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, 2003
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ____________
0-18405
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(Commission File Number)
American Tax Credit Properties II L.P.
(Exact name of registrant as specified in its governing instruments)
Delaware 13-3495678
- ------------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
organization) Identification No.)
Richman Tax Credit Properties II L.P.
599 West Putnam Avenue, 3rd floor
Greenwich, Connecticut 06830
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(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 20 through 33 and 47 through 70 of the prospectus dated May 10,
1989, as supplemented by Supplement No. 1 and Supplement No. 2 dated July 25,
1989 and September 18, 1989, respectively, filed pursuant to Rule 424(b)(3)
under the Securities Act of 1933.
PART I
Item 1. Business
Formation
American Tax Credit Properties II L.P. ("Registrant"), a Delaware limited
partnership, was formed on October 26, 1988 to invest primarily in leveraged
low-income multifamily residential complexes (the "Property" or "Properties")
that qualify for the low-income tax credit in accordance with Section 42 of the
Internal Revenue Code (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 invested
in fifty such Local Partnerships, including one whose Property 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 II L.P. (the "General Partner"), a Delaware
limited partnership, was formed on October 26, 1988 to act as the general
partner of Registrant. The general partner of the General Partner is Richman Tax
Credits Inc. ("Richman Tax Credits"), a Delaware corporation that is
wholly-owned by Richard Paul Richman. Richman Tax Credits is an affiliate of The
Richman Group, Inc. ("Richman Group"), a Delaware corporation founded by Richard
Paul Richman in 1988.
The Amendment No. 2 to the Registration Statement on Form S-11 was filed with
the Securities and Exchange Commission (the "Commission") on April 21, 1989
pursuant to the Securities Act of 1933 under Registration Statement File No.
33-25337, and was declared effective on May 9, 1989. Reference is made to the
prospectus dated May 10, 1989, as supplemented by Supplement No. 1 and
Supplement No. 2 dated July 25, 1989 and September 18, 1989, respectively, filed
with the Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933
(the "Prospectus"). 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 47 through 70 of
the Prospectus is incorporated herein by reference.
On June 14, 1989, Registrant commenced, through Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), the offering of up to 100,000 units of
limited partnership interest ("Unit") at $1,000 per Unit to investors. On June
28, 1989, July 31, 1989 and September 22, 1989, the closings for 13,533, 20,560
and 21,653 Units, respectively, took place, amounting to aggregate limited
partners' capital contributions of $55,746,000.
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 20 through 33 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.
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, Uruguay Round Agreements Act, Tax and Trade Relief
Extension Act of 1998, Tax and Trade Relief Extension Act of 1999, Community
Renewal Tax Relief Act of 2000, Economic Growth and Tax Relief Reconciliation
Act of 2001 and Job Creation and Worker Assistance Act of 2002 (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.
2
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. The relevant state tax credit agency
has allocated each of Registrant's Local Partnerships an amount of Low-income
Tax Credits, which are generally available for a ten year period from the year
the Property is placed in service (the "Ten Year Credit Period"). The Ten Year
Credit Period was exhausted by the Local Partnerships as of December 31, 2001.
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").
In addition, certain of the Local Partnerships have entered into agreements with
the relevant state tax credit agencies whereby the Local Partnerships must
maintain the low-income nature of the Properties for a period which exceeds the
Compliance Period, regardless of any sale of the Properties by the Local
Partnerships after 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 December 31, 2002, none of the Local Partnerships have
suffered an event of recapture of Low-income Tax Credits.
Although Registrant generally owns a 98.9%-99% limited partnership interest
("Local Partnership Interest") in the Local Partnerships, Registrant and
American Tax Credit Properties L.P. ("ATCP"), a Delaware limited partnership and
an affiliate of Registrant, together, in the aggregate, own a 99% Local
Partnership Interest in Santa Juanita Limited Dividend Partnership L.P. ("Santa
Juanita"); the ownership percentages of Registrant and ATCP of Santa Juanita are
64.36% and 34.64%, respectively. In addition, Registrant and American Tax Credit
Properties III L.P. ("ATCP III"), a Delaware limited partnership and an
affiliate of Registrant, together, in the aggregate, own a 99% Local Partnership
Interest in the following Local Partnerships:
Registrant ATCP III
---------- --------
Batesville Family, L.P. 37.25% 61.75%
Bruce Housing Associates, L.P. 37.25 61.75
Carrington Limited Dividend Housing
Association Limited Partnership 33.05 65.95
Ivy Family, L.P. 37.25 61.75
Lawrence Road Properties, Ltd. 37.25 61.75
Mirador del Toa Limited Partnership 39.94 59.06
Purvis Heights Properties, L.P. 37.25 61.75
Queen Lane Investors 50.50 48.50
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 7 and 8). The
subsidy agreements expire at various times during and after the Compliance
Periods of the Local Partnerships. Since October 1997, the United States
Department of Housing and Urban Development ("HUD") has issued a series of
directives related to project based Section 8 contracts that define owners'
notification responsibilities, advise owners of project based Section 8
properties of what their options are regarding the renewal of Section 8
contracts, provide guidance and procedures to owners, management agents,
contract administrators and HUD staff concerning renewal of Section 8 contracts,
provide policies and procedures on setting renewal rents and handling renewal
rent adjustments and provide the requirements and procedures for opting-out of a
Section 8 project based contract. 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 before debt
service ("NOI") and debt structure of any or all Local Partnerships currently
receiving such subsidy or similar subsidies. Six Local Partnerships' Section 8
contracts, certain of which cover only certain rental units, are currently
subject to renewal under applicable HUD guidelines. In addition, two Local
Partnerships have entered into restructuring agreements, resulting in both a
lower rent subsidy (resulting in lower NOI) and lower mandatory debt service.
3
Item 2. Properties (continued)
Mortgage
Name of Local Partnership Number loans payable as of
Name of apartment complex of rental Capital December 31, Subsidy
Apartment complex location units contribution 2002 (see footnotes)
- -------------------------- ---------- ------------- -------------------- -----------------
1989 Westview Arms Limited Partnership
Westview Arms
Dumas, Arkansas 60 $ 130,796 $ 419,628 (1a&g)
2000-2100 Christian Street Associates
Christian Street Apartments II
Philadelphia, Pennsylvania 57 1,530,255 2,422,116 (1c&f)
Ann Ell Apartments Associates, Ltd.
Ann Ell Apartments
Miami Beach, Florida 54 1,045,204 2,080,739 (1c)
Auburn Hills Apartments Limited
Partnership
Auburn Hills Apartments
Cabot, Arkansas 24 201,649 789,506 (1c)
Auburn Hills Townhouses Limited
Partnership
Auburn Hills Townhouse Apartments
Pontiac, Michigan 250 3,206,110 6,149,970 (1a&g)
Batesville Family, L.P.
Westridge Apartments
Batesville, Mississippi 48 160,741 (2) 1,428,095 (1c)
Browning Road Phase I, L.P.
Browning Road Apartments, Phase I
Greenwood, Mississippi 60 197,808 825,887 (1c)
Bruce Housing Associates, L.P.
Bruce Family Apartments
Bruce, Mississippi 40 122,814 (2) 1,096,634 (1c&d)
Canton Partners, L.P.
Pecan Village
Canton, Mississippi 48 380,199 1,441,115 (1c)
Carrington Limited Dividend Housing
Association Limited Partnership
Carrington Place
Farmington Hills, Michigan 100 1,058,976 (2) 3,313,001 (1e)
Christian Street Associates Limited
Partnership
Christian Street Apartments
Philadelphia, Pennsylvania 72 2,485,697 2,242,759 (1c&f)
Cityside Apartments, Phase II, L.P.
Cityside Apartments Phase II
Trenton, New Jersey 107 6,592,092 7,096,177 (1a&c)
Cleveland Square, Ltd.
Cleveland Square Apartments
Cleveland, Texas 48 223,327 818,128 (1c)
4
Item 2. Properties (continued)
Mortgage
Name of Local Partnership Number loans payable as of
Name of apartment complex of rental Capital December 31, Subsidy
Apartment complex location units contribution 2002 (see footnotes)
- -------------------------- ---------- ------------- -------------------- -----------------
College Avenue Apartments Limited
Partnership
College Avenue Apartments
Natchitoches, Louisiana 41 $ 352,637 $ 591,205 (1a)
Corrigan Square, Ltd.
Corrigan Square Apartments
Corrigan, Texas 96 372,833 1,408,872 (1c)
De Queen Villas Limited Partnership
De Queen Villas Apartments
De Queen, Arkansas 37 296,051 1,145,828 (1c)
Dermott Villas Limited Partnership
Dermott Villas
Dermott, Arkansas 32 272,802 1,053,235 (1c)
Eagle View, Ltd.
Eagle View Apartments
Clearfield, Kentucky 14 102,850 400,233 (1c)
Elm Hill Housing Limited Partnership
Elm Hill Housing
Boston, Massachusetts 142 5,712,391 6,759,070 (1a)
Eudora Manor Limited Partnership
Eudora Manor Apartments
Eudora, Arkansas 24 188,838 744,916 (1c)
Forest Village Housing Partnership
Forest Village Apartments
Auburn, Washington 89 401,931 -- (3) (1b&c) (3)
Harborside Housing Limited Partnership
Cal-View Apartments
East Chicago, Indiana 255 1,789,434 2,728,409 (1a,c&g)
Hill Com I Associates Limited
Partnership
Hill Com I Apartments
Pittsburgh, Pennsylvania 67 887,635 1,165,986 (1a&h)
Hill Com II Associates Limited
Partnership
Hill Com II Apartments
Pittsburgh, Pennsylvania 48 683,172 938,031 (1a&h)
Hughes Manor Limited Partnership
Hughes Manor
Hughes, Arkansas 32 287,261 1,103,878 (1c)
Ivy Family, L.P.
Ivy Apartments
Louisville, Mississippi 32 90,878 (2) 778,437 (1c&d)
5
Item 2. Properties (continued)
Mortgage
Name of Local Partnership Number loans payable as of
Name of apartment complex of rental Capital December 31, Subsidy
Apartment complex location units contribution 2002 (see footnotes)
- -------------------------- ---------- ------------- -------------------- -----------------
Lakeside Housing Limited Partnership
Lakeside Garden Apartments
East Chicago, Indiana 312 $ 3,147,863 $7,440,473 (1a,c&g)
Lawrence Road Properties, Ltd.
Hillcrest Apartments
Newton, Mississippi 24 83,013 (2) 752,561 (1c&d)
Lexington Estates Ltd.,
A Mississippi Limited Partnership
Lexington Estates
Lexington, Mississippi 24 176,225 700,923 (1c)
Littleton Avenue Community Village, L.P.
Littleton Avenue Community Village
Newark, New Jersey 102 3,087,138 4,303,080 (1c)
Lula Courts Ltd., L.P.
Lula Courts
Lula, Mississippi 24 176,645 694,485 (1c)
Magee Elderly, L.P.
Eastgate Manor
Magee, Mississippi 24 150,952 586,158 (1c&d)
Mirador del Toa Limited Partnership
Mirador del Toa Apartments
Toa Alta, Puerto Rico 48 186,717 (2) 1,864,895 (1c&d)
Nixa Heights Apartments, L.P.
Nixa Heights Apartments
Nixa, Missouri 40 250,030 994,999 (1c)
North Hills Farms Limited Partnership
North Hills Farms Apartments
Pontiac, Michigan 525 3,443,762 3,296,998 (1a&g)
Patton Place Limited Partnership
Patton Street Apartments
Springfield, Massachusetts 24 794,044 963,950 (1a&g)
Plantersville Family, L.P.
Regal Ridge Apartments
Plantersville, Mississippi 24 152,268 591,701 (1c)
Powelton Gardens Associates
Powelton Gardens Apartments
West Philadelphia, Pennsylvania 25 782,958 843,917 (1a&f)
Purvis Heights Properties, L.P.
Pineview Apartments
Purvis, Mississippi 40 128,419 (2) 1,136,111 (1c)
6
Item 2. Properties (continued)
Mortgage
Name of Local Partnership Number loans payable as of
Name of apartment complex of rental Capital December 31, Subsidy
Apartment complex location units contribution 2002 (see footnotes)
- -------------------------- ---------- ------------- -------------------- -----------------
Queen Lane Investors
Queen's Row
Philadelphia, Pennsylvania 29 $ 603,552 (2) $ 1,532,919 (1c&f)
Renova Properties, L.P.
Hymon Lucas Manor
Renova, Mississippi 24 165,582 632,811 (1c&d)
Santa Juanita Limited Dividend
Partnership L.P.
Santa Juanita Apartments
Bayamon, Puerto Rico 45 584,117 (2) 1,429,828 (1a&c)
Simpson County Family, L.P.
Azalea Apartments
Magee, Mississippi 24 211,823 807,422 (1d)
Summers Village Limited Partnership
Summers Village Apartments
Summersville, West Virginia 24 194,674 802,017 (1c)
Tchula Courts Apartments, L.P.
Tchula Courts Apartments
Tchula, Mississippi 24 150,984 729,442 (1c)
The Pendleton (A Louisiana
Partnership in Commendam)
The Pendleton
Shreveport, Louisiana 36 444,321 554,957 (1a&c)
Trenton Heights Apartments, L.P.
Trenton Heights Apartments
Trenton, Mississippi 40 100,434 435,851 (1c)
Twin Pine Family, L.P.
Twin Pine Apartments
Louisville, Mississippi 24 163,172 599,282 (1c)
Village Creek Limited Partnership
Village Creek Apartments
Arkadelphia, Arkansas 40 288,216 1,203,327 (1c)
York Park Associates Limited Partnership
York Park Apartments
Dundalk, Maryland 80 2,146,200 3,906,632 (1a)
--------------- -------------
$ 46,387,490 $ 85,746,594
=============== =============
(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) King County Housing Authority provided an interest subsidy
through issuance of tax exempt bonds, which provided first and
second mortgage loans for the acquisition and rehabilitation of
the complex.
(c) The Local Partnership's debt structure includes a principal or
interest payment subsidy.
7
Item 2. Properties (continued)
(d) The Rural Housing Service (formerly the Farmers Home
Administration) of the United States Department of Agriculture
Rental Assistance Program allows qualified low-income tenants to
receive rental subsidies.
