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, 2004
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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
---------------------------
(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 organization) (I.R.S. Employer
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
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Securities registered pursuant to Section 12(b) of the Act:
None None
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(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)
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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, Job Creation and Worker Assistance Act of 2002 and Jobs and Growth
Tax Relief Reconciliation Act of 2003 (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. In May 2003, Hill Com I Associates Limited Partnership sold 13 of
its 67 dwelling units under the threat of eminent domain by the Urban Renewal
Development Agency of Philadelphia, Pennsylvania. The sale occurred without
Registrant's knowledge and has resulted in the recapture of Low-income Tax
Credits and interest under Section 42 of the Internal Revenue Code in the amount
of approximately $1.53 per Unit for those holding Units as of such date (see
Part II, Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations herein).
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
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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 entered into restructuring agreements in 2001, 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
Name of apartment complex of rental Capital as of December 31, Subsidy
Apartment complex location units contribution 2003 (see footnotes)
- -------------------------- -------- ------------ ----------------- --------------
1989 Westview Arms Limited Partnership
Westview Arms
Dumas, Arkansas 60 $ 130,796 $ 392,851 (1a&f)
2000-2100 Christian Street Associates
Christian Street Apartments II
Philadelphia, Pennsylvania 57 1,599,658 2,366,100 (1b&e)
Ann Ell Apartments Associates, Ltd.
Ann Ell Apartments
Miami Beach, Florida 54 1,075,204 2,033,247 (1b)
Auburn Hills Apartments Limited
Partnership
Auburn Hills Apartments
Cabot, Arkansas 24 201,649 786,663 (1b)
Auburn Hills Townhouses Limited
Partnership
Auburn Hills Townhouse Apartments
Pontiac, Michigan 250 3,206,110 6,055,128 (1a&f)
Batesville Family, L.P.
Westridge Apartments
Batesville, Mississippi 48 160,741(2) 1,423,964 (1b)
Browning Road Phase I, L.P.
Browning Road Apartments, Phase I
Greenwood, Mississippi 60 197,808 816,977 (1b)
Bruce Housing Associates, L.P.
Bruce Family Apartments
Bruce, Mississippi 40 122,814(2) 1,092,492 (1b&c)
Canton Partners, L.P.
Pecan Village
Canton, Mississippi 48 380,199 1,436,914 (1b)
Carrington Limited Dividend Housing
Association Limited Partnership
Carrington Place
Farmington Hills, Michigan 100 1,058,976(2) 3,272,459 (1d)
Christian Street Associates Limited
Partnership
Christian Street Apartments
Philadelphia, Pennsylvania 72 2,548,836 2,165,038 (1b&e)
Cityside Apartments, Phase II, L.P.
Cityside Apartments Phase II
Trenton, New Jersey 107 6,592,092 6,952,776 (1a&b)
Cleveland Square, Ltd.
Cleveland Square Apartments
Cleveland, Texas 48 223,327 810,332 (1b)
4
Item 2. Properties (continued)
Mortgage
Name of Local Partnership Number loans payable
Name of apartment complex of rental Capital as of December 31, Subsidy
Apartment complex location units contribution 2003 (see footnotes)
- -------------------------- -------- ------------ ----------------- --------------
College Avenue Apartments Limited
Partnership
College Avenue Apartments
Natchitoches, Louisiana 41 $ 396,905 $ 587,000 (1a)
Corrigan Square, Ltd.
Corrigan Square Apartments
Corrigan, Texas 96 372,833 1,395,775 (1b)
De Queen Villas Limited Partnership
De Queen Villas Apartments
De Queen, Arkansas 37 296,051 1,345,352 (1b)
Dermott Villas Limited Partnership
Dermott Villas
Dermott, Arkansas 32 272,802 1,049,384 (1b)
Eagle View, Ltd.
Eagle View Apartments
Clearfield, Kentucky 14 102,850 396,204 (1b)
Elm Hill Housing Limited Partnership
Elm Hill Housing
Boston, Massachusetts 142 5,712,391 6,708,868 (1a)
Eudora Manor Limited Partnership
Eudora Manor Apartments
Eudora, Arkansas 24 188,838 742,553 (1b)
Forest Village Housing Partnership
Forest Village Apartments
Auburn, Washington 89 401,931 -- (3)
Harborside Housing Limited Partnership
Cal-View Apartments
East Chicago, Indiana 255 1,789,434 2,897,754 (1a,b&f)
Hill Com I Associates Limited
Partnership
Hill Com I Apartments
Pittsburgh, Pennsylvania 67 887,635 1,165,986 (1a&g)
Hill Com II Associates Limited
Partnership
Hill Com II Apartments
Pittsburgh, Pennsylvania 48 683,172 938,031 (1a&g)
Hughes Manor Limited Partnership
Hughes Manor
Hughes, Arkansas 32 287,261 1,100,161 (1b)
Ivy Family, L.P.
Ivy Apartments
Louisville, Mississippi 32 90,878(2) 772,383 (1b&c)
5
Item 2. Properties (continued)
Mortgage
Name of Local Partnership Number loans payable
Name of apartment complex of rental Capital as of December 31, Subsidy
Apartment complex location units contribution 2003 (see footnotes)
- -------------------------- -------- ------------ ----------------- --------------
Lakeside Housing Limited Partnership
Lakeside Garden Apartments
East Chicago, Indiana 312 $ 3,147,863 $ 7,272,097 (1a,b&f)
Lawrence Road Properties, Ltd.
Hillcrest Apartments
Newton, Mississippi 24 83,013 (2) 750,067 (1b&c)
Lexington Estates Ltd.,
A Mississippi Limited Partnership
Lexington Estates
Lexington, Mississippi 24 176,225 698,292 (1b)
Littleton Avenue Community Village, L.P.
Littleton Avenue Community Village
Newark, New Jersey 102 3,087,138 4,303,080 (1b)
Lula Courts Ltd., L.P.
Lula Courts
Lula, Mississippi 24 176,645 692,242 (1b)
Magee Elderly, L.P.
Eastgate Manor
Magee, Mississippi 24 150,952 584,408 (1b&c)
Mirador del Toa Limited Partnership
Mirador del Toa Apartments
Toa Alta, Puerto Rico 48 186,717(2) 1,857,814 (1b&c)
Nixa Heights Apartments, L.P.
Nixa Heights Apartments
Nixa, Missouri 40 250,030 991,220 (1b)
North Hills Farms Limited Partnership
North Hills Farms Apartments
Pontiac, Michigan 525 3,443,762 2,955,316 (1a&f)
Patton Place Limited Partnership
Patton Street Apartments
Springfield, Massachusetts 24 794,044 959,630 (1a&f)
Plantersville Family, L.P.
Regal Ridge Apartments
Plantersville, Mississippi 24 152,268 589,107 (1b)
Powelton Gardens Associates
Powelton Gardens Apartments
West Philadelphia, Pennsylvania 25 782,958 802,440 (1a&e)
Purvis Heights Properties, L.P.
Pineview Apartments
Purvis, Mississippi 40 128,419 (2) 1,135,775 (1b)
6
Item 2. Properties (continued)
Mortgage
Name of Local Partnership Number loans payable
Name of apartment complex of rental Capital as of December 31, Subsidy
Apartment complex location units contribution 2003 (see footnotes)
- -------------------------- -------- ------------ ----------------- --------------
Queen Lane Investors
Queen's Row
Philadelphia, Pennsylvania 29 $ 603,552 (2) $1,524,745 (1b&e)
Renova Properties, L.P.
