, A Virginia Limited Partnership;
15. Madison-Bellefield Associates;
16. Pine Hill Estates Limited Partnership;
17. Santa Juanita Limited Dividend Partnership L.P. (the "Santa Juanita Local
Partnership");
18. Vista del Mar Limited Dividend Partnership L.P.; and
19. Winnsboro Homes Limited Partnership.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Although the Partnership generally owns a 98.9%-99% limited partnership
interest in the Local Partnerships, the Partnership and American Tax Credit
Properties II L.P. ("ATCP II"), a Delaware limited partnership and an
affiliate of the Partnership, together, in the aggregate, acquired a 99%
Local Partnership Interest in the Santa Juanita Local Partnership; the
ownership percentages of the Partnership and ATCP II of the Santa Juanita
Local Partnership are 34.64% and 64.36%, respectively.
The Properties are principally comprised of subsidized and leveraged
low-income multifamily residential complexes located throughout the United
States and Puerto Rico. The required holding period of each Property, in
order to avoid Low-income Tax Credit recapture, is fifteen years from the
year in which the Low-income Tax Credits commence on the last building of
the Property (the "Compliance Period"). The rents of the Properties are
controlled by federal and state agencies pursuant to applicable laws and
regulations (see Note 8). Under the terms of each of the nineteen Local
Partnership's partnership agreements, the Partnership made capital
contributions in the aggregate amount of $34,510,290. As of December 31,
1996, the Local Partnerships have outstanding mortgage loans payable
totaling approximately $83,114,000 and accrued interest payable on such
loans totaling approximately $5,015,000, which are secured by security
interests and liens common to mortgage loans on the Local Partnerships' real
property and other assets.
Equity in loss of investment in Local Partnerships is limited to the
Partnership's investment balance in each Local Partnership; any excess is
applied to other partners' capital in any such Local Partnership (see Note
1). The amount of such excess losses applied to other partners' capital was
$7,714,573, $2,520,695 and $2,088,012 for the years ended December 31, 1996,
1995 and 1994, respectively, as reflected in the combined statements of
operations of the Local Partnerships reflected herein Note 5.
The combined balance sheets of the Local Partnerships as of December 31,
1996 and 1995 and the combined statements of operations of the Local
Partnerships for the years ended December 31, 1996, 1995 and 1994 are
reflected on pages 28 and 29, respectively.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of December 31, 1996 and 1995 are
as follows:
1996 1995
------------------ -----------
ASSETS
Cash and other investments $ 1,218,425 $ 1,304,492
Rental receivable 260,272 165,626
Escrow deposits and reserves 3,133,429 3,640,218
Land 4,416,035 4,476,955
Buildings and improvements (net of accumulated
depreciation of $31,649,149 and $27,836,776) 80,294,613 88,484,487
Intangible assets (net of accumulated amortization of
$836,753 and $736,962) 1,929,248 2,029,039
Other 965,578 862,904
------------- -------------
$ 92,217,600 $ 100,963,721
============ =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,267,704 $ 1,175,581
Due to related parties 5,291,779 5,144,533
Mortgage loans 83,114,342 83,354,276
Notes payable 1,009,368 1,017,151
Accrued interest 5,014,588 3,744,233
Other 2,034,144 2,103,775
------------- --------------
97,731,925 96,539,549
Partners' equity (deficit)
American Tax Credit Properties L.P.
Capital contributions, net of distributions 33,971,389 34,007,639
Cumulative loss (26,575,461) (24,525,705)
------------ --------------
7,395,928 9,481,934
-------------- ----------------
General partners and other limited partners, including
ATCP II
Capital contributions, net of distributions 361,046 362,230
Cumulative loss (13,271,299) (5,419,992)
------------- ----------------
(12,910,253) (5,057,762)
------------- ----------------
(5,514,325) 4,424,172
-------------- ----------------
$ 92,217,600 $ 100,963,721
============= =============
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
years ended December 31, 1996, 1995 and 1994 are as follows:
1996 1995 1994
---------------- ---------------- ----------
REVENUE
Rental $ 16,043,472 $ 15,588,130 $ 14,904,622
Interest and other 313,515 388,854 349,926
--------------- --------------- ---------------
TOTAL REVENUE 16,356,987 15,976,984 15,254,548
------------- ------------- -------------
EXPENSES
Administrative 2,471,642 2,343,712 2,263,812
Utilities 1,318,995 1,273,740 1,264,942
Operating, maintenance and other 3,596,884 3,358,571 3,020,721
Taxes and insurance 2,231,678 1,916,594 1,815,880
Interest (including amortization of
$99,791, $179,525 and $108,060) 7,807,923 7,951,364 7,579,510
Depreciation 4,022,559 3,970,278 3,879,964
Loss from eminent domain proceeding 897,770
Loss from impairment of long-lived 3,910,599
assets
TOTAL EXPENSES 26,258,050 20,814,259 19,824,829
------------- ------------- -------------
NET LOSS $ (9,901,063) $ (4,837,275) $ (4,570,281)
============ ============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties L.P. $ (2,049,756) $ (2,240,958) $ (2,319,646)
General partners and other limited
partners, including ATCP II, which
includes specially allocated items
of income to certain general
partners of $10,487, $31,511 and
$71,252, and $7,714,573, $2,520,695
and $2,088,012 of American Tax
Credit Properties L.P. loss in
excess of investment
(7,851,307) (2,596,317) (2,250,635)
------------- ------------- -------------
$ (9,901,063) $ (4,837,275) $ (4,570,281)
============ ============ ============
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year
ended March 30, 1997 is as follows:
Cash
Cash distribution
