UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-24660
LIBERTY TAX CREDIT PLUS II L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3458180
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- ---------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 317-5700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Beneficial Assignment Certificates (including underlying Limited
Partnership Interests)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements 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 definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]
The approximate aggregate book value of the voting and non-voting common
equity held by non-affiliates of the Registrant as of September 30, 2004 was
$(4,125,000), based on Limited Partner equity (deficit) as of such date.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Business
General
- -------
Liberty Tax Credit Plus II L.P. (the "Partnership") is a limited partnership
which was formed under the laws of the State of Delaware on March 25, 1988. The
general partners of the Partnership are Related Credit Properties II L.P., a
Delaware limited partnership (the "Related General Partner"), Liberty Associates
II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP
II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the
"Liberty General Partner" and together with the Related General Partner and
Liberty Associates, the "General Partners"). The general partner of the Related
General Partner is Related Credit Properties II Inc., a Delaware corporation.
The general partners of Liberty Associates are Related Credit Properties II
Inc., and the Liberty General Partner. Liberty Associates is also the special
limited partner of the Partnership. On November 17, 2003, CharterMac acquired
Related Capital Company, which is the indirect parent of RCC Manager LLC, the
sole shareholder of Related Credit Properties II Inc. Pursuant to the
acquisition, CharterMac acquired controlling interests in the General Partners.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partners' management team remained unchanged.
On July 20, 1988 the Partnership commenced a public offering (the "Offering") of
Beneficial Assignment Certificates ("BACs") representing assignments of limited
partnership interests in the Partnership ("Limited Partnership Interests").
As of January 9, 1989 (the date on which the Partnership held the final closing
of the sale of BACs and on which the Offering was terminated), the Partnership
had received $115,917,500 of gross proceeds of the Offering from 8,431
investors.
The Partnership was formed to invest, as a limited partner, in other limited
partnerships (referred to herein as "Local Partnerships" or "subsidiary
partnerships") each of which owns one or more leveraged low-income multifamily
residential complexes ("Apartment Complexes") that are eligible for the
low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform
Act of 1986, and to a lesser extent, in Local Partnerships owning properties
("Rehabilitation Projects" and together with the Apartment Complexes, the
"Properties") that are eligible for the historic rehabilitation tax credit (the
"Historic Rehabilitation Tax Credit" and together with the Housing Tax Credit,
the "Tax Credits"). Some of the Apartment Complexes benefit from one or more
other forms of federal and state housing assistance. The Partnership's
investment in each Local Partnership represents from 20% to 98% of the
partnership interests in the Local Partnership. As of March 31, 2005, the
Partnership had acquired interests in 27 Local Partnerships and does not
anticipate making any additional investments. Through the fiscal year ended
March 31, 2005, the property and the related assets and liabilities of four
Local Partnerships and the limited Partnership interest of one Local Partnership
were sold. See Item 2, Properties.
Liberty Associates is the special limited partner in all remaining 22 Local
Partnerships, as well as a general partner of the Partnership. Liberty
Associates has certain rights and obligations in its role as special limited
partner which permit it to execute control over the management and policies of
the Local Partnerships.
Investment Objectives, Tax Credits
- ----------------------------------
The investment objectives of the Partnership are to:
1. Entitle qualified BACs holders to Housing Tax Credits (and to a lesser extent
Historic Rehabilitation Tax Credits) over the period of the Partnership's
entitlement to claim Tax Credits (for each Property, ten years from the date of
investment or, if later, the date the Property is placed in service.);
2. Preserve and protect the Partnership's capital;
3. Participate in any capital appreciation in the value of the Properties and
provide distributions of sale or refinancing proceeds upon the disposition of
the Properties;
4. Provide cash distributions when available from the operations of Properties;
and
5. Allocate passive losses to individual BACs holders to offset passive income
that they may realize from rental real estate investments and other passive
activities, and allocate passive losses to corporate BACs holders to offset
active business income.
One of the Partnership's objectives is to entitle qualified BACs holders to Tax
Credits over the period of the Partnership's entitlement to claim Tax Credits
(for each Property, ten years from the date of investment or, if later, the date
the Property is leased to qualified tenants; referred to herein as the "Credit
Period"). Each of the Local Partnerships in which the Partnership has acquired
an interest has been allocated by the relevant state credit agency the authority
to recognize Tax Credits during the Credit Period provided that the Local
Partnership satisfies the rent restriction, minimum set-aside and other
requirements for recognition of the Tax Credits at all times during the 15-year
period (the "Compliance Period") commencing at the beginning of the Credit
Period. Once a Local Partnership has become eligible to recognize Tax Credits,
it may lose such eligibility and suffer an event of "recapture" if (i) the Local
Partnership ceases to meet qualification requirements, (ii) there is a decrease
in the qualified basis of Property, or (iii) there is a reduction in its
interest in the Property at any time during the Compliance Period. None of the
Local Partnerships in which the Partnership has acquired an interest has
suffered an event of recapture.
The Tax Credits are attached to a Local Partnership for the Credit Period and
are transferable with the property during the entirety of such ten year period.
If trends in the real estate market warranted the sale of a property, the
remaining Tax Credits would transfer to the new owner, thereby adding value to
the property on the market. However, such value declines each year and is not
included in the financial statement carrying amount. The Tax Credit Periods
expired at various times through December 31, 2003 with respect to the Local
Partnerships depending upon when the Tax Credit Period commenced.
2
A loss on impairment of assets is recorded when management estimates amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time the property
investments themselves are reduced to estimated fair value (generally using the
discounted cash flow valuation method). Through March 31, 2005, the Partnership
has recorded approximately $5,407,000 as an aggregate loss on impairment of
assets or reduction to estimated fair value.
While the value of the remaining Tax Credits are a factor in calculating fair
value, the expiration of the Credit Period, in and of itself, is not the only
factor in determining whether there is an impairment and generally does not have
any adverse impact on the fair value of the Local Partnerships.
The Partnership has met its primary objective of generating Tax Credits for
qualified BACs holders. As of March 31, 2005, the Credit Periods for all of the
Properties have expired, although each Local Partnership must continue to comply
with the Tax Credit requirements until the end of the Compliance Period in order
to avoid recapture of a portion of the Tax Credits. The Partnership generated
14,364 and $20,509 in Tax Credits during the 2003 and 2002 Fiscal Years,
respectively.
The Partnership continues to meet its objective of allocating passive losses to
individual BACs holders to offset passive income that they may realize from
rental real estate investments and other passive activities, and allocating
passive losses to corporate BACs holders to offset business income. At this
time, there can be no assurance that the Partnership will continue to meet this
investment objective.
The General Partners generally required, in connection with certain investments
in Local Partnerships, that the general partner of the Local Partnership ("Local
General Partners") undertake the funding of operating deficits (up to a stated
maximum amount) of the Local Partnership during a limited period of time
following the Partnership's investment ("Guarantee Period"). As of March 31,
2005, all operating deficit guarantees have expired. Generally the amounts
funded pursuant to the operating deficit guarantee (the "Operating Deficit
Guarantee") have been treated as Operating Loans, do not bear interest and will
be repaid only out of 50% of available cash flow or out of available net sale or
refinancing proceeds. See Item 8, Note 8 - Related Party Transactions.
As of March 31, 2005, the Partnership has not made any cash distributions from
the operations of the Properties. The Partnership does not anticipate providing
cash distributions to BACs holders other than distributions of sale or
refinancing proceeds upon the disposition of Properties. Accordingly, at this
time there can be no assurance that the Partnership will achieve this investment
objective.
Government Regulations
- ----------------------
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally. However, no more than
38% of the properties are located in any single state.
The Partnership is the beneficiary of certain subsidy agreements pursuant to
which the United States Department of Housing and Urban Development ("HUD")
subsidizes the amount of rent that the Local Partnerships earn. There are
substantial risks associated with owning properties receiving government
assistance, such as the possibility that Congress may not appropriate funds to
enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owner's equity contribution. The Partnership cannot sell or substantially
liquidate its investments in Local Partnerships during the period that the
subsidy agreements are in existence without HUD's approval. Furthermore, there
may not be market demand for apartments at full market rents when the rental
assistance contracts expire.
Segments
- --------
The Partnership operates in one segment, which is the investment in multi-family
residential properties.
Sale of Properties
- ------------------
The Partnership is currently in the process of disposing of its investments.
During the fiscal year ended March 31, 2005, the property and the related assets
and liabilities of one Local Partnership and the limited partnership interest in
one Local Partnership were sold. Through the fiscal year ended March 31, 2005
the Partnership has disposed of five of its twenty-seven original investments.
All gains and losses on sales are included in discontinued operations.
On December 30, 2004, the property and the related assets and liabilities of
Property Development Associates, L.P. ("Property Development") were sold to an
affiliate of the local general partner for $7,097,000, resulting in a Local
General Partner distribution of approximately $1,218,000.
On September 21, 2004, the Partnership's limited partner interest in Alexis Park
Apartments ("Alexis Park") was sold to an unaffiliated third party purchaser for
$1,000,000. This amount consisted of $600,000 paid in cash at the closing and
$400,000 pursuant to two promissory notes of $200,000 each to the Partnership.
Both notes compound interest at 5% and the principal and interest of one note is
to be paid annually from 50% of cash flow, with a maturity in five years, when
all unpaid principal and interest shall become payable. The principal and
interest on the second note is to be paid upon refinancing or sale of the
property, but in no event later than 10 years. The sale resulted in a gain of
approximately $934,000.
On August 15, 2003, the property and the related assets and liabilities of
Polynesian Apartments Associates, Ltd. ("Polynesian") were sold to an
unaffiliated third party for $2,700,000, resulting in a loss of approximately
$287,000.
On August 15, 2003, the property and the related assets and liabilities of
Seagrape Village Associates, Ltd. ("Seagrape") were sold to an unaffiliated
third party for $5,140,000, resulting in a loss of approximately $260,000.
3
On January 18, 2002, the property and the related assets and liabilities of
Campeche Isle Apartments, Limited Partnership ("Campeche") were sold to an
unaffiliated third party for $4,625,000, resulting in a loss of approximately
$45,000.
Competition
- -----------
The real estate business is highly competitive and substantially all of the
Properties acquired by the Partnership are subject to competition from similar
properties in their respective vicinities. In addition, various other limited
partnerships may, in the future, be formed by the General Partners and/or their
affiliates to engage in business which may compete with the Partnership.
Employees
- ---------
The Partnership does not have any direct employees. All services are performed
for the Partnership by its General Partners and their affiliates. The General
Partners receive compensation in connection with such activities as set forth in
Items 11 and 13. In addition, the Partnership reimburses the General Partners
and certain of their affiliates for expenses incurred in connection with the
performance by their employees of services for the Partnership in accordance
with the Partnership's Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement").
Item 2. Properties.
The Partnership had acquired an interest as a limited partner in 27 Local
Partnerships. During the fiscal year ended March 31, 2005, the property and the
related assets and liabilities of one Local Partnership and the limited
Partnership interest of one Local Partnership were sold. Through the fiscal year
ended March 31, 2005, the property and the related assets and liabilities of
four Local Partnerships and the limited partnership interest in one Local
Partnership were sold. Set forth below is a schedule of these Local Partnerships
including certain information concerning the Apartment Complexes (the "Local
Partnership Schedule"). Further information concerning these Local Partnerships
and their Properties, including any encumbrances affecting the Properties, may
be found in Item 15, Schedule III.
Except for the seven Local Partnerships listed below, the following is the
allocation of ownership percentage for each of the Local Partnerships:
Local General Partner 1%
Special Limited Partner 1%
Limited Partner - Liberty Tax Credit Plus II L.P. 98%
Local Special Liberty Tax Other
General Partner(s) Limited Partner Credit Plus II L.P. Limited Partners*
------------------ ----------------- ------------------- -----------------
Concourse Artists 1% 1% 19% 79%
Grand Concourse 1% 1% 19% 79%
Robin Housing 1% 1% 19% 79%
Willoughby-Wyckoff 1% 1% 19% 79%
Penn Alto 1% 1% 78.20% 19.80%
United Glen Arden I 1% 1% 73.52% 24.48%
Property Development Associates ** 1% 1% 66.33% 31.67%
* Each is an affiliate of the Partnership with the same management.
** Sold on December 30, 2004.
4
Local Partnership Schedule
--------------------------
% of Units Occupied at May 1,
Name and Location --------------------------------------
(Number of Units) Date Acquired 2005 2004 2003 2002 2001
- ----------------------------------------------- -------------- ------ ------ ------ ------ ------
Polynesian Apartments Associates, Ltd.
(a Limited Partnership)
Homestead, FL (84) July 1988 (b) (b) 98 99 99
Seagrape Village Associates, Ltd.
(a Limited Partnership)
Homestead, FL (112) July 1988 (b) (b) 98 99 98
Metropolitan Towers Associates, L.P.
Rio Piedras, PR (150) December 1988 98 96 91 98 99
Westminster Place II - Olive Site, L.P.
St. Louis, MO (84) October 1988 98 98 94 93 93
Property Development Associates, L.P.
Kansas City, MO (232) December 1988 (c) 82 81 78 84
Whittier Plaza Associates Limited Partnership
St. Louis, MO (27) December 1988 89 100 100 96 100
United-Glen Arden I Limited Partnership
Glen Arden, MD (354) December 1988 94 95 97 98 98
United-Glen Arden II Limited Partnership
Glen Arden, MD (238) December 1988 96 99 98 99 99
Rolling Green Limited Partnership
Chicago, IL (224) December 1988 93 99 95 90 96
Santa Juanita II Limited Partnership
Bayamon, PR (46) December 1988 91 96 100 100 93
Spring Creek Associates, L.P.
(a Delaware Limited Partnership)
Brooklyn, NY (582) December 1988 98 100 98 98 98
East Two Thirty-Five Associates
(a Delaware Limited Partnership)
New York, NY (17) December 1988 94 94 100 100 100
Upper Fifth Avenue Residential Associates, L.P.
New York, NY (151) January 1989 94 98 97 100 99
West 107th Street Associates, L.P.
(a Delaware Limited Partnership)
New York, NY (25) January 1989 100 100 100 100 100
General Atlantic Second Avenue Associates,
L.P
(a Delaware Limited Partnership)
New York, NY (18) January 1989 100 94 100 100 100
Church Lane Associates
Germantown, PA (40) February 1989 100 98 100 100 98
Campeche Isle Apartments Limited Partnership
Galveston, TX (208) May 1989 (a) (a) (a) (a) 96
Robin Housing Associates
(a Limited Partnership)
Bronx, NY (100) November 1988 96 99 96 98 93
Concourse Artists Housing Associates
(a Limited Partnership)
Bronx, NY (23) November 1988 100 96 96 100 96
2051 Grand Concourse Housing Associates
(a Limited Partnership)
Bronx, NY (63) November 1988 97 95 98 91 100
Willoughby-Wyckoff Housing Associates
(a Limited Partnership)
Brooklyn, NY (68) November 1988 93 94 99 100 87
Goodfellow Place Limited Partnership
St. Louis, MO (71) May 1989 90 94 97 93 92
Penn Alto Associates Limited Partnership
Altoona, PA (150) June 1989 90 83 84 83 82
Gramco Development Limited Dividend
Partnership, L.P.
Bayamon, PR (300) July 1989 92 92 98 98 98
Alexis Park Apartments A Louisiana Partnership
in Commendam
Bossier City, LA (280) July 1989 (d) 91 96 86 86
Williamsburg Residential, L.P.
Wichita, KS (76) August 1989 90 76 81 93 100
Victory Apartments
Chicago, IL (107) September 1989 100 95 94 94 95
5
(a) The property and the related assets and liabilities were sold during the
fiscal year ended March 31, 2002 (see Item 7 below).
(b) The property and the related assets and liabilities were sold during the
fiscal year ended March 31, 2004 (see Item 7 below).
(c) The property and the related assets and liabilities was sold during the
fiscal year ended March 31, 2005 (see Item 7 below).
(d) The Limited Partnership Interest was sold during the fiscal year ended March
31, 2005 (see Item 7 below).
All leases are generally for periods not exceeding one to two years and no
tenant occupies more than 10% of the rentable square footage.
Rents from commercial tenants (to which average rental per square foot applies)
comprise less than 5% of the rental revenues of the Partnership. Maximum rents
for the residential units are determined annually by HUD and reflect
increases/decreases in consumer price indices in various geographic areas.
Market conditions, however, determine the amount of rent actually charged.
Management periodically reviews the physical state of the Properties and
suggests to the respective Local General Partners budget improvements, which are
generally funded from cash flow from operations or release of replacement
reserve escrows to the extent available.
Management periodically reviews the insurance coverage of the Properties and
subject to budget constraints recommends to the respective Local General
Partners additional coverage if warranted. Management believes that coverage is
presently adequate.
See Item 1, Business, above for the general competitive conditions to which the
Local Partnerships and the properties described above are subject.
Real estate taxes are calculated using rates and assessed valuations determined
by the township or city in which the property is located. Such taxes have
approximated 1% of the aggregate cost of the properties as shown in Schedule III
to the financial statements included herein.
Item 3. Legal Proceedings
This information is incorporated by reference to the discussion of Alexis Park
Apartments contained under the heading "Results of Operations of Certain Local
Partnerships" in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Registrant's Common Equity, Related Security Holder
Matters and Issuer Purchases of Equity Securities
The Partnership has issued and outstanding 115,917.5 Limited Partnership
Interests, each representing a $1,000 capital contribution to the Partnership,
or an aggregate capital contribution of $115,917,500. All of the issued and
outstanding Limited Partnership Interests have been issued to Liberty Credit
Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued
115,917.5 BACs to the purchasers thereof for an aggregate purchase price of
$115,917,500. Each BAC represents all of the economic and virtually all of the
ownership rights attributable to a Limited Partnership Interest held by the
Assignor Limited Partner. BACs may be converted into Limited Partnership
Interests at no cost to the holder (other than payment of transfer costs not to
exceed $100), but Limited Partnership Interests so acquired are not thereafter
convertible into BACs.
Neither the BACs nor the Limited Partnership Interests are traded on any
established public trading market. Because of the provisions of the Revenue Act
of 1987, unless there are further changes in such law, the Partnership does not
intend to include the BACs for quotation on NASDAQ or for listing on any
national or regional stock exchange or any other established securities market.
The Revenue Act of 1987 contained provisions which have an adverse impact on
investors in "publicly traded partnerships." Accordingly, the General Partners
have imposed limited restrictions on the transferability of the BACs and the
Limited Partnership Interests in secondary market transactions. Implementation
of these restrictions should prevent a public trading market from developing and
may adversely affect the ability of an investor to liquidate his or her
investment quickly. It is expected that such procedures will remain in effect
until such time, if ever, as further revision of the Revenue Act of 1987 may
permit the Partnership to lessen the scope of the restrictions.
As of May 4, 2005, the Partnership had 8,518 registered holders of an aggregate
of 115,917.5 BACs.
All of the Partnership's general partnership interests, representing an
aggregate capital contribution of $2,000, are held by the three General
Partners.
There are no material provisions in the Partnership Agreement that restrict the
ability of the Partnership to make distributions. However, the Partnership has
not made any distributions to BACs holders as of March 31, 2005. The Partnership
does not anticipate providing cash distributions to BACs holders other than
distributions of sale or refinancing proceeds upon the disposition of
Properties.
6
Item 6. Selected Financial Data
The information set forth below presents selected financial data of the
Partnership. Additional financia information is set forth in the audited
financial statements in Item 8 hereof.