Hymon Lucas Manor
Renova, Mississippi 24 165,582 630,745 (1b&c)
Santa Juanita Limited Dividend
Partnership L.P.
Santa Juanita Apartments
Bayamon, Puerto Rico 45 584,117(2) 1,414,998 (1a&b)
Simpson County Family, L.P.
Azalea Apartments
Magee, Mississippi 24 211,823 805,068 (1c)
Summers Village Limited Partnership
Summers Village Apartments
Summersville, West Virginia 24 194,674 799,378 (1b)
Tchula Courts Apartments, L.P.
Tchula Courts Apartments
Tchula, Mississippi 24 150,984 726,736 (1b)
The Pendleton (A Louisiana
Partnership in Commendam)
The Pendleton
Shreveport, Louisiana 36 444,321 543,022 (1a&b)
Trenton Heights Apartments, L.P.
Trenton Heights Apartments
Trenton, Mississippi 40 100,434 434,265 (1b)
Twin Pine Family, L.P.
Twin Pine Apartments
Louisville, Mississippi 24 163,172 594,380 (1b)
Village Creek Limited Partnership
Village Creek Apartments
Arkadelphia, Arkansas 40 288,216 1,199,427 (1b)
York Park Associates Limited Partnership
York Park Apartments
Dundalk, Maryland 80 2,146,200 3,888,968 (1a)
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$ 46,594,300 $ 84,857,612
============= ============
(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) The Local Partnership's debt structure includes a principal or
interest payment subsidy.
(c) 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.
7
Item 2. Properties (continued)
(d) 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.
(e) The City of Philadelphia Housing Authority allows qualified
low-income tenants to receive rental certificates.
(f) The Local Partnership's Section 8 contracts, certain of which
cover only certain rental units, are subject to renewal under
applicable HUD guidelines.
(g) The Local Partnership entered into a restructuring agreement of
its Section 8 contracts and debt structure under applicable HUD
guidelines in 2001.
(2) Reflects amount attributable to Registrant only.
(3) The underlying Property was sold during the year ended March 30, 2003.
The Local Partnership has no underlying assets and liabilities and is
not included in the combined balance sheets of the Local Partnerships
as of December 31, 2003 and 2002 in Note 5 to the financial
statements.
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, 2004 was
approximately 2,917, 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, 2004 and 2003.
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, net of
recaptured Low-income Tax Credits, allocated from inception through December 31,
2003 are as follows:
Historic Net
Rehabilitation Low-income
Tax Credits Tax Credits
----------- -----------
Tax year ended December 31, 2003 $ -- $ (1.48)
Tax year ended December 31, 2002 -- .05
Cumulative totals $ 6.56 $ 1,492.79
Registrant generated total Tax Credits from investments in Local Partnerships of
approximately $1,499 per Unit through December 31, 2003, net of circumstances
which have given rise to, and 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,
-------------------------------------------------------------------------
2004 2003 2002 2001 2000
------------- ------------ ------------ ------------ ------------
Interest and other revenue $ 178,493 $ 214,972 $ 243,818 $ 239,583 $ 272,075
============= ============ ============ ============ ============
Equity in loss of investment
in local partnerships $ (2,515,371) $ (652,415) $ (927,455) $ (2,877,726) $ (1,598,531)
============= ============ ============ ============ ============
Gain on disposal of local
partnership interest $ -- $ 846,531 $ -- $ -- $ --
============= ============ ============ ============ ============
Net loss $ (3,139,682) $ (330,117) $ (1,396,994) $ (3,375,703) $ (2,048,082)
============= ============ ============ ============ ============
Net loss per unit of limited
partnership interest $ (55.76) $ (5.86) $ (24.81) $ (59.95) $ (36.74)
============= ============ ============ ============ ============
As of March 30,
--------------------------------------------------------------------------
2004 2003 2002 2001 2000
------------- ------------ ------------ ------------ ------------
Total assets $ 7,887,404 $ 10,852,760 $ 10,952,650 $ 12,318,749 $ 15,407,107
============= ============ ============ ============ ============
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, 2004, Registrant has cash and cash equivalents and investments
in bonds totaling $2,645,281 which is available for operating expenses of
Registrant and circumstances that may arise in connection with the Local
Partnerships. As of March 30, 2004, Registrant's investments in bonds represent
corporate bonds of $1,753,715, U.S. Treasury bonds of $790,528 and U.S.
government and agency bonds of $869 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, 2004, 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 decreased, in the aggregate, by
approximately $644,000 during the year ended March 30, 2004 (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, 2004, 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, 2003 of $2,515,371 (including an adjustment to
Registrant's carrying value of its investment in one Local Partnership of
$1,199,055 in accordance with applicable accounting guidelines) (see discussion
below under Results of Operations) and cash distributions received from Local
Partnerships of $12,500 (exclusive of distributions from Local Partnerships of
$23,735 classified as other income), partially offset by advances to Local
Partnerships of $206,810 (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, 2004 include
cumulative deferred administration fees and management fees of $1,791,042.
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 book value of
Registrant's investment in each Local Partnership (the "Local Partnership
Carrying Value") may be reduced if 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, 2004, 2003 and 2002
resulted in net losses of $3,139,682, $330,117 and $1,396,994, respectively. The
increase in net loss from fiscal 2003 to fiscal 2004 is primarily attributable
to (i) gain on disposal of local partnership interest of approximately $847,000
in connection with Forest Village Housing Partnership ("Forest Village")
recognized in fiscal 2003, (ii) an increase in equity in loss of investment in
local partnerships of approximately $1,863,000, (iii) a decrease in interest
revenue of approximately $25,000 resulting from the maturity of certain
investments in bonds at higher than current interest rates and a reduction in
money market rates and (iv) an increase in professional fees of approximately
$43,000, due in part to professional fees incurred in connection with Forest
Village. 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. 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 2004
and 2002 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 $4,690,000 for the year ended
December 31, 2003 includes depreciation and amortization expense of
approximately $4,821,000 and interest on non-mandatory debt of approximately
$810,000 and does not include principal payments on permanent mortgages of
approximately $1,427,000. 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 results of operations of
the Local Partnerships for the year ended December 31, 2003 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 Year 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 in
2001, 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, 2003, revenue from
operations of the Local Partnerships has generally been sufficient to cover
operating expenses and Mandatory Debt Service. Most 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.
On April 30, 2003, Hill Com I Associates Limited Partnership ("Hill Com I") sold
13 of its 67 dwelling units under the threat of eminent domain by the Urban
Renewal Development Agency of Philadelphia, Pennsylvania. The sale occurred
without Registrant's knowledge and resulted in the recapture of Low-income Tax
Credits and interest under Section 42 of the Internal Revenue Code in the amount
of approximately $1.53 per Unit for those holding Units as of such date.
Registrant's investment balance in Hill Com I, after cumulative equity losses,
became zero during the year ended March 30, 2002. Hill Com I generated
approximately $2.9 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 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, 2003, Hill Com II incurred an operating deficit of
approximately $68,000, which includes property management fees of approximately
$22,000. The Local General Partner represents that payments on the mortgage and
real estate taxes are current. Registrant's investment balance in Hill Com II,
after cumulative equity losses, became zero during the year ended March 30,
2001. 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.