Investment Partnership's distributions classified as Investment
in Local equity in received other income in Local
Partnership loss for during the during the Partnership
balance as the year year ended year ended balance as
Name of Local Partnership of March ended March 30, March 30, of March
30, 1996 December 31,1996 1997 1997 30, 1997
4611 South Drexel Limited $ -- $ -- $ -- $ -- $ --
Partnership
B & V, Ltd. -- -- (2) -- -- --
B & V Phase I, Ltd. -- -- (2) -- -- --
Blue Hill Housing Limited 2,318,974 (315,711) (5,000) -- 1,998,263
Partnership
Cityside Apartments, L.P. 3,050,781 (533,127) (5,000) -- 2,512,654
Cobbet Hill Associates
Limited Partnership -- -- (2) -- -- --
Dunbar Limited Partnership 188,534 (156,417) (2,500) -- 29,617
Dunbar Limited Partnership 239,102 (236,602) (1) (2,500) -- --
No. 2
Erie Associates Limited 316,392 (98,424) -- -- 217,968
Partnership
Federal Apartments Limited 81,022 (81,022) (1) -- -- --
Partnership
Golden Gates Associates -- -- (2) -- -- --
Grove Park Housing, A
California Limited -- -- (2) -- -- --
Partnership
Gulf Shores Apartments Ltd. -- -- (2) (3,697) 3,697 --
Hilltop North Associates, A
Virginia Limited Partnership 858,928 (102,864) -- -- 756,064
Madison-Bellefield Associates 837,465 (50,245) (5,000) -- 782,220
Pine Hill Estates Limited 62,254 (52,254) (1) (10,000) -- --
Partnership
Santa Juanita Limited
Dividend Partnership L.P. 150,880 (24,150) -- -- 126,730
Vista del Mar Limited
Dividend Partnership L.P. 1,293,123 (360,928) -- -- 932,195
Winnsboro Homes Limited 66,979 (38,012) (2,500) -- 26,467
------------- ---------- ------------------------------------------
Partnership
$ 9,464,434 $(2,049,756) $ (36,197) $ 3,697 $ 7,382,178
=========== ============ =========================== ============
- ----------------------------------------------------------------------------
(1) The Partnership's equity in loss of an investment in a Local Partnership
is limited to the remaining investment balance.
(2) Additional equity in loss of investment is not allocated to the
Partnership until equity in income is earned.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year
ended March 30, 1996 is as follows:
Cash
Partnership's Cash distribution
Investment equity in distributions classified Investment
in Local income (loss) received as other in Local
Partnership for during the income Partnership
balance as the year year ended during the balance as
Name of Local Partnership of March ended March 30, year ended of March
30, 1995 December 31,1995 1996 March 30,1996 30, 1996
--------------------- -----------
4611 South Drexel Limited $ 46,818 $ (46,818) $ -- $ -- $ --
Partnership (1)
B & V, Ltd. -- -- (2) -- -- --
B & V Phase I, Ltd. 64,618 (64,618) (1) -- -- --
Blue Hill Housing Limited 2,637,800 (316,326) (2,500) -- 2,318,974
Partnership
Cityside Apartments, L.P. 3,489,721 (438,940) -- -- 3,050,781
Cobbet Hill Associates
Limited Partnership -- -- (2) -- -- --
Dunbar Limited Partnership 295,251 (104,217) (2,500) -- 188,534
Dunbar Limited Partnership 446,184 (204,582) (2,500) -- 239,102
No. 2
Erie Associates Limited 408,960 (90,068) (2,500) -- 316,392
Partnership
Federal Apartments Limited 467,556 (381,534) (5,000) -- 81,022
Partnership
Golden Gates Associates -- -- (2) (5,000) 5,000 --
Grove Park Housing, A
California Limited -- -- (2) -- -- --
Partnership
Gulf Shores Apartments Ltd. 40,421 (40,421) (1) -- -- --
Hilltop North Associates, A
Virginia Limited Partnership 960,244 (51,816) (49,500) -- 858,928
Madison-Bellefield Associates 824,261 18,204 (5,000) -- 837,465
Pine Hill Estates Limited 156,799 (84,545) (10,000) -- 62,254
Partnership
Santa Juanita Limited
Dividend Partnership L.P. 179,363 (28,483) -- -- 150,880
Vista del Mar Limited
Dividend Partnership L.P. 1,654,830 (361,707) -- -- 1,293,123
Winnsboro Homes Limited 114,566 (45,087) (2,500) -- 66,979
------------- ------------- ------------ ----------------------------
Partnership
$11,787,392 $(2,240,958) $ (87,000) $ 5,000 $ 9,464,434
=========== =========== ========== ============ ===========
- -------------------------------------------------------------------------------
(1) The Partnership's equity in loss of an investment in a Local Partnership
is limited to the remaining investment balance.
(2) Additional equity in loss of investment is not allocated to the
Partnership until equity in income is earned.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1995 is as follows:
Cash
Cash distribution
Investment Partnership's distributions classified Investment
in Local Investment equity in loss received as other in Local
Partnership during the for the year during the income Partnership
balance as year ended ended year ended during the balance as
of March March 30, December 31, March 30, year ended of March 30,
Name of Local Partnership 30,1994 1995 1994 1995 March 30,1995 1995
------------------------- ---------- ------------- -------------------------------- ------------ ---------
4611 South Drexel
Limited Partnership $ 99,124 $ -- $ (52,306) $ -- $ -- $ 46,818
B & V, Ltd. 190,105 -- (190,105) (1) -- -- --
B & V Phase I, Ltd. -- 140,000 (75,382) -- -- 64,618
Blue Hill Housing
Limited Partnership 2,883,716 -- (245,916) -- -- 2,637,800
Cityside Apartments, L.P. 3,966,475 -- (474,254) (2,500) -- 3,489,721
Cobbet Hill Associates
Limited Partnership -- -- -- (2) -- -- --
Dunbar Limited 456,685 -- (158,934) (2,500) -- 295,251
Partnership
Dunbar Limited
Partnership 550,573 -- (101,889) (2,500) -- 446,184
No. 2
Erie Associates Limited
Partnership 446,772 -- (35,312) (2,500) -- 408,960
Federal Apartments
Limited Partnership 864,238 -- (396,682) -- -- 467,556
Golden Gates Associates -- -- -- (2) (2,500) 2,500 --
Grove Park Housing, A
California Limited 49,425 -- (49,425) (1) -- -- --
Partnership
Gulf Shores Apartments 86,358 -- (39,459) (6,478) -- 40,421
Ltd.