Years Ended March 31,
--------------------------------------------------------------------------------
OPERATIONS 2005 2004* 2003* 2002* 2001*
- ------------------------------- ------------ ------------ ------------ ------------ ------------
Revenues $ 19,949,527 $ 19,444,868 $ 19,522,826 $ 19,684,981 $ 19,413,526
Operating expenses (25,667,714) (25,949,560) (25,959,956) (25,900,048) (24,815,895)
------------ ------------ ------------ ------------ ------------
Loss from operations before
minority interest and
extraordinary items (5,718,187) (6,504,692) (6,437,130) (6,215,067) (5,402,369)
Minority interest in loss of
subsidiaries from operations 35,139 157,199 54,728 77,927 95,388
Income (loss) from discontinued
operations including gain
(loss) on sale and minority
interest 1,059,225 (1,122,509) (1,578,975) (1,848,508) (2,311,758)
Extraordinary item -
forgiveness of indebtedness 0 0 0 1,802,622 695,154
------------ ------------ ------------ ------------ ------------
Net loss $ (4,623,823) $ (7,470,002) $ (7,961,377) $ (6,183,026) $ (6,923,585)
============ ============ ============ ============ ============
Per unit amounts:
Loss from operations before
extraordinary item per BAC $ (48.54) $ (54.21) $ (54.50) $ (52.40) $ (45.33)
Income (loss) from discontinued
operations including gain
(loss) on sale and minority
interest per BAC 9.05 (9.59) (13.49) (15.79) (19.74)
Extraordinary item per BAC 0 0 0 15.40 5.94
------------ ------------ ------------ ------------ ------------
Net loss per BAC $ (39.49) $ (63.80) $ (67.99) $ (52.80) $ (59.13)
============ ============ ============ ============ ============
Years Ended March 31,
-------------------------------------------------------------------------------
FINANCIAL POSITION 2005 2004 2003 2002 2001
- ------------------------------- ------------ ------------ ------------ ------------ ------------
Total assets $121,633,650 $138,055,440 $153,051,595 $163,751,533 $172,524,072
============ ============ ============ ============ ============
Total liabilities $127,239,339 $137,513,369 $144,869,224 $147,385,098 $149,472,020
============ ============ ============ ============ ============
Minority interest $ 561,850 $ 2,123,287 $ 2,293,585 $ 2,516,272 $ 3,018,863
============ ============ ============ ============ ============
Total partners' (deficit)
capital $ (6,167,539) $ (1,581,216) $ 5,888,786 $ 13,850,163 $ 20,033,189
============ ============ ============ ============ ============
* Reclassified for comparative purposes.
During the years ended March 31, 2001 and 2002, total assets decreased primarily
due to depreciation, partially offset by net additions to property and
equipment. During the years ended March 31, 2003, 2004 and 2005, total assets
and liabilities decreased primarily due to the sale of Local Partnerships.
7
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership's capital has been invested in twenty-seven Local Partnerships.
During the fiscal year ended March 31, 2005, the property and the related assets
and liabilities of one Local Partnership and the limited partnership interest in
one Local Partnership were sold. Through the fiscal year ended March 31, 2005,
the properties and the related assets and liabilities of four Local Partnerships
were sold and the limited partnership interest in one Local Partnership was
sold. For a discussion of these sales, see Sale of Properties (Note 10 in Item
8).
Short-Term
- ----------
During the year ended March 31, 2005, the Partnership's primary sources of funds
included: (i) working capital reserves; (ii) interest earned on the working
capital reserves; (iii) cash distributions from operations of the Local
Partnerships; and (iv) sales proceeds and distributions. Such funds are
available to meet the obligations of the Partnership but are not expected to be
significant. During the year ended March 31, 2005, cash distributions of
approximately $4,000 were received by the Partnership from operations of the
Local Partnerships. Additionally, during the year ended March 31, 2005,
approximately $1,000,000 of sales proceeds were received by the Partnership from
the sale of Local Partnerships, which includes two promissory notes of $200,000
each.
The Partnership is not expected to have access to additional sources of
financing, and in particular will not have the ability to access BACs holders
for additional capital contributions to provide capital if needed by the
Partnership. There can be no assurance that additional funds will be available
to the Partnership or any Local Partnership, nor that, if any Property is sold,
the proceeds of the sale will be sufficient to pay outstanding balances due on
mortgage loans or other outstanding indebtedness to which the Property is
subject.
During the years ended March 31, 2005, 2004 and 2003, respectively, cash
distributions received from operations of the Local Partnerships were
approximately $4,000, $42,000 and $156,000. The General Partners believe that
cash distributions received from the operations of the Local Partnerships are
sufficient to fund the Partnership's ongoing operations for the foreseeable
future (assuming the General Partners continue to defer payment of their
management fees).
During the year ended March 31, 2005, cash and cash equivalents of the
Partnership and its consolidated Local Partnerships increased approximately
$1,104,000. This increase was due to cash provided by operating activities
($2,489,000), proceeds from sale of properties ($600,000), an increase in due to
selling partners ($127,000), a net increase in due to local general partners and
affiliates ($35,000), an increase in capitalization of consolidated subsidiaries
attributable to minority interest ($246,000) and a decrease in cash held in
escrow ($276,000) which exceeded an increase in deferred costs ($123,000),
acquisitions of property and equipment ($1,189,000) and repayments of mortgage
notes ($1,357,000). In the adjustments to reconcile the net loss to net cash
provided by operating activities are loss from discontinued operations
($1,059,000) and depreciation and amortization ($5,804,000).
Total expenses for the years ended March 31, 2005, 2004 and 2003, excluding
depreciation and amortization, interest and general and administrative - related
parties, totaled $13,227,309, $13,780,748 and $12,238,127, respectively.
Accounts payable and other liabilities totaled $4,052,837 and $6,048,246,
respectively, which are comprised of the following amounts:
March 31,
------------------------------
2005 2004
---------- ----------
Accounts payable $3,180,337 $4,871,140
Security deposits payable 872,500 1,177,106
---------- ----------
Total accounts payable $4,052,837 $6,048,246
========== ==========
Accounts payable are short term liabilities which are expected to be paid from
operating cash flows, working capital balances at the Local Partnership level,
local general partner advances and in certain circumstances advances from the
Partnership. Because the provisions of the secondary loans defer the payment of
accrued interest of the respective Local Partnerships, the Partnership believes
it (and the applicable Local Partnerships) has sufficient liquidity and ability
to generate cash and to meet existing and known or reasonably likely future cash
requirements over both the short and long term.
Security deposits payable are offset by cash held in security deposits, which
are included in "Cash held in escrow" on the financial statements.
Accrued interest payable as of March 31, 2005 and 2004 was $1,862,461 and
$1,900,641, respectively. Accrued interest payable represents the accrued
interest on all mortgage loans, which include primary and secondary loans.
Certain secondary loans have provisions such that interest is accrued but not
payable until a future date. The Partnership anticipates the payment of accrued
interest on the secondary loans (which make up the majority of the accrued
interest payable amount indicated in the above table and which have been
accumulating since the Partnership's investment in the respective Local
Partnership) will be made from future refinancings or sales proceeds of the
respective Local Partnerships. In addition, each Local Partnership's mortgage
notes are collateralized by the land and buildings of the respective Local
Partnership, and are without further recourse to the Partnership.
Partnership management fees owed to the General Partners amounting to
approximately $14,088,000 and $12,713,000 were accrued and unpaid as of March
31, 2005 and 2004, respectively. Without the General Partners' continued accrual
without payment of these fees, the Partnership will not be in a position to meet
its obligations. The General Partners have allowed for the accrual without
payment of these amounts but are under no obligation to continue to do so.
8
Long-Term
- ---------
For a discussion of contingencies affecting certain Local Partnerships, see
Results of Operations of Certain Local Partnerships below. Since the maximum
loss the Partnership would be liable for is its net investment in the respective
Local Partnerships, the resolution of the existing contingencies are not
anticipated to impact future results of operations, liquidity or financial
condition in a material way. However, the Partnership's loss of its investment
in a Local Partnership may result in recapture of Tax Credits if the investment
is lost before the expiration of the 15-year compliance period during which the
Properties must comply with various rent and other restrictions.
Except as described above, management is not aware of any trends or events,
commitments or uncertainties which have not otherwise been disclosed that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the Properties around the United States so that
if one area of the country is experiencing downturns in the economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversification of the portfolio may not protect against a general
downturn in the national economy.
Tabular Disclosure of Contractual Obligations
- ---------------------------------------------
The following table summarizes the Partnership's commitments as of March 31,
2005 to make future payments under its debt agreements and other contractual
obligations.
Less than 1 - 3 3 -5 More than
Total 1 Year Years Years 5 Years
----------- ----------- ----------- ----------- -----------
Mortgage notes payable (a) $65,591,884 $ 2,437,735 $ 4,798,474 $ 2,738,087 $55,617,588
=========== =========== =========== =========== ===========
(a) The mortgage notes are payable in aggregate monthly installments of
approximately $399,000 including principal and interest at rates varying
from 1% to 15% per annum, through 2042. Each subsidiary partnership's
mortgage note payable is collateralized by the land and buildings of the
respective subsidiary partnership and the assignment of certain subsidiary
partnership's rents and leases and is without further recourse.
Off Balance Sheet Arrangements
- ------------------------------
The Partnership has no off-balance sheet arrangements.
Critical Accounting Policies
- ----------------------------
In preparing the consolidated financial statements, management has made
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Set forth below is a summary of the accounting policies
that management believes are critical to the preparation of the consolidated
financial statements. The summary should be read in conjunction with the more
complete discussion of the Partnership's accounting policies included in Note 2
to the consolidated financial statements in this annual report on Form 10-K.
Property and Equipment
- ----------------------
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring such property and equipment. The cost
of property and equipment is depreciated over their estimated useful lives using
accelerated and straight-line methods. Expenditures for repairs and maintenance
are charged to expense as incurred; major renewals and betterments are
capitalized. At the time property and equipment are retired or otherwise
disposed of, the cost and accumulated depreciation are eliminated from the
assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings. The Partnership complies with Statement of
Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". A loss on impairment of assets is recorded when
management estimates amounts recoverable through future operations and sale of
the Property on an undiscounted basis are below depreciated cost. Property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows) when the Property is considered to be impaired and the
depreciated cost exceeds estimated fair value. During the year ended March 31,
2005, the Partnership did not record a loss on impairment of assets. Through
March 31, 2005, the Partnership has recorded approximately $5,407,000 as a loss
on impairment of assets.
In accordance with FASB 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets", the results of discontinued operations are reported as a
separate component of income before extraordinary items on the Consolidated
Statements of Operations. Discontinued operations include the results of
operations and any gain or loss recognized for Local Partnership that have been
disposed of or are held for sale. A gain or loss recognized on the disposal is
disclosed in the notes to the financials statements. Adjustments to amounts
previously reported in operations that are directly related to the disposal of a
Local Partnership are reclassified in the current period as discontinued
operations for comparability purposes. Assets and liabilities of a Local
Partnership that are classified as held for sale are presented separately in the
asset and liability sections, respectively, of the Consolidated Balance Sheets.
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. Such
assets would be classified as property and equipment-held for sale and are not
depreciated. There were two assets classified as property and equipment-held for
sale at March 31, 2005, Rolling Green Limited Partnership ("Rolling Green") and
Upper Fifth Avenue Residential Associates, L.P. ("Upper Fifth"). See Note 12
regarding discontinued operations.
A loss on impairment of assets is recorded when management estimates amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time property investments
9
themselves are reduced to estimated fair value (generally using discounted cash
flows).
Revenue Recognition
- -------------------
Rental income is earned primarily under standard residential operating leases
and is typically due the first day of each month, but can vary by property due
to the terms of the tenant leases. Rental income is recognized when earned and
charged to tenants' accounts receivable if not received by the due date. Rental
payments received in advance of the due date are deferred until earned. Rental
subsidies are recognized as rental income during the month in which it is
earned.
Other revenues are recorded when earned and consist of the following items:
Interest income earned on cash and cash equivalent balances and cash held in
escrow balances, income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.
Other revenues from operations include the following amounts at both the
Partnership and Local Partnership level:
Years Ended March 31,
--------------------------------------
2005 2004 2003
-------- -------- --------
Interest $132,210 $111,060 $140,010
Other 665,510 653,571 588,240
-------- -------- --------
Total other revenue $797,720 $764,631 $728,250
======== ======== ========
Other revenues from discontinued operations include the following amounts at
both the Partnership and Local Partnership level:
Years Ended March 31,
--------------------------------------
2005 2004 2003
-------- -------- --------
Interest $ 0 $ 1,610 $ 2,224
Other 896,917 200,741 202,117
-------- -------- --------
Total other revenue $896,917 $202,351 $204,341
======== ======== ========
Income Taxes
- ------------
The Partnership is not required to provide for, or pay, any federal income
taxes. Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The Partnership may be subject
to state and local taxes in jurisdictions in which it operates. For income tax
purposes, the Partnership has a fiscal year ending December 31.
New Accounting Pronouncements
- -----------------------------
On December 16, 2004, the FASB issued Statements of Financial Accounting
Standards ("SFAS") No. 153, Exchanges of Nonmonetary Assets - An Amendment of
APB Opinion No. 29 ("SFAS No. 153"). The amendments made by SFAS No. 153 are
based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. Further, the amendments
eliminate the narrow exception for nonmonetary exchanges of similar productive
assets and replace it with a broader exception for exchanges of nonmonetary
assets that do not have "commercial substance." SFAS No. 153 is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15,
2005. The Partnership does not believe that the adoption of SFAS No. 153 on June
15, 2005 will have a material effect on the Partnership's consolidated financial
statements.
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 were 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 were applicable no
later than the first reporting period ending after March 15, 2004. The adoption
of FIN 46 (R) did not have a material impact on the Partnership's financial
reporting and disclosures.
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 Consolidated 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.
Results of Operations
- ---------------------
The following is a summary of the results of operations of the Partnership for
the years ended March 31, 2005, 2004 and 2003 (the 2004, 2003 and 2002 Fiscal
Years, respectively).
The majority of the Local Partnerships' revenues continue to be in the form of
rental income with the corresponding expenses divided among operations,
depreciation and mortgage interest.
The Partnership had originally invested in 27 Local Partnerships. As of March
31, 2005, Property Development, Polynesian, Seagrape and Campeche sold their
properties and the related assets and liabilities and Alexis Park sold its
limited partnership interest. As of March 31, 2005, Rolling Green Limited
10
Partnership ("Rolling Green") and Upper Fifth Avenue Residential Associates,
L.P. ("Upper Fifth") are classified as assets held for sale and are included in
discontinued operations (see Note 12).
The net loss for the 2004, 2003 and 2002 Fiscal Years totaled $4,623,823,
$7,470,002 and $7,961,377, respectively.
The Partnership no longer continues to meet its primary objective of generating
Tax Credits for qualified BACs holders. The Partnership generated $14,364 and
$20,509 in Tax Credits during the 2003 and 2002 Fiscal Years, respectively.
2004 vs. 2003
- -------------
Rental income increased approximately 3% for the 2004 Fiscal Year as compared to
the 2003 Fiscal Year, primarily due to rental rate increases.
Total expenses, excluding taxes, remained fairly consistent with a decrease of
approximately 1% for the 2004 Fiscal Year as compared to the 2003 Fiscal Year.
Taxes increased approximately $91,000 for the 2004 Fiscal Year as compared to
the 2003 Fiscal Year, primarily due to an increase in the annual real estate
taxes at one Local Partnership, an increase in the annual real estate taxes and
an increase in personal property payments made at a second Local Partnership and
an increase in the assessed market value of the property at a third Local
Partnership.
2003 vs. 2002
- -------------
Rental income decreased approximately 1% for the 2003 Fiscal Year as compared to
the 2002 Fiscal Year.
Total expenses, excluding operating, repairs and maintenance, insurance,
financial and depreciation and amortization, increased approximately 6% for the
2003 Fiscal Year as compared to the 2002 Fiscal Year.
Repairs and maintenance increased approximately $718,000 for the 2003 Fiscal
Year as compared to the 2002 Fiscal Year primarily due to sealing the building
foundation at one Local Partnership, increased security costs, painting and wall
repairs at a second Local Partnership and increased security costs and fire
damage related repairs at a third Local Partnership.
Operating and other increased approximately $228,000 for the 2003 Fiscal Year as
compared to the 2002 Fiscal Year primarily due to an increase in natural gas,
water and sewer costs at several Local Partnerships.
Insurance increased approximately $168,000 for the 2003 Fiscal Year as compared
to the 2002 Fiscal Year primarily due to an increase in premiums at the Local
Partnerships.
Financial decreased approximately $516,000 for the 2003 Fiscal Year as compared
to the 2002 Fiscal Year primarily due to mortgage refinancings at three Local
Partnerships in the prior year.
Depreciation and amortization decreased approximately $1,054,000 for the 2003
Fiscal Year as compared to the 2002 Fiscal Year primarily due to the write-off
of deferred financing fees relating to refinancings at three Local Partnerships
in 2002.
Results of Operations of Certain Local Partnerships
- ---------------------------------------------------
(a) Subsidiary Partnerships - Going Concerns and Uncertainties
Whittier Plaza Associates
- -------------------------
The financial statements for Whittier Plaza Associates Limited Partnership
("Whittier") have been prepared assuming that Whittier will continue as a going
concern. Whittier has sustained continuous losses since commencement of
operations in 1988. Whittier has experienced higher vacancies and lower rents
than those originally projected, resulting in increased difficulty in meeting
both operating and debt service obligations. The Local General Partner, pursuant
to a development deficit guarantee agreement, has advanced approximately $21,000
and $8,000 in the 2004 and 2003 Fiscal Years, respectively, and approximately
$489,000 since 1988 to fund operating cash shortfalls. In addition, Whittier's
management company, an affiliate of the Local General Partner, has deferred
receipt of various fees since 1991 totaling approximately $107,000. These items
raise substantial doubt about Whittier's ability to continue as a going concern.
The Partnership's investment in Whittier at March 31, 2005 and 2004 was reduced
to zero as a result of prior years' losses and the minority interest balance was
$0 at each date. Whittier's net loss after minority interest amounted to
approximately $24,000, $27,000 and $29,000 for the 2004, 2003 and 2002 Fiscal
Years.
Goodfellow Place Limited Partnership
- ------------------------------------
On March 2, 2004, Goodfellow Place Limited Partnership ("Goodfellow")'s
management had entered into an agreement to sell the Project's assets for
$100,000 plus assumption of the mortgage, with a closing date set for no later
than April 30, 2005. Immediately after the sale, Management intended to
liquidate Goodfellow. The accompanying financial statements have been prepared
assuming that the Partnership will continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
the sale of the Project and subsequent liquidation of the Partnership The sale
did not occur by April 30, 2005 and the agreement was cancelled.
b) Subsidiary Partnerships - Other
Property Development Associates, L.P.
- -------------------------------------
Property Development Associates, L.P. ("Property Development") was involved as a
defendant in a pending litigation case. This case was filed by the plaintiffs on
December 18, 2002 and served on the defendants on January 6, 2003. Discovery is
ongoing. The plaintiffs have alleged assault and battery as well as wrongful
eviction. The plaintiffs are seeking unspecified damages and have not made a
demand. Trial has been rescheduled for October 11, 2005. Property Development
intends to vigorously defend the matter. The potential damages, other than those
for the alleged intentional acts of assault and battery, are covered by
insurance. Property Development was sold on December 30, 2004.
11
Gramco Development Limited Dividend Partnership, L.P.
- -----------------------------------------------------
Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net
funds of $4,867,000 by the Municipality of Bayamon (the "Municipality") and HUD.
In the event of a substantial violation to the provisions of certain agreements
between Gramco and the Municipality and between the Municipality and HUD, the
funds shall become immediately due and payable at the election of HUD and the
Municipality. Otherwise, the principal amount of the obligation together with
any interest will be forgiven. Proceeds from the loan have been deducted from
fixed assets.
Williamsburg Residential, L.P.
- ------------------------------
In November 1996, the Local General Partner of Williamsburg Residential, L.P.
("Williamsburg") stopped making the mortgage note payments which constituted an
event of default. A Reinstatement and Modification Agreement was entered into
effective March 1, 1997. The Partnership has advanced Williamsburg the necessary
funds to keep the mortgage and escrows current during 2004 and is expected to
continue to do so during 2005.
The Partnership's investment in Williamsburg has been written down to $0 by
prior years' losses and the minority interest balance was approximately $721,000
and $724,000 at March 31, 2005 and 2004, respectively. Williamsburg's net loss
after minority interest amounted to approximately $283,000, $229,000 and
$142,000 for the 2004, 2003, and 2002 fiscal years, respectively. As of March
31, 2005, the Partnership has advanced Williamsburg approximately $1,365,000.
Alexis Park Apartments
- ----------------------
The limited partnership interest in this property was sold on September 21,
2004. The following disclosure relates to the period prior to the sale of Alexis
Park Apartments ("Alexis").
The financial statements for Alexis have been prepared in conformity with U.S.
generally accepted accounting principles, assuming the continuation of the Local
Partnership as a going concern. However, negative performance indicators and the
environmental issue raise substantial doubt about the Local Partnership's
ability to continue as a going concern.
A hazardous waste issue has affected Alexis for nearly 14 years. Although this
environmental issue is in many respects beyond its control, management believes
that the selected remedy of the United States Environmental Protection Agency is
practical and is not likely to cause significant disruption to the apartment
project's operations beyond what it has experienced over the last several years.