12
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
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 December 31,
2004. 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 incurred a combined
operating deficit of approximately $250,000, excluding accrued management fees
of approximately $40,000, for the year ended December 31, 2003. Under the terms
of the Funding Agreements, Registrant has advanced $423,692 as of March 30,
2004, of which $132,542 was advanced during the year then ended. The Local
General Partners represent that 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, 2003, Ann Ell Apartments Associates, Ltd.
("Ann Ell") incurred an operating deficit of approximately $51,000. Registrant
has made cumulative advances to Ann Ell of $469,545 as of March 30, 2004, of
which $30,000 was advanced during the year then ended. The Local General Partner
represents that 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
incurred an operating deficit of approximately $71,000 for the year ended
December 31, 2003, which includes property management fees of approximately
$13,000. Registrant has made cumulative advances to College Avenue of $72,058 as
of March 30, 2004, of which $44,268 was advanced during the year then ended. The
Local General Partner represents that payments on the real estate taxes are
current. College Avenue has a Section 8 contract that expired in January 2004
and HUD declined the renewal of the contract. As a result of recent
unsatisfactory inspection results, the Fort Worth, Texas office of HUD (the
"Fort Worth Office") notified the Shreveport, Louisiana office of HUD (the
"Shreveport Office") that the Fort Worth Office intended to accelerate College
Avenue's mortgage. Registrant has advanced additional funds to ensure that
payments on the mortgage are current and that the repairs required as a result
of the latest inspection could be completed. The Shreveport Office has requested
that the Fort Worth Office schedule a follow-up inspection. The Local General
Partner is attempting to arrange a meeting with HUD in order to resolve the
outstanding issues. 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 the local general partners to fund all operating deficits
through the Compliance Period and to cause the management agent to defer
property management fees in order to avoid a default under the mortgage. During
the year ended December 31, 2003, Powelton incurred an operating deficit of
approximately $18,000, which includes property management fees of approximately
$7,000. Powelton remains 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 Queen Lane Investors ("Queen Lane")
require the management agent to defer property management fees in order to avoid
a default under the mortgage. During the year ended December 31, 2003, Queen
Lane incurred an operating deficit of approximately $60,000, which includes
property management fees of approximately $13,000. The Local General Partner
represents that payments on the mortgage and real estate taxes are current.
Registrant's investment balance in Queen Lane, after cumulative equity losses,
became zero during the year ended March 30, 2001. Queen Lane generated
approximately $1.9 per Unit per year to the limited partners upon the expiration
of its Low-income Tax Credit allocation in 2001.
On November 3, 2003, the Local General Partners of Elm Hill Housing Limited
Partnership ("Elm Hill") entered into a Purchase and Sale agreement whereby the
Property was expected to be sold on March 1, 2004. The original agreement has
been renegotiated and the Local General Partners anticipate executing an Amended
and Restated Purchase and Sale Agreement with a new closing date scheduled for
January 2005. The estimated proceeds to be received by Registrant in connection
with the sale is approximately $800,000. The agreement is subject to various
terms and conditions and is subject to termination; accordingly, there is no
assurance that such sale will ultimately take place or that the estimated
proceeds will be realized.
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.
Contractual Obligations
- -----------------------
As of March 30, 2004, Registrant has the following contractual obligations
(payments due by period):
Total < 1 year 1 - 3 years 3 - 5 years > 5 years
---------- -------- ----------- ----------- ---------
Other Long Term Liabilities:
Accounts Payable and
Accrued Expenses (1) $ 543,740 $ 25,000 $ 518,740 $ -- $ --
Payable to General Partner
and Affiliates (2) 1,247,302 60,000 1,187,302 -- --
---------- ---------- ---------- -------------- -------------
$1,791,042 $ 85,000 $1,706,042 $ -- $ --
========== ========== ========== ============== =============
(1) Represents Administration Fees payable to a third-party former service
provider. Of such amount, $25,000 is due in fiscal 2005 and the remainder
is payable from available reserves or sale or refinancing proceeds from the
Local Partnerships to the extent such amounts are available.
(2) Represents Administration and Management Fees payable to an affiliate of
the General Partner. Of such amount, $60,000 is due in fiscal 2005 and the
remainder is payable from available reserves or sale or refinancing
proceeds from the Local Partnerships to the extent such amounts are
available.
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.
14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Recent Accounting Pronouncements
- --------------------------------
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable immediately for variable interest entities created after
January 31, 2003. For variable interest entities created before February 1,
2003, the provisions of FIN 46 are applicable no later than December 15, 2003.
The Registrant has not created any variable interest entities after January 31,
2003. In December 2003, the FASB redeliberated certain proposed modifications
and revised FIN 46 ("FIN 46 (R)"). The revised provisions are applicable no
later than the first reporting period ending after March 15, 2004. The adoption
of FIN 46 (R) is not expected to have a material impact on the Registrant's
financial reporting and disclosure.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
changes the accounting for certain financial instruments that, under previous
guidance, could be classified as equity or "mezzanine" equity, by now requiring
those instruments to be classified as liabilities (or assets in some
circumstances) in the balance sheets. Further, SFAS No. 150 requires disclosure
regarding the terms of those instruments and settlement alternatives. The
guidance in SFAS No. 150 generally was effective for all financial instruments
entered into or modified after May 31, 2003, and was otherwise effective at the
beginning of the first interim period beginning after June 15, 2003. The
Registrant has evaluated SFAS No. 150 and determined that it does not have an
impact on the Registrant's financial reporting and disclosures.
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.
15
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 8. Financial Statements and Supplementary Data
Table of Contents
Page
----
Report of Independent Registered Public Accounting Firm......................17
Balance Sheets...............................................................18
Statements of Operations.....................................................19
Statements of Changes in Partners' Equity (Deficit)..........................20
Statements of Cash Flows.....................................................21
Notes to Financial Statements................................................23
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.
16
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004 and 2003, and the related statements of
operations, partners' equity (deficit) and cash flows for each of the three
years in the period ended March 30, 2004. 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. 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, 2004 and 2003, 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, 2004, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Reznick Fedder and Silverman
Bethesda, Maryland
June 14, 2004
17
AMERICAN TAX CREDIT PROPERTIES II L.P.
BALANCE SHEETS
MARCH 30, 2004 AND 2003
Notes 2004 2003
----- ------------ ------------
ASSETS
Cash and cash equivalents 3,9 $ 100,169 $ 775,452
Investments in bonds 4,9 2,545,112 2,513,779
Investment in local partnerships 5,8 5,210,954 7,532,015
Interest receivable 9 31,169 31,514
------------ ------------
$ 7,887,404 $ 10,852,760
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses 8 $ 656,773 $ 726,724
Payable to general partner and affiliates 6,8 1,247,302 996,159
Other liabilities 13,600 20,600
------------ ------------
1,917,675 1,743,483
------------ ------------
Commitments and contingencies 5,8
Partners' equity (deficit) 2,4
General partner (434,848) (403,451)
Limited partners (55,746 units of limited
partnership
interest outstanding) 6,227,206 9,335,491
Accumulated other comprehensive income, net 177,371 177,237
------------ ------------
5,969,729 9,109,277
------------ ------------
$ 7,887,404 $ 10,852,760
============ ============
See Notes to Financial Statements.