Hilltop North
Associates, A Virginia 1,014,844 -- (6,605) (47,995) -- 960,244
Limited Partnership
Madison-Bellefield 929,452 -- (100,191) (5,000) -- 824,261
Associates
Pine Hill Estates
Limited Partnership 247,200 -- (80,401) (10,000) -- 156,799
Santa Juanita Limited
Dividend Partnership 197,856 -- (18,493) -- -- 179,363
L.P.
Vista del Mar Limited
Dividend Partnership 1,826,496 -- (171,666) -- -- 1,654,830
L.P.
Winnsboro Homes Limited
Partnership 244,692 -- (122,626) (7,500 -- 114,566
--------------------------- -------------- ---------------------------------------
$14,054,011 $ 140,000 $ (2,319,646) $ (89,473) $ 2,500 $11,787,392
=========== ========= ============ =========== =========== ===========
- -------------------------------------------------------------------------------
(1) The Partnership's equity in loss of an investment in a Local Partnership
is limited to the remaining investment balance.
(2) Additional equity in loss of investment is not allocated to the
Partnership until equity in income is earned.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 1996 is
as follows:
Mortgage Buildings Accumulated
Name of Local Partnership loans payable Land and depreciation
improvements
-----------------------------------------------
4611 South Drexel Limited Partnership $ 1,369,445 $ 64,408 $ 1,756,833 $ (424,433)
B & V, Ltd. 5,515,812 340,300 2,694,281 (1,049,147)
B & V Phase I, Ltd. 2,638,947 190,830 2,758,628 (741,130)
Blue Hill Housing Limited Partnership 6,552,669 111,325 10,754,736 (3,019,650)
Cityside Apartments, L.P. 7,865,491 131,591 13,785,799 (3,675,441)
Cobbet Hill Associates Limited Partnership 13,664,829 504,683 16,011,825 (4,743,438)
Dunbar Limited Partnership 4,007,852 117,126 5,583,060 (1,600,232)
Dunbar Limited Partnership No. 2 4,589,191 131,920 6,339,575 (1,869,853)
Erie Associates Limited Partnership 914,034 34,844 1,760,397 (561,621)
Federal Apartments Limited Partnership 5,325,464 279,750 8,359,373 (2,357,531)
Golden Gates Associates 4,656,086 29,585 5,818,392 (1,793,729)
Grove Park Housing, A California Limited 6,928,577 956,952 7,676,667 (1,986,200)
Partnership
Gulf Shores Apartments Ltd. 1,492,554 172,800 1,750,427 (542,921)
Hilltop North Associates, A Virginia Limited
Partnership 3,335,611 240,514 4,771,684 (1,143,470)
Madison-Bellefield Associates 3,652,737 245,000 5,515,361 (1,571,950)
Pine Hill Estates Limited Partnership 2,472,686 40,000 3,842,116 (1,027,128)
Santa Juanita Limited Dividend Partnership 1,521,268 228,718 2,320,159 (603,379)
L.P.
Vista del Mar Limited Dividend Partnership 5,376,868 565,689 8,640,411 (2,472,761)
L.P.
Winnsboro Homes Limited Partnership 1,234,221 30,000 1,804,038 (465,135)
-------------- ------------------------------------------
$ 83,114,342 $ 4,416,035 $111,943,762 $(31,649,149)
============ =========== ============ ============
Property information for each Local Partnership as of December 31, 1995 is
as follows:
Mortgage Buildings Accumulated
Name of Local Partnership loans payable Land and depreciation
improvements
-----------------------------------------------
4611 South Drexel Limited Partnership $ 1,378,616 $ 64,408 $ 1,756,833 $ (360,517)
B & V, Ltd. 5,545,119 401,220 7,931,322 (1,259,333)
B & V Phase I, Ltd. 2,638,947 190,830 2,758,628 (636,997)
Blue Hill Housing Limited Partnership 6,575,760 111,325 10,754,736 (2,626,074)
Cityside Apartments, L.P. 7,922,111 131,591 13,785,799 (3,171,904)
Cobbet Hill Associates Limited Partnership 13,449,324 504,683 15,970,046 (4,156,164)
Dunbar Limited Partnership 4,016,519 117,126 5,517,187 (1,395,320)
Dunbar Limited Partnership No. 2 4,598,856 131,920 6,339,575 (1,634,239)
Erie Associates Limited Partnership 928,022 34,844 1,760,397 (498,071)
Federal Apartments Limited Partnership 5,393,144 279,750 8,297,309 (2,037,388)
Golden Gates Associates 4,669,861 29,585 5,813,505 (1,585,439)
Grove Park Housing, A California Limited 6,952,566 956,952 7,661,757 (1,707,189)
Partnership
Gulf Shores Apartments Ltd. 1,495,054 172,800 1,750,427 (478,794)
Hilltop North Associates, A Virginia Limited
Partnership 3,358,811 240,514 4,700,034 (1,011,964)
Madison-Bellefield Associates 3,720,055 245,000 5,415,347 (1,344,217)
Pine Hill Estates Limited Partnership 2,516,299 40,000 3,842,116 (869,563)
Santa Juanita Limited Dividend Partnership 1,532,327 228,718 2,190,094 (516,270)
L.P.