(e) The Michigan State Housing Development Authority allows tenants,
who would otherwise pay more than 40% of their income for rent
and utilities, to receive rental subsidies.
(f) The City of Philadelphia Housing Authority allows qualified
low-income tenants to receive rental certificates.
(g) The Local Partnership's Section 8 contracts, certain of which
cover only certain rental units, are subject to renewal under
applicable HUD guidelines.
(h) The Local Partnership has entered into a restructuring agreement
of its Section 8 contracts and debt structure under applicable
HUD guidelines.
(2) Reflects amount attributable to Registrant only.
(3) The underlying Property was sold during the year ended March 30, 2003.
See discussion herein under Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Item 3. Legal Proceedings
Registrant is not aware of any 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.
8
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.
Accordingly, accurate information as to the market value of a Unit at any given
date is not available. The number of owners of Units as of May 31, 2003 was
approximately 3,172, holding 55,746 Units.
Merrill Lynch follows internal guidelines for providing estimated values of
limited partnerships and other direct investments reported on client account
statements. Pursuant to such guidelines, estimated values for limited
partnership interests reported on Merrill Lynch client account statements (such
as Registrant's Units) are provided to Merrill Lynch by independent valuation
services. These estimated values are based on financial and other information
available to the independent services (i) 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 (ii) on March 31st for
reporting on June month-end and subsequent client account statements through the
November month-end client account statements of the same year. In addition,
Registrant may provide an estimate of 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.
Distributions
Registrant owns a limited partnership interest in Local Partnerships that are
the owners of Properties that are leveraged and receive government assistance in
various forms of rental and debt service subsidies. The distribution of 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 cash
distributions to its partners. There were no cash distributions to the partners
during the years ended March 30, 2003 and 2002.
Low-income Tax Credits and Historic Rehabilitation Tax Credits (together, the
"Tax Credits"), which are subject to various limitations, may be used by
partners 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, 2003 and 2002 and the cumulative Tax Credits allocated from
inception through December 31, 2002 are as follows:
Historic
Rehabilitation Low-income
Tax Credits Tax Credits
----------- -----------
Tax year ended December 31, 2002 $ -- $ .05
Tax year ended December 31, 2001 -- 2.02
Cumulative totals $ 6.56 $ 1,494.27
Registrant generated total Tax Credits from investments in Local Partnerships of
approximately $1,501 per Unit through December 31, 2002, notwithstanding future
circumstances which may give 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). The Ten Year
Credit Period for all of the Properties was fully exhausted as of December 31,
2001.
9
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,
----------------------------------------------------------------------------------------
2003 2002 2001 2000 1999
------------ ------------ ------------ ------------ ------------
Interest and other revenue $ 214,972 $ 243,818 $ 239,583 $ 272,075 $ 339,756
============ ============ ============ ============ ============
Equity in loss of investment
in local partnerships $ (652,415) $ (927,455) $ (2,877,726) $ (1,598,531) $ (2,363,768)
============ ============ ============ ============ ============
Gain on disposal of local
partnership interest $ 846,531 $ -- $ -- $ -- $ --
============ ============ ============ ============ ============
Net loss $ (330,117) $ (1,396,994) $ (3,375,703) $ (2,048,082) $ (2,759,975)
============ ============ ============ ============ ============
Net loss per unit of limited
partnership interest $ (5.86) $ (24.81) $ (59.95) $ (36.74) $ (49.01)
============ ============ ============ ============ ============
As of March 30,
----------------------------------------------------------------------------------------
2003 2002 2001 2000 1999
------------ ------------ ------------ ------------ ------------
Total assets $ 10,852,760 $ 10,952,650 $ 12,318,749 $ 15,407,107 $ 17,409,763
============ ============ ============ ============ ============
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Capital Resources and Liquidity
Registrant admitted limited partners in three closings with aggregate limited
partners' capital contributions of $55,746,000. In connection with the offering
of the sale of units, Registrant incurred organization and offering costs of
approximately $6,534,000 and established a working capital reserve of
approximately $3,345,000. The remaining net proceeds of approximately
$45,867,000 (the "Net Proceeds") were available to be applied to the acquisition
of limited partnership interests in local partnerships (the "Local
Partnerships") that own low-income multifamily residential complexes (the
"Property" or "Properties") that qualify for the low-income tax credit in
accordance with Section 42 of the Internal Revenue Code (the "Low-income Tax
Credit"); one Local Partnership owns a Property that also qualified for the
historic rehabilitation tax credit in accordance with Section 48(g) of the
Internal Revenue Code of 1986. The Net Proceeds were utilized in acquiring an
interest in fifty Local Partnerships.
As of March 30, 2003, Registrant has cash and cash equivalents and investments
in bonds totaling $3,289,231 which is available for operating expenses of
Registrant and circumstances that may arise in connection with the Local
Partnerships. As of March 30, 2003, Registrant's investments in bonds represent
corporate bonds of $1,751,844 U.S. Treasury bonds of $756,942 and U.S.
government agency bonds of $4,993 with various maturity dates ranging from 2004
to 2008. Registrant acquired such investments in bonds with the intention of
utilizing proceeds generated by such investments to meet its annual obligations.
Future sources of Registrant funds are expected to be primarily from interest
earned on working capital and limited cash distributions from Local
Partnerships.
During the year ended March 30, 2003, Registrant received cash from interest
revenue, maturity/redemption and sale of bonds and distributions from Local
Partnerships and utilized cash for operating expenses and advances to Local
Partnerships (see discussion below under Local Partnership Matters). Cash and
cash equivalents and investments in bonds increased, in the aggregate, by
approximately $486,000 during the year ended March 30, 2003 (which includes the
amortization of net premium on investments in bonds of approximately $4,000 and
the accretion of zero coupon bonds of approximately $39,000). Notwithstanding
circumstances that may arise in connection with the Properties, Registrant does
not expect to realize significant gains or losses on its investments in bonds,
if any.
10
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
During the year ended March 30, 2003, 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, 2002 of $652,415 and cash distributions received
from Local Partnerships of $126,876 (exclusive of distributions from Local
Partnerships of $35,579 classified as other income and $846,531 classified as
gain on disposal of local partnership interest in connection with the sale of
Forest Village Housing Partnership ("Forest Village")), partially offset by
advances to Local Partnerships of $209,573 (see discussion below under Local
Partnership Matters). Accounts payable and accrued expenses and payable to
general partner and affiliate in the accompanying balance sheet as of March 30,
2003 include cumulative deferred administration fees and management fees of
$1,564,903.
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. Accordingly, the investment
is carried at cost and is adjusted for Registrant's share of each Local
Partnership's results of operations and by cash distributions received. Equity
in loss of each investment in Local Partnership allocated to Registrant is
recognized to the extent of Registrant's investment balance in each Local
Partnership. Equity in loss in excess of Registrant's investment balance in a
Local Partnership is allocated to other partners' capital in any such Local
Partnership. As a result, the reported 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,
irrespective 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. In addition, the carrying value of
Registrant's investment in local partnerships may be reduced if the book value
(the "Local Partnership Carrying Value") is considered to exceed the estimated
value derived by management. Accordingly, cumulative losses and cash
distributions in excess of the investment or an adjustment to a Local
Partnership's Carrying Value are not necessarily indicative of adverse operating
results of a Local Partnership. See discussion below under Local Partnership
Matters regarding certain Local Partnerships currently operating below economic
break even levels.
Registrant's operations for the years ended March 30, 2003, 2002 and 2001
resulted in net losses of $330,117, $1,396,994 and $3,375,703, respectively. The
decrease in net loss from fiscal 2002 to fiscal 2003 is primarily attributable
to (i) gain on disposal of local partnership interest of approximately $847,000
in connection with Forest Village and (ii) a decrease in equity in loss of
investment in local partnerships of approximately $275,000, all partially offset
by a decrease in interest revenue of approximately $38,000 resulting from the
maturity of certain investments in bonds at higher than current interest rates
and a reduction in money market rates. The decrease in net loss from fiscal 2001
to fiscal 2002 is primarily attributable to an increase in equity in loss of
investment in local partnerships of approximately $1,950,000. Equity in loss of
investment in local partnerships has fluctuated over the last three years as a
result of (i) Registrant adjusting the Local Partnership Carrying Value in
connection with its investments in certain Local Partnerships during fiscal 2002
and 2001 as reflected in Note 5 to the financial statements, (ii) fluctuations
in the nonrecognition of losses in accordance with the equity method of
accounting and (iii) changes in the net operating losses of those Local
Partnerships in which Registrant continues to have an investment balance.
The Local Partnerships' net loss of approximately $2,418,000 for the year ended
December 31, 2002 includes gain on sale of property of approximately $1,367,000,
depreciation and amortization expense of approximately $4,932,000 and interest
on non-mandatory debt of approximately $809,000, and does not include principal
payments on permanent mortgages of approximately $1,395,000. The Local
Partnerships' net loss of approximately $3,114,000 for the year ended December
31, 2001 includes depreciation and amortization expense of approximately
$4,541,000 and interest on non-mandatory debt of approximately $739,000, and
does not include principal payments on permanent mortgages of approximately
$1,274,000. The Local Partnerships' net loss of approximately $4,191,000 for the
year ended December 31, 2000 includes depreciation and amortization expense of
approximately $5,239,000 and interest on non-mandatory debt of approximately
$709,000, and does not include principal payments on permanent mortgages of
approximately $1,263,000. The results of operations of the Local Partnerships
for the year ended December 31, 2002 are not necessarily indicative of results
that may be expected in future periods.
11
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Local Partnership Matters
Registrant's primary objective is to provide Low-income Tax Credits to limited
partners generally over a ten year period. The relevant state tax credit agency
has allocated each of Registrant's Local Partnerships an amount of Low-income
Tax Credits, which are generally available for a ten year period from the year
the Property is placed in service (the ("Ten Tear Credit Period"). The Ten Year
Credit Period was fully exhausted by the Local Partnerships as of December 31,
2001. 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").
In addition, certain of the Local Partnerships have entered into agreements with
the relevant state tax credit agencies whereby the Local Partnerships must
maintain the low-income nature of the Properties for a period which exceeds the
Compliance Period, regardless of any sale of the Properties by the Local
Partnerships after 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.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. 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"). The subsidy agreements expire at various
times during and after the Compliance Periods of the Local Partnerships. Since
October 1997, the United States Department of Housing and Urban Development
("HUD") has issued a series of directives related to project based Section 8
contracts that define owners' notification responsibilities, advise owners of
project based Section 8 properties of what their options are regarding the
renewal of Section 8 contracts, provide guidance and procedures to owners,
management agents, contract administrators and HUD staff concerning renewal of
Section 8 contracts, provide policies and procedures on setting renewal rents
and handling renewal rent adjustments and provide the requirements and
procedures for opting-out of a Section 8 project based contract. 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 before debt service ("NOI") and debt structure of any or
all Local Partnerships currently receiving such subsidy or similar subsidies.
Six Local Partnerships' Section 8 contracts, certain of which cover only certain
rental units, are currently subject to renewal under applicable HUD guidelines.
In addition, two Local Partnerships entered into restructuring agreements,
resulting in both a lower rent subsidy (resulting in lower NOI) and lower
mandatory debt service.
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, 2002, revenue from
operations of the Local Partnerships has generally been sufficient to cover
operating expenses and Mandatory Debt Service. Substantially all of the Local
Partnerships are effectively operating at or above break even levels, although
certain Local Partnerships' operating 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 any required deferral of property management fees.
As a result of increasing deficits and declining occupancy caused by
deteriorating physical conditions, Forest Village filed for protection under
Chapter 11 of the federal Bankruptcy Code in the United States Bankruptcy Court,
Western District of Washington (the "Court") on March 25, 1999. Forest Village
filed a plan of reorganization (the "Plan") that was confirmed by the Court on
December 14, 1999. The terms of the Plan called for Registrant to provide up to
$500,000 (the "Bankruptcy Advance"), all of which was previously funded, which
Forest Village utilized to pay certain obligations including all first mortgage
arrears and certain secured and unsecured creditors and to make necessary
repairs to the complex. The Plan also resulted in recasting the second mortgage
and cumulative arrears over a new 30 year amortization period that reduced
Forest Village's mandatory debt service by approximately $77,000 per annum. In
addition to the Bankruptcy Advance, Registrant provided advances of $282,874 to
Forest Village. Registrant's investment balance in Forest Village, after
cumulative equity losses, became zero during the year ended March 30, 1995 and
advances made by Registrant, including the Bankruptcy Advance, were offset by
additional equity in loss of investment in local partnerships. Forest Village
generated approximately $1.5 per Unit per year to the limited partners upon the
expiration of its Low-income Tax Credit allocation in 2001.
12
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
In May 2002, Forest Village sold its underlying Property for $2,600,000. The
combined statement of operations of the Local Partnerships for the year ended
December 31, 2002 included in Note 5 in the accompanying financial statements
reflects gain on sale of property of $1,367,286. The sale proceeds were utilized
to repay the outstanding mortgages in full, post a bond for the purpose of
avoiding Low-income Tax Credit recapture and repay Registrant for advances noted
above. Registrant received $846,531 in connection with the sale and the
purchaser is required to continue to operate the Property as low-income pursuant
to Section 42 through the remainder of the Compliance Period. The statement of
operations of Registrant for the year ended March 30, 2003 includes gain on
disposal of local partnership interest of $846,531 in connection with Forest
Village.