18
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 30, 2004, 2003 AND 2002
Notes 2004 2003 2002
----- ----------- ----------- ------------
REVENUE
Interest $ 154,758 $ 179,393 $ 217,725
Other income from local partnerships 23,735 35,579 26,093
----------- ----------- -----------
TOTAL REVENUE 178,493 214,972 243,818
----------- ----------- -----------
EXPENSES
Administration fees 8 294,416 293,193 299,307
Management fees 6,8 294,416 293,193 299,307
Professional fees 98,024 54,963 80,427
State of New Jersey filing fee 69,872 95,000
Printing, postage and other 46,076 2,856 34,316
----------- ----------- -----------
TOTAL EXPENSES 802,804 739,205 713,357
----------- ----------- -----------
Loss from operations (624,311) (524,233) (469,539)
Equity in loss of investment
in local partnerships 5 (2,515,371) (652,415) (927,455)
----------- ----------- -----------
Loss prior to gain on disposal
of local Partnership interest (3,139,682) (1,176,648) (1,396,994)
Gain on disposal of local
partnership Interest 5 846,531
----------- ----------- -----------
NET LOSS (3,139,682) (330,117) (1,396,994)
Other comprehensive income, net 4 134 142,557 41
----------- ----------- -----------
COMPREHENSIVE LOSS $(3,139,548) $ (187,560) $(1,396,953)
=========== =========== ===========
NET LOSS ATTRIBUTABLE TO 2
General partner $ (31,397) $ (3,301) $ (13,970)
Limited partners (3,108,285) (326,816) (1,383,024)
----------- ----------- -----------
$(3,139,682) $ (330,117) $(1,396,994)
=========== =========== ===========
NET LOSS per unit of limited
partnership interest
(55,746 units of limited
partnership interest) $ (55.76) $ (5.86) $ (24.81)
=========== =========== ===========
See Notes to Financial Statements.
19
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 30, 2004, 2003 AND 2002
Accumulated
Other
Comprehensive
General Limited Income (Loss),
Partner Partners Net Total
------------- ------------ ------------- ------------
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
Net loss (31,397) (3,108,285) (3,139,682)
Other comprehensive income, net 134 134
------------ ------------ ------------ ------------
Partners' equity (deficit),
March 30, 2004 $ (434,848) $ 6,227,206 $ 177,371 $ 5,969,729
============ ============ ============ ============
See Notes to Financial Statements.
20
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 2004, 2003 AND 2002
2004 2003 2002
----------- ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 119,744 $ 160,703 $ 177,040
Cash used for local partnerships for deferred
expenses (7,000) (7,000) (7,000)
Cash paid for
administration fees (205,552) (305,484) (304,826)
management fees (157,137) (239,516) (269,516)
professional fees (93,693) (68,149) (62,215)
State of New Jersey filing fee (123,654)
printing, postage and other expenses (41,576) (31,386) (38,946)
----------- ----------- -----------
Net cash used in operating activities (508,868) (490,832) (505,463)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash distributions from local partnerships 36,235 1,008,986 226,436
Maturity/redemption and sale of bonds 4,160 456,351 400,573
Advances to local partnerships (206,810) (209,573) (192,242)
----------- ----------- -----------
Net cash provided by (used in) investing
activities (166,415) 1,255,764 434,767
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents (675,283) 764,932 (70,696)
Cash and cash equivalents at beginning of year 775,452 10,520 81,216
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 100,169 $ 775,452 $ 10,520
=========== =========== ===========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds, net $ 134 $ 142,557 $ 41
=========== =========== ===========
- --------------------------------------------------------------------------------
See reconciliation of net loss to net cash used in operating activities on page
22.
See Notes to Financial Statements.
21
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS - (Continued)
YEARS ENDED MARCH 30, 2004, 2003 AND 2002
2004 2003 2002
------------ ----------- -----------
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
Net loss $(3,139,682) $ (330,117) $(1,396,994)
Adjustments to reconcile net loss to net
cash used in operating activities
Equity in loss of investment in local
partnerships 2,515,371 652,415 927,455
Distributions from local partnerships
classified as other income (23,735) (35,579) (26,093)
Gain on disposal of local partnership
interest (846,531)
Gain on redemption/sale of bonds (4,918)
Amortization of net premium on
investments in bonds 3,723 4,354 5,817
Accretion of zero coupon bonds (39,082) (39,082) (39,082)
Decrease (increase) in interest
receivable 345 16,038 (2,502)
Increase (decrease) in accounts payable
and accrued expenses (69,951) 28,284 (36,418)
Increase in payable to general partner
and affiliates 251,143 66,386 74,272
Decrease in other liabilities (7,000) (7,000) (7,000)
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES $ (508,868) $ (490,832) $ (505,463)
=========== =========== ===========
See Notes to Financial Statements.
22
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 2004, 2003 AND 2002
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.
Reclassifications
-----------------
Certain prior year balances have been reclassified to conform to the
current year presentation.
23
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
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.
Recent Accounting Pronouncements
--------------------------------
In January 2003, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 46, "Consolidation of Variable Interest Entities"
("FIN 46"). FIN 46 is applicable immediately for variable interest entities
created after January 31, 2003. For variable interest entities created
before February 1, 2003, the provisions of FIN 46 are applicable no later
than December 15, 2003. The Partnership has not created any variable
interest entities after January 31, 2003. In December 2003, the FASB
redeliberated certain proposed modifications and revised FIN 46 ("FIN 46
(R)"). The revised provisions are applicable no later than the first
reporting period ending after March 15, 2004. The adoption of FIN 46 (R) is
not expected to have a material impact on the Partnership's financial
reporting and disclosure.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
SFAS No. 150 changes the accounting for certain financial instruments that,
under previous guidance, could be classified as equity or "mezzanine"
equity, by now requiring those instruments to be classified as liabilities
(or assets in some circumstances) in the balance sheets. Further, SFAS No.
150 requires disclosure regarding the terms of those instruments and
settlement alternatives. The guidance in SFAS No. 150 generally was
effective for all financial instruments entered into or modified after May
31, 2003, and was otherwise effective at the beginning of the first interim
period beginning after June 15, 2003. The Partnership has evaluated SFAS
No. 150 and determined that it does not have an impact on the Partnership's
financial reporting and disclosures.
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.
24
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
3. Cash and Cash Equivalents
As of March 30, 2004, the Partnership has $100,169 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, 2004 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 $ 400,002 $ 10,542 $ -- $ 410,544
After one year through five years 1,249,410 93,761 -- 1,343,171
----------- ----------- ----------- -----------
1,649,412 104,303 -- 1,753,715
----------- ----------- ----------- -----------
U.S. Treasury debt securities
After five years through ten years 717,637 72,891 -- 790,528
----------- ----------- ----------- -----------
U.S. government and agency securities
Within one year 692 177 -- 869
----------- ----------- ----------- -----------
$ 2,367,741 $ 177,371 $ -- $ 2,545,112
=========== =========== =========== ===========
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
=========== =========== =========== ===========
25
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships
As of March 30, 2004, 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 ("Harborside");
22. Hill Com I Associates Limited Partnership ("Hill Com I");
23. Hill Com II Associates Limited Partnership;
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;
36. Plantersville Family, L.P.;
37. Powelton Gardens Associates;
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.
26
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
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 $46,594,300, which includes advances made to certain Local
Partnerships. As of December 31, 2003, the Local Partnerships have
outstanding mortgage loans payable totaling approximately $84,858,000 and
accrued interest payable on such loans totaling approximately $8,230,000,
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
$3,010,297, $2,665,779 and $2,125,501 for the years ended December 31,
2003, 2002 and 2001, 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 Harborside by
$1,199,055 for the year ended March 30, 2004 and in Hill Com I by $279,273
for the year ended March 30, 2002. Such loss is 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,
2003 and 2002 and the combined statements of operations of the Local
Partnerships for the years ended December 31, 2003, 2002 and 2001 are
reflected on pages 28 and 29, respectively.