Vista del Mar Limited Dividend Partnership 5,407,880 565,689 8,272,113 (2,151,238)
L.P.
Winnsboro Homes Limited Partnership 1,255,005 30,000 1,804,038 (396,095)
-------------- -----------------------------------------
$ 83,354,276 $ 4,476,955 $116,321,263 $(27,836,776)
============ =========== ============ ============
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
The summary of property activity during the year ended December 31, 1996 is
as follows:
Net change
Balance as of during the year ended Balance as of
December 31, 1995 December 31, 1996 December 31, 1996
----------------- --------------------- -----------------
Land $ 4,476,955 $ (60,920) $ 4,416,035
Buildings and 116,321,263 (4,377,501) 111,943,762
--------------- ---------------- ----------------
improvements
120,798,218 (4,438,421) 116,359,797
Accumulated (27,836,776) (3,812,373) (31,649,149)
---------------- ---------------- ----------------
depreciation
$ 92,961,442 $ (8,250,794) $ 84,710,648
================ =============== ================
The Partnership acquired a 99% limited partnership interest in the B & V
Local Partnership, a 190-unit complex located in Homestead, Florida in
December 1988. In August 1992, much of Homestead, Florida was devastated by
Hurricane Andrew and the property owned by the B & V Local Partnership
sustained substantial damage. The damage to the complex was covered by
property insurance and the B & V Local Partnership was covered by rental
interruption insurance. It was the intention of the local general partner of
the B & V Local Partnership to reconstruct the complex, and thus preserve
the Low-income Tax Credits. However, delays in the rebuilding of the complex
occurred due to disagreements with the insurance company concerning
selection of the contractor and the costs to rebuild the complex. In
addition, the insurance carrier ceased making rental interruption insurance
payments and subsequently the lender declared a default. While conducting
repairs, which included completing 52 rental units which were placed in
service, the B & V Local Partnership undertook significant efforts to effect
a workout with the lender and cause the insurance company and contractor to
perform under their obligations to rebuild the complex, which included
reorganization plans, bankruptcy proceedings, binding arbitration and
voluntary nonbinding mediation. Despite such efforts, the complex lost 32
rental units pursuant to a quick-take eminent domain proceeding in April
1996 and the remainder of the complex was ultimately lost in April 1997 when
the Bankruptcy Court ordered title transfer of the property.
In December 1996, in connection with the bankruptcy and foreclosure
proceedings surrounding the B & V Local Partnership, the Bankruptcy Court
determined the value of the property owned by the B & V Local Partnership
whereby the appraised value of the property was $1,898,600, which resulted
in the recognition of an impairment loss of $3,910,599 included in the
combined statement of operations of the Local Partnerships for the year
ended December 31, 1996. The Partnership's investment balance in the B & V
Local Partnership, after the cumulative equity losses, became zero during
the year ended March 30, 1995. Accordingly, the aforementioned impairment
had no effect on the financial position, results of operations or cash flows
of the Partnership.
As part of the overall plan and arrangement with the Local General Partner
of the B & V Local Partnership (see discussion above), the Partnership
acquired a 98% limited partnership interest in the B & V Phase I Local
Partnership, which owns a 97-unit, Section 8 assisted apartment complex
located in Homestead, Florida, from principals of the local general partner
of the B & V Local Partnership during the year ended March 30, 1995. The
purpose of acquiring an interest in the B & V Phase I Local Partnership was
to mitigate potential adverse consequences of a loss of Low-income Tax
Credits in the event that the rebuilding of the apartment complex owned by
the B & V Local Partnership was not completed. Under the terms of the
limited partnership agreement between the Partnership and the B & V Phase I
Local Partnership, the Partnership made its full capital contribution of
$140,000 in October 1994 with total Low-income Tax Credits expected to be
allocated to the Partnership over the period 1994 through 1998 of
approximately $499,000. Prior to the acquisition, the B & V Phase I Local
Partnership
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
5. Investment in Local Partnerships (continued)
was also damaged by Hurricane Andrew in August 1992. Since May 1, 1996, all
97 of the rental units were complete and occupied. Under an agreement with
the lender, the B & V Phase I Local Partnership was to commence paying debt
service in January 1995 which was to coincide with the completion of
construction. However, due to construction delays, the B & V Phase I Local
Partnership had not commenced making such payments. The lender declared a
default under the terms of the mortgage and, on December 9, 1996 the lender
commenced a foreclosure action. On January 14, 1997, by agreement of the B &
V Phase I Local Partnership and the lender, the Circuit Court for Dade
County issued an order directing the B & V Phase I Local Partnership to make
mortgage payments to the lender accruing since December 1996 and to
thereafter make monthly mortgage payments to the lender. The B & V Phase I
Local Partnership has complied with this order and all payments accruing
since December 1996 through June 1997 have been made. On April 18, 1997, a
motion for summary judgment in the lender's foreclosure action was scheduled
to be heard. However, on April 17, 1997, the B & V Phase I Local Partnership
filed a Chapter 11 Bankruptcy Petition with the United States Bankruptcy
Court, District of Connecticut, Bridgeport Division. As of April 25, 1997,
the lender filed a motion seeking to change the venue for this case to the
Southern District of Florida. Subsequently, hearings were held in order for
the Bankruptcy Court to consider the lender's motion. In the course of these
hearings, the lender and the B & V Phase I Local Partnership reached a
tentative agreement whereby the lender would withdraw its request to change
venue and the B & V Phase I Local Partnership would agree to submit to the
Bankruptcy Court a plan providing for, among other things, a schedule of
buy-out prices to be paid to the lender at future designated dates. The
Bankruptcy Court has not yet ruled on either the requested relief or the
proposed settlement plan. Provided that the Bankruptcy Court accepts the
proposed settlement plan and the B & V Phase I Local Partnership is not
required to make debt service payments in excess of current levels, the
Partnership does not anticipate an interruption in Low-income Tax Credits
allocated from the B & V Phase I Local Partnership through December 31,
1997.