Christian Street Associates Limited Partnership ("Christian Street") and
2000-2100 Christian Street Associates ("2000 Christian Street"), which Local
Partnerships have certain common general partner interests and a common first
mortgage lender, have experienced ongoing operating deficits. Under terms of the
partnership agreements, the Local General Partners exceeded their respective
operating deficit guarantees and, as of September 30, 1998, had advanced in
excess of $1,000,000 in the aggregate to Christian Street and 2000 Christian
Street. The Local General Partners approached the lender with the intention to
restructure the loans; however the lender indicated that in connection with any
such restructuring, the respective Local Partnerships would be responsible for
certain costs, which would likely have been significant. If the Local General
Partners were to cease funding the operating deficits, Registrant would likely
incur substantial recapture of Low-income Tax Credits. Effective October 1,
1998, in an attempt to avoid potential adverse tax consequences, Registrant and
the Local General Partners agreed to equally share the funding of operating
deficits through June 30, 2000 in the case of Christian Street and through
September 30, 2000 in the case of 2000 Christian Street (the respective "Funding
Agreements"). The Funding Agreements have been extended through September 30,
2003. The Local General Partners agreed to cause the management agent to accrue
and defer its management fees during the period of the Funding Agreements and
the accrued management fees are excluded when determining the operating
deficits. Christian Street and 2000 Christian Street reported a combined
operating deficit of approximately $187,000, excluding accrued management fees
of approximately $42,000, for the year ended December 31, 2002. Under the terms
of the Funding Agreements, Registrant has advanced $291,150 as of March 30,
2003, of which $95,933 was advanced during the year then ended. Payments on the
mortgages and real estate taxes are current. Registrant's investment balances in
Christian Street and 2000 Christian Street, after cumulative equity losses,
became zero during the year ended March 30, 1997 and advances made by Registrant
have been offset by additional equity in loss of investment in local
partnerships. Christian Street and 2000 Christian Street generated approximately
$8.2 and approximately $4.4 per Unit per year to the limited partners upon the
expiration of their Low-income Tax Credit allocations in 2000 and 2001,
respectively.
During the year ended December 31, 2002, Ann Ell Apartments Associates, Ltd.
("Ann Ell") reported an operating deficit of approximately $64,000. Registrant
has made cumulative advances to Ann Ell of $439,545 as of March 30, 2003, of
which $97,000 was advanced during the year then ended. Payments on the mortgage
and real estate taxes are current. Registrant's investment balance in Ann Ell,
after cumulative equity losses, became zero during the year ended March 30, 1994
and advances made by Registrant have been offset by additional equity in loss of
investment in local partnerships. Ann Ell generated approximately $1.7 per Unit
per year to the limited partners upon the expiration of its Low-income Tax
Credit allocation in 2001.
The terms of the partnership agreement of College Avenue Apartments Limited
Partnership ("College Avenue") require the management agent to defer property
management fees in order to avoid a default under the mortgage. College Avenue
reported an operating deficit of approximately $45,000 for the year ended
December 31, 2002, which includes property management fees of approximately
$13,000. Registrant has made cumulative advances to College Avenue of $27,790 as
of March 30, 2003, of which $16,640 was advanced during the year then ended.
Payments on the mortgage and real estate taxes are current. Registrant's
investment balance in College Avenue, after cumulative equity losses, became
zero during the year ended March 30, 1999 and advances made by Registrant have
been offset by additional equity in loss of investment in local partnerships.
College Avenue generated approximately $1.2 per Unit per year to the limited
partners upon the expiration of its Low-income Tax Credit allocation in 2000.
The terms of the partnership agreement of Powelton Gardens Associates
("Powelton") require local general partners to fund all operating deficits
through the Compliance Period. Powelton reported an operating deficit of
approximately $45,000 for the year ended December 31, 2002. In addition,
Powelton is approximately two months in arrears on its Mandatory Debt Service,
including escrow and replacement reserve deposits. The local general partner has
reported that the lender has not declared a default as a result of the arrearage
and that payments on the real estate taxes are current. Registrant's investment
balance in Powelton, after cumulative equity losses, became zero during the year
ended March 30, 2002. Powelton generated approximately $2.6 per Unit per year to
the limited partners upon the expiration of its Low-income Tax Credit allocation
in 2001.
13
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
The terms of the partnership agreement of Hill Com II Associates Limited
Partnership ("Hill Com II") require the management agent to defer property
management fees in order to avoid a default under the mortgage. During the year
ended December 31, 2002, Hill Com II incurred an operating deficit of
approximately $39,000, which includes property management fees of approximately
$23,000. Payments on the mortgage and real estate taxes are current. Hill Com II
generated approximately $2.3 per Unit per year to the limited partners upon the
expiration of its Low-income Tax Credit allocation in 2000.
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.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America, which requires Registrant to
make certain estimates and assumptions. A summary of significant accounting
policies is provided in Note 1 to the financial statements. The following
section is a summary of certain aspects of those accounting policies that may
require subjective or complex judgments and are most important to the portrayal
of Registrant's financial condition and results of operations. Registrant
believes that there is a low probability that the use of different estimates or
assumptions in making these judgments would result in materially different
amounts being reported in the financial statements.
o Registrant accounts for its investment in local partnerships in
accordance with the equity method of accounting since Registrant does
not control the operations of a Local Partnership.
o If the book value of Registrant's investment in a Local Partnership
exceeds the estimated value derived by management, Registrant reduces
its investment in any such Local Partnership and includes such
reduction in equity in loss of investment in local partnerships.
Recently Issued Accounting Standards
In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a
liability for the fair value of an obligation assumed under a guarantee. FIN 45
also requires additional disclosures by a guarantor in its interim and annual
financial statements about the obligations associated with guarantees issued.
The recognition provisions of FIN 45 are effective for any guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. The adoption of FIN 45 did not have a material effect on Registrant's
financial position, results of operations or cash flows.
In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51" ("FIN 46"). FIN 46
addresses the consolidation by business enterprises of variable interest
entities as defined. FIN 46 applies immediately to variable interests in
variable interest entities created after January 31, 2003. For public
enterprises with a variable interest entity created before February 1, 2003, FIN
46 applies to that enterprise no later than the beginning of the first interim
or annual reporting period beginning after June 15, 2003. The adoption of FIN 46
is not expected to have a material effect on Registrant's financial position,
results of operations or cash flows.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Registrant has invested a significant portion of its working capital reserves in
corporate bonds, U.S. Treasury instruments and U.S. government and agency
securities. The market value of such investments is subject to fluctuation based
upon changes in interest rates relative to each investment's maturity date and
the associated bond rating. Since Registrant's investments in bonds have various
maturity dates through 2008, the value of such investments may be adversely
impacted in an environment of rising interest rates in the event Registrant
decides to liquidate any such investment prior to its maturity. Although
Registrant may utilize reserves to assist an under performing Property, it
otherwise intends to hold such investments to their respective maturities.
Therefore, Registrant does not anticipate any material adverse impact in
connection with such investments.
14
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 8. Financial Statements and Supplementary Data
Table of Contents
Page
----
Independent Auditors' Report..................................................16
Balance Sheets................................................................17
Statements of Operations......................................................18
Statements of Changes in Partners' Equity (Deficit)...........................19
Statements of Cash Flows......................................................20
Notes to Financial Statements.................................................22
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.
15
INDEPENDENT AUDITORS' REPORT
To the Partners
American Tax Credit Properties II L.P.
We have audited the accompanying balance sheets of American Tax Credit
Properties II L.P. as of March 30, 2003 and 2002, and the related statements of
operations, partners' equity (deficit) and cash flows for each of the three
years in the period ended March 30, 2003. 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 auditing standards generally
accepted in the United States of America. 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 II L.P. as of March 30, 2003 and 2002, and the results of its
operations, changes in partners' equity (deficit) and its cash flows for each of
the three years in the period ended March 30, 2003, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Reznick Fedder and Silverman
Bethesda, Maryland
June 17, 2003
16
AMERICAN TAX CREDIT PROPERTIES II L.P.
BALANCE SHEETS
MARCH 30, 2003 AND 2002
Notes 2003 2002
--------- ----------- -----------
ASSETS
Cash and cash equivalents 3,9 $775,452 $10,520
Investments in bonds 4,9 2,513,779 2,792,845
Investment in local partnerships 5,8 7,532,015 8,101,733
Interest receivable 9 31,514 47,552
----------- -----------
$10,852,760 $10,952,650
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses 8 $726,724 $698,440
Payable to general partner and affiliate 6,8 996,159 929,773
Other liabilities 20,600 27,600
----------- -----------
1,743,483 1,655,813
=========== ===========
Commitments and contingencies 5,8
Partners' equity (deficit) 2,4
General partner (403,451) (400,150)
Limited partners (55,746 units of limited partnership
interest outstanding) 9,335,491 9,662,307
Accumulated other comprehensive income, net 177,237 34,680
----------- -----------
9,109,277 9,296,837
----------- -----------
$10,852,760 $10,952,650
=========== ===========
See Notes to Financial Statements.
17
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 30, 2003, 2002 AND 2001
Notes 2003 2002 2001
------- ----------- ----------- ------------
REVENUE
Interest $ 179,393 $ 217,725 $ 235,425
Other income from local partnerships 35,579 26,093 4,158
----------- ----------- ------------
TOTAL REVENUE 214,972 243,818 239,583
----------- ----------- ------------
EXPENSES
Administration fees 8 293,193 299,307 299,307
Management fees 6,8 293,193 299,307 299,307
Professional fees 54,963 80,427 92,870
Printing, postage and other 97,856 34,316 46,076
----------- ----------- ------------
TOTAL EXPENSES 739,205 713,357 737,560
----------- ----------- ------------
Loss from operations (524,233) (469,539) (497,977)
Equity in loss of investment in local
partnerships 5 (652,415) (927,455) (2,877,726)
----------- ----------- ------------
Loss prior to gain on disposal of local
partnership interest (1,176,648) (1,396,994) (3,375,703)
Gain on disposal of local partnership
interest 5 846,531
----------- ----------- ------------
NET LOSS (330,117) (1,396,994) (3,375,703)
Other comprehensive income 4 142,557 41 150,497
----------- ----------- ------------
COMPREHENSIVE LOSS $ (187,560) $(1,396,953) $ (3,225,206)
=========== =========== ============
NET LOSS ATTRIBUTABLE TO 2
General partner $(3,301) $(13,970) $(33,757)
Limited partners (326,816) (1,383,024) (3,341,946)
----------- ----------- ------------
$ (330,117) $(1,396,994) $ (3,375,703)
=========== =========== ============
NET LOSS per unit of limited partnership
interest (55,746 units of limited
partnership interest) $ (5.86) $ (24.81) $(59.95)
=========== =========== ============
See Notes to Financial Statements.
18
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 30, 2003, 2002 AND 2001
Other
General Limited Comprehensive
Partner Partners Income (Loss),
Net Total
------------ ------------ ------------ ------------
Partners' equity (deficit), March 30, 2000 $ (352,423) $ 14,387,277 $ (115,858) $ 13,918,996
Net loss (33,757) (3,341,946) (3,375,703)
Other comprehensive income, net 150,497 150,497
------------ ------------ ------------ ------------
Partners' equity (deficit), March 30, 2001 (386,180) 11,045,331 34,639 10,693,790
Net loss (13,970) (1,383,024) (1,396,994)
Other comprehensive income, net 41 41
------------ ------------ ------------ ------------
Partners' equity (deficit), March 30, 2002 (400,150) 9,662,307 34,680 9,296,837
Net loss (3,301) (326,816) (330,117)
Other comprehensive income, net 142,557 142,557
------------ ------------ ------------ ------------
Partners' equity (deficit), March 30, 2003 $ (403,451) $ 9,335,491 $ 177,237 $ 9,109,277
============ ============ ============ ============
See Notes to Financial Statements.
19
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 2003, 2002 AND 2001
2003 2002 2001
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 160,703 $ 177,040 $ 211,952
Cash used for local partnerships for deferred expenses (7,000) (7,000) (7,000)
Cash paid for
administration fees (305,484) (304,826) (242,224)
management fees (239,516) (269,516) (239,516)
professional fees (68,149) (62,215) (87,316)
printing, postage and other expenses (31,386) (38,946) (24,656)
----------- ----------- -----------
Net cash used in operating activities (490,832) (505,463) (388,760)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 1,008,986 226,436 81,877
Maturity/redemption and sale of bonds 456,351 400,573 306,264
Investment in local partnerships (209,573) (192,242) (253,486)
Investments in bonds (includes accrued interest of $5,832) (306,142)
----------- ----------- -----------
Net cash provided by (used in) investing activities 1,255,764 434,767 (171,487)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 764,932 (70,696) (560,247)
Cash and cash equivalents at beginning of year 10,520 81,216 641,463
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 775,452 $ 10,520 $ 81,216
=========== =========== ===========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds, net $ 142,557 $ 41 $ 150,497
=========== =========== ===========
See reconciliation of net loss to net cash used in operating activities on page
21.
See Notes to Financial Statements.
20
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS - (Continued)
YEARS ENDED MARCH 30, 2003, 2002 AND 2001
2003 2002 2001
----------- ----------- -----------
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING
ACTIVITIES
Net loss $ (330,117) $(1,396,994) $(3,375,703)
Adjustments to reconcile net loss to net cash used in
operating activities
Equity in loss of investment in local partnerships 652,415 927,455 2,877,726
Distributions from local partnerships classified as other
income (35,579) (26,093) (4,158)
Gain on disposal of local partnership interest (846,531)
Gain on redemption/sale of bonds (4,918) (129)
Amortization of net premium on investments in bonds 4,354 5,817 8,387
Accretion of zero coupon bonds (39,082) (39,082) (39,082)
Decrease (increase) in interest receivable 16,038 (2,502) 7,351
Increase (decrease) in accounts payable and accrued
expenses 28,284 (36,418) 26,974
Increase in payable to general partner and affiliate 66,386 74,272 116,874
Decrease in other liabilities (7,000) (7,000) (7,000)
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES $ (490,832) $ (505,463) $ (388,760)
=========== =========== ===========
See Notes to Financial Statements.
21
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 2003, 2002 AND 2001
1. Organization, Purpose and Summary of Significant Accounting Policies
American Tax Credit Properties II L.P. (the "Partnership") was formed on
October 26, 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 June 28, 1989. The Partnership was formed to invest
primarily in leveraged low-income multifamily residential complexes (the
"Property" or "Properties") that qualify for the low-income tax credit in
accordance with Section 42 of the Internal Revenue Code (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 Local Partnership whose
Property 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 II L.P. (the "General Partner") was formed
on October 26, 1988 to act as a 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.
Investment in Local Partnerships
The Partnership 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 the Partnership's share
of each Local Partnership's results of operations and by 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. Equity in
loss in excess of the Partnership's investment balance in a Local
Partnership is allocated to other partners' capital in any 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 or additional investment is made by the
Partnership. Distributions received subsequent to the elimination of an
investment balance for any such investment in a Local Partnership are
recorded as other income from local partnerships.