27
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of December 31,
2003 and 2002 are as follows:
2003 2002
------------- -------------
ASSETS
Cash and cash equivalents $ 1,751,943 $ 1,820,263
Rents receivable 418,925 426,140
Escrow deposits and reserves 6,325,707 6,047,039
Land 3,906,771 3,930,673
Buildings and improvements (net of accumulated
depreciation of $69,357,958 and $64,933,253) 74,558,167 78,780,411
Intangible assets (net of accumulated
amortization of $1,074,981and $1,382,176) 1,296,361 1,327,698
Other assets 1,448,467 1,425,671
------------- -------------
$ 89,706,341 $ 93,757,895
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 2,465,127 $ 2,014,029
Due to related parties 4,246,512 3,805,439
Mortgage loans 84,857,612 85,746,594
Notes payable 988,436 1,259,422
Accrued interest 8,229,819 7,515,988
Other liabilities 697,550 700,106
------------- -------------
101,485,056 101,041,578
------------- -------------
Partners' equity (deficit)
American Tax Credit Properties II L.P.
Capital contributions, net of distributions 45,008,247 44,786,623
Cumulative loss (37,427,740) (36,111,424)
------------- -------------
7,580,507 8,675,199
------------- -------------
General partners and other limited partners
Capital contributions, net of distributions 3,045,596 3,072,216
Cumulative loss (22,404,818) (19,031,098)
------------- -------------
(19,359,222) (15,958,882)
------------- -------------
(11,778,715) (7,283,683)
------------- -------------
$ 89,706,341 $ 93,757,895
============= =============
28
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
years ended December 31, 2003, 2002 and 2001 are as follows:
2003 2002 2001
------------ ------------ ------------
REVENUE
Rental $ 21,506,882 $ 21,329,310 $ 21,389,069
Interest and other 693,974 758,544 693,807
------------ ------------ ------------
TOTAL REVENUE 22,200,856 22,087,854 22,082,876
------------ ------------ ------------
EXPENSES
Administrative 3,972,160 3,767,107 3,788,594
Utilities 3,461,914 3,180,965 3,427,028
Operating and maintenance 5,166,504 4,802,324 4,572,352
Taxes and insurance 3,679,786 3,115,874 2,712,638
Financial 5,789,391 6,074,798 6,155,379
Depreciation and amortization 4,821,137 4,932,382 4,540,540
------------ ------------ ------------
TOTAL EXPENSES 26,890,892 25,873,419 25,196,531
------------ ------------ ------------
LOSS FROM OPERATIONS
BEFORE GAIN ON SALE OF PROPERTY (4,690,036) (3,785,565) (3,113,655)
Gain on sale of property 1,367,286
------------ ------------ ------------
NET LOSS $ (4,690,036) $ (2,418,279) $ (3,113,655)
============ ============ ============
NET LOSS ATTRIBUTABLE TO
American Tax Credit $ (1,316,316) $ (652,415) $ (648,186)
Properties II L.P.
General partners and other
limited partners, which
includes specially
allocated items of revenue
to certain general partners
of $21,950, $1,249,414 and
$54,577, and Partnership
loss in excess of
investment of $3,010,297,
$2,665,779 and $2,125,501 (3,373,720) (1,765,864) (2,465,469)
------------ ------------ ------------
$ (4,690,036) $ (2,418,279) $ (3,113,655)
============ ============ ============
29
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year ended
March 30, 2004 is as follows:
Cash
Investment in Partnership's Adjustment to distributions Investment in
Local Investments equity in carry value received Local
Partnership during the income for the during the during the Partnership
balance as of year ended year ended year ended year ended balance as of
March 30, March 30, December 31, March 30, March 30, March 30,
Name of Local Partnership 2003 2004 2003 2004 2004(3) 2004
- ------------------------- ------------ ---------- ------------- ------------ ----------- ------------
1989 Westview Arms Limited Partnership $ 88,958 $ -- $ (1,283) $ -- $ -- $ 87,675
2000-2100 Christian Street Associates -- 69,403 (69,403) (1) -- -- --
Ann Ell Apartments Associates, Ltd. -- 30,000 (30,000) (1) -- -- --
Auburn Hills Apartments Limited Partnership -- -- -- (2) -- -- --
Auburn Hills Townhouses Limited Partnership 525,045 -- (228,713) -- (5,000) 291,332
Batesville Family, L.P. -- -- -- (2) -- -- --
Browning Road Phase I, L.P. -- -- -- (2) -- -- --
Bruce Housing Associates, L.P. 5,871 -- (1,731) -- -- 4,140
Canton Partners, L.P. -- -- -- (2) -- -- --
Carrington Limited Dividend Housing
Association Limited Partnership 138,084 -- (64,689) -- -- 73,395
Christian Street Associates Limited
Partnership -- 63,139 (63,139) (1) -- -- --
Cityside Apartments, Phase II, L.P. -- -- -- (2) -- -- --
Cleveland Square, Ltd. -- -- -- (2) -- -- --
College Avenue Apartments Limited
Partnership -- 44,268 (44,268) (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 1,557,309 -- (369,022) -- -- 1,188,287
Eudora Manor Limited Partnership -- -- -- (2) -- -- --
Forest Village Housing Partnership -- -- -- (2) -- -- --
Harborside Housing Limited Partnership 1,570,996 -- (369,441) (1,199,055) (4) (2,500) --
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 3,489,666 -- (30,198) -- (5,000) 3,454,468
Patton Place Limited Partnership 142,915 -- (38,989) -- -- 103,926
Plantersville Family, L.P. -- -- -- (2) -- -- --
Powelton Gardens Associates -- -- -- (2) -- -- --
Purvis Heights Properties, L.P. 13,171 -- (5,440) -- -- 7,731
Queen Lane Investors -- -- -- (2) -- -- --
Renova Properties, L.P. -- -- -- (2) -- -- --
Santa Juanita Limited Dividend Partnership
L.P. -- -- -- (2) -- -- --
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) -- -- --
--------- -------- ---------- ----------- -------- ----------
$7,532,015 $ 206,810 $(1,316,316) $(1,199,055) $(12,500) $5,210,954
========== ========= =========== =========== ======== ==========
(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 $23,735 of distributions received classified as other
income from local partnerships.
(4) The Partnership has adjusted the investment's carrying value in accordance
with applicable accounting guidelines.
30
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year ended
March 30, 2003 is as follows:
Cash
Investment in Partnership's Adjustment to distributions Investment in
Local Investments equity in carry value received Local
Partnership during the income for the during the during the Partnership
balance as of year ended year ended year ended year ended balance as of
March 30, March 30, December 31, March 30, March 30, March 30,
Name of Local Partnership 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 $23,735 of distributions received classified as other
income from local partnerships. (4) The Partnership has adjusted the
investment's carrying value in accordance with applicable accounting
guidelines.