The local general partner of the B & V Phase I Local Partnership has
transferred its 1% general partner interest to an unrelated third party and
transferred its 1% limited partner interest to the Partnership. The
Partnership's investment balance in the B & V Phase I Local Partnership,
after the cumulative equity losses, became zero during the year ended March
30, 1996.
The Erie Local Partnership is operating pursuant to an amended and restated
note (the "Amended Note") dated December 1, 1994 which matures on December
31, 1997. The original financing called for mandatory debt service of $7,647
per month, while the Amended Note requires monthly mandatory debt service of
$5,883. The Local General Partners of the Erie Local Partnership report that
the Erie Local Partnership is several months in arrears under the terms of
the Amended Note, that a default has been declared by the lender and that
discussions are currently being held with the lender in an attempt to
restructure the loan.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
6. Transactions with General Partner and Affiliates
For the years ended March 30, 1997, 1996 and 1995, the Partnership paid
and/or incurred the following amounts to the General Partner and/or
affiliates in connection with services provided to the Partnership:
Years Ended March 30,
1997 1996 1995
-------------------- --------------------------------
Paid/ Paid/ Paid/
incurred incurred incurred
Management fee (see Note 8) $175,466/ $175,466/ $175,466/
175,466 175,466 175,466
For the years ended December 31, 1996, 1995 and 1994, the Local Partnerships
paid and/or incurred the following amounts to the General Partner and/or
affiliates in connection with services provided to the Local Partnerships:
Years Ended December 31,
1996 1995 1994
---------------------------------------- ------------
Paid (received)/ Paid (received)/ Paid (received)/
incurred incurred incurred
Property development fees $ --/ $ 74,900/ $ 19,423/
-- -- --
Property management fees 151,033/ 152,220/ 94,836/
157,983 142,925 181,157
Insurance 195,321/ 162,419/ 95,981/
202,343 149,673 95,981
Advance -- (2,500) (19,423)
The property development fees were capitalized by the Local Partnerships.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
7. Taxable Loss
A reconciliation of the financial statement net loss of the Partnership for
the years ended March 30, 1997, 1996 and 1995 to the tax return net loss for
the years ended December 31, 1996, 1995 and 1994 is as follows:
1997 1996 1995
----------------- ----------------- -----------
Financial statement net loss for the
years ended March 30, 1997, 1996 and $ (2,384,219) $ (2,425,508) $ (2,498,880)
1995
Add (less) net transactions occurring between:
January 1, 1994 to March 30, 1994 -- -- (39,398)
January 1, 1995 to March 30, 1995 -- (52,025) 52,025
January 1, 1996 to March 30, 1996 (40,146) 40,146 --
January 1, 1997 to March 30, 1997 112,344 -- --
------------- ----------------- -------------
Adjusted financial statement net loss
for the years ended December 31,
1996, 1995 and 1994 (2,312,021) (2,437,387) (2,486,253)
Differences arising from equity in loss
of investment in Local Partnerships (3,435,403) (1,981,297) (1,949,078)
Other differences (7,010) (11,755) 6,204
-------------- -------------- --------------
Tax return net loss for the years
ended December 31, 1996, 1995 and $ (5,754,434) $ (4,430,439) $ (4,429,127)
============ ============ ============
1994
The differences between the equity in the investment in Local Partnerships
for tax return and financial reporting purposes as of December 31, 1996 and
1995 are as follows:
1996 1995
------------- ---------
Investment in Local Partnerships - financial $ 7,395,928 $ 9,481,934
reporting
Investment in Local Partnerships - tax (705,874) 4,816,757
----------- -----------
$ 8,101,802 $ 4,665,177
=========== ===========
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
8. Commitments and Contingencies
Pursuant to the Partnership Agreement, the Partnership is required to pay
the General Partner an annual management fee ("Management Fee") in the
amount of $175,466 for its services in connection with the management of the
affairs of the Partnership, subject to certain provisions of the Partnership
Agreement. The Partnership incurred a Management Fee of $175,466 for each of
the three years ended March 30, 1997. An unpaid Management Fee in the amount
of $43,861 is recorded as payable to general partner in the accompanying
balance sheets as of March 30, 1997 and 1996.
In addition, pursuant to the Partnership Agreement, the Partnership is
required to pay ML Fund Administrators Inc., an affiliate of the Selling
Agent, an annual administration fee ("Administration Fee") in the amount of
$152,758 and an annual additional administration fee ("Additional
Administration Fee") in the amount of $30,965 for its administrative
services provided to the Partnership, subject to certain provisions of the
Partnership Agreement. The Partnership incurred an Administration Fee and an
Additional Administration Fee in the amounts of $152,758 and $30,965,
respectively, for each of the three years ended March 30, 1997. Such amounts
are aggregated and reflected under the caption administration fees in the
accompanying financial statements. Unpaid Administration Fees in the amount
of $7,740 are included in accounts payable and accrued expenses in the
accompanying balance sheets as of March 30, 1997 and 1996.