The Local Partnership's congressman, U.S. Senators and the Mayor of Bossier City
have assisted Alexis in preventing this issue from escalating unnecessarily and
management believes that no escalation will occur in the near term. Further, all
indications are that an oil company will bear all costs of remediation and that
the Local Partnership will not be called upon to share in those costs.
Accordingly, management believes the Local Partnership has the opportunity to
continue as a going concern during 2005.
At September 21, 2004, Alexis' current liabilities exceed its current assets by
approximately $371,000 and the Local Partnership sustained an operating loss of
approximately $56,000 for the period ended September 21, 2004. Although these
conditions could raise substantial doubt about Alexis' ability to continue as a
going concern, such doubt is alleviated because current liabilities includes
approximately $220,000 of obligations that are payable to a related party that
is not expected to require payments beyond Alexis' ability to pay and management
expects operations to generate sufficient funds to satisfy Alexis' obligations
for the next twelve months. Accordingly, management believes that Alexis has the
ability to continue as a going concern for at least one year from September 21,
2004.
These items raise substantial doubt about Alexis' ability to continue as a going
concern. The maximum loss for which the Partnership would be liable is its net
investment in Alexis. The Partnership's investment in Alexis at March 31, 2005
and 2004 was reduced to zero as a result of prior years' losses and the minority
interest balance was $0 at each date. Alexis' net (income) loss after minority
interest amounted to approximately $(745,000), $149,000 and $172,000, for the
2004, 2003 and 2002 Fiscal Years, respectively.
Other
- -----
The Partnership's investments, as a limited partner in the Local Partnerships,
are subject to the risks incident to potential losses arising from management
and ownership of improved real estate. The Partnership's investments also could
be adversely affected by poor economic conditions generally, which could
increase vacancy levels, rental payment defaults, and increased operating
expenses, any or all of which could threaten the financial viability of one or
more of the Local Partnerships.
There also are substantial risks associated with the operation of Apartment
Complexes receiving government assistance. These include governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent apartments in the complexes, difficulties in obtaining government approval
for rent increases, limitations on the percentage of income which low and
moderate-income tenants may pay as rent, the possibility that Congress may not
appropriate funds to enable HUD to make the rental assistance payments it has
contracted to make, and the possibility that when the rental assistance
contracts expire, there may not be market demand for apartments at full market
rents in a Local Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs as, for example, for such items as fuel, utilities and labor.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
The Partnership has mortgage notes that are payable in aggregate monthly
installments including principal and interest at rates varying from 1% to 15%
per annum. The Partnership does not believe there is a material risk associated
with the various interest rates associated with the mortgage notes as the
majority of the Local Partnership mortgage notes have fixed rates. The
Partnership currently discloses in Item 8, Note 3 of the Notes to Consolidated
Financial Statements, the fair value of the mortgage notes payable.
The Partnership does not have any other market risk sensitive instruments.
12
Item 8. Financial Statements and Supplementary Data
Sequential
Page
----------
(a)1. Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm 14
Consolidated Balance Sheets at March 31, 2005 and 2004 74
Consolidated Statements of Operations for the Years Ended March 31,
2005, 2004 and 2003 75
Consolidated Statements of Changes in Partners' Deficit (Capital) for
the Years Ended March 31, 2005, 2004 and 2003 76
Consolidated Statements of Cash Flows for the Years Ended March 31,
2005, 2004 and 2003 77
Notes to Consolidated Financial Statements 79
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Partners of
Liberty Tax Credit Plus II L.P. and Subsidiaries
(A Delaware Limited Partnership)
We have audited the consolidated balance sheets of Liberty Tax Credit Plus II
L.P. and Subsidiaries (A Delaware Limited Partnership) as of March 31, 2005 and
2004, and the related consolidated statements of operations, changes in
partners' (deficit) capital, and cash flows for the years ended March 31, 2005,
2004 and 2003 (the 2004, 2003 and 2002 Fiscal Years). 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 did not
audit the financial statements for 23 (2004 Fiscal Year), 26 (2003 Fiscal Year)
and 27 (2002 Fiscal Year) subsidiary partnerships whose losses aggregated
$3,727,702, $6,756,365 and $4,342,013 for the 2004, 2003 and 2002 Fiscal Years,
respectively, and whose assets constituted 81% and 98% of the Partnership's
assets at March 31, 2005 and 2004, presented in the accompanying consolidated
financial statements. The financial statements for 23 (2004 Fiscal Year), 26
(2003 Fiscal Year) and 27 (2002 Fiscal Year) of these subsidiary partnerships
were audited by other auditors whose reports thereon have been furnished to us
and our opinion expressed herein, insofar as it relates to the amounts included
for these subsidiary partnerships, is based solely upon the reports of the other
auditors.
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 audits 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, based upon our audits, and the reports of the other auditors
referred to above, the accompanying consolidated financial statements referred
to in the first paragraph present fairly, in all material respects, the
financial position of Liberty Tax Credit Plus II L.P. and Subsidiaries at March
31, 2005 and 2004, and the results of their operations and their cash flows for
the years ended March 31, 2005, 2004 and 2003, in conformity with U.S. generally
accepted accounting principles.
As discussed in Note 12(a), the consolidated financial statements include the
financial statements of two limited partnerships with significant contingencies
and uncertainties. The financial statements of these subsidiary partnerships
were prepared assuming that each will continue as a going concern. The two
subsidiary partnerships' net losses aggregated $98,382 (Fiscal 2004), $107,386
(Fiscal 2003) and $76,079 (Fiscal 2002) and their assets aggregated $1,970,877
and $1,970,814 at March 31, 2005 and 2004, respectively. These matters raise
substantial doubt about these subsidiary partnerships' abilities to continue as
going concerns. Management's plans in regard to these matters are also described
in Note 12(a). The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
June 17, 2005
14
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Polynesian Apartments Associates, Ltd.
We have audited the accompanying statements of operations, changes in partners`
capital and cash flows of POLYNESIAN APARTMENTS ASSOCIATES, LTD. (a limited
partnership), FHA Project No. FL29-K005-015-152, for the period January 1, 2003
to December 18, 2003 (date of dissolution). These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the Untied States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of the operations and cash flows of
POLYNESIAN APARTMENTS ASSOCIATES, LTD. for the period January 1, 2003 to
December 18, 2003 (date of dissolution), in conformity with accounting
principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP
New York, New York
December 18, 2003
15
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Polynesian Apartments Associates, Ltd.
We have audited the accompanying balance sheet of POLYNESIAN APARTMENTS
ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-152, as
of December 31, 2002, and the related statements of operations, changes in
partners' capital and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the Untied States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of POLYNESIAN APARTMENTS
ASSOCIATES, LTD. as of December 31, 2002 and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP
New York, New York
January 27, 2003
16
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Seagrape Village Associates, Ltd.
We have audited the accompanying statements of operations, changes in partners'
capital deficiency and cash flows of SEAGRAPE VILLAGE ASSOCIATES, LTD. (a
limited partnership), FHA Project No. FL29-K005-015-151, for the period January
1, 2003 to December 18, 2003 (date of dissolution). These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of the operations and the cash flows of
SEAGRAPE VILLAGE ASSOCIATES, LTD. for the period January 1, 2003 to December 18,
2003 (date of dissolution), in conformity with accounting principles generally
accepted in the United States of America.
/s/ Friedman Alpren & Green LLP
New York, New York
December 18, 2003
17
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Seagrape Village Associates, Ltd.
We have audited the accompanying balance sheet of SEAGRAPE VILLAGE ASSOCIATES,
LTD. (a limited partnership), FHA Project No. FL29-K005-015-151, as of December
31, 2002, and the related statements of operations, changes in partners' capital
deficiency and cash flows for the year then ended. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SEAGRAPE VILLAGE ASSOCIATES,
LTD. as of December 31, 2002 and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ Friedman Alpren & Green LLP
New York, New York
January 27, 2003
18
[Letterhead of JOSE E. ROSARIO & CO.]
INDEPENDENT AUDITOR'S REPORT
To the Partners Puerto Rico Housing Finance Corporation
Metropolitan Towers Associates, L.P. San Juan, Puerto Rico
Rio Piedras, Puerto Rico
I have audited the accompanying balance sheets of Metropolitan Towers
Associates, L.P., HUD Project No. RQ-46K-051-005, as of December 31, 2004 and
2003, and the related statements of loss, changes in partners' capital, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with auditing standards generally accepted
in the United States of America and Puerto Rico and Government Auditing
Standards issued by the Comptroller General of the United States. Those
standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Metropolitan Towers Associates,
L.P., as of December 31, 2004 and 2003 and the results of its operations,
changes in partners' capital, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United State of
America and Puerto Rico.
In accordance with GOVERNMENT AUDITING STANDARDS, I have also issued a report
dated January 28, 2005 on my consideration of Metropolitan Towers Associates,
L.P.'s internal control over financial reporting and on my tests of its
compliance with certain provisions of laws, regulations, contracts, grants,
agreements and other matters. The purpose of those reports are to describe the
scope of our testing of internal control over financial reporting and compliance
and the results of that testing and not to provide an opinion on the internal
control over financial reporting or on compliance. Those reports are an integral
part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and
should be read in conjunction with this report in considering the results of my
audits.
My audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 13 to 18 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of Metropolitan
Towers Associates, L.P. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Jose E. Rosario & Co.
License No. 961
Expires December 1, 2007
San Juan, Puerto Rico
January 28, 2005
Stamp No. 2029003 of the Puerto Rico College of CPA was affixed to the original.
19
[Letterhead of JOSE E. ROSARIO & CO.]
INDEPENDENT AUDITOR'S REPORT
To the Partners Puerto Rico Housing Finance Corporation
Metropolitan Towers Associates, LP San Juan, Puerto Rico
Rio Piedras, Puerto Rico
I have audited the accompanying balance sheets of Metropolitan Towers
Associates, LP, HUD Project No. RQ-46K-051-005, as of December 31, 2003 and
2002, and the related statements of loss, changes in partners' capital, and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on my audits.
I conducted my audits in accordance with auditing standards generally accepted
in the United States of America and Puerto Rico and Government Auditing
Standards issued by the Comptroller General of the United States. Those
standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Metropolitan Towers Associates,
L.P., as of December 31, 2003 and 2002 and the results of its operations,
changes in partners' capital, and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United State of
America and Puerto Rico.
In accordance with GOVERNMENT AUDITING STANDARDS, I have also issued a report
dated January 30, 2004, on my consideration of Metropolitan Towers Associates,
L.P.'s internal control and on my tests of its compliance with certain
provisions of laws, regulations, contracts, and grants. Those reports are an
integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of my audits.
My audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information on pages 13 to 19 is presented for purposes of additional analysis
and is not a required part of the basic financial statements of Metropolitan
Towers Associates, L.P.. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in my
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Jose E. Rosario & Co.
License No. 961
Expires December 1, 2004
San Juan, Puerto Rico
January 30, 2004
Stamp No. 1931869 of the Puerto Rico College of CPA was affixed to the original.
20
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners
Westminster Place II - Olive Site, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., Project No. 085-35415-PM, a limited partnership, as of December 31,
2004 and 2003, and the related statements of income, partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the 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 Westminster Place II - Olive
Site, L.P. as of December 31, 2004 and 2003 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our
reports dated January 29, 2005 on our consideration of Westminster Place II -
Olive Site, L.P.'s internal control over financial reporting and on our tests of
its compliance with certain provisions of laws, regulations, contracts, grant
agreements, and other matters. The purpose of those reports is to describe the
scope of our testing of internal control over financial reporting and compliance
and results of that testing and not to provide an opinion on the internal
control over financial reporting or on compliance. Those reports are an integral
part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and
should be read in conjunction with this report in considering the results of our
audits.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 13 to 22) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 29, 2005
21
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners
Westminster Place II - Olive Site, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheet of Westminster Place II - Olive
Site, L.P., Project No. 085-35415-PM, a limited partnership, as of December 31,
2003 and 2002, and the related statements of income, partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the 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 Westminster Place II - Olive
Site, L.P. as of December 31, 2003 and 2002 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our
reports dated February 2, 2004 on our consideration of Westminster Place II -
Olive Site, L.P.'s internal controls and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. Those reports are
an integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audits.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 13 to 22) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 6 to the
financial statements, the Partnership's rental subsidy will be depleted during
2004 which will raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters are described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP
February 2, 2004
St. Louis, Missouri
22
[Letterhead of RBG & Co.]
Independent Auditors' Report
Partners
Property Development Associates, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheet of Property Development
Associates, L.P., a limited partnership, as of December 31, 2004 and 2003, and
the related statements of operations, partners' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Partnership's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, 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 Property Development
Associates, L.P. as of December 31, 2004 and 2003, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
February 5, 2005
23
[Letterhead of RBG & Co.]
Independent Auditors' Report
Partners
Property Development Associates, L.P.
St. Louis, Missouri
We have audited the accompanying balance sheet of Property Development
Associates, L.P., a limited partnership, as of December 31, 2003 and 2002, and
the related statements of income, partners' equity and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Property Development
Associates, L.P. as of December 31, 2003 and 2002, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
February 5, 2004
24
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners
Whittier Plaza Associates Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, Project No. 085-35412-PM-SR, a limited partnership, as of
December 31, 2004 and 2003, and the related statements of operations, partners'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the 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 Whittier Plaza Associates
Limited Partnership as of December 31, 2004 and 2003, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our
reports dated February 2, 2005 on our consideration of Whittier Plaza Associates
Limited Partnership's internal control over financial reporting and on our tests
of its compliance with certain provisions of laws, regulations, contracts, grant
agreements, and other matters. The purpose of those reports is to describe the
scope of our testing of internal control over financial reporting and compliance
and the results of that testing and nto to provide an opinion on the internal
control over financial reporting or on compliance. Those reports are an integral
part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and
should be considered in assessing the results of our audit.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 15 to 24) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership has sustained recurring losses from
operations, lower than anticipated rental income, and has continually required a
general partner to fund deficits. These items raise substantial doubt about the
Partnership's ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
February 2, 2005
25
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners
Whittier Plaza Associates Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheet of Whittier Plaza Associates
Limited Partnership, Project No. 085-35412-PM-SR, a limited partnership, as of
December 31, 2003 and 2002, and the related statements of income, partners'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the 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 Whittier Plaza Associates
Limited Partnership as of December 31, 2003 and 2002, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our
reports dated January 30, 2004 on our consideration of Whittier Plaza Associates
Limited Partnership's internal control and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. Those reports are
an integral part of an audit performed in accordance with GOVERNMENT AUDITING
STANDARDS and should be read in conjunction with this report in considering the
results of our audit.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information (shown on pages 15 to 24) is presented for purposes of additional
analysis and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 5 to the
financial statements, the Partnership has sustained recurring losses from
operations, excessive vacancies, and has continually required a general partner
to fund deficits. These items raise substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
January 30, 2004
26
[Letterhead of Habif, Arogeti & Wynne, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of United - Glenarden I Limited
Partnership as of December 31, 2004, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United - Glenarden I Limited
Partnership as of December 31, 2004, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
January 27, 2005
27
[Letterhead of Habif, Arogeti & Wynne, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of United - Glenarden I Limited
Partnership as of December 31, 2003, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United - Glenarden I Limited
Partnership as of December 31, 2003, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
January 28, 2004
28
[Letterhead of Habif, Arogeti & Wynne, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of United - Glenarden I Limited
Partnership as of December 31, 2002, and the related statements of operations,
changes in partners' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United - Glenarden I Limited
Partnership as of December 31, 2002, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 6, 2003
29
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners of
United - Glenarden II Limited Partnership
We have audited the accompanying balance sheet of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2004, and the related statements of operations,
changes in partners' equity (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with standards generally accepted in the
United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2004, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
January 27, 2005
30
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners of
United - Glenarden II Limited Partnership
We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2003, and the related statements of operations,
changes in partners' equity (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with standards generally accepted in the
United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2003, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
January 28, 2004
31
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners of
United - Glenarden II Limited Partnership
We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2002, and the related statements of operations,
changes in partners' equity (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UNITED - GLENARDEN II LIMITED
PARTNERSHIP as of December 31, 2002, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
/s/ Habif, Arogeti & Wynne, P.C.
Atlanta, Georgia
February 6, 2003
32
[Letterhead of SOLOMON & ASSOCIATES LLC]
INDEPENDENT AUDITOR'S REPORT
To the Partners
ROLLING GREEN LIMITED PARTNERSHIP
D/B/A Prairie View Apartments
Libertyville, IL
We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2004 and 2003, and the related statements of
income, changes in partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2004 and 2003, and the results of its operations
and cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Solomon & Associates LLC
Chicago, IL
January 28, 2005
(except for Note 15, as to which the date is February 15, 2005)
33
[Letterhead of SOLOMON & ASSOCIATES LLC]
INDEPENDENT AUDITOR'S REPORT
To the Partners
ROLLING GREEN LIMITED PARTNERSHIP
D/B/A Prairie View Apartments
Libertyville, IL
We have audited the accompanying balance sheets of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, and the related statements of
income, changes in partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ROLLING GREEN LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, and the results of its operations,
changes in partners' equity (deficit) and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Solomon & Associates LLC
Chicago, IL
January 23, 2004
34
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners
Santa Juanita II Limited Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited
Partnership, as of December 31, 2004, and the related statements of profit and
loss, partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards issued by the
Comptroller General of the 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Santa Juanita II Limited
Partnership as of December 31, 2004, and the results of its operations, changes
in partners' equity, and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 6, 2004, on our
consideration of Santa Juanita II Limited Partnership's internal control, a
report dated February 6, 2004, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to major
HUD programs, and a report dated February 6, 2004 on its compliance with
specific requirements applicable to Affirmative Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information on pages 24
through 34 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
February 3, 2005
San Juan, Puerto Rico
Stamp No. 2073266 of the Puerto Rico Society of Certified Public Accountants was
affixed to original.
Federal Employer Identification Number: 66-0365844
35
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners
Santa Juanita II Limited Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited
Partnership, as of December 31, 2003, and the related statements of profit and
loss, partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards issued by the
Comptroller General of the 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Santa Juanita II Limited
Partnership as of December 31, 2003, and the results of its operations, changes
in partners' equity, and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 6, 2004, on our
consideration of Santa Juanita II Limited Partnership's internal control, a
report dated February 6, 2004, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to major
HUD programs, and a report dated February 6, 2004 on its compliance with
specific requirements applicable to Affirmative Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 24
through 33 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
February 6, 2004
San Juan, Puerto Rico
Stamp No. 2073265 of the Puerto Rico Society of Certified Public Accountants was
affixed to original.
Federal Employer Identification Number: 66-0365844
36
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners
Santa Juanita II Limited Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited
Partnership, as of December 31, 2002, and the related statements of profit and
loss, partners' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards issued by the
Comptroller General of the 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Santa Juanita II Limited
Partnership as of December 31, 2002, and the results of its operations, changes
in partners' equity, and cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated February 10, 2003, on our
consideration of Santa Juanita II Limited Partnership's internal control, a
report dated February 10, 2003, on its compliance with specific requirements
applicable to major HUD programs and specific requirements applicable to major
HUD programs, and a report dated February 10, 2003 on its compliance with
specific requirements applicable to Affirmative Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 24
through 33 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
February 10, 2003
San Juan, Puerto Rico
Stamp No. 2073264 of the Puerto Rico Society of Certified Public Accountants was
affixed to original.
Federal Employer Identification Number: 66-0365844
37
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Spring Creek Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of Spring Creek Associates, L.P.
(a Delaware Limited Partnership) as of December 31, 2003 and 2002, and the
related statements of operations changes in partners' capital (deficit), and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spring Creek Associates, L.P.
as of December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Berdon, LLP
Certified Public Accountants
New York, N.Y.
January 21, 2004
38
[Letterhead of Berdon LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
East Two Thirty-Five Associates, L.P.
We have audited the accompanying consolidated balance sheet of East Two
Thirty-Five Associates, L.P. and subsidiary (Delaware limited partnerships) as
of December 31, 2004, and the related consolidated statements of operations,
changes in partners' capital (deficit), and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements of East Two Thirty-Five Associates, L.P. and subsidiary as of
December 31, 2003 were audited by other auditors whose report dated February 10,
2004 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the 2004 consolidated financial statements referred to above
present fairly, in all material respects, the financial position n of East Two
Thirty-Five Associates, L.P. and subsidiary as of December 31, 2004, and the
results of their operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Berdon LLP
Certified Public Accountants
New York, New York
February 11, 2005
39
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of
East Two Thirty-Five Associates, L.P.