31
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 2003 is follows:
Mortgage loans Buildings and Accumulated
Name of Local Partnership payable Land improvements depreciation
-----------------------------------------------------------------------------------------------------------------------------
1989 Westview Arms Limited Partnership $ 392,851 $ 20,275 $ 736,245 $ (279,282)
2000-2100 Christian Street Associates 2,366,100 -- 31,325 (4,068)
Ann Ell Apartments Associates, Ltd. 2,033,247 199,645 2,838,576 (1,377,450)
Auburn Hills Apartments Limited Partnership 786,663 48,245 1,013,162 (366,763)
Auburn Hills Townhouses Limited Partnership 6,055,128 225,000 12,523,316 (6,794,638)
Batesville Family, L.P. 1,423,964 52,000 1,843,095 (752,388)
Browning Road Phase I, L.P. 816,977 43,000 1,069,123 (576,488)
Bruce Housing Associates, L.P. 1,092,492 16,000 1,482,081 (720,761)
Canton Partners, L.P. 1,436,914 35,000 1,865,291 (907,973)
Carrington Limited Dividend Housing
Association Limited Partnership 3,272,459 200,000 6,590,677 (3,243,210)
Christian Street Associates Limited Partnership 2,165,038 -- 41,753 (15,847)
Cityside Apartments, Phase II, L.P. 6,952,776 87,997 14,242,965 (7,139,975)
Cleveland Square, Ltd. 810,332 20,000 1,208,578 (624,923)
College Avenue Apartments Limited Partnership 587,000 24,600 1,008,439 (506,588)
Corrigan Square, Ltd. 1,395,775 63,358 1,897,355 (973,233)
De Queen Villas Limited Partnership 1,345,352 37,000 1,687,412 (588,044)
Dermott Villas Limited Partnership 1,049,384 15,000 1,364,852 (496,050)
Eagle View, Ltd. 396,204 35,000 497,783 (182,070)
Elm Hill Housing Limited Partnership 6,708,868 119,200 12,604,541 (5,500,505)
Eudora Manor Limited Partnership 742,553 16,000 940,850 (339,692)
Harborside Housing Limited Partnership 2,897,754 39,400 6,594,750 (2,854,620)
Hill Com I Associates Limited Partnership 1,165,986 119,502 2,669,820 (1,150,170)
Hill Com II Associates Limited Partnership 938,031 112,110 2,281,915 (1,090,723)
Hughes Manor Limited Partnership 1,100,161 16,007 1,422,747 (514,334)
Ivy Family, L.P. 772,383 11,000 1,076,150 (535,782)
Lakeside Housing Limited Partnership 7,272,097 50,000 11,938,171 (5,314,418)
Lawrence Road Properties, Ltd. 750,067 50,000 959,446 (383,812)
Lexington Estates Ltd. 698,292 30,750 881,265 (483,521)
Littleton Avenue Community Village, L.P. 4,303,080 512,331 7,220,383 (3,567,441)
Lula Courts Ltd., L.P. 692,242 19,600 900,181 (484,681)
Magee Elderly, L.P. 584,408 30,000 731,409 (304,178)
Mirador del Toa Limited Partnership 1,857,814 105,000 2,343,426 (1,241,742)
Nixa Heights Apartments, L.P. 991,220 31,500 1,315,343 (499,064)
North Hills Farms Limited Partnership 2,955,316 525,000 13,226,055 (7,761,697)
Patton Place Limited Partnership 959,630 56,015 1,765,001 (617,862)
Plantersville Family, L.P. 589,107 12,000 788,656 (398,078)
Powelton Gardens Associates 802,440 29,207 1,974,175 (966,962)
Purvis Heights Properties, L.P. 1,135,775 47,000 1,507,912 (580,547)
Queen Lane Investors 1,524,745 60,301 2,781,754 (1,294,242)
Renova Properties, L.P. 630,745 22,700 824,155 (426,748)
Santa Juanita Limited Dividend Partnership L.P. 1,414,998 228,718 2,441,275 (1,209,705)
Simpson County Family, L.P. 805,068 24,700 1,047,171 (509,958)
Summers Village Limited Partnership 799,378 71,000 969,818 (350,447)
Tchula Courts Apartments, L.P. 726,736 10,000 928,791 (579,126)
The Pendleton 543,022 40,000 1,269,163 (683,869)
Trenton Heights Apartments, L.P. 434,265 29,200 596,813 (262,319)
Twin Pine Family, L.P. 594,380 7,000 825,450 (409,357)
Village Creek Limited Partnership 1,199,427 37,950 1,471,698 (566,038)
York Park Associates Limited Partnership 3,888,968 321,460 5,675,813 (2,926,569)
-------------- ------------ -------------- -------------
$ 84,857,612 $ 3,906,771 $ 143,916,125 $ (69,357,958)
============== ============ ============== ==============
32
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 2002 is
as follows:
Mortgage loans Buildings and Accumulated
Name of Local Partnership 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)
============== ============ ============== =============
33
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
5. Investment in Local Partnerships (continued)
The summary of property activity during the year ended December 31, 2003 is
as follows:
Net change
Balance as of during Balance as of
December 31, the year ended December 31,
2002 December 31, 2003 2003
------------- ----------------- --------------
Land $3,930,673 $ (23,902) $ 3,906,771
Buildings and improvements 143,713,664 202,461 143,916,125
----------- ----------- ------------
147,644,337 178,559 147,822,896
Accumulated depreciation (64,933,253) (4,424,705) (69,357,958)
----------- ----------- ------------
$82,711,084 $(4,246,146) $ 78,464,938
=========== ============ ============
Effective October 1, 1998, 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 December 31, 2004. Under the terms of the Funding Agreements,
the Partnership has advanced $423,692 as of March 30, 2004, of which $132,542
and $95,933, respectively, was advanced during the years ended March 30, 2004
and 2003. 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 $30,000 and $97,000 during the years ended March 30,
2004 and 2003, respectively, to Ann Ell to fund operating deficits. Cumulative
advances as of March 30, 2004 are $469,545. 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 $44,268 and $16,640 during the years ended March 30,
2004 and 2003, respectively, to College Avenue to fund operating deficits.
Cumulative advances as of March 30, 2004 are $72,058. 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.
34
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
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 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.
6. Transactions with General Partner and Affiliates
For the years ended March 30, 2004, 2003 and 2002, the Partnership paid
and/or incurred the following amounts to the General Partner and/or
affiliates in connection with services provided to the Partnership:
2004 2003 2002
--------------------- ------------------ --------------------
Paid Incurred Paid Incurred Paid Incurred
-------- -------- -------- -------- -------- --------
Management fees (see Note 8) $157,137 $294,416 $239,516 $293,193 $269,516 $299,307
Administration fees (see Note 8) 180,552 294,416 280,484 293,193 254,826 299,307
For the years ended December 31, 2003, 2002 and 2001, 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 $ 139,599 $ 136,068 $ 177,405 $ 142,315 $ 101,513 $ 146,756
Insurance and other services 191,953 183,848 121,687 106,631 106,694 108,380
35
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
7. Taxable Loss
A reconciliation of the financial statement net loss of the Partnership for
the years ended March 30, 2004, 2003 and 2002 to the tax return net loss for
the years ended December 31, 2003, 2002 and 2001 is as follows:
2004 2003 2002
------------ ------------ ------------
Financial statement net loss for the
years ended March 30, 2004, 2003 and 2002 $(3,139,682) $ (330,917) $(1,396,994)
Add (less) net transactions occurring
between
January 1, 2001 to March 30, 2001 -- -- (122,139)
January 1, 2002 to March 30, 2002 -- (131,136) 131,136
January 1, 2003 to March 30, 2003 (91,275) 91,275 --
January 1, 2004 to March 30, 2004 136,664 -- --
------------ ------------ -------------
Adjusted financial statement net loss
for the years ended December 31,
2004, 2003 and 2002 (3,094,293) (369,978) (1,387,997)
Adjustment to management and
administration fees pursuant to 101,568 118,815 116,144
Internal Revenue Code Section 267
Differences arising from gain on
disposal of local partnership
interest -- (218,968) --
Differences arising from equity in
loss of investment in local
partnerships (2,606,750) (3,655,779) (2,723,735)
Other income from local partnerships (16,462) (37,261) (26,021)
Other differences 19,797 (300) (5,917)
------------ ------------ ------------
Tax return net loss for the years
ended December 31, 2003, 2002 and
2001 $(5,596,140) $(4,163,471) $(4,027,526)
============ ============ ============
The differences between the investment in local partnerships for tax and
financial reporting purposes as of December 31, 2003 and 2002 are as
follows:
2003 2002
------------ ------------
Investment in local partnerships -
financial reporting $5,213,454 $7,467,007
Investment in local partnerships - tax (6,293,633) (1,173,029)
------------ -----------
$11,507,087 $8,640,036
============ ===========
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.