The rents of the Properties, many of which receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8"), are subject to specific laws,
regulations and agreements with federal and state agencies. The subsidy
agreements expire at various times during and after the Compliance Periods
of the Local Partnerships. The United States Department of Housing and Urban
Development ("HUD") has issued notices which implement provisions to renew
certain project based Section 8 contracts expiring during HUD's fiscal year
1997, where requested by an owner, for an additional one year term generally
at or below current rent levels, subject to certain guidelines. HUD has an
additional program (the "Restructuring Program") which, in general, provides
for restructuring rents and/or mortgages where rents may be adjusted to
market levels and mortgage terms may be adjusted based on the reduction in
rents, although there may be instances in which only rents, but not
mortgages, are restructured. The Partnership cannot reasonably predict
legislative initiatives and governmental budget negotiations, the outcome of
which could result in a reduction in funds available for the various federal
and state administered housing programs including the Section 8 program.
Such changes could adversely affect the future net operating income and debt
structure of any or all Local Partnerships currently receiving such subsidy
or similar subsidies. Two Local Partnerships, whose Section 8 contracts
expired during 1996 and were extended for one year, have applied for
treatment under the Restructuring Program during 1997.
9. Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated fair
value amounts have been determined using available market information,
assumptions, estimates and valuation methodologies.
Cash and Cash Equivalents
The carrying amount approximates fair value.
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1997, 1996 AND 1995
9. Fair Value of Financial Instruments (continued)
Investments in Bonds Available-For-Sale
Fair value is estimated based on market quotes provided by an independent
service as of the balance sheet dates.
Interest Receivable
The carrying amount approximates fair value due to the terms of the
underlying investments.
Accounts Payable and Accrued Expenses and Payable to General Partner
The carrying amounts approximate fair value due to the payment terms in
connection with of the obligations.
The estimated fair values of the Partnership's financial instruments as
of March 30, 1997 and 1996 are disclosed elsewhere in the financial
statements.
10. Letter of Credit
In connection with an agreement with the first mortgage lender of the Cobbet
Local Partnership, the Partnership is contingently liable under a standby
letter of credit in the amount of $242,529 which was issued on June 18, 1997
for the purpose of covering potential operating deficits of the Cobbet Local
Partnership. The letter of credit expires on June 18, 1998 and is secured by
the Partnership's investments in U.S. Treasury bonds in the amount of
approximately $255,000, purchased in June 1997.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Registrant has no officers or directors. The General Partner manages
Registrant's affairs and has general responsibility and authority in all matters
affecting its business. The responsibilities of the General Partner are
currently carried out by Richman Tax. The executive officers and directors of
Richman Tax are:
Served in present
Name capacity since 1 Position held
Richard Paul Richman February 10, 1988 President and Director
David A. Salzman April 29, 1994 Vice President
Neal Ludeke February 10, 1988 Vice President and Treasurer
Gina S. Scotti February 10, 1988 Secretary
- -------------------------------------------------------------------------------
1 Director holds office until his successor is elected and qualified. All
officers serve at the pleasure of the Director.
Richard Paul Richman, age 49, is the sole Director and President of Richman
Tax. Mr. Richman is the President and sole stockholder of Richman Group.
Mr. Richman is the Director, President and principal shareholder of WRC.
Mr. Richman is involved in the syndication and management of residential
property. Mr. Richman is also a director of Wilder Richman Resources Corp.,
an affiliate of Richman Tax and the general partner of Secured Income L.P.,
a director of Wilder Richman Historic Corporation, an affiliate of Richman
Tax and the general partner of Wilder Richman Historic Properties II, L.P.,
a director of Richman Tax Credits Inc., an affiliate of Richman Tax and the
general partner of the general partner of American Tax Credit Properties II
L.P., a director of Richman Housing Credits Inc., an affiliate of Richman
Tax and the general partner of the general partner of American Tax Credit
Properties III L.P. and a director of Richman American Credit Corp., an
affiliate of Richman Tax and the manager of American Tax Credit Trust, a
Delaware statutory business trust.
David A. Salzman, age 36, is a Vice President of Richman Tax. Mr. Salzman
is responsible for the acquisition and development of residential real
estate for syndication as a Vice President of acquisitions of Richman
Group.
Neal Ludeke, age 39, is a Vice President and Treasurer of Richman Tax. Mr.
Ludeke, a Vice President and Treasurer of Richman Group, is engaged
primarily in the syndication, asset management and finance operations of
Richman Group. In addition, Mr. Ludeke is a Vice President and Treasurer of
R.G. Housing Advisors Inc. ("RGHA"), an affiliate of Richman Group. Mr.
Ludeke's responsibilities in connection with RGHA include advisory services
provided to a small business investment company and various partnership
management functions.
Gina S. Scotti, age 41, is the Secretary of Richman Tax. Ms. Scotti is the
Secretary of WRC and a Vice President and the Secretary of Richman Group.
As the Director of Investor Services, Ms. Scotti is responsible for all
communications with investors.
Item 11. Executive Compensation
Registrant has no officers or directors. Registrant does not pay the officers or
director of Richman Tax any remuneration. During the year ended March 30, 1997,
Richman Tax did not pay any remuneration to any of its officers or director.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Dominion Capital Inc., having the mailing address P.O. Box 26532, Richmond,
Virginia 23621, is the owner of 2,800 Units, representing approximately 6.8% of
all such Units. As of May 20, 1997, no person or entity, other than Dominion
Capital Inc., was known by Registrant to be the beneficial owner of more than
five percent of the Units.
Richman Tax is wholly-owned by Richard Paul Richman.
Item 13. Certain Relationships and Related Transactions
The General Partner and certain of its affiliates are entitled to receive
certain compensation, fees, and reimbursement of expenses and have
received/earned fees for services provided to Registrant as described in Notes 6
and 8 to the audited financial statements included in Item 8 - "Financial
Statements and Supplementary Data" herein.
Transactions with General Partner and Affiliates
The tax losses and net Low-income Tax Credits generated by Registrant during the
year ended December 31, 1996 allocated to the General Partner were $57,544 and
$58,079, respectively. The tax losses and net Low-income Tax Credits generated
by the General Partner during the year ended December 31, 1996 (from the
allocation of Registrant discussed above) and allocated to Richman Tax were
$39,448 and $41,282, respectively.