I have audited the accompanying consolidated balance sheet of East Two
Thirty-Five Associates, L.P. and subsidiary as (Delaware limited partnerships)
as of December 31, 2003, and the related consolidated statements of operations,
changes in partners' capital (deficit), and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
consolidated financial statements based on my audit. The consolidated financial
statements of East Two Thirty-Five Associates, L.P. and subsidiary as of
December 31, 2002 were audited by other auditors whose report dated February 10,
2003 expressed an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the December 31, 2003 consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
East Two Thirty-Five Associates, L.P. and subsidiary as of December 31, 2003,
and the results of their operations and their cash flows for the year then ended
in conformity with accounting principles generally accepted in the United States
of America.
/s/ Sunil J. Shah CPA, PC
New York, N.Y.
February 10, 2004
40
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
East Two Thirty-Five Associates, L.P.
New York, New York
We have audited the accompanying consolidated balance sheets of East Two
Thirty-Five Associates, L.P. and subsidiary as (Delaware limited partnership) as
of December 31, 2002 and 2001, and the related consolidated statements of
operations, changes in partners' capital, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of East Two Thirty-Five
Associates, L.P. and subsidiary as of December 31, 2002 and 2001, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
/s/ Berdon, LLP
New York, N.Y.
February 10, 2003
41
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Upper Fifth Avenue Residential Associates, L.P.
New York, New York
We have audited the accompanying balance sheet of Upper Fifth Avenue Residential
Associates, L.P. (a Delaware limited partnership) as of December 31, 2004, and
the related statements of operations, changes in partners' capital (deficit),
and cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit. The financial
statements of Upper Fifth Avenue Residential Associates, L.P. as of December 31,
2003, were audited by other auditors whose report dated February 6, 2004
expressed an unqualified opinion on those statements.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 2004 financial statements referred to above present fairly,
in all material respects, the financial position of Upper Fifth Avenue
Residential Associates, L.P. as of December 31, 2004, and the results of its
operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP
Certified Public Accountants
New York, N.Y.
February 1, 2005
42
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Upper Fifth Avenue Residential Associates, L.P.
New York, New York
I have audited the accompanying balance sheet of Upper Fifth Avenue Residential
Associates, L.P. (a Delaware limited partnership) as of December 31, 2003, and
the related statement of operations, changes in partners' capital (deficit), and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. My responsibility is to express
an opinion on these financial statements based on our audit. The Financial
statements of Upper Fifth Avenue Residential Associates, L.P. as of December 31,
2002, we audited by other auditors whose report dated January 28, 2003 expressed
an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that I 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. I believe that my audit provide a reasonable basis for
my opinion.
In my opinion, the 2003 financial statements referred to above present fairly,
in all material respects, the financial position of Upper Fifth Avenue
Residential Associates, L.P. as of December 31, 2003 and the results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Sunil J. Shah CPA, P.C.
Certified Public Accountants
Iselin, New Jersey
February 6, 2004
43
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
Upper Fifth Avenue Residential Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of Upper Fifth Avenue
Residential Associates, L.P. (a Delaware limited partnership) as of December 31,
2002 and 2001, and the related statements of operations, changes in partners'
capital (deficit), and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Upper Fifth Avenue Residential
Associates, L.P. as of December 31, 2002 and 2001, and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP
Certified Public Accountants
New York, N.Y.
January 28, 2003
44
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
West 107th Street Associates, L.P.
We have audited the accompanying balance sheet of West 107th Street Associates,
L.P. (a Delaware limited partnership) as of December 31, 2004, and the related
statements of operations, changes in partners' capital, and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of West 107th
Street Associates, L.P. as of December 31, 2003 were audited by other auditors
whose report dated January 19, 2004 expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the 2004 financial statements referred to above present fairly,
in all material respects, the financial position of West 107th Street
Associates, L.P. as of December 31, 2004, and the results of its operations and
its cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Berdon, LLP
Certified Public Accountants
New York, N.Y.
February 1, 2005
45
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of
West 107th Street Associates, L.P.
I have audited the accompanying balance sheet of West 107th Street Associates,
L.P. (a Delaware Limited Partnership) as of December 31, 2003, and the related
statements of operations, changes in partners' capital, and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on my audit. The financial statements of West 107th
Street Associates, L.P. as of December 31, 2002 were audited by other auditors
whose report dated January 9, 2003 expressed an unqualified opinion on those
statements.
I conducted my audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that I 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. I believe that my audit provides a reasonable basis for
my opinion.
In my opinion, the December 31, 2003 financial statements referred to above
present fairly, in all material respects, the financial position of West 107th
Street Associates, L.P. as of December 31, 2003 and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Sunil J. Shah CPA, PC
Certified Public Accountants
New York, N.Y.
January 19, 2004
46
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
West 107th Street Associates, L.P.
New York, New York
We have audited the accompanying balance sheets of West 107th Street Associates,
L.P. (a Delaware Limited Partnership) as of December 31, 2002 and 2001, and the
related statements of operations, changes in partners' capital, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of West 107th Street Associates,
L.P. as of December 31, 2002 and 2001 and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Berdon, LLP
Certified Public Accountants
New York, N.Y.
January 9, 2003
47
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
General Atlantic Second Avenue Associates, L.P.
We have audited the accompanying consolidated balance sheet of General Atlantic
Second Avenue Associates, L.P. and subsidiary (a Delaware limited partnership)
as of December 31, 2004, and the related consolidated statements of operations,
changes in partners' capital (deficit), and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. The consolidated financial
statements of General Atlantic Second Avenue Associates, L.P. and subsidiary as
of December 31, 2003 were audited by other auditors whose report dated February
3, 2004 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2004 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
General Atlantic Second Avenue Associates, L.P. and subsidiary as of December
31, 2004, and the results of their operations and their cash flows for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America.
/s/ Berdon, LLP
Certified Public Accountants
New York, N.Y.
February 10, 2005
48
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of
General Atlantic Second Avenue Associates, L.P.
I have audited the accompanying consolidated balance sheet of General Atlantic
Second Avenue Associates, L.P. and subsidiary (a Delaware Limited Partnership)
as of December 31, 2003, and the related consolidated statements of operations,
changes in partners' capital (deficit) and cash flows for the year then ended.
These consolidated financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
consolidated financial statements based on my audit. The consolidated financial
statements of General Atlantic Second Avenue Associates, L.P. and subsidiary as
of December 31, 2002 were audited by other auditors whose report dated January
31, 2003 expressed an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the December 31, 2003 consolidated financial statements referred
to above present fairly, in all material respects, the consolidated financial
position of General Atlantic Second Avenue Associates, L.P. and subsidiary as of
December 31, 2003 and the results of their operations and their cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.
/s/ Sunil J. Shah CPA, PC
Certified Public Accountants
New York, N.Y.
February 3, 2004
49
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of
General Atlantic Second Avenue Associates, L.P.
New York, New York
We have audited the accompanying consolidated balance sheets of General Atlantic
Second Avenue Associates, L.P. and subsidiary (a Delaware Limited Partnership)
as of December 31, 2002 and 2001, and the related consolidated statements of
operations, changes in partners' capital (deficit), and cash flows for the year
then ended. These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits. The consolidated
financial statements of General Atlantic Second Avenue Associates, L.P. as of
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of General
Atlantic Second Avenue Associates, L.P. and subsidiary as of December 31, 2002
and 2001 and the consolidated results of their operations and their cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ Berdon, LLP
Certified Public Accountants
New York, N.Y.
January 31, 2003
50
[Letterhead of Reznick Group, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Church Lane Associates
We have audited the accompanying balance sheets of Church Lane Associates as of
December 31, 2004 and 2003, and the related statements of profit and loss,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the 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 Church Lane Associates as of
December 31, 2004 and 2003, and the results of its operations, the changes in
partners' equity (deficit) and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
In accordance with Government Auditing Standards, we have also issued our report
for the year ended December 31, 2004, dated January 28, 2005, on our
consideration of Church Lane Associates' internal control over financial
reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements and other matters. The purpose of
that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to
provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards and should be considered in assessing the
results of our audit.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The 2004 supplemental information on
pages 25 through 28 is presented for purposes of additional analysis and is not
a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Reznick Group, P.C.
Baltimore, Maryland
January 28, 2005
51
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Church Lane Associates
We have audited the accompanying balance sheets of Church Lane Associates as of
December 31, 2003 and 2002, and the related statements of profit and loss,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the 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 Church Lane Associates as of
December 31, 2003 and 2002, and the results of its operations, the changes in
partners' equity (deficit) and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
In accordance with Government Auditing Standards, we have also issued our report
for the year ended December 31, 2003, dated January 23, 2004, on our
consideration of Church Lane Associates' internal control over financial
reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information on pages 27
through 30 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 23, 2004
52
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners
Campeche Isle Apartments Limited Partnership
We have audited the accompanying statement of changes in net assets in
liquidation of Campeche Isle Apartments Limited Partnership for the period
January 1, 2002 through January 18, 2002. This financial statement is the
responsibility of the partnership's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all
material respects, the changes in net assets in liquidation of for the period
January 1, 2002 through January 18, 2002, in conformity with accounting
principles generally accepted in the United States of America.
As described in note A to the financial statements during 2001, the partnership
adopted a plan to sell the rental property and liquidate the partnership in lieu
of continuing the business. On January 18, 2002, the partnership sold the rental
property. As a result, the partnership's financial statement is presented on the
liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial
statement taken as a whole. The supplemental information on page 7 is presented
for purposes of additional analysis and is not a required part of the basic
financial statement. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statement taken as a whole.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland
August 14, 2002
53
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robin Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 2004 and 2003, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robin Housing Associates as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 21, 2005
54
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Robin Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Robin Housing Associates (a
limited partnership) as of December 31, 2003 and 2002, and the related
statements of operations, partners' capital (deficiency), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Robin Housing Associates as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 23, 2004
55
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Concourse Artists Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 2004 and 2003, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concourse Artists Housing
Associates as of December 31, 2004 and 2003, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 21, 2005
56
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Concourse Artists Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Concourse Artists Housing
Associates (a limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Concourse Artists Housing
Associates as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 23, 2004
57
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
2051 Grand Concourse Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 2004 and 2003, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 2051 Grand Concourse Housing
Associates as of December 31, 2004 and 2003, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 21, 2005
58
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
2051 Grand Concourse Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of 2051 Grand Concourse Housing
Associates (a limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 2051 Grand Concourse Housing
Associates as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 23, 2004
59
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Willoughby-Wyckoff Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 2004 and 2003, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 Willoughby-Wyckoff Housing
Associates as of December 31, 2004 and 2003, and the results of its operations
and its cash flows for the years then ended in conformity with conformity with
accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 21, 2005
60
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners
Willoughby-Wyckoff Housing Associates
3743-A White Plains Road
Bronx, New York 10467
We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing
Associates (a limited partnership) as of December 31, 2003 and 2002, and the
related statements of operations, partners' capital (deficiency), and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 Willoughby-Wyckoff Housing
Associates as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with conformity with
accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements take as a whole. The accompanying information is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter
Certified Public Accountants, P.C.
White Plains, New York
January 23, 2004
61
[Letterhead of WOLFE NILGES NAHORSKI]
INDEPENDENT AUDITORS' REPORT
To the Partners
Goodfellow Place Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, 2004 and 2003, and the related statements of
income (loss), partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial 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 Goodfellow Place Limited
Partnership as of December 31, 2004 and 2003, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 12 to the financial statements, the Partnership's
management has entered into an agreement to sell the Project's assets for
$100,000 plus assumption of the mortgage, with a closing date set for no later
than April 30, 2005. Immediately after the sale, Management intends to liquidate
the Partnership. The accompanying financial statements have been prepared
assuming that the Partnership will continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
the sale of the Project and subsequent liquidation of the Partnership.
Our report on our audits of Goodfellow Place Limited Partnership for 2004 and
2003 were made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule of operating expenses is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information for 2004 and 2003 has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basis financial statements taken as a whole.
/s/ Wolfe Nilges Nahorski
A Professional Corporation
January 21, 2005, except information in Note 12 which is dated February 24, 2005
St. Louis, Missouri
62
[Letterhead of WOLFE NILGES NAHORSKI]
INDEPENDENT AUDITORS' REPORT
To the Partners
Goodfellow Place Limited Partnership
St. Louis, Missouri
We have audited the accompanying balance sheets of Goodfellow Place Limited
Partnership as of December 31, 2003 and 2002, and the related statements of
Income (loss), partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial 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 Goodfellow Place Limited
Partnership as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Wolfe Nilges Nahorski
A Professional Corporation
January 22, 2004
St. Louis, Missouri
63
[Letterhead of HAMILTON & MUSSER, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Penn Alto Associates, Limited Partnership
Altoona, Pennsylvania 16601
We have audited the accompanying balance sheets of Penn Alto Associates, Limited
Partnership as of December 31, 2004 and 2003 and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Penn Alto Associates, Limited
Partnership, as of December 31, 2004 and 2003, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information on pages
9 and 10 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Hamilton & Musser
Certified Public Accountants
Mechanicsburg, Pennsylvania
February 11, 2005
64
[Letterhead of HAMILTON & MUSSER, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Penn Alto Associates, Limited Partnership
Altoona, Pennsylvania 16601
We have audited the accompanying balance sheets of Penn Alto Associates, Limited
Partnership as of December 31, 2003 and 2002 and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Penn Alto Associates, Limited
Partnership, as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplementary information on pages
9 and 10 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Hamilton & Musser
Certified Public Accountants
Mechanicsburg, Pennsylvania
February 19, 2004
65
[Letterhead of Horwath Velez & Co. PSC]
Partners
Gramco Development Limited Dividend Partnership, L.P.
San Juan, Puerto Rico
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying balance sheet of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2004, and the related statements of operations, partners' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the 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 statements
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2004, and the results of its operations, changes in partners' equity and its
cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a reports
dated March 8, 2005, on our consideration of the Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG) internal
control over financial reporting and on our tests on its compliance with certain
provisions of laws, regulations, contracts, grants, agreements, and other
matters. The purpose of those reports is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that
testing and not to provide an opinion on the internal control over financial
reporting or on compliance. Those reports are an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of the audits.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information included on the report on pages 22 to 25 is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project
No. 056-35140-LD (HODAG). Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements for the year
ended December 31, 2004, and in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
/s/ Horwath Velez & Co. PSC
San Juan, Puerto Rico
March 8, 2005
Stamp number 2036267 was affixed to the original of this report.
66
[Letterhead of Torres Llompart, Sanchez Ruiz & Co.]
Partners
Gramco Development Limited Dividend Partnership, L.P.
San Juan, Puerto Rico
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying balance sheets of Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2003 and 2002, and the related statements of profit and loss, partners'
capital, and cash flows for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and Government Auditing Standards, issued by the
Comptroller General of the 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 statements 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 Gramco Development Limited
Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December
31, 2003 and 2002, and the results of its operations, changes in partners'
capital and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for audits of HUD Programs, issued by the US Department of Housing and
Urban Development, we have also issued a report dated January 21, 2004, on our
consideration of the Partnership's internal control and on our tests on its
compliance with specific requirements applicable to major HUD programs; and
compliance with specific requirements applicable to Fair Housing and
Non-Discrimination. Those reports are an integral part of an audit performed in
accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of the audits.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements, taken as a whole. The accompanying supplementary
information included in the report on pages 24 to 27 is presented for purposes
of additional analysis and is not a required part of the basic financial
statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project
No. 056-35140-LD (HODAG). Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements for the year
ended December 31, 2003, and in our opinion, is fairly stated in all material
respects in relation to the basic financial statements for the year ended
December 31, 2003, taken as a whole.
/s/ Torres Llompart, Sanchez Ruiz & Co.
January 21, 2004
License No. 169
San Juan, Puerto Rico
Stamp number 1943068 was affixed to the original of this report.
67
[Letterhead of COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT
To the Partners
Alexis Park Apartments, A Louisiana Partnership In Commendam
Bossier City, Louisiana
We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at September 21, 2004 and December 31, 2003
and the related statements of income, partners' capital and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted standards.
Those standards require that we plan and perform the audits 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 in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at September 21, 2004 and
December 31, 2003, and the results of its operations and its cash flows for the
periods then ended in conformity with generally accepted accounting principles.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the period January 1, 2004 through September 21, 2004
and the year ended December 31, 2003 taken as a whole. The supplementary
Schedule 1 is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the audit procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
December 15, 2004
68
[Letterhead of COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT
To the Partners
Alexis Park Apartments, A Louisiana Partnership In Commendam
Bossier City, Louisiana
We have audited the accompanying balance sheets of Alexis Park Apartments, A
Louisiana Partnership In Commendam at December 31, 2003 and December 31, 2002
and the related statements of income, partners' capital and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted standards.
Those standards require that we plan and perform the audits 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 in the first paragraph
above present fairly, in all material respects, the financial position of Alexis
Park Apartments, A Louisiana Partnership In Commendam at December 31, 2003 and
December 31, 2002, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed at Note 11 to the
financial statements, there are uncertainties that affect the Partnership
concerning the existence of hazardous waste and negative performance indicators
that raise substantial doubt about the Partnership's ability to continue as a
going concern. Management's position in regard to these matters is also
discussed at Note 11. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the years ended December 31, 2003 and December 31, 2002
taken as a whole. The supplementary Schedule 1 is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the audit procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
February 2, 2004
69
[Letterhead of Dickey, Wolf & Humbard, LLC]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Williamsburg Residential, L.P.
We have audited the balance sheets of Williamsburg Residential, L.P. (a Kansas
Limited Partnership) as of December 31, 2004 and 2003, and the related
statements of operations, partners' equity/(deficit), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Williamsburg Residential, L.P.
as of December 31, 2004 and 2003, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Dickey, Wolf & Humbard, LLC
Certified Public Accountants
Harrisonville, MO
January 31, 2005
70
[Letterhead of Dickey, Wolf & Humbard, LLC]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Williamsburg Residential, L.P.
We have audited the balance sheets of Williamsburg Residential, L.P. (a Kansas
Limited Partnership) as of December 31, 2003 and 2002, and the related
statements of operations, partners' equity/(deficit), and cash flows for the
years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Williamsburg Residential, L.P.
as of December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Dickey, Wolf & Humbard, LLC
Certified Public Accountants
Harrisonville, MO
January 9, 2004
71
[Letterhead of MAYER HOFFMAN MCCANN P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Victory Apartments
We have audited the balance sheets of Victory Apartments - F.H.A. Project No.
071-35701 as of December 31, 2004 and 2003, and the related statements of
income, changes in partners' capital, and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards and the standards applicable to financial audits contained in
GOVERNMENT AUDITING STANDARDS, issued by the Comptroller General of the 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 Victory Apartments, F.H.A.
Project No. 071-35701 as of December 31, 2004 and 2003, and the results of its
operations and its cash flows for the years then ended in conformity with U.S.
generally accepted accounting principles.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a reports
dated January 27, 2005, on our consideration of the Partnership's internal
control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, grants, agreements and other
matters. The purpose of those reports is to describe the scope of our testing
and not to provide an opinion on the internal control over financial reporting
or on compliance. Those reports are an integral part of an audit performed in
accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction
with this report in considering the results of our audits.
/s/ Mayer Hoffman McCann P.C.
Chicago, Illinois
January 27, 2005
72
[Letterhead of PHILIP ROOTBERG & COMPANY, LLP]
INDEPENDENT AUDITOR'S REPORT
To the Partners
Victory Apartments
We have audited the accompanying balance sheet of Victory Apartments (a limited
partnership) - F.H.A. Project No. 071-35701 as of December 31, 2002 and 2001,
and the related statements of profit and loss, partners' capital, and cash flows
for the years then ended. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the 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 Victory Apartments, F.H.A.
Project No. 071-35701 as of December 31, 2002 and 2001, and the results of its
operations, changes in its partners' capital and its cash flows for the years
then ended in conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report
dated January 21, 2003, on our consideration of the Partnership's internal
control and on our test of its compliance with certain provisions of laws,
regulations, contracts and grants. Those reports are an integral part of an
audit performed in accordance with Government Auditing Standards and should be
read in conjunction with this report in considering the results of our audits.
Our 2002 audit was conducted for the purpose of forming an opinion on the basic
2002 financial statements taken as a whole. The accompanying supplemental
schedules listed on the preceding contents page are presented for purposes of
additional analysis to comply with HUD reporting requirements and are not a
required part of the basic 2002 financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic 2002
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic 2002 financial statements taken as a whole.