36
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
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 $206,091 for the year ended March 30, 2004, $205,235 for the year ended
March 30, 3003 and $209,514 for the year ended March 30, 2002. The annual
Additional Management Fee is equal to .06% of Invested Assets. The
Partnership incurred an Additional Management Fee of $88,325 for the year
ended March 30, 2004, $87,958 for the year in ended March 30, 2003 and
$89,793 for the year 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 $956,135 and
$818,856 are included in payable to general partner and affiliates in the
accompanying balance sheets as of March 30, 2004 and 2003, 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 $206,091 for the year ended March 30,
2004, $205,235 for the year ended March 30, 2003 and $209,514 for the year
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 $88,325 for the year ended March 30, 2004, $87,958 for the year ended
March 30, 2003 and $89,793 for the year 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 $543,740 and $568,740 are included in accounts
payable and accrued expenses as of March 30, 2004 and 2003, 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 $291,167 and $177,303 are included in
due to general partner and affiliates in the accompanying balance sheets as
of March 30, 2004 and 2003, respectively.
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 in 2001,
resulting in both a lower rent subsidy (resulting in lower NOI) and lower
mandatory debt service.
37
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
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, 2004 and 2003 are disclosed elsewhere in the financial
statements.
38
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 2004, 2003 AND 2002
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
-------------- ------------- ------------- -------------
2004
- ----
Total revenue $ 38,872 $ 45,537 $ 47,872 $ 46,212
Loss from operations (172,741) (154,107) (160,799) (136,664)
Equity in loss of investment
in local partnerships (409,958) (424,191) (188,780) (1,492,442)
Net loss (582,699) (578,298) (349,579) (1,629,106)
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
39
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Item 9A. Controls and Procedures
-----------------------
As of March 30, 2004, under the direction of the Chief Executive Officer and
Chief Financial Officer, Registrant evaluated the effectiveness of its
disclosure controls and procedures and internal controls over financial
reporting and concluded that (i) Registrant's disclosure controls and procedures
were effective as of March 30, 2004, and (ii) no changes occurred during the
quarter ended March 30, 2004, that materially affected, or are reasonably likely
to materially affect, such internal controls.
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 56, is the sole Director of Richman Tax Credits. Mr.
Richman is the Chairman and a 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 43, is the President of Richman Tax Credits and is a
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 46, 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 48, 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. Dodge is responsible for communications with investors.
The Board of Directors of the General Partner acts as the audit committee of the
Registrant. Mr. Richman is a member of the Board of Directors of the General
Partner and is deemed to be an audit committee financial expert. Mr. Richman is
not independent of the Registrant.
40
Item 10. Directors and Executive Officers of the Registrant (continued)
--------------------------------------------------------------
The Board of Directors of the General Partner has adopted a code of ethics for
senior financial officers of the Registrant, applicable to the Registrant's
principal financial officer and comptroller or principal accounting officer, or
persons performing similar functions. The Registrant will provide to any person
without charge a copy of such code of ethics upon written request to the General
Partner at 599 W. Putnam Avenue, Greenwich, Connecticut 06830, Attention:
Secretary.
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, 2004, 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 3,561 Units,
representing approximately 6.4% of all such Units. As of May 31, 2004, 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.
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, 2003 allocated to the General Partner were $55,961 and
$30, respectively. The net tax losses and Low-income Tax Credits generated by
the General Partner during the year ended December 31, 2003 (from the allocation
of Registrant discussed above) and allocated to Richman Tax Credits were $35,485
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, 2004.
Item 14. Principal Accountant Fees and Services
--------------------------------------
The annual audit fees for Registrant for the years ended March 30, 2004 and 2003
were $53,064 and $50,995, respectively.
The annual tax preparation fees for Registrant for each of the years ended March
30, 2004 and 2003 were $11,000.
Audit related fees for Registrant for the years ended March 30, 2004 and 2003
were $16,611 and $0, respectively.
41
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,
Limited Partnership 1989 (File No. 33-25337)
10.03 Ann Ell Apartments Associates, Ltd. Exhibit 10.1 to Form 10-Q
Second Amended and Restated Agreement Report dated June 29, 1990
of 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,
Agreement of Limited Partnership 1990 (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,
Partnership 1990 (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,
Restated Agreement of Limited 1992 (File No 0-18405)
Partnership
10.08 Amendment No. 1 to the Batesville Exhibit 10.06 to Form 10-K
Family, L.P. Amended and Restated Report dated March 30,
Agreement of Limited Partnership 1992 (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,
Agreement of Limited Partnership 1990 (File No. 0-18405)
42
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,
Agreement of Limited Partnership 1991 (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,
of Limited Partnership 1990 (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,
Restated Agreement of Limited 1990 (File No. 0-18405)
Partnership
10.13 Bruce Housing Associates, L.P. Exhibit 10.03 to Form 10-K
Amended and Restated Agreement of Report dated March 30,
Limited Partnership 1990 (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,
Amended and Restated Agreement 1992 (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 Report dated March 30,
Restated Agreement of Limited 1992 (File No. 0-18405)
Partnership
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,
Restated Agreement of Limited 1990 (File No. 0-18405)
Partnership
10.17 Bruce Housing Associates, L.P. Exhibit 10.2 to Form 10-Q
Amendment No. 3 to the Amended Report dated December 30,
and Restated Agreement of 1991 (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,
Limited Partnership 1989 (File No. 33-25337)
10.19 Carrington Limited Dividend Housing Exhibit 10.3 to Form 10-Q
Association Limited Partnership Report dated September 29,
Amended and Restated Agreement 1990 (File No. 0-18405)
of Limited Partnership
10.20 Carrington Limited Dividend Exhibit 10.4 to Form 10-Q
Housing Association Limited Report dated September 29,
Partnership Second Amended and 1990 (File No. 0-18405)
Restated Agreement of Limited
Partnership
10.21 Carrington Limited Dividend Exhibit 10.3 to Form 10-Q
Housing Association Limited Report dated December 30,
Partnership Amendment No. 1 to 1990 (File No. 0-18405)
the Second Amended and Restated
Agreement of Limited Partnership
10.22 Christian Street Associates Exhibit 10.2 to Form 10-Q
Limited Partnership Second Amended and Report dated September 29,
Restated Agreement and Certificate 1989 (File No. 33-25337)
of Limited Partnership
43
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,
Limited Partnership 1989 (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,