Indebtedness of Management
No officer or director of the General Partner or any affiliate of the foregoing
was indebted to Registrant at any time during the year ended March 30, 1997.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statements, Financial Statement Schedules and Exhibits
(1) Financial Statements
See Item 8 - "Financial Statements and Supplementary Data."
(2) Financial Statement Schedules
No financial statement schedules are included because of the absence
of the conditions under which they are required or because the
information is included in the financial statements or the notes
thereto.
(3) Exhibits
Incorporated by
Exhibit Reference to
3.1 Certificate of Limited Partnership of Exhibit 3.2 to Amendment No. 2
Registrant to the Registration Statement
on Form
S-11 dated April 29, 1988
(File No. 33-20391)
10.1 4611 South Drexel Limited Partnership Exhibit 10.3 to Form 10-Q
Agreement of Limited Partnership Report
dated December 30, 1989
(File No. 0-17619)
10.2 B & V, Ltd. Fourth Amended and Restated Exhibit 10.3 to Form 8-K Report
Agreement and Certificate of Limited dated January 17, 1989
Partnership (File No. 33-20391)
10.3 B & V Phase I, Ltd. Amended and Exhibit 10.1 to Form 10-Q
Restated Agreement of Limited Report
Partnership dated September 29, 1994
(File No. 0-17619)
10.4 B & V Phase I, Ltd. Assignment of
Partnership Interests, Assumption of
Responsibilities, and
Waiver of Conditions
10.5 Blue Hill Housing Limited Partnership Exhibit 10.7 to Form 8-K Report
Amended and Restated Agreement and dated January 17, 1989
Certificate of Limited Partnership (File No. 33-20391)
10.6 Cityside Apartments, L.P. Amended and Exhibit 10.3 to Form 10-K
Restated Agreement of Limited Report
Partnership dated March 30, 1990
(File No. 0-17619)
10.7 Amendment No. 1 to Cityside Apartments, Exhibit 10.4 to Form 10-K
L.P. Amended and Restated Agreement of Report
Limited Partnership dated March 30, 1992
(File No. 0-17619)
10.8 Amendment No. 2 to Cityside Apartments, Exhibit 10.5 to Form 10-K
L.P. Amended and Restated Agreement of Report
Limited Partnership dated March 30, 1992
(File No. 0-17619)
Incorporated by
Exhibit Reference to
10.9 Amendment No. 3 to Cityside Apartments, Exhibit 10.6 to Form 10-K
L.P. Amended and Restated Agreement of Report
Limited Partnership dated March 30, 1992
(File No. 0-17619)
10.10 Cobbet Hill Associates Limited Exhibit 10.4 to Form 10-K
Partnership Amended and Restated Report
Agreement and Certificate of Limited dated March 30, 1990
Partnership (File No. 0-17619)
10.11 Cobbet Hill Associates Limited Exhibit 10.8 to Form 10-K
Partnership First Amendment to Amended Report
and Restated Agreement and Certificate dated March 30, 1993
of Limited Partnership (File No. 0-17619)
10.12 Cobbet Hill Associates Limited Exhibit 10.9 to Form 10-K
Partnership Second Amendment to the Report
Amended and Restated Agreement and dated March 30, 1993
Certificate of Limited Partnership (File No. 0-17619)
10.13 Dunbar Limited Partnership Second Exhibit 10.5 to Form 10-K
Amended and Restated Agreement of Report
Limited Partnership dated March 30, 1990
(File No. 0-17619)
10.14 Dunbar Limited Partnership No. 2 Second Exhibit 10.6 to Form 10-K
Amended and Restated Agreement of Report
Limited Partnership dated March 30, 1990
(File No. 0-17619)
10.15 Erie Associates Limited Partnership Exhibit 10.2 to Form 10-K
Amended and Restated Agreement and Report
Certificate of Limited Partnership dated March 30, 1989
(File No. 33-20391)
10.16 Federal Apartments Limited Partnership Exhibit 10.8 to Form 10-K
Amended and Restated Agreement of Report
Limited Partnership dated March 30, 1990
(File No. 0-17619)
10.17 First Amendment to Federal Apartments Exhibit 10.14 to Form 10-K
Limited Partnership Amended and Report
Restated Agreement of Limited dated March 30, 1993
Partnership (File No. 0-17619)
10.18 Second Amendment to Federal Apartments Exhibit 10.15 to Form 10-K
Limited Partnership Amended and Report
Restated Agreement of Limited dated March 30, 1993
Partnership (File No. 0-17619)
10.19 Golden Gates Associates Amended and Exhibit 10.1 to Form 8-K Report
Restated Agreement of Limited dated January 17, 1989
Partnership (File No. 33-20391)
10.20 Grove Park Housing, A California Exhibit 10.10 to Form 10-K
Limited Partnership Amended and Report
Restated Agreement of Limited dated March 30, 1990
Partnership (File No. 0-17619)
Incorporated by
Exhibit Reference to
10.21 Gulf Shores Apartments Ltd. Amended and Exhibit 10.3 to Form 10-K
Restated Agreement and Certificate of Report
Limited Partnership dated March 30, 1989
(File No. 33-20391)
10.22 Hilltop North Associates, A Virginia Exhibit 10.12 to Form 10-K
Limited Partnership Amended and Report
Restated Agreement of Limited dated March 30, 1990
Partnership (File No. 0-17619)
10.23 Madison-Bellefield Associates Amended Exhibit 10.2 to Form 8-K Report
and Restated Agreement and Certificate dated January 17, 1989
of Limited Partnership (File No. 33-20391)
10.24 Amended and Restated Articles of Exhibit 10.2 to Form 10-Q
Partnership in Commendam of Pine Hill Report
Estates Limited Partnership dated December 30, 1989
(File No. 0-17619)
10.25 Santa Juanita Limited Dividend Exhibit 10.4 to Form 10-Q
Partnership Amended and Restated Report
Agreement of Limited Partnership dated December 30, 1989
(File No. 0-17619)
10.26 Second Amendment of Limited Partnership Exhibit 10.23 to Form 10-K
of Santa Juanita Limited Dividend Report dated March 30, 1994
Partnership and Amendment No. 2 to the (File No. 0-17619)
Amended and Restated Agreement of
Limited Partnership
10.27 Amendment No. 1 to Santa Juanita Exhibit 10.1 to Form 10-Q
Limited Dividend Partnership L.P. Report
Amended and Restated Agreement of dated September 29, 1995
Limited Partnership (File No. 0-17619)
(Replaces in its entirety Exhibit 10.24 hereof.)