/s/ Philip Rootberg & Company, LLP
Chicago, Illinois
January 21, 2003
73
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31,
-------------------------------
2005 2004
------------- -------------
ASSETS
Operating assets:
Property and equipment, at cost, less accumulated depreciation
(Notes 2, 4 and 7) $ 84,607,267 $ 121,262,827
Cash and cash equivalents (Notes 2, 3 and 12) 2,942,859 1,838,615
Cash held in escrow (Notes 2, 3 and 5) 7,410,533 8,314,043
Deferred costs - less accumulated amortization (Notes 2 and 6) 1,952,697 2,333,029
Other assets 2,363,526 4,306,926
------------- -------------
Total operating assets 99,276,882 138,055,440
------------- -------------
Assets of discontinued operations (Note 13):
Property and equipment held for sale, net of accumulated
depreciation of $12,722,802 and $0, respectively 19,181,395 0
Net assets held for sale 3,175,373 0
------------- -------------
Total discontinued assets 22,356,768 0
------------- -------------
Total assets $ 121,633,650 $ 138,055,440
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Operating Liabilities:
Mortgage notes payable (Notes 3 and 7) $ 65,591,884 $ 96,557,630
Accounts payable and other liabilities 4,052,837 6,048,246
Accrued interest payable 1,862,461 1,900,641
Due to local general partners and affiliates (Note 8) 7,125,544 14,797,705
Due to general partners and affiliates (Note 8) 17,143,043 15,634,778
Due to selling partners 2,701,207 2,574,369
------------- -------------
Total operating liabilities 98,476,976 137,513,369
------------- -------------
Liabilities of discontinued operations (Note 13):
Mortgage notes payable of assets held for sale 19,331,973 0
Net liabilities held for sale including minority interest 9,430,390 0
------------- -------------
Total discontinued liabilities 28,762,363 0
------------- -------------
Total liabilities
Minority interests (Note 2) 561,850 2,123,287
------------- -------------
Commitments and contingencies (Notes 8 and 12)
Partners' deficit:
Limited partners ( 115,917.5 BACs issued and outstanding) (Note 1) (5,112,305) (534,720)
General partners (1,055,234) (1,046,496)
------------- -------------
Total partners' deficit (6,167,539) (1,581,216)
------------- -------------
Total liabilities and partners' deficit $ 121,633,650 $ 138,055,440
============= =============
See accompanying notes to consolidated financial statements.
74
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended March 31,
----------------------------------------------
2005 2004* 2003*
------------ ------------ ------------
Operations:
Revenues
Rental income $ 19,151,807 $ 18,680,237 $ 18,794,576
Other (Note 11) 797,720 764,631 728,250
------------ ------------ ------------
19,949,527 19,444,868 19,522,826
------------ ------------ ------------
Expenses
General and administrative 4,486,728 4,953,170 4,535,580
General and administrative-related parties (Note 8) 2,668,229 2,365,425 2,348,918
Repairs and maintenance 4,363,169 4,738,219 4,019,926
Operating and other 2,441,764 2,270,007 2,042,280
Real estate taxes 729,156 637,675 626,988
Insurance 1,206,488 1,181,677 1,013,353
Financial, primarily interest 3,968,565 4,014,243 4,529,853
Depreciation and amortization 5,803,615 5,789,144 6,843,058
------------ ------------ ------------
Total expenses 25,667,714 25,949,560 25,959,956
------------ ------------ ------------
Loss from operations before minority interest (5,718,187) (6,504,692) (6,437,130)
Minority interest in loss of subsidiaries from operations 35,139 157,199 54,728
------------ ------------ ------------
Loss from operations (5,683,048) (6,347,493) (6,382,402)
Discontinued operations:
Income (loss) from discontinued operations (including
gain (loss) on sale of properties and minority interest)
(Note 13) 1,059,225 (1,122,509) (1,578,975)
------------ ------------ ------------
Net loss $ (4,623,823) $ (7,470,002) $ (7,961,377)
============ ============ ============
Loss from operations - limited partners $ (5,626,217) $ (6,284,018) $ (6,318,578)
Income (loss) from discontinued operations (including gain
(loss) on sale of properties and minority interest) -
limited partners 1,048,633 (1,111,284) (1,563,185)
------------ ------------ ------------
Net loss - limited partners $ (4,577,584) $ (7,395,302) $ (7,881,763)
============ ============ ============
Number of BACs outstanding 115,917.5 115,917.5 115,917.5
============ ============ ============
Loss from operations per BAC $ (48.54) $ (54.21) $ (54.50)
Income (loss) from discontinued operations (including gain
(loss) on sale of properties and minority interest) per
BAC 9.05 (9.59) (13.49)
------------ ------------ ------------
Loss per BAC $ (39.49) $ (63.80) $ (67.99)
============ ============ ============
* Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
75
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
Limited General
Total Partners Partners
------------ ------------ ------------
Partners' capital (deficit) -
April 1, 2002 $ 13,850,163 $ 14,742,345 $ (892,182)
Net loss (7,961,377) (7,881,763) (79,614)
------------ ------------ ------------
Partners' capital (deficit) -
March 31, 2003 5,888,786 6,860,582 (971,796)
Net loss (7,470,002) (7,395,302) (74,700)
------------ ------------ ------------
Partners' deficit - March 31, 2004 (1,581,216) (534,720) (1,046,496)
Noncash contribution from
related party sale 37,500 0 37,500
Net loss (4,623,823) (4,577,585) (46,238)
------------ ------------ ------------
Partners' deficit March 31, 2005 $ (6,167,539) $ (5,112,305) $ (1,055,234)
============ ============ ============
See accompanying notes to consolidated financial statements.
76
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Years Ended March 31,
----------------------------------------------
2005 2004* 2003*
------------ ------------ ------------
Cash flows from operating activities:
Net loss $ (4,623,823) $ (7,470,002) $ (7,961,377)
------------ ------------ ------------
Adjustments to reconcile net loss to net cash provided
by operating activities:
(Income) loss from discontinued operations (1,059,225) 1,122,509 1,578,975
Depreciation and amortization 5,803,615 5,789,144 6,843,058
Minority interest in (loss) income of subsidiaries (35,139) (157,199) (54,728)
Accrued interest added to principal of mortgage note
payable 52,872 52,872 52,876
(Increase) decrease in assets:
Cash held in escrow (59,421) 22,532 (392,935)
Other assets 159,590 148,357 24,698
Increase (decrease) in liabilities:
Accounts payable and other liabilities 165,177 54,328 434,374
Due to general partners and affiliates 2,085,061 1,828,381 1,751,992
------------ ------------ ------------
Total adjustments 7,112,530 8,860,924 10,238,310
------------ ------------ ------------
Net cash provided by operating activities 2,488,707 1,390,922 2,276,933
------------ ------------ ------------
Cash flows from investing activities:
Proceeds from sale of properties 600,000 7,840,000 4,625,000
Costs paid relating to sale of properties 0 (136,254) (129,688)
Acquisition of property and equipment (1,188,722) (932,748) (942,496)
Decrease (increase) in cash held in escrow 276,392 (199,096) (745,014)
------------ ------------ ------------
Net cash (used in) provided by investing activities (312,330) 6,571,902 2,807,802
------------ ------------ ------------
Cash flows from financing activities:
Increase in deferred costs (123,282) (150,197) (465,596)
Proceeds from mortgage notes 0 0 30,838,245
Repayments of mortgage notes (1,357,129) (8,120,035) (34,713,615)
Increase in due to local general partners and affiliates 445,504 361,350 170,648
Decrease in due to local general partners and affiliates (410,181) (158,724) (674,046)
Increase in due to selling partners 126,838 116,754 107,520
Increase (decrease) in capitalization of consolidated
subsidiaries attributable to minority interest 246,117 248,704 (23,674)
------------ ------------ ------------
Net cash used in financing activities (1,072,133) (7,702,148) (4,760,518)
------------ ------------ ------------
77
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(continued)
Years Ended March 31,
----------------------------------------------
2005 2004* 2003*
------------ ------------ ------------
Net increase in cash and cash equivalents 1,104,244 260,676 324,217
Cash and cash equivalents at beginning of year 1,838,615 1,577,939 1,253,722
------------ ------------ ------------
Cash and cash equivalents at end of year $ 2,942,859 $ 1,838,615 $ 1,577,939
============ ============ ============
Supplemental disclosure of cash flows information:
Cash paid during the year for interest $ 4,826,443 $ 6,043,819 $ 6,037,438
============ ============ ============
* Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
78
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 1 - General
Liberty Tax Credit Plus II L.P., a Delaware limited partnership (the
"Partnership"), was organized on March 25, 1988, but had no activity until July
1, 1988 (which date is considered to be inception for financial accounting
purposes). The Partnership had no operations until commencement of the public
offering on July 20, 1988.
The general partners of the Partnership are Related Credit Properties II L.P., a
Delaware limited partnership (the "Related General Partner"), Liberty Associates
II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP
II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the
"Liberty General Partner" and together with the Related General Partner and
Liberty Associates, the "General Partners"). The general partner of the Related
General Partner is Related Credit Properties II Inc., a Delaware corporation.
The general partners of Liberty Associates are Related Credit Properties II
Inc., and the Liberty General Partner. Liberty Associates is also the special
limited partner of the Partnership. On November 17, 2003, CharterMac acquired
Related Capital Company, which is the indirect parent of RCC Manager LLC, the
sole shareholder of Related Credit Properties II Inc. Pursuant to the
acquisition, CharterMac acquired controlling interests in the General Partners.
This acquisition did not affect the Partnership or its day-to-day operations, as
the majority of the General Partners' management team remained unchanged.
The Partnership's business is to invest in other limited partnerships ("Local
Partnerships", "subsidiaries" or "subsidiary partnerships") owning leveraged
low-income multifamily residential complexes ("Apartment Complexes") that are
eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in
the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning
properties ("Rehabilitation Projects" and together with the Apartment Complexes,
the "Properties") that are eligible for the historic rehabilitation tax credit.
The Partnership's investment in each Local Partnership represents a 20% to 98%
interest in that Local Partnership. The Partnership had originally invested in
27 Local Partnerships. During the year ended March 31, 2005, the Partnership
sold the property and the related assets and liabilities of one Local
Partnership and the limited Partnership interest of one Local Partnership.
Through the year ended March 31, 2005, the Partnership has sold the properties
and the related assets and liabilities of four Local Partnerships and the
limited partnership interest in one Local Partnership (see Note 10).
The Partnership was authorized to issue a total of 200,000 Beneficial Assignment
Certificates ("BACs"), of which 120,000 have been registered with the Securities
and Exchange Commission for sale to the public. The public offering was
completed on January 9, 1989 with a total of 115,917.5 BACs sold and
$115,917,500 of proceeds received by the Partnership.
The terms of the Partnership's Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") provide, among other things, that net
profits or losses and distributions of cash flow are, in general, allocated 99%
to the limited partners and BACs holders and 1% to the general partners.
NOTE 2 - Summary of Significant Accounting Policies
a) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership
and 24, 26 and 27 subsidiary partnerships in which the Partnership is a limited
partner for the years ended March 31, 2005, 2004 and 2003 (the 2004, 2003 and
2002 "Fiscal Years"), respectively. Through the rights of the Partnership and/or
a General Partner (which has a contractual obligation to act on behalf of the
Partnership) to remove the general partner of the subsidiary local partnerships
and to approve certain major operating and financial decisions, the Partnership
has a controlling financial interest in the subsidiary local partnerships.
For financial reporting purposes, the Partnership's fiscal year ends on March
31, in order to allow adequate time for the subsidiaries' financial statements
to be prepared and consolidated. The books and records of the Partnership are
maintained on the accrual basis of accounting, in accordance with U.S. generally
accepted accounting principles ("GAAP"). All subsidiaries have fiscal years
ending December 31. Accounts of the subsidiaries have been adjusted for
intercompany transactions from January 1 through March 31. All intercompany
accounts and transactions with the subsidiary partnerships have been eliminated
in consolidation.
Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from cash contributions and cash
distributions to the minority interest partners.
The Partnership's investment in each subsidiary partnership is equal to the
respective subsidiary partners' equity less minority interest capital, if any.
Losses attributable to minority interests which exceed the minority interest's
investment in a subsidiary partnership have been charged to the Partnership.
Such losses aggregated approximately $398,000, $0 and $564,000 for the years
ended March 31, 2005, 2004 and 2003 (the 2004, 2003 and 2002 Fiscal Years),
respectively. In consolidation, all subsidiary partnership losses are included
in the Partnership's capital account except for losses allocated to minority
interest capital.
b) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and investments
in short-term highly liquid instruments purchased with original maturities of
three months or less.
79
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
c) Property and Equipment
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring such property and equipment. The cost
of property and equipment is depreciated over their estimated useful lives using
accelerated and straight-line methods. Expenditures for repairs and maintenance
are charged to expense as incurred; major renewals and betterments are
capitalized. At the time property and equipment are retired or otherwise
disposed of, the cost and accumulated depreciation are eliminated from the
assets and accumulated depreciation accounts and the profit or loss on such
disposition is reflected in earnings. The Partnership complies with Statement of
Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". A loss on impairment of assets is recorded when
management estimates amounts recoverable through future operations and sale of
the Property on an undiscounted basis are below depreciated cost. Property
investments themselves are reduced to estimated fair value (generally using
discounted cash flows) when the Property is considered to be impaired and the
depreciated cost exceeds estimated fair value. During the year ended March 31,
2005, the Partnership did not record a loss on impairment of assets. Through
March 31, 2005, the Partnership has recorded approximately $5,407,000 as a loss
on impairment of assets.
In accordance with FASB 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets", the results of discontinued operations are reported as a
separate component of income before extraordinary items on the Consolidated
Statements of Operations. Discontinued operations include the results of
operations and any gain or loss recognized for Local Partnership that have been
disposed of or are held for sale. A gain or loss recognized on the disposal is
disclosed in the notes to the financials statements. Adjustments to amounts
previously reported in operations that are directly related to the disposal of a
Local Partnership are reclassified in the current period as discontinued
operations for comparability purposes. Assets and liabilities of a Local
Partnership that are classified as held for sale are presented separately in the
asset and liability sections, respectively, of the Consolidated Balance Sheets.
At the time management commits to a plan to dispose of assets, said assets are
adjusted to the lower of carrying amount or fair value less costs to sell. Such
assets would be classified as property and equipment-held for sale and are not
depreciated. There were two assets classified as property and equipment-held for
sale at March 31, 2005, Rolling Green Limited Partnership ("Rolling Green") and
Upper Fifth Avenue Residential Associates, L.P. ("Upper Fifth"). See Note 12
regarding discontinued operations.
d) Revenue Recognition
Rental income is earned primarily under standard residential operating leases
and is typically due the first day of each month, but can vary by property due
to the terms of the tenant leases. Rental income is recognized when earned and
charged to tenants' accounts receivable if not received by the due date. Rental
payments received in advance of the due date are deferred until earned. Rental
subsidies are recognized as rental income during the month in which it is
earned.
Other revenues are recorded when earned and consist of the following items:
Interest income earned on cash and cash equivalent balances and cash held in
escrow balances, income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.
Other revenues from operations include the following amounts at both the
Partnership and Local Partnership level:
Years Ended March 31,
--------------------------------------
2005 2004 2003
-------- -------- --------
Interest $132,210 $111,060 $140,010
Other 665,510 653,571 588,240
-------- -------- --------
Total other revenue $797,720 $764,631 $728,250
======== ======== ========
Other revenues from discontinued operations include the following amounts at
both the Partnership and Local Partnership level:
Years Ended March 31,
--------------------------------------
2005 2004 2003
-------- -------- --------
Interest $ 0 $ 1,610 $ 2,224
Other 896,917 200,741 202,117
-------- -------- --------
Total other revenue $896,917 $202,351 $204,341
======== ======== ========
e) Offering Costs
Costs incurred to sell BACs, including brokerage and the nonaccountable expense
allowance, are considered selling and offering expenses. These costs are charged
directly to limited partners' capital.
80
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
f) Income Taxes
The Partnership is not required to provide for, or pay, any federal income
taxes. Net income or loss generated by the Partnership is passed through to the
partners and is required to be reported by them. The Partnership may be subject
to state and local taxes in jurisdictions in which it operates. For income tax
purposes, the Partnership has a fiscal year ending December 31 (Note 9).
g) Loss Contingencies
The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated. In
addition, the Partnership evaluates a potential environmental liability
independently from any potential claim for recovery.
h) Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates.
i) New Accounting Pronouncements
On December 16, 2004, the FASB issued Statements of Financial Accounting
Standards ("SFAS") No. 153, Exchanges of Nonmonetary Assets - An Amendment of
APB Opinion No. 29 ("SFAS No. 153"). The amendments made by SFAS No. 153 are
based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. Further, the amendments
eliminate the narrow exception for nonmonetary exchanges of similar productive
assets and replace it with a broader exception for exchanges of nonmonetary
assets that do not have "commercial substance." SFAS No. 153 is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15,
2005. The Company does not believe that the adoption of SFAS No. 153 on June 15,
2005 will have a material effect on the Company's consolidated financial
statements.
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 was 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 were 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 were applicable no
later than the first reporting period ending after March 15, 2004. The adoption
of FIN 46 (R) did not have a material impact on the Partnership's financial
reporting and disclosures.
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 Consolidated 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.
NOTE 3 - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments (all of which are held for nontrading
purposes) for which it is practicable to estimate that value:
Cash and Cash Equivalents, and Cash Held in Escrow
- ---------------------------------------------------------
The carrying amount approximates fair value.
Mortgage Notes Payable
- ----------------------
The fair value of mortgage notes payable is estimated, where practicable, based
on the borrowing rate currently available for similar loans.
The estimated fair values of the Partnership's mortgage notes payable from
operating liabilities are as follows:
March 31, 2005 March 31, 2004
------------------------- -------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
----------- ----------- ----------- -----------
Mortgage notes payable for which it is:
Practicable to estimate fair value $23,254,467 $23,254,467 $34,390,205 $34,192,920
Not practicable $42,337,417 * $62,167,425 *
81
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
The estimated fair values of the Partnership's mortgage notes payable from
discontinued liabilities are as follows:
March 31, 2005
---------------------------
Carrying Fair
Amount Value
----------- -----------
Mortgage notes payable for which it is:
Practicable to estimate fair value $ 5,580,613 $ 6,789,731
Not practicable $13,751,360 *
* Management believes it is not practicable to estimate the fair value of the
mortgage notes payable because mortgage programs with similar characteristics
are not currently available to the Local Partnerships.
The carrying amount of other financial instruments that require such disclosure
approximates fair value.
NOTE 4 - Property and Equipment
The components of property and equipment and their estimated useful lives from
operating asset are as follows:
March 31, Estimated
------------------------------ Useful Lives
2005 2004 (Years)
------------- ------------- -------------
Land $ 10,431,355 $ 12,323,699 --
Building and improvements 156,163,976 205,124,742 15 to 40
Other 4,398,989 5,819,617 5 to 15
------------- -------------
170,994,320 223,268,058
Less: Accumulated depreciation (86,387,053) (102,005,231)
------------- -------------
$ 84,607,267 $ 121,262,827
============= =============
Included in property and equipment are $6,955,050 of acquisition fees paid or
accrued to the General Partners and $1,606,014 of acquisition expenses as of
March 31, 2005 and 2004. In addition, as of March 31, 2005 and 2004, buildings
and improvements include $7,015,991 of capitalized interest.
In connection with the rehabilitation of the Properties, the subsidiary
partnerships have incurred developer's fees of $20,563,695 to the local general
partners and affiliates. Such fees have been included in the cost of property
and equipment.
Depreciation expense for the years ended March 31, 2005, 2004 and 2003 amounted
to $5,707,376, $5,789,144 and $6,843,058, respectively.
During the 2005 and 2004 Fiscal Years, there were decreases in accumulated
depreciation in the amounts of $83,528 and $0, respectively, due to write-offs
on dispositions from operations and $9,885,825 and $2,997,401, respectively,
relating to the discontinued operations.
The components of property and equipment held for sale and their estimated
useful lives from discontinued asset are as follows:
Estimated
March 31, Useful Lives
2005 (Years)
------------ ------------
Land $ 638,738 --
Building and improvements 30,538,700 15 to 40
Other 724,572 5 to 15
------------
31,902,010
Less: Accumulated depreciation (12,720,615)
------------
$ 19,181,395
============
Depreciation expense from discontinued operations for the year ended March 31,
2005 amounted to $1,364,414.
