Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ------to------
Commission file number 0-22104
Boston Financial Tax Credit Fund Plus, A Limited Partnership
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(Exact name of registrant as specified in its charter)
Massachusetts 04-3105699
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Arch Street, Boston, Massachusetts 02110-1106
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ___ Accelerated Filer ___
Non-accelerated filer ___ (Do not check if a
smaller reporting company) Smaller reporting company X
---
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X .
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
------------------------------ --------
Item 1. Financial Statements
Balance Sheets - September 30, 2009 (Unaudited)
and March 31, 2009 (Audited) 1
Statements of Operations (Unaudited) -
For the Three and Six Months Ended September 30, 2009 and 2008 2
Statement of Changes in Partners' Equity (Unaudited) -
For the Six Months Ended September 30, 2009 3
Statements of Cash Flows (Unaudited) -
For the Six Months Ended September 30, 2009 and 2008 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 17
PART II - OTHER INFORMATION
Items 1-6 18
SIGNATURE 19
CERTIFICATIONS 20
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
BALANCE SHEETS
September 30, 2009 (Unaudited) and March 31, 2009 (Audited)
Assets September 30 March 31
-------- ----------------- ----------------
Cash and cash equivalents $ 4,528,705 $ 4,400,689
Investments in Local Limited Partnerships (Note 1) 1,830,495 2,099,831
Other investments (Note 2) 900,300 1,278,877
Accounts receivable - 5,000
--------------- ---------------
Total Assets $ 7,259,500 $ 7,784,397
=============== ===============
Liabilities and Partners' Equity
Due to affiliate $ 69,598 $ 84,843
Accrued expenses 38,039 62,449
--------------- ---------------
Total Liabilities 107,637 147,292
General, Initial and Investor Limited Partners' Equity 7,151,863 7,637,105
--------------- ---------------
Total Liabilities and Partners' Equity $ 7,259,500 $ 7,784,397
=============== ===============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 2009 and 2008
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
---------------- ---------------- ---------------- --------------
Revenue
Investment $ 17,100 $ 16,928 $ 34,032 $ 25,110
Accretion of Original Issue Discount
(Note 2) 18,529 45,669 40,423 95,174
Cash distribution income 568 2,586 5,556 8,334
---------------- ---------------- ---------------- --------------
Total Revenue 36,197 65,183 80,011 128,618
---------------- ---------------- ---------------- --------------
Expenses:
Asset management fees, affiliate 25,170 39,813 50,340 79,626
Impairment on investments in Local
Limited Partnerships (Note 1) 138,158 266,000 138,158 266,000
General and administrative
(includes reimbursements to an affiliate
in the amounts of $42,664 and
$79,581 for the six months ended
September 30, 2009 and 2008,
respectively) 42,144 79,736 100,370 154,160
Amortization 1,269 1,921 2,540 3,982
---------------- ---------------- ---------------- ---------------
Total Expenses 206,741 387,470 291,408 503,768
---------------- ---------------- ---------------- ---------------
Loss before equity in income of Local Limited
Partnerships and gain on sale of investments in
Local Limited Partnerships (170,544) (322,287) (211,397) (375,150)
Equity in income of Local Limited
Partnerships (Note 1) 59,774 25,504 140,605 104,655
Gain on sale of investments in Local Limited
Partnerships - 16,290 4,550 2,185,821
---------------- ---------------- ---------------- ---------------
Net Income (Loss) $ (110,770) $ (280,493) $ (66,242) $ 1,915,326
================ ================= ================= ===============
Net Income (Loss) allocated:
General Partners $ (2,937) $ (8,175) $ (4,852) $ 13,783
Class A Limited Partners (118,275) (297,636) (95,297) 1,690,761
Class B Limited Partners 10,442 25,318 33,907 210,782
---------------- ---------------- ---------------- ---------------
$ (110,770) $ (280,493) $ (66,242) $ 1,915,326
================ ================= ================= ===============
Net Income (Loss) Per Limited Partner Unit
Class A Limited Partners (34,643 Units) $ (3.41) $ (8.59) $ (2.75) $ 48.81
================ ================= ================ ===============
Class B Limited Partners (3,290 Units) $ 3.17 $ 7.70 $ 10.31 $ 64.07
================ ================= ================ ==============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Six Months Ended September 30, 2009
(Unaudited)