10.28 Amendment No. 2 to Santa Juanita Exhibit 10.2 to Form 10-Q
Limited Dividend Partnership L.P. Report
Amended and Restated Agreement of dated September 29, 1995
Limited Partnership (File No. 0-17619)
10.29 Vista Del Mar Limited Dividend Exhibit 10.1 to Form 10-K
Partnership Amended and Restated Report
Agreement and Certificate of Limited dated March 30, 1989
Partnership (File No. 33-20391)
10.30 Certificate of Amendment of Limited Exhibit 10.25 to Form 10-K
Partnership of Vista Del Mar Limited Report dated March 30, 1994
Dividend Partnership and Amendment No. (File No. 0-17619)
1 to the Amended and Restated Agreement
and Certificate of Limited Partnership
10.31 Amendment No. 1 to Vista del Mar Exhibit 10.3 to Form 10-Q
Limited Dividend Partnership L.P. Report
Amended and Restated Agreement of dated September 29, 1995
Limited Partnership (File No. 0-17619)
(Replaces in its entirety Exhibit 10.28 hereof.)
Incorporated by
Exhibit Reference to
10.32 Amendment No. 2 to Vista del Mar Exhibit 10.4 to Form 10-Q Report
Limited Dividend Partnership L.P. dated September 29, 1995
Amended and Restated Agreement of (File No. 0-17619)
Limited Partnership
10.33 Amended and Restated Articles of Exhibit 10.1 to Form 10-Q Report
Partnership in Commendam of Winnsboro dated December 30, 1989
Homes Limited Partnership (File No. 0-17619)
10.34 The B & V, Ltd. Exhibit 10.2 to Form 10-Q Report
Investment Agreement dated September 29, 1994
(File No. 0-17619)
10.35 The B & V Phase I, Ltd. Exhibit 10.3 to Form 10-Q Report
Investment Agreement dated September 29, 1994
(File No. 0-17619)
27 Financial Data Schedule
99.22 Pages 21 through 35, 51 through 75 and Exhibit 28 to Form 10-K
Report 89 through 91 of Prospectus dated dated March 30, 1989
May 6, 1989 filed pursuant to Rule (File No. 33-20391)
424(b)(3) under the Securities Act of 1933
99.23 Pages 16 through 19 of Prospectus dated Exhibit 28.2 to Form 10-K Report
May 6, 1989 filed pursuant to Rule dated March 30, 1990
424(b)(3) under the Securities Act of (File No. 0-17619)
1933
99.24 Supplement No. 1 dated August 11, 1988 Exhibit 28.3 to Form 10-K Report
to Prospectus dated March 30, 1991
(File No. 0-17619)
99.25 Supplement No. 2 dated September 20, Exhibit 28.4 to Form 10-K Report
1988 to Prospectus dated March 30, 1991
(File No. 0-17619)
99.26 December 31, 1992 financial statements Exhibit 28.26 to Form 10-K Report
of Cityside Apartments, L.P. pursuant dated March 30, 1993
to Title 17, Code of Federal (File No. 0-17619)
Regulations, Section 210.3-09
99.27 December 31, 1993 financial statements Exhibit 99.27 to Form 10-K Report
of Cityside Apartments, L.P. pursuant dated March 30, 1994
to Title 17, Code of Federal (File No. 0-17619)
Regulations, Section 210.3-09
99.28 December 31, 1994 financial statements Exhibit 99.28 to Form 10-K Report
of Cityside Apartments, L.P. pursuant dated March 30, 1995
to Title 17, Code of Federal (File No. 0-17619)
Regulations, Section 210.3-09
99.29 December 31, 1995 financial statements Exhibit 99.29 to Form 10-K Report
of Cityside Apartments, L.P. pursuant dated March 30, 1996
to Title 17, Code of Federal (File No. 0-17619)
Regulations, Section 210.3-09
99.30 December 31, 1996 financial statements
of Cityside Apartments, L.P. pursuant
to Title 17, Code of Federal
Regulations, Section 210.3-09
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Registrant during the last quarter of
the period covered by this report.
(c) Exhibits
See (a)(3) above.
(d) Financial Statement Schedules
See (a)(2) above.
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.
AMERICAN TAX CREDIT PROPERTIES L.P.
(a Delaware limited partnership)
By: Richman Tax Credit Properties L.P.,
General Partner
by: Richman Tax Credit Properties Inc.,
general partner
Dated: June 30, 1997 /s/ Richard Paul Richman
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by: Richard Paul Richman
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Signature Title Date
/s/ Richard Paul Richman President, Chief Executive June 30, 1997
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Officer and Director of the
general partner
of the General Partner
/s/ Neal Ludeke Vice President and Treasurer June 30, 1997
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of the general partner of the
General Partner (Principal
Financial and Accounting
Officer of Registrant)