82
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 5 - Cash Held in Escrow
Cash held in escrow from operating assets is restricted and consists of the
following:
March 31,
-----------------------
2005 2004
---------- ----------
Real estate taxes, insurance, reconstruction and other $3,497,315 $3,713,774
Reserve for replacements 3,085,158 3,465,131
Tenant security deposits 828,060 1,135,138
---------- ----------
$7,410,533 $8,314,043
========== ==========
Cash held in escrow from discontinued assets is restricted and consists of the
following:
March 31,
2005
----------
Real estate taxes, insurance, reconstruction and other $228,225
Reserve for replacements 142,435
Tenant security deposits 233,539
--------
$604,199
========
NOTE 6 - Deferred Costs
The components of deferred costs and their periods of amortization from
operating assets are as follows:
March 31,
------------------------------------------
2005 2004 Period
----------- ----------- ------------
Financing expenses $ 2,817,550 $ 3,907,517 *
Other 639,858 639,858 Various
----------- -----------
3,457,408 4,547,375
Less: Accumulated amortization (1,504,711) (2,214,346)
----------- -----------
$ 1,952,697 $ 2,333,029
=========== ===========
* Over the life of the respective related mortgages
Amortization expense for the years ended March 31, 2005, 2004 and 2003 amounted
to $96,239, $334,126 and $1,276,505, respectively. During the years ended March
31, 2005 and 2004, accumulated amortization decreased $0 and $168,721 due to the
write-off of fully amortized deferred costs and $156,271 and $0, respectively,
due to the discontinued operations.
The components of deferred costs and their periods of amortization from
discontinued assets are as follows:
March 31,
2005 Period
--------- -------
Financing expenses $ 955,929 *
Less: Accumulated amortization (693,016)
---------
$ 262,913
=========
* Over the life of the respective related mortgages
Amortization expense from discontinued operations for the year ended March 31,
2005 amounted to $43,413.
83
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 7 - Mortgage Notes Payable
The mortgage notes are payable in aggregate monthly installments of
approximately $475,000 including principal and interest at rates varying from 1%
to 15% per annum, through 2042. Each subsidiary partnership's mortgage note
payable is collateralized by the land and buildings of the respective subsidiary
partnership and the assignment of certain subsidiary partnership's rents and
leases and is without further recourse.
Annual principal payment requirements for each of the next five fiscal years and
thereafter from operating liabilities are as follows:
Fiscal Year Ending Amount
- ---------------------------------- -----------
2005 $ 2,437,735
2006 3,284,149
2007 1,514,325
2008 1,526,704
2009 1,211,383
Thereafter 55,617,588
-----------
$65,591,884
===========
Annual principal payment requirements for each of the next five fiscal years and
thereafter from discontinued liabilities are as follows:
Fiscal Year Ending Amount
- ---------------------------------- -----------
2005 $ 371,265
2006 388,248
2007 406,050
2008 424,718
2009 444,298
Thereafter 17,297,394
-----------
$19,331,973
===========
Property Development Associates, L.P.
- -------------------------------------
During 2002, Property Development Associates L.P. ("Property Development") was
notified that certain defaults had occurred with the mortgage note payable. As
of December 31, 2002, the Mortgagee was pursuing all of its rights and remedies
for default, including, without limitation, acceleration of the maturity date of
the Loan and demand for payment of the entire outstanding balance of the Loan.
On March 5, 2004, the mortgage note payable was purchased by an affiliate of the
management company (which is not affiliated with the Local General Partner or
the General Partners). The purchase of this note remedied the defaults and the
note terms were modified. The Maturity Date was extended from May 1, 2004 to
August 1, 2004, and the interest rate was changed from 6% to 7%. The borrower
had the option to extend the maturity date to February 1, 2005. Additionally,
commencing on April 1, 2004 and continuing through the Maturity Date, the
subsidiary partnership will not be obligated to make the monthly principal
payments. Property Development was sold on December 30, 2004.
NOTE 8 - Related Party Transactions
Related Party Fees
- ------------------
One of the General Partners has a 1% interest as a special limited partner in
each of the Local Partnerships. An affiliate of the General Partners also has a
minority interest in certain Local Partnerships.
The General Partners and their affiliates perform services for the Partnership.
The costs incurred from operations for the years ended March 31, 2005, 2004 and
2003 are as follows:
84
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
Years Ended March 31,
------------------------------------
2005 2004* 2003*
---------- ---------- ----------
Partnership management fees (a) $1,374,500 $1,445,000 $1,460,000
Expense reimbursement (b) 193,309 180,477 149,966
Property management fees incurred to affiliates of the
General Partners (c) 434,890 370,181 362,942
Local administrative fee (d) 44,000 44,000 41,500
---------- ---------- ----------
Total general and administrative-General Partners 2,046,699 2,089,658 2,014,408
---------- ---------- ----------
Property management fees incurred to Affiliates of the
Local General Partners (c) 621,530 325,767 334,510
---------- ---------- ----------
Total general and administrative-related parties $2,668,229 $2,365,425 $2,348,918
========== ========== ==========
* Reclassified for comparative purposes.
The costs incurred from discontinued operations for the years ended March 31,
2005, 2004 and 2003 are as follows:
Years Ended March 31,
------------------------------
2005 2004* 2003*
-------- -------- --------
Local administrative fee (d) $ 2,500 $ 5,000 $ 10,000
-------- -------- --------
Total general and administrative-General Partners 2,500 5,000 10,000
-------- -------- --------
Property management fees incurred to Affiliates of the
Local General Partners (c) 192,190 199,248 186,154
-------- -------- --------
Total general and administrative-related parties $194,690 $204,248 $196,154
======== ======== ========
* Reclassified for comparative purposes.
(a) The General Partners are entitled to receive a partnership management fee,
after payment of all Partnership expenses, which together with the local annual
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. The partnership management fee, subject to the foregoing
limitation, will be determined by the General Partners in their sole discretion
based upon their review of the Partnership's investments. Partnership management
fees owed to the General Partners amounting to approximately $14,088,000 and
$12,713,000 were accrued and unpaid as of March 31, 2005 and March 31, 2004.
Without the General Partner's continued accrual without payment, the Partnership
will not be in a position to meet its obligations. The General Partners have
allowed for the accrual without payment of these amounts but are under no
obligation to do so.
(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.
(c) Property management fees incurred by subsidiary partnerships in operations
amounted to $1,600,039, $1,552,819 and $1,570,624 for the 2004, 2003 and 2002
Fiscal Years, respectively. Of these fees $1,248,610, $895,169 and $883,606 were
incurred to affiliates of the Local General Partners. Included in amounts
incurred to affiliates of the Local General Partners are $434,890, $370,181 and
$362,942, respectively, which were also incurred to affiliates of the General
Partner. Also included in these fees are $192,190, $199,248 and $186,154,
respectively, which were incurred to affiliates of the Local General Partners of
properties classified as discontinued operations.
(d) Liberty Associates, a special limited partner of the subsidiary
partnerships, is entitled to receive a local administrative fee of up to $2,500
per year from each subsidiary partnership.
Liberty Associates has a 1% interest as the special limited partner in each of
the subsidiary partnerships. Liberty Associates received cash distributions of
approximately $50, $1,000 and $4,000 during the 2004, 2003 and 2002 Fiscal
Years, respectively.
Pursuant to the Partnership Agreement and the Local Partnership Agreements, the
General Partners and Liberty Associates received their allocable share of
profits, losses and tax credits allocated by the Partnership and the Local
Partnerships, respectively.
85
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(e) Due to Local General Partners and affiliates at March 31, 2005 and 2004
consists of the following:
March 31,
-------------------------
2005 2004
----------- -----------
Operating advances $ 1,311,506 $ 6,643,817
Development fee payable 2,365,577 2,391,797
Operating deficit advances 2,795,187 4,978,835
Management and other fees 653,274 581,194
Notes payable (f) 0 202,062
----------- -----------
$ 7,125,544 $14,797,705
=========== ===========
(f) Notes payable consist of the following:
Alexis
This unsecured promissory note bears interest at 2% above prime and was due on
demand. Interest expense of $12,910 was incurred for the year ended March 31,
2004. On September 21, 2004, the limited partnership
interest in Alexis Park was sold (see Note 10) $ 0 $ 202,062
=========== ===========
Due to Local General Partners and affiliates from discontinued liabilities
at March 31, 2005 consists of the following:
March 31,
----------
2005
----------
Operating advances $5,441,627
Operating deficit advances 2,183,648
Management and other fees 11,524
----------
$7,636,799
==========
(g) Tenant Leases
Upper Fifth Avenue Residential Associates, L.P. has entered into a 40-year lease
agreement with Upper Fifth Avenue Residential Leasing L.P. ("UFRL"), an
affiliate to the Local General Partner, covering approximately 30,000 square
feet of commercial space, two garages and laundry facilities. The lease
agreement provides for a fixed rental of $40,000 per year.
As of December 31, 2004, future minimum lease rentals required to be paid by
UFRL under the noncancelable portion of its lease are summarized as follows:
2005 $ 40,000
2006 40,000
2007 40,000
2008 40,000
2009 40,000
Thereafter 790,000
--------
$990,000
========
(h) Advances to Local Partnerships
During the fiscal years ended March 31, 2005 and 2004, net advances to certain
Local Partnerships by the General Partner amounted to $176,762 and $185,783,
respectively. As of March 31, 2005 and 2004, the amounts due to the General
Partner from Local Partnerships totaled $1,559,101 and $1,382,339, respectively,
and are recorded in due to general partners and affiliates on the Consolidated
Balance Sheets.
Due to General Partners and affiliates from the Local Partnerships consists of
the following:
March 31,
-------------------------------
2005 2004
------------- -------------
Property Development Associates, L.P. $ 0 $ 151,703
Goodfellow Place Limited Partnership 193,648 75,542
Williamsburg Residential, L.P. 1,365,453 1,155,094
------------ ------------
$ 1,559,101 $ 1,382,339
============ ============
86
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 9 - Taxable Net Loss
A reconciliation of the financial statement net loss to the taxable net loss for
the Partnership and its consolidated subsidiaries is as follows:
Years Ended December 31,
-----------------------------------------
2004 2003 2002
----------- ----------- -----------
Financial statement
Net loss $(4,623,823) $(7,470,002) $(7,961,377)
Difference resulting from parent company
having a different fiscal year for income
tax and financial reporting purposes (158,870) 43,581 (43,872)
Difference between depreciation and
amortization expense recorded for financial
reporting purposes and the accelerated cost
recovery system utilized for income tax
purposes (1,676,552) (2,045,563) (2,207,445)
Difference between gain/loss on sale of
properties reported for financial reporting
purposes and income tax purposes 706,798 1,195,211 0
Excess losses allocated to minority interest
for income tax purposes 391,544 134,118 643,157
Other (267,443) 5,626 5,759
----------- ----------- -----------
Taxable net loss as shown on the income tax
return for the calendar year ended $(5,628,346) $(8,137,029) $(9,563,778)
=========== =========== ===========
NOTE 10 - Sale of Properties
The Partnership is currently in the process of disposing of its investments.
During the fiscal year ended March 31, 2005, the property and the related assets
and liabilities of one Local Partnership and the limited partnership interest in
one Local Partnership were sold. Through the fiscal year ended March 31, 2005
the Partnership has disposed of five of its twenty-seven original investments.
All gains and losses on sales are included in discontinued operations.
On December 30, 2004, the property and the related assets and liabilities of
Property Development Associates, L.P. ("Property Development") were sold to an
affiliate of the Local General Partner for $7,097,000, resulting in a Local
General Partner distribution of approximately $1,300,000.
On September 21, 2004, the Partnership's limited partnership interest in Alexis
Park Apartments ("Alexis Park") was sold to an unaffiliated third party
purchaser for $1,000,000. This amount consisted of $600,000 paid in cash at the
closing and $400,000 pursuant to two promissory notes of $200,000 each to the
Partnership. Both notes compound interest at 5% and the principal and interest
of one note is to be paid annually from 50% of cash flow, with a maturity in
five years, when all unpaid principal and interest shall become payable. The
principal and interest on the second note is to be paid upon refinancing or sale
of the property, but in no event later than 10 years. The sale resulted in a
gain of approximately $934,000.
On August 15, 2003, the property and the related assets and liabilities of
Polynesian Apartments Associates, Limited Partnership ("Polynesian") were sold
to an unaffiliated third party for $2,700,000, resulting in a loss of
approximately $287,000.
On August 15, 2003, the property and the related assets and liabilities of
Seagrape Village Associates, Limited Partnership ("Seagrape") were sold to an
unaffiliated third party for $5,140,000, resulting in a loss of approximately
$260,000.
On January 18, 2002, the property and the related assets and liabilities of
Campeche Isle Apartments, Limited Partnership ("Campeche") were sold to an
unaffiliated third party for $4,625,000, resulting in a loss of approximately
$45,000.
87
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 11 - Selected Quarterly Financial Data (Unaudited)
The following table summarizes the Partnership's quarterly results of operations
for the years ended March 31, 2005 and 2004. The fluctuations between the
quarters are primarily due to the sales of Local Partnerships (see Note 10).
Quarter Ended
--------------------------------------------------------------
June 30, September 30, December 31, March 31,
OPERATIONS 2004 2004 2004 2005
- ------------------------------------------------ ------------ ------------- ------------ -------------
Revenues $ 4,959,934 $ 4,926,914 $ 4,921,967 $ 5,140,712
Operating expenses (6,673,140) (6,514,943) (6,441,198) (6,038,433)
------------ ------------- ------------ -------------
Loss from operations before minority interest (1,713,206) (1,588,029) (1,519,231) (897,721)
Minority interest in loss (income) of
subsidiaries from operations 62,159 58,971 (89,298) 3,307
(Loss) income from discontinued operations
including gain (loss) on sale and
minority interest (260,370) (185,736) 1,196,428 308,903
------------ ------------- ------------ -------------
Net loss $ (1,911,417) $ (1,714,794) $ (412,101) $ (585,811)
============ ============= ============ =============
Per unit amounts:
Net loss per BAC from operations $ (14.10) $ (13.06) $ (13.74) $ (7.64)
Net (loss) income per BAC from discontinued
operations (2.22) (1.59) 10.22 2.64
------------ ------------- ------------ -------------
Net loss per BAC $ (16.32) $ (14.65) $ (3.52) $ (5.00)
============ ============= ============ =============
Quarter Ended
--------------------------------------------------------------
June 30, September 30, December 31, March 31,
OPERATIONS 2003* 2003* 2003* 2004*
- ------------------------------------------------ ------------ ------------- ------------ -------------
Revenues $ 4,808,536 $ 4,960,869 $ 4,943,124 $ 4,732,339
Operating expenses (6,408,090) (6,645,514) (6,702,705) (6,193,251)
------------ ------------- ------------ -------------
Loss from operations before minority interest (1,599,554) (1,684,645) (1,759,581) (1,460,912)
Minority interest in loss of subsidiaries
from operations 68,604 15,358 19,494 53,743
Loss from discontinued operations including
gain (loss) on sale and minority interest (441,082) (317,673) (284,323) (79,431)
------------ ------------- ------------ -------------
Net loss $ (1,972,032) $ (1,986,960) $ (2,024,410) $ (1,486,600)
============ ============= ============ =============
Per unit amounts:
Net loss per BAC from operations $ (13.07) $ (14.26) $ (14.86) $ (12.02)
Net loss per BAC from discontinued operations (3.77) (2.71) (2.43) (0.68)
------------ ------------- ------------ -------------
Net loss per BAC $ (16.84) $ (16.97) $ (17.29) $ (12.70)
============ ============= ============ =============
* Reclassified for comparative purposes.
88
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 12 - Commitments and Contingencies
a) Subsidiary Partnerships - Going Concerns and Uncertainties
The auditors for two subsidiary partnerships, Whittier Plaza Associates Limited
Partnership and Goodfellow Place Limited Partnership modified their reports on
the 2004 Fiscal Year financial statements due to the uncertainty of each
subsidiary partnership's ability to continue as a going concern. The financial
statements do not include any adjustments that would be necessary in the event
the subsidiary partnerships are unable to continue as going concerns.
Whittier Plaza Associates
- -------------------------
The financial statements for Whittier Plaza Associates Limited Partnership
("Whittier") have been prepared assuming that Whittier will continue as a going
concern. Whittier has sustained continuous losses since commencement of
operations in 1988. Whittier has experienced higher vacancies and lower rents
than those originally projected, resulting in increased difficulty in meeting
both operating and debt service obligations. The Local General Partner, pursuant
to a development deficit guarantee agreement, has advanced approximately $21,000
and $8,000 in the 2004 and 2003 Fiscal Years, respectively, and approximately
$489,000 since 1988 to fund operating cash shortfalls. In addition, Whittier's
management company, an affiliate of the Local General Partner, has deferred
receipt of various fees since 1991 totaling approximately $107,000. These items
raise substantial doubt about Whittier's ability to continue as a going concern.
The Partnership's investment in Whittier at March 31, 2005 and 2004 was reduced
to zero as a result of prior years' losses and the minority interest balance was
$0 at each date. Whittier's net loss after minority interest amounted to
approximately $24,000, $27,000 and $29,000 for the 2004, 2003 and 2002 Fiscal
Years.
Goodfellow Place Limited Partnership
- ------------------------------------
On March 2, 2004, Goodfellow Place Limited Partnership ("Goodfellow")'s
management had entered into an agreement to sell the Project's assets for
$100,000 plus assumption of the mortgage, with a closing date set for no later
than April 30, 2005. Immediately after the sale, Management intended to
liquidate Goodfellow. The accompanying financial statements have been prepared
assuming that the Partnership will continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
the sale of the Project and subsequent liquidation of the Partnership The sale
did not occur by April 30, 2005 and the agreement was cancelled.
b) Subsidiary Partnerships - Other
Alexis Park Apartments
- -----------------------
The limited partnership interest in this property was sold on September 21,
2004.
The financial statements for Alexis Park Apartments ("Alexis") have been
prepared in conformity with U.S. generally accepted accounting principles,
assuming the continuation of the Local Partnership as a going concern. However,
negative performance indicators and the environmental issue raise substantial
doubt about the Local Partnership's ability to continue as a going concern.
A hazardous waste issue has affected Alexis for nearly 14 years. Although this
environmental issue is in many respects beyond its control, management believes
that the selected remedy of the United States Environmental Protection Agency is
practical and is not likely to cause significant disruption to the apartment
project's operations beyond what it has experienced over the last several years.
The Local Partnership's congressman, U.S. Senators and the Mayor of Bossier City
have assisted Alexis in preventing this issue from escalating unnecessarily and
management believes that no escalation will occur in the near term. Further, all
indications are that an oil company will bear all costs of remediation and that
the Local Partnership will not be called upon to share in those costs.
Accordingly, management believes the Local Partnership has the opportunity to
continue as a going concern during 2005.
At September 21, 2004, the Partnership's current liabilities exceed its current
assets by approximately $371,000 and the Partnership sustained an operating loss
of approximately $56,000 for the period ended September 21, 2004. Although these
conditions could raise substantial doubt about the Partnership's ability to
continue as a going concern, such doubt is alleviated because current
liabilities includes approximately $220,000 of obligations that are payable to a
related party that is not expected to require payments beyond the Partnership's
ability to pay and management expects operations to generate sufficient funds to
satisfy the Partnership's obligations for the next twelve months. Accordingly,
management believes that Alexis has the ability to continue as a going concern
for at least one year from September 21, 2004.
These items raise substantial doubt about Alexis' ability to continue as a going
concern. The maximum loss for which the Partnership would be liable is its net
investment in Alexis. The Partnership's investment in Alexis at March 31, 2005
and 2004 was reduced to zero as a result of prior years' losses and the minority
interest balance was $0 at each date. Alexis' net (income) or loss after
minority interest amounted to approximately $(745,000), $149,000 and $172,000,
for the 2004, 2003 and 2002 Fiscal Years, respectively.
Property Development Associates, L.P.
- ----------------------------------------
Property Development Associates, L.P. ("Property Development") was involved as a
defendant in a pending litigation case. This case was filed by the plaintiffs on
December 18, 2002 and served on the defendants on January 6, 2003. Discovery is
ongoing. The plaintiffs have alleged assault and battery as well as wrongful
eviction. The plaintiffs are seeking unspecified damages and have not made a
demand. Trial has been rescheduled for October 11, 2005. Property Development
intends to vigorously defend the matter. The potential damages, other than those
for the alleged intentional acts of assault and battery, are covered by
insurance. Property Development was sold on December 30, 2004.
89
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
Gramco Development Limited Dividend Partnership, L.P.
- -----------------------------------------------------
Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net
funds of $4,867,000 by the Municipality of Bayamon (the "Municipality") and HUD.