The Partnership regularly assesses the carrying value of its investments
in local partnerships. If the carrying value of an investment in a Local
Partnership exceeds the estimated value derived by management, the
Partnership reduces its investment in any such Local Partnership and
includes such reduction in equity in loss of investment in local
partnerships.
Advances made to Local Partnerships are recorded as investments in local
partnerships. Such advances are considered by the Partnership to be
voluntary loans to the respective Local Partnerships and the Partnership
may be reimbursed at a future date to the extent such Local Partnerships
generate distributable cash flow or receive proceeds from sale or
refinancing. The Partnership recognizes additional equity in loss of
investment in local partnerships to the extent of such advances.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of 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.
Cash and Cash Equivalents
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.
22
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
1. Organization, Purpose and Summary of Significant Accounting Policies
(continued)
Investments in Bonds
Investments in bonds are classified as available-for-sale and represent
investments that the Partnership intends to hold for an indefinite period
of time but not necessarily to maturity. Any decision to sell an
investment would be based on various factors, including significant
movements in interest rates and liquidity needs. Investments in bonds are
carried at estimated fair value and unrealized gains or losses are
included as items of comprehensive income (loss) and are reported as a
separate component of partners' equity (deficit).
Premiums and discounts on investments in bonds are amortized (accreted)
using the effective yield 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.
Realized gain (loss) on redemption or sale of investments in bonds 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 Statement of Financial
Accounting Standards ("SFAS") No. 109 "Accounting for Income Taxes," the
Partnership has included in Note 7 disclosures related to differences in
the book and tax bases of accounting.
Recently Issued Accounting Standards
In November 2002, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45"). FIN 45 requires that upon issuance of
a guarantee, a guarantor must recognize a liability for the fair value of
an obligation assumed under a guarantee. FIN 45 also requires additional
disclosures by a guarantor in its interim and annual financial statements
about the obligations associated with guarantees issued. The recognition
provisions of FIN 45 are effective for any guarantees issued or modified
after December 31, 2002. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December
15, 2002. The adoption of FIN 45 did not have a material effect on the
Partnership's financial position, results of operations or cash flows.
In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB
No. 51" ("FIN 46"). FIN 46 addresses the consolidation by business
enterprises of variable interest entities as defined. FIN 46 applies
immediately to variable interests in variable interest entities created
after January 31, 2003. For public enterprises with a variable interest
entity created before February 1, 2003, FIN 46 applies to that enterprise
no later than the beginning of the first interim or annual reporting
period beginning after June 15, 2003. The adoption of FIN 46 is not
expected to have a material effect on the Partnership's financial
position, results of operations or cash flows.
2. Capital Contributions
On June 14, 1989, the Partnership commenced the offering of units (the
"Units") through Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Selling Agent"). On June 28, 1989, July 31, 1989 and September 22, 1989,
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 three closings.
At these closings, subscriptions for a total of 55,746 Units representing
$55,746,000 in limited partners' capital contributions were accepted. In
connection with the offering of Units, the Partnership incurred
organization and offering costs of $6,534,064, of which $75,000 was
capitalized as organization costs and $6,459,064 was charged to the
limited partners' equity as syndication costs. 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.
23
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
3. Cash and Cash Equivalents
As of March 30, 2003, the Partnership has $775,452 in cash and cash
equivalents that are deposited in interest-bearing accounts with an
institution that is not insured by the Federal Deposit Insurance
Corporation.
4. Investments in Bonds
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 the providing of operating
advances resulting from circumstances that may arise in connection with
the Local Partnerships. Investments in bonds are reflected in the
accompanying balance sheets at estimated fair value.
As of March 30, 2003 certain information concerning investments in bonds
is as follows:
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
----------- ----------- ----------- ----------
Corporate debt securities
After one year through five years $ 1,653,135 $ 107,810 $ (9,101) $ 1,751,844
----------- ----------- ----------- -----------
U.S. Treasury debt securities
After five years through ten years 678,555 78,387 -- 756,942
----------- ----------- ----------- -----------
U.S. government and agency securities
After one year through five years 4,852 141 -- 4,993
----------- ----------- ----------- -----------
$ 2,336,542 $ 186,338 $ (9,101) $ 2,513,779
=========== =========== =========== ===========
As of March 30, 2002, certain information concerning investments in bonds
is as follows:
Gross Gross
Amortized unrealized unrealized Estimated
Description and maturity cost gains losses fair value
----------- ----------- ---------- ----------
Corporate debt securities
Within one year $ 450,800 $ 13,605 $ -- $ 464,405
After one year through five years 1,656,689 49,033 (25,419) 1,680,303
----------- ----------- ----------- -----------
2,107,489 62,638 (25,419) 2,144,708
----------- ----------- ----------- -----------
U.S. Treasury debt securities
After five years through ten years 639,473 -- (3,034) 636,439
----------- ----------- ----------- -----------
U.S. government and agency securities
After five years through ten years 11,203 495 -- 11,698
----------- ----------- ----------- -----------
$ 2,758,165 $ 63,133 $ (28,453) $ 2,792,845
=========== =========== =========== ===========
24
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships
As of March 30, 2003, the Partnership owns a limited partnership interest
in the following Local Partnerships:
1. 1989 Westview Arms Limited Partnership;
2. 2000-2100 Christian Street Associates ("2000 Christian Street");
3. Ann Ell Apartments Associates, Ltd. ("Ann Ell")*;
4. Auburn Hills Apartments Limited Partnership;
5. Auburn Hills Townhouses Limited Partnership;
6. Batesville Family, L.P.;
7. Browning Road Phase I, L.P.;
8. Bruce Housing Associates, L.P.;
9. Canton Partners, L.P.;
10. Carrington Limited Dividend Housing Association Limited Partnership;
11. Christian Street Associates Limited Partnership ("Christian Street");
12. Cityside Apartments, Phase II, L.P.*;
13. Cleveland Square, Ltd.;
14. College Avenue Apartments Limited Partnership ("College Avenue");
15. Corrigan Square, Ltd.;
16. De Queen Villas Limited Partnership;
17. Dermott Villas Limited Partnership;
18. Eagle View, Ltd.;
19. Elm Hill Housing Limited Partnership;
20. Eudora Manor Limited Partnership;
21. Harborside Housing Limited Partnership;
22. Hill Com I Associates Limited Partnership ("Hill Com I");
23. Hill Com II Associates Limited Partnership ("Hill Com II");
24. Hughes Manor Limited Partnership;
25. Ivy Family, L.P.; 26. Lakeside Housing Limited Partnership;
27. Lawrence Road Properties, Ltd.;
28. Lexington Estates Ltd., A Mississippi Limited Partnership;
29. Littleton Avenue Community Village, L.P.;
30. Lula Courts Ltd., L.P.;
31. Magee Elderly, L.P.;
32. Mirador del Toa Limited Partnership;
33. Nixa Heights Apartments, L.P.;
34. North Hills Farms Limited Partnership;
35. Patton Place Limited Partnership ("Patton Place");
36. Plantersville Family, L.P.;
37. Powelton Gardens Associates ("Powelton Gardens");
38. Purvis Heights Properties, L.P.;
39. Queen Lane Investors;
40. Renova Properties, L.P.;
41. Santa Juanita Limited Dividend Partnership L.P. ("Santa Juanita");
42. Simpson County Family, L.P.;
43. Summers Village Limited Partnership;
44. Tchula Courts Apartments, L.P.;
45. The Pendleton (A Louisiana Partnership in Commendam);
46. Trenton Heights Apartments, L.P.;
47. Twin Pine Family, L.P.;
48. Village Creek Limited Partnership; and
49. York Park Associates Limited Partnership*.
*An affiliate of the General Partner is a general partner of and/or
provides services to the Local Partnership.
25
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
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 L.P. ("ATCP"), a Delaware limited partnership and an
affiliate of the Partnership, together, in the aggregate, own a 99% Local
Partnership Interest in Santa Juanita; the ownership percentages of the
Partnership and ATCP of Santa Juanita are 64.36% and 34.64%,
respectively. In addition, the Partnership and American Tax Credit
Properties III L.P. ("ATCP III"), a Delaware limited partnership and an
affiliate of the Partnership, together, in the aggregate, own a 99% Local
Partnership Interest in the following Local Partnerships:
The
Partnership ATCP III
----------- --------
Batesville Family, L.P. 37.25% 61.75%
Bruce Housing Associates, L.P. 37.25 61.75
Carrington Limited Dividend Housing Association
Limited Partnership 33.05 65.95
Ivy Family, L.P. 37.25 61.75
Lawrence Road Properties, Ltd. 37.25 61.75
Mirador del Toa Limited Partnership 39.94 59.06
Purvis Heights Properties, L.P. 37.25 61.75
Queen Lane Investors 50.50 48.50
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. Under the terms of each of the Local
Partnership's partnership agreements, the Partnership has made capital
contributions in the aggregate amount of $46,387,490, which includes
advances made to certain Local Partnerships. As of December 31, 2002, the
Local Partnerships have outstanding mortgage loans payable totaling
approximately $85,747,000 and accrued interest payable on such loans
totaling approximately $7,516,000, 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 $2,665,779, $2,125,501 and $1,916,796 for the years ended
December 31, 2002, 2001 and 2000, respectively, as reflected in the
combined statements of operations of the Local Partnerships reflected
herein Note 5.
As a result of management's assessment of the carrying value of the
investment in local partnerships under applicable accounting guidelines
(see Note 1), the Partnership reduced its investment in Hill Com I by
$279,273 for the year ended March 30, 2002, and in Hill Com I, Hill Com
II and Powelton Gardens by $387,000, $409,511 and $141,000, respectively,
for the year ended March 30, 2001. Such losses are included in equity in
loss of investment in local partnerships in the accompanying statements
of operations of the Partnership for the years indicated.
The combined balance sheets of the Local Partnerships as of December 31,
2002 and 2001 and the combined statements of operations of the Local
Partnerships for the years ended December 31, 2002, 2001 and 2000 are
reflected on pages 27 and 28, respectively.
26
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of December 31,
2002 and 2001 are as follows:
2002 2001
------------- -------------
ASSETS
Cash and cash equivalents $ 1,820,263 $ 2,127,352
Rents receivable 426,140 431,523
Escrow deposits and reserves 6,047,039 5,755,211
Land 3,930,673 4,180,673
Buildings and improvements (net of accumulated
depreciation of $64,933,253 and $61,229,767) 78,780,411 84,160,541
Intangible assets (net of accumulated amortization
of $1,382,176 and $1,258,567) 1,327,698 1,407,245
Other assets 1,425,671 1,387,096
------------- -------------
$ 93,757,895 $ 99,449,641
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 2,014,029 $ 1,812,873
Due to related parties 3,805,439 4,165,047
Mortgage loans 85,746,594 88,453,937
Notes payable 1,259,422 1,418,799
Accrued interest 7,515,988 6,958,723
Other liabilities 700,106 710,234
------------- -------------
101,041,578 103,519,613
------------- -------------
Partners' equity (deficit)
American Tax Credit Properties II L.P.