Amended and Restated Agreement of 1992 (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,
Limited Partnership 1990 (File No. 0-18405)
10.26 College Avenue Apartments Exhibit 10.7 to Form 10-Q
Limited Partnership Amended Report dated December 30,
and Restated and Articles of 1989 (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,
Limited Partnership 1990 (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,
Agreement of Limited Partnership 1990 (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,
Agreement of Limited Partnership 1990 (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 (File No. 0-18405)
Agreement
10.32 Elm Hill Housing Limited Partnership Exhibit 10.13 to Form 10-K
Second Amended and Restated Report dated March 30,
Agreement and Certificate of Limited 1990 (File No. 0-18405)
Partnership
10.33 Eudora Manor Limited Partnership Exhibit 10.14 to Form 10-K
Amended and Restated Agreement Report dated March 30,
and Certificate of Limited 1990 (File No. 0-18405)
Partnership
10.34 Forest Village Housing Partnership Exhibit 10.2 to Form 10-Q
Amendment No. 1 to Amended and Report dated December 30,
Restated Agreement of Limited 1993 (File No. 0-18405)
Restated
10.35 Amended and Restated Agreement Exhibit 10.5 to Form 10-Q
of Limited Partnership Report dated September 29,
Harborside Housing Limited 1990 (File No. 0-18405)
Partnership
44
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,
Agreement and Certificate of Limited 1989 (File No. 33-25337)
Partnership
10.37 Hill Com I Associates Exhibit 10.35 to Form 10-K
Limited Partnership First Amendment Report dated March 30,
to Amended and Restated Agreement and 1992 (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,
Agreement and Certificate of Limited 1989 (File No. 33-25337)
Partnership
10.39 Hill Com II Associates Limited Exhibit 10.37 to Form 10-K
Partnership First Amendment to Report dated March 30,
Amended and Restated Agreement and 1992 (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,
and Articles of Limited Partnership 1990 (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,
Partnership 1990 (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,
of Limited Partnership 1990 (File No. 0-18405)
10.43 Ivy Family, L.P. Amendment No. 3 Exhibit 10.3 to Form 10-Q
to the Amended and Restated Agreement Report dated December 30,
of Limited Partnership 1991 (File No. 0-18405)
10.44 Second Amended and Restated Agreement Exhibit 10.6 to Form 10-Q
of Limited Partnership Lakeside Report dated September 29,
Housing Limited Partnership 1990 (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,
Limited Partnership 1989 (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,
Restated Agreement of Limited 1990 (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 Report dated December 30,
Restated Agreement of Limited 1991 (File No. 0-18405)
Partnership
10.48 Lexington Estates Ltd., A Mississippi Exhibit 10.20 to Form 10-K
Limited Partnership Amended and Report dated March 30,
Restated Agreement of Limited 1990 (File No. 0-18405)
Partnership
45
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,
Restated Agreement of Limited 1989 (File No. 33-25337)
Partnership
10.50 Lula Courts Ltd., L.P. Exhibit 10.22 to Form 10-K
Amended and Restated Agreement of Report dated March 30,
Limited Partnership 1990 (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,
Limited Partnership 1989 (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,
(A Delaware Limited Partnership) 1991 (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,
Certificate of Limited Partnership 1990 (File No. 0-18405)
10.55 North Hills Farms Limited Exhibit 10.6 to Form 10-Q
Partnership Second Amended and Report dated June 29, 1990
Restated Agreement of Limited (File No. 0-18405)
Partnership
10.56 First Amendment to the Exhibit 10.54 to Form 10-K
North Hills Farms Limited Partnership Report dated March 30,
Second Amended and Restated Agreement 1992 (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,
of Limited Partnership 1990 (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,
Limited Partnership 1990 (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,
Limited Partnership 1989 (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,
Limited Partnership 1990 (File No. 0-18405)
46
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,
Restated Agreement of Limited 1992 (File No. 0-18405)
Partnership
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,
Agreement of Limited Partnership 1992 (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,
Restated Agreement of Limited 1990 (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,
Amended and Restated 1991 (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,
of Limited Partnership 1990 (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,
and Certificate of Limited Partnership 1990 (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,
Limited Partnership 1989 (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,
Agreement of Limited Partnership 1989 (File No. 33-25337)
10.69 Second Amendment of Limited Exhibit 10.68 to Form 10-K
Partnershipof Santa Juanita Limited Report dated March 30,
Dividend Partnership and Amendment 1994 (File No. 0-18405)
No. 2 to the Amended and Restated
Agreement of Limited Partnership
10.70 Amendment No. 1 to Santa Juanita Exhibit 10.1 to Form 10-Q
Limited Dividend Partnership L.P. Report dated September 29,
Amended and Restated Agreement of 1995 (File No. 0-18405)
Limited Partnership (Replaces
in its entirety Exhibit
10.69 hereof.)
10.71 Amendment No.2 to Santa Juanita Exhibit 10.2 to Form 10-Q
Limited Dividend Partnership Report dated September 29,
L.P. Amended and Restated Agreement 1995 (File No. 0-18405)
of Limited Partnership
10.72 Simpson County Family, L.P. Exhibit 10.4 to Form 10-Q
Amended and Restated Agreement of Report dated December 30,
Limited Partnership 1989 (File No. 33-25337)
47
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,
Certificate of Limited Partnership 1990 (File No. 0-18405)
10.75 The Pendleton (A Louisiana Exhibit 10.7 to Form 10-Q
Partnership in Commendam) Third Report dated September 29,
Amended and Restated Articles 1990 (File No. 0-18405)
of Partnership
10.76 Trenton Heights Apartments, L.P. Exhibit 10.34 to Form 10-K
Amended and Restated Agreement and Report dated March 30,
Certificate of Limited Partnership 1990 (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,
Partnership 1990 (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 Exhibit 10.1 to Form 10-Q
Partnership Amended and Restated Report dated June 29, 1989
Agreement of 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,
January 19, 1990 1990 (File No. 0-18405)
10.81 Non-Negotiable Purchase Money Exhibit 10.9 to Form 10-Q
Promissory Notes dated as of Report dated December 30,
May 1, 1990 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,
Non-Negotiable Purchase Money 1991 (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,
Non-Negotiable Purchase Money 1991 (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)
48
Incorporated by
Exhibit Reference to
------- ------------
28.1 Pages 14 through 33, 47 through 70 Exhibit 28.1 to Form 10-K
and 86 through 88 of prospectus Report dated March 30,
dated May 10, 1989 filed pursuant 1990 (File No. 0-18405)
to Rule 424(b)(3) under the
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)
31.1 Rule 13a-14/15d-14(a) Certification of
Chief Executive Officer
31.2 Rule 13a-14/15d-14(a) Certification of
Chief Financial Officer.
32.1 Section 1350 Certification of Chief
Executive Officer.
32.2 Section 1350 Certification of Chief
Financial Officer.
(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.
49
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: July 13, 2004 /s/ David Salzman
------------- ------------------------
by: David Salzman
Chief Executive Officer
Dated: July 13, 2004 /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 of July 13, 2004
- ------------------------- the general partner of the -------------
(David Salzman) General Partner
/s/ Neal Ludeke Chief Financial Officer of July 13, 2004
- ------------------------- the general partner of the -------------
(Neal Ludeke) General Partner