In the event of a substantial violation to the provisions of certain agreements
between Gramco and the Municipality and between the Municipality and HUD, the
funds shall become immediately due and payable at the election of HUD and the
Municipality. Otherwise, the principal amount of the obligation together with
any interest will be forgiven. Proceeds from the loan have been deducted from
fixed assets.
Williamsburg Residential, L.P.
- --------------------------------
In November 1996, the Local General Partner of Williamsburg Residential, L.P.
("Williamsburg") stopped making the mortgage note payments which constituted an
event of default. A Reinstatement and Modification Agreement was entered into
effective March 1, 1997. The Partnership has advanced Williamsburg the necessary
funds to keep the mortgage and escrows current during 2004 and is expected to
continue to do so during 2005.
The Partnership's investment in Williamsburg has been written down to $0 by
prior years' losses and the minority interest balance was approximately $721,000
and $724,000 at March 31, 2005 and 2004, respectively. Williamsburg's net loss
after minority interest amounted to approximately $283,000, $229,000 and
$142,000 for the 2004, 2003, and 2002 fiscal years, respectively. As of March
31, 2005, the Partnership has advanced Williamsburg approximately $1,365,000.
c) Uninsured Cash and Cash Equivalents
The Partnership maintains its cash and cash equivalents in various banks.
Accounts at each bank are guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $100,000. As of March 31, 2005, uninsured cash and cash
equivalents approximated $2,300,000.
d) Cash Distributions
Cash distributions from the Local Partnerships to the Partnership are restricted
by the provisions of the respective Local Partnership agreements and or HUD.
Such cash distributions are typically made from surplus cash flow.
e) Tax Credits
As of December 31, 2003, the Tax Credit Period for each Local Partnership has
expired. A portion of the Housing Tax Credits are subject still to recapture in
future years if (i) a Local Partnership ceases to meet qualification
requirements, or (ii) if there is a decrease in the qualified basis of the Local
Partnership's Property, or (iii) if there is a reduction in the Local
Partnership interest in the Property at any time during the 15-year Compliance
Period that began with the first tax year of the Credit Period.
f) Other
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate. The Partnership can
also be affected by poor economic conditions generally. However, no more than
40% of the Properties are located in any single state. There are also
substantial risks associated with owning Properties receiving government
assistance, such as the possibility that Congress may not appropriate funds to
enable HUD to make rental assistance payments. HUD also restricts annual cash
distributions to partners based on operating results and a percentage of the
owner's equity contribution. The Partnership cannot sell or substantially
liquidate its investments in subsidiary partnerships during the period that the
subsidy agreements are in existence without HUD's approval. Furthermore, there
may not be market demand for apartments at market rents when the rental
assistance contracts expire.
NOTE 13 - Discontinued Operations
The following table summarizes the financial position and results of operations
of the Local Partnerships that are classified as discontinued operations. As of
March 31, 2005, Property Development, Alexis Park, Rolling Green and Upper Fifth
were classified as discontinued operations in the Consolidated Balance Sheets.
90
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
March 31,
---------------------------
2005 2004
------------ -------------
Assets
Property and equipment - less accumulated depreciation of $12,720,615 and $0 $ 19,181,395 $ 0
Cash and cash equivalents 111,730 0
Cash held in escrow 604,199 0
Deferred costs, net of accumulated amortization of $693,016 and $0 262,913 0
Other assets 2,196,531 0
------------ -------------
Total assets $ 22,356,768 $ 0
============ =============
Liabilities
Mortgage notes payable $ 19,331,973 $ 0
Accounts payable and other 1,793,747 0
Due to general partners and affiliates 7,636,799 0
Minority interest (156) 0
------------ -------------
Total liabilities $ 28,762,363 $ 0
============ =============
The following table summarizes the results of operations of the Local
Partnership that are classified as discontinued operations. For the year ended
March 31, 2005, Property Development, Alexis Park, Rolling Green and Upper Fifth
were classified as discontinued operations in the Consolidated Statements of
Operations. For the year ended March 31, 2004, Property Development, Alexis
Park, Rolling Green, Upper Fifth, Polynesian and Seagrape were classified as
discontinued operations on the Consolidated Statements of Operations. For the
year ended March 31, 2003, Property Development, Alexis Park, Rolling Green,
Upper Fifth, Polynesian, Seagrape and Campeche were classified as discontinued
operations on the Consolidated Statements of Operations.
Consolidated Statements of Discontinued Operations:
Year Ended March 31,
----------------------------------------
2005 2004 2003
----------- ----------- -----------
Revenues
Rental income $ 6,388,344 $ 7,342,682 $ 7,557,250
Other (Note 2) 896,917 202,351 204,341
Gain (loss) on sale of properties (Note 10) 933,805 (546,734) (44,883)
----------- ----------- -----------
Total revenue 8,219,066 6,998,299 7,716,708
----------- ----------- -----------
Expenses
General and administrative 1,169,874 1,152,933 1,273,955
General and administrative-related parties (Note 8)
194,690 204,248 196,154
Repairs and maintenance 1,921,697 2,214,268 2,169,125
Operating and other 794,425 802,091 743,464
Real estate taxes 375,412 455,967 514,281
Insurance 608,093 698,692 658,548
Financial, primarily interest 1,198,707 1,645,936 1,933,037
Depreciation and amortization 1,407,827 1,978,670 1,951,404
----------- ----------- -----------
Total expenses 7,670,725 9,152,805 9,439,968
----------- ----------- -----------
Income (loss) before minority interest 548,341 (2,154,506) (1,723,260)
Minority interest in loss of subsidiaries from
discontinued operations 510,884 1,031,997 144,285
----------- ----------- -----------
Total income (loss) from discontinued operations
(including gain (loss) on sale of properties
and minority interest) $ 1,059,225 $(1,122,509) $(1,578,975)
=========== =========== ===========
Income (loss) - limited partners from
discontinued operations (including gain
(loss) on sale of properties and minority
interest) $ 1,048,633 $(1,111,284) $(1,563,185)
=========== =========== ===========
Number of BACs outstanding 115,917.5 115,917.5 115,917.5
=========== =========== ===========
Income (loss) discontinued operations (including
gain (loss) on sale of properties and
minority interest) per BAC $ 9.05 $ (9.59) $ (13.49)
=========== =========== ===========
91
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Item 9A. Controls and Procedures
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Chief Executive
Officer and Chief Financial Officer of Related Credit Properties II, Inc., the
general partner of Related General Partner, has evaluated the effectiveness of
the Partnership's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended ("Exchange Act") as of the end of the period covered by this report.
Based on such evaluation, such officer has concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.
(b) INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes
in the Partnership's internal control over financial reporting during the fiscal
year to which this report relates that have materially affected, or are
reasonably likely to materially affect, the Partnership's internal control over
financial reporting.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership has no directors or executive officers. The general partners of
the Partnership are Related Credit Properties II L.P., a Delaware limited
partnership (the "Related General Partner"), Liberty Associates II L.P., a
Delaware limited partnership ("Liberty Associates"), and Liberty GP II Inc.
(formerly Shearson Liberty GP II Inc.), a Delaware corporation (the "Liberty
General Partner" and together with the Related General Partner and Liberty
Associates, the "General Partners"). The general partner of the Related General
Partner is Related Credit Properties II Inc., a Delaware corporation. The
general partners of Liberty Associates are Related Credit Properties II Inc.,
and the Liberty General Partner. Liberty Associates is also the special limited
partner of the Partnership. The Partnership's affairs are managed and controlled
by the General Partners. The Partnership has not adopted a separate code of
ethics because the Partnership has no directors or executive officers. However,
the parent company of Related Capital Company, which controls our General
Partners, has adopted a code of ethics. See http://www.chartermac.com.
On November 17, 2003, CharterMac acquired Related Capital Company, which is the
indirect parent of RCC Manager LLC, the sole shareholder of Related Credit
Properties II Inc. Pursuant to the acquisition, CharterMac acquired controlling
interests in the General Partners. Alan P. Hirmes replaced Stephen M. Ross as
Director of Related Credit Properties II Inc. effective April 1, 2004 as a
result of this acquisition. This acquisition did not affect the Partnership or
its day-to-day operations, as the majority of the General Partners' management
team remained unchanged.
Certain information concerning the directors and executive officers of the
Liberty General Partner and of Related Credit Properties II, Inc., is set forth
below.
Related Credit Properties II, Inc.
----------------------------------
Name Position
---- --------
Alan P. Hirmes Director and President
Stuart J. Boesky Senior Vice President
Marc D. Schnitzer Vice President
Denise L. Kiley (1) Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
(1) On February 25, 2005, Ms. Kiley announced here retirement as Chief Credit
Officer and trustee of CharterMac, the indirect parent of RCC Manager LLC,
the sole shareholder of the Related General Partner. Upon here retirement,
she will also resign from her position as Vice President of the Related
General Partner.
ALAN P. HIRMES, 50, has been a Certified Public Accountant in New York since
1978. Prior to joining Related Capital Company ("Capital") in October 1983, Mr.
Hirmes was employed by Weiner & Co., certified public accountants. Mr. Hirmes is
also a Vice President of Capital. Mr. Hirmes graduated from Hofstra University
with a Bachelor of Arts degree. Mr. Hirmes also serves on the Board of Trustees
of CharterMac and American Mortgage Acceptance Company ("AMAC").
STUART J. BOESKY, 49, practiced real estate and tax law in New York City with
the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined
Capital. From 1983 to 1984 Mr. Boesky practiced law with the Boston law firm of
Kaye, Fialkow, Richard & Rothstein (which subsequently merged with Strook &
Strook & Lavan), and from 1978 to 1980 was a consultant specializing in real
estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from
Michigan State University with a Bachelor of Arts degree and from Wayne State
School of Law with a Juris Doctor degree. He then received a Master of Laws
degree in Taxation from Boston University School of Law. Mr. Boesky also serves
on the Board of Trustees of CharterMac and AMAC.
MARC D. SCHNITZER, 44, joined Capital in January 1988 after receiving his Master
of Business Administration degree from The Wharton School of The University of
Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial
92
Analyst with The First Boston Corporation in New York, an international
investment banking firm. Mr. Schnitzer received a Bachelor of Science degree,
summa cum laude, in Business Administration, from the School of Management at
Boston University in May 1983. Mr. Schnitzer also serves on the Board of
Trustees of CharterMac.
DENISE L. KILEY, 45, is responsible for overseeing the due diligence and asset
management of all multifamily residential properties invested in Capital
sponsored corporate, public and private equity and debt funds. Prior to joining
Capital in 1990, Ms. Kiley had experience acquiring, financing and asset
managing multifamily residential properties. From 1981 through 1985, she was an
auditor with Price Waterhouse. Ms. Kiley holds a Bachelor of Science degree in
Accounting from Boston College. Ms. Kiley also serves on the Board of Trustees
of CharterMac. As noted above, Ms. Kiley is retiring from CharterMac.
GLENN F. HOPPS, 42, joined Capital in December 1990, and prior to that date, was
employed by Marks Shron & Company and Weissbarth, Altman and Michaelson,
certified public accountants. Mr. Hopps graduated from New York State University
at Albany with a Bachelor of Science degree in Accounting.
TERESA WICELINSKI, 39, joined Capital in June 1992, and prior to that date was
employed by Friedman, Alpren & Green, certified public accountants. Ms.
Wicelinski graduated from Pace University with a Bachelor of Arts degree in
Accounting.
Liberty GP II Inc.
------------------
Name Position
---- --------
Alan P. Hirmes Director and President
Stuart J. Boesky Executive Vice President
Marc D. Schnitzer Vice President
Denise L. Kiley (1) Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
Biographical information with respect to Messrs. Hirmes, Boesky, Schnitzer, Ms.
Kiley, Hopps and Ms. Wicelinski is set forth above.
Item 11. Executive Compensation
The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to directors or
officers of the Liberty General Partner or the general partner of the Related
General Partner for their services. Certain directors and executive officers of
the Liberty General Partner and the general partner of the Related General
Partner receive compensation from the General Partners and their affiliates for
services performed for various affiliated entities which may include services
performed for the Partnership.
Under the terms of the Partnership Agreement, the General Partners and their
affiliates are entitled to receive compensation from the Partnership in
consideration of certain services rendered to the Partnership by such parties.
Such arrangements include, but are not limited to, the payment of an accountable
operating expense reimbursement, an annual partnership management fee not to
exceed 0.5% of invested assets and subordinated disposition fees. In addition,
the General Partners are entitled to 1% of all cash distributions and Housing
Tax Credit allocations and a subordinated 15% interest in net sales or
refinancing proceeds. Also see Note 8 to the Financial Statements in Item 8 for
a presentation of the types and amounts of compensation paid to the General
Partners and their affiliates, which is incorporated by reference thereto.
Tabular information concerning salaries, bonuses and other types of compensation
payable to executive officers has not been included in this annual report. As
noted above, the Partnership has no executive officers. The level of
compensation payable to the General Partners and/or their affiliates is limited
by the terms of the Partnership Agreement and may not be increased therefrom on
a discretionary basis.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Security Holder Matters
The general partnership interests and BACs in the Partnership are owned in the
manner indicated on the chart below.
Liberty Associates II L.P. holds a 1% limited partnership interest in each Local
Partnership.
Except as set forth in the table below, no person is known by the Partnership to
be the beneficial owner of more than 5% percent of the Limited Partnership
Interests and/or the BACs; and none of the General Partners nor any director or
executive officer of the Liberty General Partner or of the general partner of
the Related General Partner owns any Limited Partnership Interests or BACs,
except as noted in the chart below.
93
Name and Address of Amount and Nature of Percentage
Title of Class Beneficial Ownership Beneficial Ownership of Class
- ------------------- ------------------------------- -------------------- ----------
General Partnership Related Credit Properties II $500 capital 49%
Interest in the L.P. contribution -
Partnership 625 Madison Avenue directly owned
New York, NY 10022
General Partnership Liberty GP II, Inc. $500 capital 49%
Interest in the 625 Madison Avenue contribution -
Partnership New York, NY 10022 directly owned
General Partnership Liberty Associates II L.P. $1,000 capital 2%
Interest in the 625 Madison Avenue contribution -
Partnership New York, NY 10022 directly owned
BACs Everest Housing Investors 2, LLC 6,328.75 5.5%
199 S. Robles Avenue, Suite 200
Pasadena, CA 91101
BACs Lehigh Tax Credit Partners, Inc. 2,239 (1) 1.9%
625 Madison Avenue
New York, NY 10022
BACs Alan P. Hirmes 2,239 (1)(2) 1.9%
625 Madison Avenue
New York, NY 10022
BACs Stuart J. Boesky 2,239 (1)(2) 1.9%
625 Madison Avenue
New York, NY 10022
BACs Marc D. Schnitzer 0 0%
625 Madison Avenue
New York, NY 10022
BACs Denise L. Kiley 0 0%
625 Madison Avenue
New York, NY 10022
BACs Glenn F. Hopps 0 0%
625 Madison Avenue
New York, NY 10022
BACs Teresa Wicelinski 0 0%
625 Madison Avenue
New York, NY 10022
BACs All directors and executive 2,239 (1)(2) 1.9%
officers of the general partner
of the Related General Partner
as a group seven persons)
625 Madison Avenue
New York, NY 10022
(1) All such BACs represent BACs owned directly by Lehigh Tax Credit Partners
L.L.C. ("Lehigh I") and Lehigh Tax Credit Partners II L.L.C. ("Lehigh II") for
which Lehigh Tax Credit Partners, Inc. (the "Managing Member") serves as
managing member. As of May 4, 2005, Lehigh I held 1,080.5 BACs and Lehigh II
held 1,161.5 BACs.
(2) Each such party serves as a director and executive officer of the Managing
Member, and owns an equity interest therein.
Item 13. Certain Relationships and Related Transactions
The Partnership has and will continue to have certain relationships with the
General Partners and their affiliates, as discussed in Item 11 and also Note 8
to the Financial Statements in Item 8 above, which are incorporated herein by
reference thereto. However, there have been no direct financial transactions
between the Partnership, on the one hand, and the directors or executive
officers of the Liberty General Partner or the general partner of the Related
General Partner, on the other.
94
Item 14. Principal Accountant Fees and Services
Audit Fees
- ----------
The aggregate fees billed by Trien Rosenberg Rosenberg Weinberg Ciullo and
Fazzari LLP and their respective affiliates for professional services rendered
for the audit of our annual financial statements for the years ended March 31,
2005 and 2004 and for the reviews of the financial statements included in the
Partnership's Quarterly Reports on Form 10-Q for those years were $54,800 and
$54,800, respectively.
Audit Related Fees
- ------------------
None
Tax Fees
- --------
The aggregate fees billed by Weiser LLP (formerly, Rubin and Katz LLP) and their
respective affiliates for professional services rendered for the preparation of
our annual tax returns for the years ended December 31, 2004 and 2003 were
$10,200 and $9,800, respectively.
All Other Fees
- --------------
None
The Partnership is not required to have, and does not have, a stand-alone audit
committee.
95
PART IV
Item 15. Exhibits and Financial Statement Schedules
Sequential
Page
----------
(a) 1. Financial Statements
--------------------
Report of Independent Registered Public Accounting Firm 14
Consolidated Balance Sheets at March 31, 2005 and 2004 74
Consolidated Statements of Operations for the Years
Ended March 31, 2005, 2004 and 2003 75
Consolidated Statements of Changes in Partners' Deficit)
Capital for the Years Ended March 31, 2005, 2004 and 2003 76
Consolidated Statements of Cash Flows for the Years
Ended March 31, 2005, 2004 and 2003 77
Notes to Consolidated Financial Statements 79
(a) 2. Financial Statement Schedules
-----------------------------
Report of Independent Registered Public Accounting Firm 102
Schedule I - Condensed Financial Information of Registrant 103
Schedule III - Real Estate and Accumulated Depreciation 106
All other schedules have been omitted because they are
not required or because the required information is
contained in the financial statements and notes thereto.
(a) 3. Exhibits
--------
(3B) Form of Amended and Restated Agreement of Limited
Partnership of Liberty Tax Credit Plus II L.P.
(incorporated by reference to exhibits filed with
Amendment No. 1 to Liberty Tax Credit Plus II L.P.'s
Registration Statement on Form S-11 Registration
No. 33-21429)
(21) Subsidiaries of the Registrant 97
(31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) 100
(32.1) Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b)
and Section 1350 of Title 18 of the United States Code
(18 U.S.C. 1350) 101
96
Item 15. Exhibits and Financial Statement Schedules (continued)
Jurisdiction
Subsidiaries of the Registrant (Exhibit 21) of Organization
------------------------------ ---------------
Metropolitan Towers Associates, L.P. PR
Westminster Place II - Olive Site, L.P. MO
Whittier Plaza Associates Limited Partnership MO
United-Glen Arden I Limited Partnership MD
United-Glen Arden II Limited Partnership MD
Rolling Green Limited Partnership IL
Santa Juanita II Limited Partnership NY
Spring Creek Associates, L.P.
(a Delaware Limited Partnership) DE
East Two Thirty-Five Associates L.P.
(a Delaware Limited Partnership) (14th Street) DE
Upper Fifth Avenue Residential Associates, L.P. DE
West 107th Street Associates, L.P.
(a Delaware Limited Partnership) DE
General Atlantic Second Avenue Associates, L.P.
(a Delaware Limited Partnership)
(96th Street) NY
Church Lane Associates PA
Robin Housing Associates (a Limited Partnership) NY
Concourse Artists Housing Associates
(a Limited Partnership) NY
2051 Grand Concourse Housing Associates
(a Limited Partnership) NY
Willoughby-Wyckoff Housing Associates
(a Limited Partnership) NY
Goodfellow Place Limited Partnership MO
Penn Alto Associates Limited Partnership PA
Gramco Development Limited Dividend Partnership, L.P.
(Bayamon) PR
Williamsburg Residential, L.P. KS
Victory Apartments IL
97
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.
LIBERTY TAX CREDIT PLUS II L.P.