Capital contributions, net of distributions 44,786,623 45,555,964
Cumulative loss (36,111,424) (35,459,009)
------------- -------------
8,675,199 10,096,955
------------- -------------
General partners and other limited partners
Capital contributions, net of distributions 3,072,216 3,098,307
Cumulative loss (19,031,098) (17,265,234)
------------- -------------
(15,958,882) (14,166,927)
------------- -------------
(7,283,683) (4,069,972)
------------- -------------
$ 93,757,895 $ 99,449,641
============= =============
27
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
years ended December 31, 2002, 2001 and 2000 are as follows:
2002 2001 2000
------------ ------------ ------------
REVENUE
Rental $ 21,329,310 $ 21,389,069 $ 20,607,114
Interest and other 758,544 693,807 749,692
------------ ------------ ------------
TOTAL REVENUE 22,087,854 22,082,876 21,356,806
EXPENSES
Administrative 3,767,107 3,788,594 3,874,564
Utilities 3,180,965 3,427,028 2,702,949
Operating and maintenance 4,802,324 4,572,352 4,972,828
Taxes and insurance 3,115,874 2,712,638 2,550,207
Financial 6,074,798 6,155,379 6,208,603
Depreciation and amortization 4,935,382 4,540,540 5,239,002
------------ ------------ ------------
TOTAL EXPENSES 25,873,419 25,196,531 25,548,153
------------ ------------ ------------
LOSS FROM OPERATIONS
BEFORE GAIN ON SALE OF
PROPERTY (3,785,565) (3,113,655) (4,191,347)
Gain on sale of property 1,367,286
------------ ------------ ------------
NET LOSS $ (2,418,279) $ (3,113,655) $ (4,191,347)
============ ============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties II L.P. $ (652,415) $ (648,186) $ (1,940,215)
General partners and other limited
partners, which includes specially
allocated items of revenue to certain
general partners of $1,249,414, $54,577
and $59,700, and Partnership loss in
excess of investment of $2,665,779,
$2,125,501 and $1,916,796
(1,765,864) (2,465,469) (2,251,132)
------------ ------------ ------------
$ (2,418,279) $ (3,113,655) $ (4,191,347)
============ ============ ============
28
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year ended
March 30, 2003 is as follows:
Partnership's
equity in Adjustment Cash Investment
Investment income to carrying distributions in Local
in Local Investment (loss) for value during received Partnership
Partnership during the the the year during the balance as
Name of Local Partnership balance as year ended year ended ended year ended of March
of March March 30, December 31, March 30, March 30, 30,
30, 2002 2003 2002 2003 2003 (3) 2003
- -------------------------------------------- ------------- -------------- --------------- ------------- -------------- ------------
1989 Westview Arms Limited Partnership $ 60,383 $ -- $ 28,575 $ -- $ -- $ 88,958
2000-2100 Christian Street Associates -- 44,980 (44,980) (1) -- -- --
Ann Ell Apartments Associates, Ltd. -- 97,000 (97,000) (1) -- -- --
Auburn Hills Apartments Limited Partnership -- -- -- (2) -- -- --
Auburn Hills Townhouses Limited Partnership 664,858 -- (134,813) -- (5,000) 525,045
Batesville Family, L.P. -- -- -- (2) -- -- --
Browning Road Phase I, L.P. -- -- -- (2) -- -- --
Bruce Housing Associates, L.P. 9,621 -- (3,750) -- -- 5,871
Canton Partners, L.P. -- -- -- (2) -- -- --
Carrington Limited Dividend Housing
Association Limited Partnership 200,696 -- (62,612) -- -- 138,084
Christian Street Associates Limited
Partnership -- 50,953 (50,953) (1) -- -- --
Cityside Apartments, Phase II, L.P. -- -- -- (2) -- -- --
Cleveland Square, Ltd. -- -- -- (2) -- -- --
College Avenue Apartments Limited
Partnership -- 16,640 (16,640) (1) -- -- --
Corrigan Square, Ltd. -- -- -- (2) -- -- --
De Queen Villas Limited Partnership -- -- -- (2) -- -- --
Dermott Villas Limited Partnership -- -- -- (2) -- -- --
Eagle View, Ltd. -- -- -- (2) -- -- --
Elm Hill Housing Limited Partnership 1,780,554 -- (106,906) -- (116,339) 1,557,309
Eudora Manor Limited Partnership -- -- -- (2) -- -- --
Forest Village Housing Partnership -- -- -- (2) -- -- --
Harborside Housing Limited Partnership 1,692,849 -- (121,853) -- -- 1,570,996
Hill Com I Associates Limited Partnership -- -- -- (2) -- -- --
Hill Com II Associates Limited Partnership -- -- -- (2) -- -- --
Hughes Manor Limited Partnership -- -- -- (2) -- -- --
Ivy Family, L.P. -- -- -- (2) -- -- --
Lakeside Housing Limited Partnership -- -- -- (2) -- -- --
Lawrence Road Properties, Ltd. -- -- -- (2) -- -- --
Lexington Estates Ltd. -- -- -- (2) -- -- --
Littleton Avenue Community Village, L.P. -- -- -- (2) -- -- --
Lula Courts Ltd., L.P. -- -- -- (2) -- -- --
Magee Elderly, L.P. -- -- -- (2) -- -- --
Mirador del Toa Limited Partnership -- -- -- (2) -- -- --
Nixa Heights Apartments, L.P. -- -- -- (2) -- -- --
North Hills Farms Limited Partnership 3,451,929 -- 42,737 -- (5,000) 3,489,666
Patton Place Limited Partnership 174,876 -- (31,961) -- -- 142,915
Plantersville Family, L.P. -- -- -- (2) -- -- --
Powelton Gardens Associates -- -- -- (2) -- -- --
Purvis Heights Properties, L.P. 27,581 -- (13,873) -- (537) 13,171
Queen Lane Investors -- -- -- (2) -- -- --
Renova Properties, L.P. -- -- -- (2) -- -- --
Santa Juanita Limited Dividend Partnership
L.P. 38,386 -- (38,386) (1) -- -- --
Simpson County Family, L.P. -- -- -- (2) -- -- --
Summers Village Limited Partnership -- -- -- (2) -- -- --
Tchula Courts Apartments, L.P. -- -- -- (2) -- -- --
The Pendleton -- -- -- (2) -- -- --
Trenton Heights Apartments, L.P. -- -- -- (2) -- -- --
Twin Pine Family, L.P. -- -- -- (2) -- -- --
Village Creek Limited Partnership -- -- -- (2) -- -- --
York Park Associates Limited Partnership -- -- -- (2) -- -- --
----------- -------- ---------- -------- --------- -----------
$ 8,101,733 $209,573 $ (652,415) $ -- $(126,876) $ 7,532,015
=========== ======== ========== ======== ========= ===========
(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 or additional investment
is made by the Partnership.
(3) The total excludes $35,579 of distributions received classified as
other income from local partnerships.
29
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year ended
March 30, 2002 is as follows:
Partnership's
equity in Adjustment Cash Investment
Investment income to carrying distributions in Local
in Local Investment (loss) for value during received Partnership
Partnership during the the the year during the balance as
balance as year ended year ended ended year ended of March
of March March 30, December 31, March 30, March 30, 30,
Name of Local Partnership 30, 2001 2002 2001 2002 2002 (4) 2002
- -------------------------------------------- ------------- -------------- --------------- ------------- -------------- ------------
1989 Westview Arms Limited Partnership $ 67,155 $ -- $ (6,772) $ -- $ -- $ 60,383
2000-2100 Christian Street Associates -- 44,102 (44,102)(1) -- -- --
Ann Ell Apartments Associates, Ltd. -- 81,027 (81,027)(1) -- -- --
Auburn Hills Apartments Limited Partnership -- -- --(2) -- -- --
Auburn Hills Townhouses Limited Partnership 388,752 -- 281,106 -- (5,000) 664,858
Batesville Family, L.P. -- -- -- (2) -- -- --
Browning Road Phase I, L.P. -- -- -- (2) -- -- --
Bruce Housing Associates, L.P. 17,635 -- (8,014) -- -- 9,621
Canton Partners, L.P. -- -- -- (2) -- -- --
Carrington Limited Dividend Housing
Association Limited Partnership 275,025 -- (74,329) -- -- 200,696
Christian Street Associates Limited
Partnership -- 46,544 (46,544)(1) -- -- --
Cityside Apartments, Phase II, L.P. 217,866 -- (217,866)(1) -- -- --
Cleveland Square, Ltd. -- -- -- (2) -- -- --
College Avenue Apartments Limited -- 11,150 (11,150)(1) -- -- --
Partnership
Corrigan Square, Ltd. -- -- -- (2) -- -- --
De Queen Villas Limited Partnership -- -- -- (2) -- -- --
Dermott Villas Limited Partnership -- -- -- (2) -- -- --
Eagle View, Ltd. -- -- -- (2) -- -- --
Elm Hill Housing Limited Partnership 2,036,747 -- (135,234) -- (120,959) 1,780,554
Eudora Manor Limited Partnership -- -- -- (2) -- -- --
Forest Village Housing Partnership -- 9,419 (9,419)(1) -- -- --
Harborside Housing Limited Partnership 1,784,095 - - (91,246) -- -- 1,692,849
Hill Com I Associates Limited Partnership 345,449 -- (66,176) (279,273)(3) -- --
Hill Com II Associates Limited Partnership -- -- -- (2) -- -- --
Hughes Manor Limited Partnership 5,368 -- (5,368)(1) -- -- --
Ivy Family, L.P. 5,542 -- (5,542)(1) -- -- --
Lakeside Housing Limited Partnership 154,117 -- (85,807)(1) -- (68,310) --
Lawrence Road Properties, Ltd. -- -- -- (2) -- -- --
Lexington Estates Ltd. -- -- -- (2) -- -- --
Littleton Avenue Community Village, L.P. -- -- -- (2) -- -- --
Lula Courts Ltd., L.P. -- -- -- (2) -- -- --
Magee Elderly, L.P. 2,680 -- (2,680)(1) -- -- --
Mirador del Toa Limited Partnership -- -- -- (2) -- -- --
Nixa Heights Apartments, L.P. -- -- -- (2) -- -- --
North Hills Farms Limited Partnership 3,343,268 -- 113,661 -- (5,000) 3,451,929
Patton Place Limited Partnership 217,347 -- (42,471) -- -- 174,876
Plantersville Family, L.P. -- -- -- (2) -- -- --
Powelton Gardens Associates 21,138 -- (21,138)(1) -- -- --
Purvis Heights Properties, L.P. 35,474 -- (6,819) -- (1,074) 27,581
Queen Lane Investors -- -- -- (2) -- -- --
Renova Properties, L.P. -- -- -- (2) -- -- --
Santa Juanita Limited Dividend Partnership
L.P. 91,527 -- (53,141) -- -- 38,386
Simpson County Family, L.P. -- -- -- (2) -- -- --
Summers Village Limited Partnership -- -- -- (2) -- -- --
Tchula Courts Apartments, L.P. -- -- -- (2) -- -- --
The Pendleton 28,104 -- (28,104)(1) -- -- --
Trenton Heights Apartments, L.P. -- -- -- (2) -- -- --
Twin Pine Family, L.P. -- -- -- (2) -- -- --
Village Creek Limited Partnership -- -- -- (2) -- -- --
York Park Associates Limited Partnership -- -- -- (2) -- -- --
---------- -------- ---------- --------- --------- ---------
$9,037,289 $192,242 $ (648,182) $(279,273) $(200,343) 8,101,733
========== ======== ========== ========= ========= =========
(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 or additional investment
is made by the Partnership.
(3) The Partnership has adjusted the investment's carrying value in
accordance with applicable accounting guidelines.
(4) The total excludes $26,093 of distributions received classified as
other income from local partnerships.
30
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 2002 is
as follows:
Mortgage Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
----------------------------------------------------------- --------------- ---------------- ----------------- ----------------
1989 Westview Arms Limited Partnership $ 419,628 $ 20,275 $ 736,245 $ (261,699)
2000-2100 Christian Street Associates 2,422,116 -- 31,325 (2,929)
Ann Ell Apartments Associates, Ltd. 2,080,739 199,645 2,838,576 (1,281,124)
Auburn Hills Apartments Limited Partnership 789,506 48,245 1,013,162 (342,278)
Auburn Hills Townhouses Limited Partnership 6,149,970 225,000 12,433,438 (6,332,273)
Batesville Family, L.P. 1,428,095 52,000 1,816,601 (705,028)
Browning Road Phase I, L.P. 825,887 43,000 1,065,616 (531,491)
Bruce Housing Associates, L.P. 1,096,634 16,000 1,460,299 (675,664)
Canton Partners, L.P. 1,441,115 35,000 1,851,581 (866,917)
Carrington Limited Dividend Housing
Association Limited Partnership 3,313,001 200,000 6,576,478 (2,992,681)
Christian Street Associates Limited Partnership 2,242,759 -- 41,753 (12,105)
Cityside Apartments, Phase II, L.P. 7,096,177 87,997 14,242,965 (6,621,958)
Cleveland Square, Ltd. 818,128 20,000 1,187,823 (575,349)
College Avenue Apartments Limited Partnership 591,205 24,600 999,333 465,106
Corrigan Square, Ltd. 1,408,872 63,358 1,890,344 (901,630)
De Queen Villas Limited Partnership 1,145,828 37,000 1,687,412 (547,118)
Dermott Villas Limited Partnership 1,053,235 15,000 1,356,414 (461,337)
Eagle View, Ltd. 400,233 35,000 496,686 (170,160)
Elm Hill Housing Limited Partnership 6,759,070 119,200 12,530,741 (5,183,382)
Eudora Manor Limited Partnership 744,916 16,000 939,977 (316,356)
Harborside Housing Limited Partnership 2,728,409 39,400 6,594,750 (2,683,625)
Hill Com I Associates Limited Partnership 1,165,986 143,404 2,968,,501 (1,297,760)
Hill Com II Associates Limited Partnership 938,031 112,110 2,241,227 (1,006,135)
Hughes Manor Limited Partnership 1,103,878 16,007 1,422,747 (479,278)
Ivy Family, L.P. 778,437 11,000 1,075,733 (501,620)
Lakeside Housing Limited Partnership 7,440,473 50,000 11,938,171 (5,018,636)
Lawrence Road Properties, Ltd. 752,561 50,000 947,764 (358,996)
Lexington Estates Ltd. 700,923 30,750 878,186 (449,699)
Littleton Avenue Community Village, L.P. 4,303,080 512,331 7,213,019 (3,273,788)
Lula Courts Ltd., L.P. 694,485 19,600 896,918 (448,990)
Magee Elderly, L.P. 586,158 30,000 720,498 (285,659)
Mirador del Toa Limited Partnership 1,864,895 105,000 2,341,013 (1,155,272)
Nixa Heights Apartments, L.P. 994,999 31,500 1,314,353 (473,023)
North Hills Farms Limited Partnership 3,296,998 525,000 13,180,670 (7,298,465)
Patton Place Limited Partnership 963,950 56,015 1,765,001 (573,574)
Plantersville Family, L.P. 591,701 12,000 775,241 (373,151)
Powelton Gardens Associates 843,917 29,207 1,972,575 (893,248)
Purvis Heights Properties, L.P. 1,136,111 47,000 1,506,005 (541,865)
Queen Lane Investors 1,532,919 60,301 2,781,754 (1,188,295)
Renova Properties, L.P. 632,811 22,700 814,218 (402,949)
Santa Juanita Limited Dividend Partnership L.P. 1,429,828 228,718 2,430,592 (1,115,681)
Simpson County Family, L.P. 807,422 24,700 1,025,902 (476,380)
Summers Village Limited Partnership 802,017 71,000 969,818 (326,920)
Tchula Courts Apartments, L.P. 729,442 10,000 920,260 (547,662)
The Pendleton 554,957 40,000 1,269,163 (636,288)
Trenton Heights Apartments, L.P. 435,851 29,200 591,572 (248,388)
Twin Pine Family, L.P. 599,282 7,000 809,133 (381,761)
Village Creek Limited Partnership 1,203,327 37,950 1,471,698 (528,563)
York Park Associates Limited Partnership 3,906,632 321,460 5,675,813 (2,720,997)
-------------- -------------- -------------- --------------
$ 85,746,594 $ 3,930,673 $ 143,713,664 $ (64,933,253)
============== ============== ============== ==============
31
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 2001 is
as follows:
Mortgage Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
----------------------------------------------------------- --------------- ---------------- ----------------- ----------------
1989 Westview Arms Limited Partnership $ 444,599 $ 20,275 $ 736,245 $ (244,123)
2000-2100 Christian Street Associates 2,474,296 -- 31,325 (1,790)
Ann Ell Apartments Associates, Ltd. 2,134,064 199,645 2,838,576 (1,176,850)
Auburn Hills Apartments Limited Partnership 792,112 48,245 1,013,162 (317,793)
Auburn Hills Townhouses Limited Partnership 6,236,893 225,000 12,329,691 (5,872,681)
Batesville Family, L.P. 1,431,853 52,000 1,816,601 (656,198)
Browning Road Phase I, L.P. 834,094 43,000 1,061,001 (484,390)