-------------------------------
(Registrant)
By: RELATED CREDIT PROPERTIES II L.P.,
a General Partner
By: Related Credit Properties II Inc.,
its general partner
Date: June 23, 2005
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President and Chief Executive Officer
(Principal Executive Officer)
and
By: LIBERTY GP II, INC.,
a General Partner
Date: June 23, 2005
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President
and
By: LIBERTY ASSOCIATES II, L.P.,
a General Partner
By:Related Credit Properties II, Inc.,
its General Partner
Date: June 23, 2005
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President
By:Liberty GP II, Inc.,
its General Partner
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
Signature Title Date
- ------------------ --------------------------------------------------------------- --------------
President and Chief Executive Officer (Principal Executive and
Financial Officer) of Related Credit Properties II Inc.,
(general partner of each of Related Credit Properties II L.P.
and Liberty Associates II, L.P., General Partners of
Registrant) and Liberty GP II, Inc. (general partner of Liberty
Associates II, L.P, a General Partner of Registrant)
/s/ Alan P. Hirmes Director of Related Credit Properties II Inc., (general partner
- ------------------ of each of Related Credit Properties II L.P. and Liberty
Alan P. Hirmes Associates II, L.P., each a General Partner of Registrant) June 23, 2005
Treasurer (Principal Accounting Officer) of Related Credit
Properties II Inc., (general partner of each of Related Credit
Properties II L.P. and Liberty Associates II, L.P., General
/s/ Glenn F. Hopps Partners of Registrant) and Liberty GP II, Inc. (general
- ------------------ partner of Liberty Associates II, L.P., a General Partner of
Glenn F. Hopps Registrant) June 23, 2005
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE
13A-14(a) OR RULE 15D-14(a)
I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of
Related Credit Properties II Inc. the general partner of Related Credit
Properties II L.P. and of Liberty GP II Inc., each of which is a General Partner
of Liberty Tax Credit Plus II L.P. (the "Partnership"), hereby certify that:
1. I have reviewed this annual report on Form 10-K for the period ending
March 31, 2005 of the Partnership;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the Partnership as of, and for, the periods presented in this
report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the Partnership,
including its consolidated subsidiaries, is made known to me by others
within those entities, particularly during the period in which this
report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles
c) evaluated the effectiveness of the Partnership's disclosure controls
and procedures and presented in this report my conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the Partnership's internal
control over financial reporting that occurred during the Partnership's
fourth fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Partnership's internal control over
financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the Partnership's auditors and to
the boards of directors of the General Partners:
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Partnership's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Partnership's
internal control over financial reporting.
Date: June 23, 2005
-------------
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and
Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT
TO RULE 13a-14(b) OR RULE 15d-14(b)
AND SECTION 1350 OF TITLE 18
OF THE UNITED STATES CODE (18 U.S.C. 1350)
In connection with the Annual Report of Liberty Tax Credit Plus II L.P. (the
"Partnership") on Form 10-K for the year ending March 31, 2005 as filed with the
Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I,
Alan P. Hirmes, Principal Executive Officer and Principal Financial Officer of
Related Credit Properties II Inc. (general partner of each of Related Credit
Properties II L.P. and Liberty Associates II, L.P., General Partners of
Registrant) and Liberty GP II, Inc. (general partner of Liberty Associates II,
L.P.), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
A signed original of this written statement required by Section 906 has been
provided to the Partnership and will be retained by the Partnership and
furnished to the SEC or its staff upon request.
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Principal Executive Officer and
Principal Financial Officer
June 23, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Partners of
Liberty Tax Credit Plus II L.P. and Subsidiaries
(A Delaware Limited Partnership)
In connection with our audits of the consolidated financial statements of
Liberty Tax Credit Plus II L.P. and Subsidiaries (A Delaware Limited
Partnership) included in this Form 10-K as presented in our opinion dated June
17, 2005 on page 14, and based on the reports of other auditors, we have also
audited supporting Schedule I for the 2004, 2003 and 2002 Fiscal Years and
Schedule III at March 31, 2005. In our opinion, and based on the reports of the
other auditors, these consolidated schedules present fairly, when read in
conjunction with the related consolidated financial statements, the financial
data required to be set forth therein.
As discussed in Note 12(a), the consolidated financial statements include the
financial statements of two limited partnerships with significant contingencies
and uncertainties. The financial statements of these subsidiary partnerships
were prepared assuming that each will continue as a going concern. The two
subsidiary partnerships' net losses aggregated $98,382 (Fiscal 2004), $107,386
(Fiscal 2003) and $76,079 (Fiscal 2002) and their assets aggregated $1,970,877
and $1,970,814 at March 31, 2005 and 2004, respectively. These matters raise
substantial doubt about these subsidiary partnerships' abilities to continue as
going concerns. Management's plans in regard to these matters are also described
in Note 12(a). The accompanying consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG
WEINBERG CIULLO & FAZZARI LLP
New York, New York
June 17, 2005
102
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Summarized condensed financial information of registrant (not including
consolidated subsidiary partnerships)
CONDENSED BALANCE SHEETS
ASSETS
March 31,
------------------------------
2005 2004
------------ ------------
Cash and cash equivalents $ 692,943 $ 6,539
Investment and advances in subsidiary partnerships 35,448,649 36,642,410
Other assets 549,390 208,410
------------ ------------
Total assets $ 36,690,982 $ 36,857,359
============ ============
LIABILITIES AND PARTNERS' EQUITY
Due to general partner and affiliates $ 17,159,839 $ 15,299,354
Other liabilities 57,994 65,220
------------ ------------
Total liabilities 17,217,833 15,364,574
------------ ------------
Partners' equity 19,473,149 21,492,785
------------ ------------
Total liabilities and partners' equity $ 36,690,982 $ 36,857,359
============ ============
Investments in subsidiary partnerships are recorded in accordance with the
equity method of accounting, wherein the investments are not reduced below zero.
Accordingly, partners' equity on the consolidated balance sheet will differ from
partners' equity shown above.
103
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
Year Ended March 31,
-----------------------------------------
2005 2004 2003
----------- ----------- -----------
Revenues
Other $ 47,011 $ 39,042 $ 38,721
----------- ----------- -----------
Expenses
Administrative and management 132,309 196,497 580,974
Administrative and management-related parties 1,567,809 1,625,477 1,237,610
----------- ----------- -----------
Total expenses 1,700,118 1,821,974 1,818,584
----------- ----------- -----------
Loss from operations (1,653,107) (1,782,932) (1,779,863)
----------- ----------- -----------
Gain on sale of investment in subsidiary partnership 958,609 0 0
Equity in loss of subsidiary partnerships (*) (1,325,138) (2,684,011) (2,554,208)
----------- ----------- -----------
Net loss $(2,019,636) $(4,466,943) $(4,334,071)
=========== =========== ===========
(*) Includes suspended prior year losses in excess of investment in accordance
with the equity method of accounting amounting to $(2,487), $(162,783) and
$0 for 2005, 2004, and 2003, respectively.
104
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Year Ended March 31,
-----------------------------------------
2005 2004 2003
----------- ----------- -----------
Cash flows from operating activities:
Net loss $(2,019,636) $(4,466,943) $(4,334,071)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash provided
by operating activities:
Gain on sale of investment in subsidiary partnership (958,609) 0 0
Equity in loss of subsidiary partnerships 1,325,138 2,684,011 2,554,208
Increase in assets
Other assets 59,020 (38,212) (4,725)
Increase (decrease) in liabilities
Due to general partners and affiliates 1,860,485 1,962,370 1,824,617
Other liabilities (7,226) (936) (2,136)
----------- ----------- -----------
Total adjustment 2,278,808 4,607,233 4,371,964
----------- ----------- -----------
Net cash provided by operating activities 259,172 140,290 37,893
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of investment in subsidiary partnership 600,000 0 0
Distributions from subsidiaries 3,904 42,386 156,351
Advances and investments in subsidiary partnerships (176,672) (185,783) (216,476)
----------- ----------- -----------
Net cash provided by (used in) investing activities 427,232 (143,397) (60,125)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 686,404 (3,107) (22,232)
Cash and cash equivalents, beginning of year 6,539 9,646 31,878
----------- ----------- -----------
Cash and cash equivalents, end of year $ 692,943 $ 6,539 $ 9,646
=========== =========== ===========
105
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2005
Cost Capitalized
Initial Cost to Partnership Subsequent to
--------------------------- Acquisition:
Buildings and Improvements
Description Encumbrances Land Improvements (Disposals)
- --------------------------------------------------------------- ------------ ------------ ------------- ----------------
Apartment Complexes
Polynesian Apartments Associates, Ltd.
Homestead, FL (d)(g) $ 0 $ 386,180 $ 4,195,068 $ (4,581,248)
Seagrape Village Associates, LTD.
Homestead, FL (d)(g) 0 1,270,000 6,123,373 (7,393,373)
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 5,199,182 322,000 2,434,303 6,102,746
Westminster Place II- Olive Site, L.P.
St. Louis, MO 4,175,953 928,979 5,382,740 192,270
Property Development Associates, L.P.
Kansas City, MO (e)(g)(h) 0 624,858 7,228,721 (7,853,579)
Whittier Plaza Associates, L.P.
St. Louis, MO 1,619,788 26,920 2,015,030 (381,375)
United-Glen Arden I L.P.
Glen Arden, MO 11,736,622 1,770,000 6,577,720 13,399,444
United-Glen Arden II L.P.
Glen Arden, MO 9,014,957 1,190,000 4,837,436 9,356,595
Rolling Green L.P.
Chicago, IL (g)(h) 5,580,613 466,683 4,533,670 4,173,344
Santa Juanita II L.P.
Bayamon, PR 727,129 115,000 2,085,485 1,919,298
Spring Creek Associates, L.P.
Brooklyn, NY 0 3,343,549 16,216,700 21,330,289
East Two Thirty-Five Associates L.P.(14th Street)
New York, NY 0 950,000 2,542,604 (527,787)
Concourse Artists Housing Associates, L.P.
Bronx, NY 1,437,043 5,750 2,246,560 85,343
2051 Grand Concourse Housing Associates
Bronx, NY 3,371,281 31,500 5,221,117 71,608
Robin Housing Associates
Bronx, NY 4,985,804 26,750 8,186,055 78,133
Willoughby-Wyckoff Housing Associates
Bronx, NY 4,056,038 17,000 6,126,088 100,448
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY(g)(h) 13,751,360 159,861 21,096,862 1,471,590
West 107th Street Associates, L.P.
Bronx, NY 0 305,813 3,850,928 132,299
General Atlantic Second Avenue Associates, L.P. (96th Street)
Bronx, NY 0 246,495 2,689,395 167,710
Church Lane Associates
Germantown, PA 1,693,879 20,000 4,009,983 16,146
Campeche Isle Apartments L.P.
Galveston, TX (c) 0 450,000 6,792,005 (7,242,005)
Goodfellow Place L.P.
St. Louis, MO 1,910,772 160,000 4,581,787 (3,495,692)
Penn Alto Associates L.P.
Altoona, PA 3,383,140 60,000 2,731,082 9,225,570
Gross Amount at which Carried at close of Period
------------------------------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
- --------------------------------------------------------------- ------------ ------------- ------------ ------------
Apartment Complexes
Polynesian Apartments Associates, Ltd.
Homestead, FL (d)(g) $ 0 $ 0 $ 0 $ 0
Seagrape Village Associates, LTD.
Homestead, FL (d)(g) 0 0 0 0
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 327,292 8,531,757 8,559,049 (3,160,756)
Westminster Place II- Olive Site, L.P.
St. Louis, MO 916,669 5,587,320 6,503,989 (2,422,031)
Property Development Associates, L.P.
Kansas City, MO (e)(g)(h) 0 0 0 0
Whittier Plaza Associates, L.P.
St. Louis, MO 32,261 1,628,314 1,660,575 (812,087)
United-Glen Arden I L.P.
Glen Arden, MO 1,775,293 19,971,871 21,747,164 (12,510,937)
United-Glen Arden II L.P.
Glen Arden, MO 1,195,293 14,188,738 15,384,031 (8,893,272)
Rolling Green L.P.
Chicago, IL (g)(h) 471,975 8,701,722 9,173,697 (3,941,950)
Santa Juanita II L.P.
Bayamon, PR 120,293 3,999,490 4,119,783 (2,113,416)
Spring Creek Associates, L.P.
Brooklyn, NY 2,595,782 38,294,756 40,890,538 (19,725,195)
East Two Thirty-Five Associates L.P.(14th Street)
New York, NY 462,662 2,502,155 2,964,817 (1,456,968)
Concourse Artists Housing Associates, L.P.
Bronx, NY 11,042 2,326,611 2,337,653 (1,354,260)
2051 Grand Concourse Housing Associates
Bronx, NY 36,792 5,287,433 5,324,225 (3,096,277)
Robin Housing Associates
Bronx, NY 32,042 8,258,896 8,290,938 (4,828,592)
Willoughby-Wyckoff Housing Associates
Bronx, NY 22,292 6,221,244 6,243,536 (3,627,520)
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY(g)(h) 166,763 22,561,550 22,728,313 (8,778,667)
West 107th Street Associates, L.P.
Bronx, NY 312,715 3,976,325 4,289,040 (2,283,147)
General Atlantic Second Avenue Associates, L.P. (96th Street)
Bronx, NY 253,397 2,850,203 3,103,600 (1,642,267)
Church Lane Associates
Germantown, PA 26,902 4,019,227 4,046,129 (2,367,348)
Campeche Isle Apartments L.P.
Galveston, TX (c) 0 0 0 0
Goodfellow Place L.P.
St. Louis, MO 41,102 1,204,993 1,246,095 (458,920)
Penn Alto Associates L.P.
Altoona, PA 97,907 11,918,745 12,016,652 (6,006,624)
Life on which
Depreciation in
Year of Latest Income
Construction Date Statements is
Description Renovation Acquired Computed (a)(b)
- --------------------------------------------------------------- ------------ ------------ -----------------
Apartment Complexes
Polynesian Apartments Associates, Ltd.
Homestead, FL (d)(g) 1988 July 1988 27.5 years
Seagrape Village Associates, LTD.
Homestead, FL (d)(g) 1988 July 1988 27.5 years
Metropolitan Towers Associates, Ltd.
Rio Piedras, PR 1987 Dec. 1988 40 Years
Westminster Place II- Olive Site, L.P.
St. Louis, MO 1988 Oct. 1988 20 - 40 years
Property Development Associates, L.P.
Kansas City, MO (e)(g)(h) 1988 Dec. 1988 40 years
Whittier Plaza Associates, L.P.
St. Louis, MO 1987 Dec. 1988 20 - 40 years
United-Glen Arden I L.P.
Glen Arden, MO 1988 Dec. 1988 8 - 25 years
United-Glen Arden II L.P.
Glen Arden, MO 1988 Dec. 1988 15 - 25 years
Rolling Green L.P.
Chicago, IL (g)(h) 1988 Dec. 1988 7 - 39 years
Santa Juanita II L.P.
Bayamon, PR 1988 Dec. 1988 27.5 years
Spring Creek Associates, L.P.
Brooklyn, NY 1987 Dec. 1988 15 - 27.5 years
East Two Thirty-Five Associates L.P.(14th Street)
New York, NY 1988 Dec. 1988 27.5 - 31.5 years
Concourse Artists Housing Associates, L.P.
Bronx, NY 1988 Nov. 1988 27.5 years
2051 Grand Concourse Housing Associates
Bronx, NY 1988 Nov. 1988 27.5 years
Robin Housing Associates
Bronx, NY 1988 Nov. 1988 27.5 years
Willoughby-Wyckoff Housing Associates
Bronx, NY 1988 Nov. 1988 27.5 years
Upper Fifth Avenue Residential Associates, L.P.
Bronx, NY(g)(h) 1987 Jan. 1989 40 years
West 107th Street Associates, L.P.
Bronx, NY 1987 Jan. 1989 27.5 - 31.5 years
General Atlantic Second Avenue Associates, L.P. (96th Street)
Bronx, NY 1988 Jan. 1989 27.5 - 31.5 years
Church Lane Associates
Germantown, PA 1988 Feb. 1989 15 - 27.5 years
Campeche Isle Apartments L.P.
Galveston, TX (c) 1988 May 1989 27.5 years
Goodfellow Place L.P.
St. Louis, MO 1988 May 1989 10 -40 years
Penn Alto Associates L.P.
Altoona, PA 1989 June 1989 27.5 - 40 years
106
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2005
Cost Capitalized
Initial Cost to Partnership Subsequent to
--------------------------- Acquisition:
Buildings and Improvements
Description Encumbrances Land Improvements (Disposals)
- --------------------------------------------------------------- ------------ ------------ ------------- ----------------
Gramco Development Limited Dividend Partnership, L.P.(Bayamon)
Bayamon, PR 3,980,395 1,322,887 7,609,024 (243,301)
Alexis Park Apartments
Bossier City, LA (f)(g)(h) 0 640,000 7,297,925 (7,937,925)
Williamsburg Residential
Wichita, KS 1,894,860 136,974 831,584 1,878,957
Victory Apartments
Chicago, IL 6,405,051 161,500 4,929,133 5,339,748
Less Discontinued operations
(19,331,973) (3,997,582) (57,267,624) (29,363,196)
------------ ------------ ------------- -------------
$ 65,591,884 $ 11,141,117 $ 95,104,754 $ 64,748,449
============ ============ ============= =============
Gross Amount at which Carried at close of Period
------------------------------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
- --------------------------------------------------------------- ------------ ------------- ------------ ------------
Gramco Development Limited Dividend Partnership, L.P.(Bayamon)
Bayamon, PR 1,329,788 7,358,822 8,688,610 (4,648,770)
Alexis Park Apartments
Bossier City, LA (f)(g)(h) 0 0 0 0
Williamsburg Residential
Wichita, KS 673,429 2,174,086 2,847,515 (1,119,586)
Victory Apartments
Chicago, IL 168,402 10,261,979 10,430,381 (3,859,079)
Less Discontinued operations (638,738) (31,263,272) (31,902,010) (12,720,616)
------------ ------------ ------------ ------------
$ 10,431,355 $160,562,965 $170,994,320 $ 86,387,053
============ ============ ============ ============
Life on which
Depreciation in
Year of Latest Income
Construction Date Statements is
Description Renovation Acquired Computed (a)(b)
- --------------------------------------------------------------- ------------ ------------ ---------------
Apartment Complexes
Gramco Development Limited Dividend Partnership, L.P.(Bayamon) 1989 July 1989 25 years
Bayamon, PR
Alexis Park Apartments 1986 July 1989 27.5 years
Bossier City, LA (f)(g)(h)
Williamsburg Residential 1989 Aug. 1989 40 years
Wichita, KS
Victory Apartments 1988 Sept. 1989 40 years
Chicago, IL
Less Discontinued operations
(a) Since all properties were acquired as operating properties, depreciation is
computed using primarily the straight-line method over the estimated useful
lives determined by the partnership date of acquisition.
(b) Furniture and fixtures, included in building improvements, are depreciated
primarily by the straight-line method over the estimated useful lives
ranging from 5 to 15 years.
(c) The property and the related assets and liabilities of this Local
Partnership were sold during the fiscal year ended March 31, 2002 and
included in discontinued operations.
(d) The property and the related assets and liabilities of these Local
Partnerships were sold during the fiscal year ended March 31, 2004.
(e) The property and the related assets and liabilities of this Local
Partnership were sold during the fiscal year ended March 31, 2005.
(f) The limited Partnership interest of this Local Partnership was sold during
the fiscal year ended March 31, 2005.
(g) These properties are included in discontinued operations for the fiscal
year ended March 31, 2004.
(h) These properties are included in discontinued operations for the fiscal
year ended March 31, 2005.
Cost of Property and Equipment Accumulated Depreciation
----------------------------------------------- -----------------------------------------------
Year Ended March 31,
--------------------------------------------------------------------------------------------------
2005 2004 2003 2005 2004 2003
------------- ------------- ------------- ------------- ------------- -------------
Balance at beginning of period $ 223,268,058 $ 235,227,902 $ 241,906,148 $ 102,005,231 $ 99,213,488 $ 94,895,961
Additions during period:
Improvements 1,278,534 933,142 947,397
Depreciation expense 7,071,790 7,433,688 7,517,957
Deductions during period:
Discontinued operations and
dispositions (53,552,272) (12,892,986) (7,625,643) (22,689,968) (4,641,945) (3,200,430)
------------- ------------- ------------- ------------- ------------- -------------
Balance at close of period $ 170,994,320 $ 223,268,058 $ 235,227,902 $ 86,387,053 $ 102,005,231 $ 99,213,488
============= ============= ============= ============= ============= =============
At the time the local partnerships were acquired by Liberty Tax Credit Plus II
Limited Partnership, the entire purchase price paid by Liberty Tax Credit Plus
II Limited Partnership was pushed down to the local partnerships as property and
equipment with an offsetting credit to capital. Since the projects were in the
construction phase at the time of acquisition, the capital accounts were
insignificant at the time of purchase. Therefore, there are no material
differences between the original cost basis for tax and GAAP.
107