Bruce Housing Associates, L.P. 1,100,431 16,000 1,441,646 (622,106)
Canton Partners, L.P. 1,444,937 35,000 1,851,080 (795,645)
Carrington Limited Dividend Housing
Association Limited Partnership 3,349,699 200,000 6,524,793 (2,744,908)
Christian Street Associates Limited Partnership 2,315,225 -- 36,189 (8,122)
Cityside Apartments, Phase II, L.P. 7,225,344 87,997 14,242,965 (6,104,086)
Cleveland Square, Ltd. 824,701 20,000 1,177,656 (526,757)
College Avenue Apartments Limited Partnership 595,011 24,600 999,333 (424,920)
Corrigan Square, Ltd. 1,420,904 63,358 1,888,580 (831,196)
De Queen Villas Limited Partnership 1,157,536 37,000 1,686,819 (506,224)
Dermott Villas Limited Partnership 1,056,764 15,000 1,353,243 (427,761)
Eagle View, Ltd. 403,931 35,000 496,686 (158,357)
Elm Hill Housing Limited Partnership 6,804,401 119,200 12,530,741 (4,867,960)
Eudora Manor Limited Partnership 747,071 16,000 939,452 (293,191)
Forest Village Housing Partnership 1,483,913 250,000 2,273,454 (1,019,330)
Harborside Housing Limited Partnership 2,924,624 39,400 6,594,750 (2,513,825)
Hill Com I Associates Limited Partnership 1,165,986 143,404 2,926,545 (1,188,026)
Hill Com II Associates Limited Partnership 938,031 112,110 2,183,158 (923,645)
Hughes Manor Limited Partnership 1,107,276 16,007 1,422,747 (444,091)
Ivy Family, L.P. 783,986 11,000 1,067,700 (459,469)
Lakeside Housing Limited Partnership 7,436,465 50,000 11,938,171 (4,722,853)
Lawrence Road Properties, Ltd. 754,841 50,000 943,132 (334,816)
Lexington Estates Ltd. 703,328 30,750 875,930 (416,496)
Littleton Avenue Community Village, L.P. 4,303,080 512,331 7,147,462 (2,976,439)
Lula Courts Ltd., L.P. 696,526 19,600 887,958 (412,391)
Magee Elderly, L.P. 587,752 30,000 716,577 (267,636)
Mirador del Toa Limited Partnership 1,870,929 105,000 2,335,743 (1,069,149)
Nixa Heights Apartments, L.P. 998,461 31,500 1,314,353 (446,199)
North Hills Farms Limited Partnership 3,615,303 525,000 13,048,098 (6,860,190)
Patton Place Limited Partnership 968,270 56,015 1,765,001 (529,287)
Plantersville Family, L.P. 594,079 12,000 762,533 (343,573)
Powelton Gardens Associates 882,8003 29,207 1,960,851 (819,423)
Purvis Heights Properties, L.P. 1,139,573 47,000 1,498,309 (502,897)
Queen Lane Investors 1,543,391 60,301 2,778,023 (1,081,767)
Renova Properties, L.P. 634,691 22,700 810,814 (372,118)
Santa Juanita Limited Dividend Partnership L.P. 1,443,590 228,718 2,429,898 (1,023,187)
Simpson County Family, L.P. 809,563 24,700 1,020,163 (436,417)
Summers Village Limited Partnership 804,429 71,000 969,818 (303,394)
Tchula Courts Apartments, L.P. 731,894 10,000 919,420 (519,582)
The Pendleton 566,748 40,000 1,269,163 (588,707)
Trenton Heights Apartments, L.P. 437,301 29,200 591,572 (233,856)
Twin Pine Family, L.P. 603,819 7,000 797,832 (349,374)
Village Creek Limited Partnership 1,206,875 37,950 1,469,536 (491,147)
York Park Associates Limited Partnership 3,922,544 321,460 5,675,813 (2,515,425)
-------------- -------------- -------------- --------------
$ 88,453,937 $ 4,180,673 $ 145,390,308 $ (61,229,767)
============== ============== ============== ==============
32
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
The summary of property activity during the year ended December 31, 2002
is as follows:
Net change during
Balance as of the year ended Balance as of
December 31, 2001 December 31, 2002 December 31, 2002
----------------- ----------------- -----------------
Land $ 4,180,673 $ (250,000) $ 3,930,673
Buildings and improvements 145,390,308 (1,676,644) 143,713,664
--------------- -------------- ---------------
149,570,981 (1,926,644) 147,644,337
Accumulated depreciation (61,229,767) (3,703,486) (64,933,253)
--------------- -------------- ---------------
$ 88,341,214 $ (5,630,130) $ 82,711,084
=============== ============== ===============
Effective October 1, 1998, in an attempt to avoid potential adverse tax
consequences, the Partnership and the local general partners of 2000-2100
Christian Street Associates ("2000 Christian Street") and Christian Street
Associates Limited Partnership ("Christian Street") agreed to equally
share the funding of operating deficits through June 30, 2000 in the case
of Christian Street and through September 30, 2000 in the case of 2000
Christian Street (the respective "Funding Agreements"). The Funding
Agreements have been extended through September 30, 2003. Under the terms
of the Funding Agreements, the Partnership has advanced $291,150 as of
March 30, 2003, of which $95,933 and $90,646, respectively, was advanced
during the years ended March 30, 2003 and 2002. Such advances have been
recorded as investment in local partnerships and have been offset by
additional equity in loss of investment in local partnerships (see Note
1).
The Partnership advanced $97,000 and $81,027 during the years ended March
30, 2003 and 2002, respectively, to Ann Ell to fund operating deficits.
Cumulative advances as of March 30, 2003 are $439,545. Such advances have
been recorded as investment in local partnerships and have been offset by
additional equity in loss of investment in local partnerships (see Note
1).
The Partnership advanced $16,640 and $11,150 during the years ended March
30, 2003 and 2002, respectively, to College Avenue to fund operating
deficits. Cumulative advances as of March 30, 2003 are $27,790. Such
advances have been recorded as investment in local partnerships and have
been offset by additional equity in loss of investment in local
partnerships (see Note 1).
As a result of increasing deficits and declining occupancy caused by
deteriorating physical conditions, Forest Village Housing Partnership
("Forest Village") filed for protection under Chapter 11 of the federal
Bankruptcy Code in the United States Bankruptcy Court, Western District of
Washington (the "Court") on March 25, 1999. Forest Village filed a plan of
reorganization (the "Plan") which was confirmed by the Court on December
14, 1999. The terms of the Plan called for the Partnership to provide up
to $500,000 (the "Bankruptcy Advance"), all of which was previously
funded, which Forest Village utilized to pay certain obligations including
all first mortgage arrears and certain secured and unsecured creditors and
to make necessary repairs to the complex. The Plan also resulted in
recasting the second mortgage and cumulative arrears over a new 30 year
amortization period that reduced Forest Village's mandatory debt service
by approximately $77,000 per annum. In addition to the Bankruptcy Advance,
the Partnership provided advances of $282,874 to Forest Village. Such
advances, including the Bankruptcy Advance, were recorded as investment in
local partnerships and were offset by additional equity in loss of
investment in local partnerships (see Note 1). Of all such amounts
advanced by the Partnership, $534,500 bore interest at 8.5% and was
repayable out of net cash flow from the operations of the Property. No
interest was recorded by the Partnership.
33
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
5. Investment in Local Partnerships (continued)
In May 2002, Forest Village sold its underlying Property for $2,600,000.
The combined statement of operations of the Local Partnerships for the
year ended December 31, 2002 included herein Note 5 reflects gain on sale
of property of $1,367,286. The sale proceeds were utilized to repay the
outstanding mortgages in full, post a bond for the purpose of avoiding
Low-income Tax Credit recapture and repay the Partnership for advances
discussed above. The Partnership received $846,531 in connection with the
sale and the purchaser is required to continue to operate the Property as
low-income pursuant to Section 42 through the remainder of the Compliance
Period. The accompanying financial statements for the year ended March 30,
2003 include gain on disposal of local partnership interest of $846,531 in
connection with Forest Village.
An affiliate of the General Partner was the temporary local general
partner of Forest Village. Since March 30, 1995, the Partnership has had a
zero investment balance in Forest Village and continued to account for
such investment under the equity method of accounting. The mortgage loans
of Forest Village were nonrecourse to the Partnership. Selected balance
sheet data of Forest Village as of December 31, 2001 includes land and
building of $1,504,124 net of accumulated depreciation of $1,019,330,
total assets of $1,603,066, mortgage loans and accrued interest of
$1,590,394, total liabilities of $2,059,088 (of which $378,101 represents
advances due to the Partnership) and partners' deficit of $456,022.
Selected balance sheet data of Forest Village as of December 31, 2000
includes land and building of $1,609,844 net of accumulated depreciation
of $913,610, total assets of $1,651,768, mortgage loans and accrued
interest of $1,587,033, total liabilities of $2,046,768 (of which $378,101
represents advances due to the Partnership) and partners' deficit of
$395,000. Selected statement of operations data for the period through the
date of sale in 2002 includes rental income of $169,207, gain on sale of
property of $1,296,695, interest and other revenue of $12,952, interest
expense of $126,409, depreciation and amortization expenses of $46,432,
operating and maintenance expenses of $46,260, administrative expenses of
$33,174, utilities expenses of $22,949 and taxes and insurance expenses of
$15,508. Selected statement of operations data for the year ended December
31, 2001 includes rental income of $477,874, interest and other revenue of
$15,285, interest expense of $130,745, depreciation and amortization
expenses of $108,706, operating and maintenance expenses of $119,909,
administrative expenses of $92,836, utilities expenses of $43,154 and
taxes and insurance expenses of $58,144. Selected statement of operations
data for the year ended December 31, 2000 includes rental income of
$309,045, interest and other revenue of $61,519, interest expense of
$134,444, depreciation and amortization expenses of $89,928, operating and
maintenance expenses of $459,170, administrative expenses of $83,243,
utilities expenses of $38,480 and taxes and insurance expenses of $63,769.
6. Transactions with General Partner and Affiliates
For the years ended March 30, 2003, 2002 and 2001, the Partnership paid
and/or incurred the following amounts to the General Partner and/or
affiliates in connection with services provided to the Partnership:
2003 2002 2001
----------------------- ----------------------- ---------------------------
Paid Incurred Paid Incurred Paid Incurred
----------------------- ----------------------- ---------------------------
Management fees (see Note 8) $ 239,516 $293,193 $ 269,516 $299,307 $ 239,516 $299,307
Administration fees (see Note 8) 280,484 293,193 254,826 299,307 242,224 299,307
34
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
6. Transactions with General Partner and Affiliates (continued)
For the years ended December 31, 2002, 2001 and 2000, 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:
2003 2002 2001
----------------------- ----------------------- ---------------------------
Paid Incurred Paid Incurred Paid Incurred
----------------------- ----------------------- ---------------------------
Property management fees $ 177,405 $ 142,315 $ 101,513 $146,756 $117,080 $136,107
Insurance and other services 121,687 106,631 106,694 108,380 90,351 93,208
7. Taxable Loss
A reconciliation of the financial statement net loss of the Partnership
for the years ended March 30, 2003, 2002 and 2000 to the tax return net
loss for the years ended December 31, 2003, 2002 and 2001 is as follows:
2003 2002 2001
Financial statement net loss for the years ended
March 30, 2003, 2002 and 2001 $ (330,117) $(1,396,994) $(3,375,703)
Add (less) net transactions occurring between
January 1, 2000 to March 30, 2000 -- -- (115,420)
January 1, 2001 to March 30, 2001 -- (122,139) 122,139
January 1, 2002 to March 30, 2002 (131,136) 131,136 --
January 1, 2003 to March 30, 2003 91,275 -- --
----------- ----------- -----------
Adjusted financial statement net loss for the years
ended December 31, 2002, 2001 and 2000 (369,978) (1,387,997) (3,368,984)
Adjustment to management and administration fees
pursuant to Internal Revenue Code Section 267 118,815 116,144 96,464
Differences arising from gain on disposal of local
partnership interest (218,968) -- --
Differences arising from equity in loss of investment
in local partnerships (3,655,779) (2,723,735) (1,264,990)
Other income from local partnerships (37,261) (26,021) (958)
Other differences (300) (5,917) (4,921)
----------- ----------- -----------
Tax return net loss for the years ended December 31,
2002, 2001 and 2000 $(4,163,471) $(4,027,526) $(4,543,389)
=========== =========== ===========
35
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
7. Taxable Loss (continued)
The differences between the investment in local partnerships for tax and
financial reporting purposes as of December 31, 2002 and 2001 are as
follows:
2002 2001
------------- -------------
Investment in local partnerships - financial reporting $ 7,467,007 $ 8,076,136
Investment in local partnerships - tax (1,173,029) 2,281,776
------------- -------------
$ 8,640,036 $ 5,794,360
============= =============
Payable to general partner and affiliate in the accompanying balance
sheets represents accrued management and administration fees not
deductible for tax purposes pursuant to Internal Revenue Code Section
267.
8. Commitments and Contingencies
Pursuant to the Partnership Agreement, the Partnership incurs an annual
management fee ("Management Fee") and an annual additional management fee
("Additional Management Fee") payable to the General Partner for its
services in connection with the management of the affairs of the
Partnership. The annual Management Fee is equal to .14% of all proceeds
as of December 31 of any year, invested or committed for investment in
Local Partnerships plus all debts of the Local Partnerships related to
the Properties ("Invested Assets"). The Partnership incurred a Management
Fee of $205,235 for the year ended March 30, 2003 and $209,514 for each
of the two years in the period ended March 30, 3002. The annual
Additional Management Fee is equal to .06% of Invested Assets. The
Partnership incurred an Additional Management Fee of $87,958 for the year
ended March 30, 2003 and $89,793 for each of the two years in the period
ended March 30, 2002. Such amounts are aggregated and reflected under the
caption management fees in the accompanying financial statements. Unpaid
Additional Management Fees in the amount of $818,856 and $765,179 are
included in payable to general partner and affiliate in the accompanying
balance sheets as of March 30, 2003 and 2002, respectively.
In addition, pursuant to the Partnership Agreement, the Partnership is
authorized to contract for administrative services provided to the
Partnership. From the inception of the Partnership through November 23,
1999, such administrative services were provided by ML Fund
Administrators Inc. ("MLFA"), an affiliate of the Selling Agent, pursuant
to an Administrative Services Agreement. MLFA resigned the performance of
its basic services under the Administrative Services Agreement effective
November 23, 1999, with certain transitional services continuing through
April 30, 2000. The General Partner transitioned the administrative
services to an affiliate of the General Partner without any changes to
the terms of the Administrative Services Agreement. Pursuant to such
agreement, the Partnership incurs an annual administration fee
("Administration Fee") and an annual additional administration fee
("Additional Administration Fee") for administrative services provided to
the Partnership. The annual Administration Fee is equal to .14% of
Invested Assets. The Partnership incurred an Administration Fee of
$205,235 for the year ended March 30, 2003 and $209,514 for each of the
two years in the period ended March 30, 2002. The annual Additional
Administration Fee is subject to certain provisions of the Partnership
Agreement and is equal to .06% of Invested Assets. The Partnership
incurred an Additional Administration Fee of $87,958 for the year ended
March 30, 2003 and $89,793 for each of the two years in the period ended
March 30, 2002. Such amounts are aggregated and reflected under the
caption administration fees in the accompanying financial statements.
Unpaid Additional Administration Fees due to MLFA in the amount of
$568,740 and $593,740 are included in accounts payable and accrued
expenses as of March 30, 2003 and 2002, respectively, in the accompanying
balance sheets. Cumulative unpaid Administration Fees and Additional
Administration Fees due to an affiliate of the General Partner in the
cumulative amount of $177,303 and $164,594 are included in due to general
partner and affiliate in the accompanying balance sheets as of March 30,
2003 and 2002, respectively.
36
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
8. Commitments and Contingencies (continued)
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. Since October 1997, the
United States Department of Housing and Urban Development ("HUD") has
issued a series of directives related to project based Section 8
contracts that define owners' notification responsibilities, advise
owners of project based Section 8 properties of what their options are
regarding the renewal of Section 8 contracts, provide guidance and
procedures to owners, management agents, contract administrators and HUD
staff concerning renewal of Section 8 contracts, provide policies and
procedures on setting renewal rents and handling renewal rent adjustments
and provide the requirements and procedures for opting-out of a Section 8
project based contract. 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 before debt service ("NOI") and debt structure of any or all Local
Partnerships currently receiving such subsidy or similar subsidies. Six
Local Partnerships' Section 8 contracts, certain of which cover only
certain rental units, are currently subject to renewal under applicable
HUD guidelines. In addition, two Local Partnerships entered into
restructuring agreements, resulting in both a lower rent subsidy
(resulting in lower NOI) and lower mandatory debt service.
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.
Investments in bonds
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.
The estimated fair value of the Partnership's financial instruments as of
March 30, 2003 and 2002 are disclosed elsewhere in the financial
statements.
37
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2003, 2002 AND 2001
10. Quarterly Financial Information - Unaudited
The following is a summary of results of operations for each of the four
quarters for the years indicated:
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------------- --------------- --------------- -----------------
2003
----
Total revenue $ 73,590 $ 49,195 $ 49,556 $ 42,631
Loss from operations (86,399) (119,392) (132,167) (186,275)
Equity in loss of investment
in local partnerships (196,707) (121,604) (236,303) (97,801)
Gain on disposal of local
partnership interest 732,000 -- 114,531 --
Net earnings (loss) 448,894 (240,996) (253,939) (284,076)
2002
Total revenue $ 76,701 $ 55,762 $ 55,351 $ 56,004
Loss from operations (98,132) (115,716) (124,555) (131,136)
Equity in income (loss)
of investment
in local partnerships (642,513) (333,519) (119,357) 167,934
Net earnings (loss) (740,645) (449,235) (243,912) 36,798
2001
Total revenue $ 63,251 $ 62,284 $ 60,196 $ 53,852
Loss from operations (117,940) (136,096) (121,802) (122,139)
Equity in loss of investment
in local partnerships (346,845) (490,217) (136,241) (1,904,423)
Net loss (464,785) (626,313) (258,043) (2,026,562)
38
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 Credits. The executive officers and
directors of Richman Tax Credits are:
Served in present
Name capacity since (1) Position held
----------------------- ---------------------- ----------------------------
Richard Paul Richman October 26, 1988 Director
David A. Salzman February 1, 2001 President
Neal Ludeke October 26, 1988 Vice President and Treasurer
Gina S. Dodge October 26, 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 55, is the sole Director of Richman Tax Credits. Mr.
Richman is the Chairman and principal stockholder of Richman Group. Mr. Richman
is involved in the syndication, development and management of residential
property. Mr. Richman is also a director of Wilder Richman Resources Corp., an
affiliate of Richman Tax Credits and the general partner of Secured Income L.P.,
a director of Wilder Richman Historic Corporation, an affiliate of Richman Tax
Credits and the general partner of Wilder Richman Historic Properties II, L.P.,
a director of Richman Tax Credit Properties Inc., an affiliate of Richman Tax
Credits and the general partner of the general partner of American Tax Credit
Properties L.P., a director of Richman Housing Credits Inc., an affiliate of
Richman Tax Credits 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 Credits and the manager of American Tax Credit
Trust, a Delaware statutory business trust.
David A. Salzman, age 42, is the President of Richman Tax Credits and is a
minority stockholder and the President of Richman Group. Mr. Salzman is
responsible for the acquisition and development of residential real estate for
syndication for Richman Group.
Neal Ludeke, age 45, is a Vice President and the Treasurer of Richman Tax
Credits. Mr. Ludeke, a Vice President and the 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 the Treasurer of
Richman Asset Management, Inc. ("RAM"), an affiliate of Richman Tax Credits. Mr.
Ludeke's responsibilities in connection with RAM include various partnership
management functions.
Gina S. Dodge, age 47, is the Secretary of Richman Tax Credits. Ms. Dodge is a
Vice President and the Secretary of Richman Group. As the Director of Investor
Services, Ms. Scotti is responsible for communications with investors.
Item 11. Executive Compensation
Registrant has no officers or directors. Registrant does not pay the officers or
director of Richman Tax Credits any remuneration. During the year ended March
30, 2003, Richman Tax Credits did not pay any remuneration to any of its
officers or its director.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Affiliates of Everest Properties, Inc., having the mailing address 155 N. Lake
Avenue, Suite 1000, Pasadena, California 91101, are the owners of 3,533 Units,
representing approximately 6.3% of all such Units. As of May 31, 2003, no person
or entity, other than affiliates of Everest Properties, Inc., was known by
Registrant to be the beneficial owner of more than five percent of the Units.
Richman Tax Credits is wholly owned by Richard Paul Richman.
39
Item 13. Certain Relationships and Related Transactions
The General Partner and certain of its affiliates are entitled to receive
certain 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 net tax loss and Low-income Tax Credits generated by Registrant during the
year ended December 31, 2002 allocated to the General Partner were $41,634 and
$30, respectively. The net tax losses and Low-income Tax Credits generated by
the General Partner during the year ended December 31, 2002 (from the allocation
of Registrant discussed above) and allocated to Richman Tax Credits were $26,395
and $22, 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, 2003.
Item 14. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
a. Within the 90 days prior to the date of this report, Registrant's Chief
Executive Officer and Chief Financial Officer carried out an evaluation of
the effectiveness of Registrant's "disclosure controls and procedures" as
defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and
15(d)-14(c). Based on that evaluation, Registrant's Chief Executive Officer
and Principal Financial Officer have concluded that as of the date of the
evaluation, Registrant's disclosure controls and procedures were adequate
and effective in timely alerting them to material information relating to
Registrant required to be included in Registrant's periodic SEC filings.
Changes in Internal Controls
b. There were no significant changes in Registrant's internal controls or in
other factors that could significantly affect Registrant's internal
controls subsequent to the date of that evaluation.
40
PART IV
Item 15. 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
------- ---------------
10.01 1989 Westview Arms Limited Partnership Exhibit 10.8 to Form 10-Q
Amended and Restated Certificate and Report dated September 29, 1990
Articles of Limited Partnership (File No. 0-18405)
10.02 2000-2100 Christian Street Associates Exhibit 10.8 to Form 10-Q
Amended and Restated Agreement of Report dated December 30, 1989
Limited Partnership (File No. 33-25337)
10.03 Ann Ell Apartments Associates, Ltd. Exhibit 10.1 to Form 10-Q
Second Amended and Restated Agreement of Report dated June 29, 1990
Limited Partnership (File No. 0-18405)
10.04 Auburn Hills Apartments Limited Exhibit 10.2 to Form 10-Q
Partnership Amended and Report dated June 29, 1990
Restated Certificate and Articles (File No. 0-18405)
of Limited Partnership
10.05 Auburn Hills Townhouses Limited Exhibit 10.01 to Form 10-K
Partnership Amended and Restated Report dated March 30, 1990
Agreement of Limited Partnership (File No. 0-18405)
10.06 Batesville Family, L.P. Amended and Exhibit 10.02 to Form 10-K
Restated Agreement of Limited Report dated March 30, 1990
Partnership (File No. 0-18405)
10.07 Batesville Family, L.P. First Exhibit 10.05 to Form 10-K
Amendment to the Amended and Report dated March 30, 1992
Restated Agreement of Limited Partnership (File No 0-18405)
10.08 Amendment No. 1 to the Batesville Family, L.P. Exhibit 10.06 to Form 10-K
Amended and Restated Report dated March 30, 1992
Agreement of Limited Partnership (File No. 0-18405)
10.09 Amendment No. 2 to the Batesville Exhibit 10.1 to Form 10-Q
Family, L.P. Amended and Restated Report dated December 30, 1990
Agreement of Limited Partnership (File No. 0-18405)
41
Incorporated by
Exhibit Reference to
------- --------------
10.10 Batesville Family, L.P. Amendment Exhibit 10.1 to Form 10-Q
No. 3 to Amended and Restated Report dated December 30, 1991
Agreement of Limited Partnership (File No. 0-18405)
10.11 Browning Road Phase I, L.P. Exhibit 10.1 to Form 10-Q
Amended and Restated Agreement Report dated September 29, 1990
of Limited Partnership (File No. 0-18405)
10.12 Browning Road Phase I, L.P. Exhibit 10.2 to Form 10-Q
First Agreement to Amended and Report dated September 29, 1990
Restated Agreement of Limited Partnership (File No. 0-18405)
10.13 Bruce Housing Associates, L.P. Exhibit 10.03 to Form 10-K
Amended and Restated Agreement of Report dated March 30, 1990
Limited Partnership (File No. 0-18405)
10.14 Amendment No. 1 to the Exhibit 10.12 to Form 10-K
Bruce Housing Associates, L.P. Report dated March 30, 1992
Amended and Restated Agreement (File No. 0-18405)
of Limited Partnership
10.15 Bruce Housing Associates, L.P. Exhibit 10.13 to Form 10-K
First Amendment to Amended and Restated Report dated March 30, 1992
Agreement of Limited Partnership (File No. 0-18405)
10.16 Amendment No. 2 to the Bruce Housing Exhibit 10.2 to Form 10-Q
Associates, L.P. Amended and Report dated December 30, 1990
Restated Agreement of Limited Partnership (File No. 0-18405)
10.17 Bruce Housing Associates, L.P. Exhibit 10.2 to Form 10-Q
Amendment No. 3 to the Amended Report dated December 30, 1991
and Restated Agreement of (File No. 0-18405)
Limited Partnership
10.18 Canton Partners, L.P. Exhibit 10.2 to Form 10-Q
Amended and Restated Agreement of Report dated December 30, 1989
Limited Partnership (File No. 33-25337)
10.19 Carrington Limited Dividend Housing Exhibit 10.3 to Form 10-Q
Association Limited Partnership Report dated September 29, 1990
Amended and Restated Agreement (File No. 0-18405)
of Limited Partnership
10.20 Carrington Limited Dividend Exhibit 10.4 to Form 10-Q
Housing Association Limited Partnership Report dated September 29, 1990
Second Amended and Restated (File No. 0-18405)
Agreement of Limited Partnership
10.21 Carrington Limited Dividend Housing Association Exhibit 10.3 to Form 10-Q
Limited Partnership Amendment No. 1 to the Report dated December 30, 1990
Second Amended and Restated Agreement (File No. 0-18405)
of Limited Partnership
10.22 Christian Street Associates Exhibit 10.2 to Form 10-Q
Limited Partnership Second Amended and Report dated September 29, 1989
Restated Agreement and Certificate (File No. 33-25337)
of Limited Partnership
42
Incorporated by
Exhibit Reference to
------- ---------------
10.23 Cityside Apartments, Phase II, L.P. Exhibit 10.1 to Form 10-Q
Amended and Restated Agreement of Report dated September 29, 1989
Limited Partnership (File No. 33-25337)
10.24 Amendment No. 1 to Cityside Exhibit 10.22 to Form 10-K
Apartments, Phase II, L.P. Report dated March 30, 1992
Amended and Restated Agreement of (File No. 0-18405)
Limited Partnership
10.25 Cleveland Square, Ltd. Exhibit 10.07 to Form 10-K
Amended and Restated Agreement of Report dated March 30, 1990
Limited Partnership (File No. 0-18405)
10.26 College Avenue Apartments Exhibit 10.7 to Form 10-Q
Limited Partnership Amended Report dated December 30, 1989
and Restated and Articles of (File No. 33-25337)
Partnership in Commendam
10.27 Corrigan Square, Ltd. Exhibit 10.09 to Form 10-K
Amended and Restated Agreement of Report dated March 30, 1990
Limited Partnership (File No. 0-18405)
10.28 Critical Ventures Housing Exhibit 10.3 to Form 10-Q
Partnership III, A Washington Limited Report dated June 29, 1990
Partnership Amended and Restated (File No. 0-18405)
Agreement of Limited Partnership
10.29 De Queen Villas Limited Partnership Exhibit 10.11 to Form 10-K
Amended and Restated Certificate and Report dated March 30, 1990
Agreement of Limited Partnership (File No. 0-18405)
10.30 Dermott Villas Limited Partnership Exhibit 10.12 to Form 10-K
Amended and Restated Certificate and Report dated March 30, 1990
Agreement of Limited Partnership (File No. 0-18405)
10.31 Eagle View, Ltd. Second Amended and Exhibit 10.4 to Form 10-K
Restated Certificate of Limited Report dated June 29, 1990
Partnership and Limited Partnership Agreement (File No. 0-18405)
10.32 Elm Hill Housing Limited Partnership Exhibit 10.13 to Form 10-K
Second Amended and Restated Report dated March 30, 1990
Agreement and Certificate of Limited Partnership (File No. 0-18405)
10.33 Eudora Manor Limited Partnership Exhibit 10.14 to Form 10-K
Amended and Restated Agreement Report dated March 30, 1990
and Certificate of Limited Partnership (File No. 0-18405)
10.34 Forest Village Housing Partnership Exhibit 10.2 to Form 10-Q
Amendment No. 1 to Amended and Restated Report dated December 30, 1993
Agreement of Limited Partnership (File No. 0-18405)
10.35 Amended and Restated Agreement Exhibit 10.5 to Form 10-Q
of Limited Partnership Report dated September 29, 1990
Harborside Housing Limited Partnership (File No. 0-18405)
43
Incorporated by
Exhibit Reference to
------- ---------------
10.36 Hill Com I Associates Limited Exhibit 10.9 to Form 10-Q
Partnership Amended and Restated Report dated December 30, 1989
Agreement and Certificate of Limited Partnership (File No. 33-25337)
10.37 Hill Com I Associates Exhibit 10.35 to Form 10-K
Limited Partnership First Amendment Report dated March 30, 1992
to Amended and Restated Agreement and (File No. 0-18405)
Certificate of Limited Partnership
10.38 Hill Com II Associates Limited Exhibit 10.10 to Form 10-Q
Partnership Amended and Restated Report dated December 30, 1989
Agreement and Certificate of Limited Partnership (File No. 33-25337)
10.39 Hill Com II Associates Limited Exhibit 10.37 to Form 10-K
Partnership First Amendment to Report dated March 30, 1992
Amended and Restated Agreement and (File No. 0-18405)
Certificate of Limited Partnership
10.40 Hughes Manor Limited Partnership Exhibit 10.17 to Form 10-K
Amended and Restated Certificate Report dated March 30, 1990
and Articles of Limited Partnership (File No. 0-18405)
10.41 Ivy Family, L.P. Amended and Exhibit 10.18 to Form 10-K
Restated Agreement of Limited Report dated March 30, 1990
Partnership (File No. 0-18405)
10.42 Amendment No. 1 to the Ivy Family, Exhibit 10.4 to Form 10-Q
L.P. Amended and Restated Agreement Report dated December 31, 1990
of Limited Partnership (File No. 0-18405)
10.43 Ivy Family, L.P. Amendment No. 3 to the Exhibit 10.3 to Form 10-Q
Amended and Restated Agreement Report dated December 30, 1991
of Limited Partnership (File No. 0-18405)
10.44 Second Amended and Restated Agreement Exhibit 10.6 to Form 10-Q
of Limited Partnership Lakeside Housing Report dated September 29, 1990
Limited Partnership (File No. 0-18405)
10.45 Lawrence Road Properties, Ltd. Exhibit 10.11 to Form 10-Q
Amended and Restated Agreement of Report dated December 30, 1989
Limited Partnership (File No. 33-25337)
10.46 Amendment No. 2 to the Lawrence Road Exhibit 10.5 to Form 10-Q
Properties, Ltd. Amended and Report dated December 31, 1990
Restated Agreement of Limited (File No. 0-18405)
Partnership
10.47 Lawrence Road Properties, Ltd. Exhibit 10.4 to Form 10-Q
Amendment No. 3 to the Amended and Restated Report dated December 30, 1991
Agreement of Limited Partnership (File No. 0-18405)
10.48 Lexington Estates Ltd., A Mississippi Exhibit 10.20 to Form 10-K
Limited Partnership Amended and Restated Report dated March 30, 1990
Agreement of Limited Partnership (File No. 0-18405)
44
Incorporated by
Exhibit Reference to
------- ---------------
10.49 Littleton Avenue Community Exhibit 10.3 to Form 10-Q
Village, L.P. Amended and Report dated September 29, 1989
Restated Agreement of Limited Partnership (File No. 33-25337)
10.50 Lula Courts Ltd., L.P. Exhibit 10.22 to Form 10-K
Amended and Restated Agreement of Report dated March 30, 1990
Limited Partnership (File No. 0-18405)
10.51 Magee Elderly, L.P. Amended Exhibit 10.1 to Form 10-Q
and Restated Agreement of Report dated December 30, 1989
Limited Partnership (File No. 33-25337)
10.52 Mirador del Toa Limited Partnership Exhibit 10.5 to Form 10-Q
(A Delaware Limited Partnership) Report dated June 29, 1990
Amended and Restated Agreement (File No. 0-18405)
of Limited Partnership
10.53 Amendment No. 1 to the Mirador Exhibit 10.40 to Form 10-K
del Toa Limited Partnership Report dated March 30, 1991
(A Delaware Limited Partnership) (File No. 0-18405)
Amended and Restated Agreement
of Limited Partnership
10.54 Nixa Heights Apartments, L.P. Exhibit 10.24 to Form 10-K
Amended and Restated Agreement and Report dated March 30, 1990
Certificate of Limited Partnership (File No. 0-18405)
10.55 North Hills Farms Limited Exhibit 10.6 to Form 10-Q
Partnership Second Amended and Restated Report dated June 29, 1990
Agreement of Limited Partnership (File No. 0-18405)
10.56 First Amendment to the Exhibit 10.54 to Form 10-K
North Hills Farms Limited Partnership Report dated March 30, 1992
Second Amended and Restated Agreement (File No. 0-18405)
of Limited Partnership
10.57 Patton Place Limited Partnership Exhibit 10.25 to Form 10-K
Second Amended and Restated Agreement Report dated March 30, 1990
of Limited Partnership (File No. 0-18405)
10.58 Plantersville Family, L.P. Exhibit 10.26 to Form 10-K
Amended and Restated Agreement of Report dated March 30, 1990
Limited Partnership (File No. 0-18405)
10.59 Powelton Gardens Associates Exhibit 10.6 to Form 10-Q
Amended and Restated Agreement of Report dated December 30, 1989
Limited Partnership (File No. 33-25337)
10.60 Purvis Heights Properties, L.P. Exhibit 10.28 to Form 10-K
Amended and Restated Agreement of Report dated March 30, 1990
Limited Partnership (File No. 0-18405)
45
Incorporated by
Exhibit Reference to
------- ---------------
10.61 Purvis Heights Properties, L.P. Exhibit 10.60 to Form 10-K
First Amendment to Amended and Report dated March 30, 1992
Restated Agreement of Limited Partnership (File No. 0-18405)
10.62 Amendment No. 1 to the Purvis Heights Exhibit 10.61 to Form 10-K
Properties, L.P. Amended and Restated Report dated March 30, 1992
Agreement of Limited Partnership (File No. 0-18405)
10.63 Amendment No. 2 to the Purvis Heights Exhibit 10.6 to Form 10-Q
Properties, L.P. Amended and Report dated December 31, 1990
Restated Agreement of Limited (File No. 0-18405)
Partnership
10.64 Purvis Heights Properties, L.P. Exhibit 10.5 to Form 10-K
Amendment No. 3 to the Report dated December 30, 1991
Amended and Restated (File No. 0-18405)
Agreement of Limited Partnership
10.65 Queen Lane Investors Amended and Exhibit 10.29 to Form 10-K
Restated Agreement and Certificate Report dated March 30, 1990
of Limited Partnership (File No. 0-18405)
10.66 Queen Lane Investors Amendment No. 1 Exhibit 10.7 to Form 10-Q
to Amended and Restated Agreement Report dated December 31, 1990
and Certificate of Limited Partnership (File No. 0-18405)
10.67 Renova Properties, L.P. Amended Exhibit 10.3 to Form 10-Q
and Restated Agreement of Report dated December 30, 1989
Limited Partnership (File No. 33-25337)
10.68 Santa Juanita Limited Dividend Exhibit 10.5 to Form 10-Q
Partnership Amended and Restated Report dated December 30, 1989
Agreement of Limited Partnership (File No. 33-25337)
10.69 Second Amendment of Limited Partnership Exhibit 10.68 to Form 10-K
of Santa Juanita Limited Dividend Partnership Report dated March 30, 1994
and Amendment No. 2 to the Amended and (File No. 0-18405)
Restated Agreement of Limited Partnership
10.70 Amendment No. 1 to Santa Juanita Limited Exhibit 10.1 to Form 10-Q
Dividend Partnership L.P. Amended and Report dated September 29, 1995
Restated Agreement of Limited Partnership (File No. 0-18405)
(Replaces in its entirety Exhibit 10.69 hereof.)
10.71 Amendment No. 2 to Santa Juanita Limited Exhibit 10.2 to Form 10-Q
Dividend Partnership L.P. Amended and Report dated September 29, 1995
Restated Agreement of Limited Partnership (File No. 0-18405)
10.72 Simpson County Family, L.P. Exhibit 10.4 to Form 10-Q
Amended and Restated Agreement of Report dated December 30, 1989
Limited Partnership (File No. 33-25337)
46
Incorporated by
Exhibit Reference to
------- ---------------
10.73 Summers Village Limited Partnership Exhibit 10.7 to Form 10-Q
Amended and Restated Certificate Report dated June 29, 1990
of Limited Partnership and (File No. 0-18405)
Limited Partnership Agreement
10.74 Tchula Courts Apartments, L.P. Exhibit 10.33 to Form 10-K
Amended and Restated Agreement and Report dated March 30, 1990
Certificate of Limited Partnership (File No. 0-18405)
10.75 The Pendleton (A Louisiana Partnership Exhibit 10.7 to Form 10-Q
in Commendam) Third Amended and Report dated September 29, 1990
Restated Articles of Partnership (File No. 0-18405)
10.76 Trenton Heights Apartments, L.P. Exhibit 10.34 to Form 10-K
Amended and Restated Agreement and Report dated March 30, 1990
Certificate of Limited Partnership (File No. 0-18405)
10.77 Twin Pine Family, L.P. Amended and Exhibit 10.35 to Form 10-K
Restated Agreement of Limited Report dated March 30, 1990
Partnership (File No. 0-18405)
10.78 Village Creek Limited Partnership Exhibit 10.8 to Form 10-Q
Amended and Restated Certificate and Report dated June 29, 1990
Articles of Limited Partnership (File No. 0-18405)
10.79 York Park Associates Limited Partnership Exhibit 10.1 to Form 10-Q
Amended and Restated Agreement of Report dated June 29, 1989
Limited Partnership (File No. 33-25337)
10.80 Non-Negotiable Purchase Money Exhibit 10.8 to Form 10-Q
Promissory Notes dated as of Report dated December 30, 1990
January 19, 1990 (File No. 0-18405)
10.81 Non-Negotiable Purchase Money Exhibit 10.9 to Form 10-Q
Promissory Notes dated as of May 1, 1990 Report dated December 30, 1990
(File No. 0-18405)
10.82 Assignment and Assumption Agreements Exhibit 10.63 to Form 10-K
dated as of June 28, 1991 on the Report dated March 30, 1991
Non-Negotiable Purchase Money (File No. 0-18405)
Promissory Notes dated as of January 19, 1990
10.83 Assignment and Assumption Agreements Exhibit 10.64 to Form 10-K
dated as of June 28, 1991 on the Report dated March 30, 1991
Non-Negotiable Purchase Money (File No. 0-18405)
Promissory Notes dated as of May 1, 1990
10.84 Promissory Note and Loan Agreement Exhibit 10.1 to Form 10-Q
dated November 12, 1993 Report dated December 30, 1993
(File No. 0-18405)
47
Incorporated by
Exhibit Reference to
------- ------------
28.1 Pages 14 through 33, 47 through 70 and 86 Exhibit 28.1 to Form 10-K
through 88 of prospectus dated May 10, 1989 Report dated March 30, 1990
filed pursuant to Rule 424(b)(3) under the (File No. 0-18405)
Securities Act of 1933
28.2 Supplement No. 1 dated Exhibit 28.2 to Form 10-K
July 25, 1989 of Prospectus Report dated March 30, 1991
(File No. 0-18405)
28.3 Supplement No. 2 dated Exhibit 28.3 to Form 10-K
September 18, 1989 of Prospectus Report dated March 30, 1991
(File No. 0-18405)
99.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 - David Salzman - Chief Executive Officer of
Richman Tax Credits Inc., general partner of Richman Tax
Credit Properties II L.P., General Partner of the
Company.
99.2 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 - Neal Ludeke - Chief Financial Officer of
Richman Tax Credits Inc., general partner of Richman Tax
Credit Properties II L.P., General Partner of the
Company.
(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.
48
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 II L.P.
(a Delaware limited partnership)
By: Richman Tax Credit Properties II L.P.,
General Partner
by: Richman Tax Credits Inc.,
general partner
Dated: June 30, 2003 /s/ David Salzman
------------- -----------------------------------
by: David Salzman
Chief Executive Officer
Dated: June 30, 2003 /s/ Neal Ludeke
------------- -----------------------------------
by: Neal Ludeke
Chief Financial Officer
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/ David Salzman Chief Executive Officer June 30, 2003
- ------------------------------ of the general -------------
(David Salzman) partner of the
General Partner
/s/ Neal Ludeke Chief Financial Officer June 30, 2003
- ------------------------------ of the general -------------
(Neal Ludeke) partner of the
General Partner
49
CERTIFICATIONS
I, David Salzman, certify that:
1. I have reviewed this annual report on Form 10-K of American Tax Credit
Properties II L.P.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report ("the Evaluation Date"); and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: June 30, 2003 /s/ David Salzman
---------------------------------------
by: David Salzman
Chief Executive Officer of Richman
Tax Credits Inc., general partner of
Richman Tax Credit Properties II L.P.,
General Partner of the Registrant
50
I, Neal Ludeke, certify that:
1. I have reviewed this annual report on Form 10-K of American Tax Credit
Properties II L.P.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report ("the Evaluation Date"); and
(c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: June 30, 2003 /s/ Neal Ludeke
----------------------------------------
by: Neal Ludeke
Chief Financial Officer of Richman
Tax Credits Inc., general partner
of Richman Tax Credit Properties II
L.P., General Partner of the Registrant
51