Investor Investor
Initial Limited Limited
General Limited Partners, Partners,
Partners Partner Class A Class B Total
Balance at March 31, 2009 $ 76,371 $ 5,000 $ 6,077,949 $ 1,477,785 $ 7,637,105
Cash distributions - - - (419,000) (419,000)
Net Income (Loss) (4,852) - (95,297) 33,907 (66,242)
------------- ------------ ------------- ------------ --------------
Balance at September 30, 2009 $ 71,519 $ 5,000 $ 5,982,652 $ 1,092,692 $ 7,151,863
============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
STATEMENTS OF CASH FLOWS
For the Six Months Ended September, 2009 and 2008
(Unaudited)
2009 2008
---------------- -----------------
Net cash used for operating activities $ (154,035) $ (182,514)
Net cash provided by investing activities 701,051 3,356,414
Net cash used for financing activities (419,000) (537,000)
---------------- -----------------
Net increase in cash and cash equivalents 128,016 2,636,900
Cash and cash equivalents, beginning 4,400,689 1,052,170
---------------- ----------------
Cash and cash equivalents, ending $ 4,528,705 $ 3,689,070
================ ================
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Fund's Form 10-K for the year ended March 31, 2009. In the opinion of the
Managing General Partner, these financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Fund's financial position and results of operations. The results of operations
for the periods may not be indicative of the results to be expected for the
year.
The Managing General Partner has elected to report results of the Local Limited
Partnerships on a 90 day lag basis because the Local Limited Partnerships report
their results on a calendar year basis. Accordingly, the financial information
of the Local Limited Partnerships that is included in the accompanying financial
statements is as of June 30, 2009 and 2008.
Generally, profits, losses, tax credits and cash flow from operations are
allocated 99% to the Limited Partners and 1% to the General Partners. Net
proceeds from a sale or refinancing will be allocated 95% to the Limited
Partners and 5% to the General Partners, after certain priority payments. The
General Partners may have an obligation to fund deficits in their capital
accounts, subject to limits set forth in the Partnership Agreement. However, to
the extent that the General Partners' capital accounts are in a deficit
position, certain items of net income may be allocated to the General Partners
in accordance with the Partnership Agreement.
1. Investments in Local Limited Partnerships
The Fund has limited partnership interests in seven Local Limited Partnerships
which were organized for the purpose of owning and operating multi-family
housing complexes, all of which are government-assisted. The Fund's ownership
interest in each Local Limited Partnership is 99%. The Fund may have negotiated
or may negotiate options with the local general partners to purchase or sell the
Fund's interests in the Local Limited Partnerships at the end of the Compliance
Period at nominal prices. In the event that Properties are sold to a third
party, or upon dissolution of the Local Limited Partnerships, proceeds will be
distributed according to the terms of each Local Limited Partnership agreement.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
The following is a summary of investments in Local Limited Partnerships at
September 30 and March 31, 2009:
September 30 March 31
---------------- ----------------
Capital contributions and advances paid to Local Limited Partnerships and
purchase price paid to withdrawing partners of Local Limited Partnerships $ 9,456,311 $ 13,590,985
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $2,004,455 and $3,474,251 at September 30 and March 31,
respectively) (2,254,654) (6,025,254)
Cumulative cash distributions received from Local Limited Partnerships (3,700,335) (3,534,918)
---------------- ----------------
Investments in Local Limited Partnerships before adjustments 3,501,322 4,030,813
Excess investment costs over the underlying assets acquired:
Acquisition fees and expenses 276,617 399,859
Cumulative amortization of acquisition fees and expenses (110,288) (142,587)
---------------- ----------------
Investments in Local Limited Partnerships before valuation allowance 3,667,651 4,288,085
Valuation allowance on investments in Local Limited Partnerships (1,837,156) (2,188,254)
---------------- ----------------
Investments in Local Limited Partnerships $ 1,830,495 $ 2,099,831
================ =================
During the six months ended September 30, 2009, $74,990 was reimbursed from one
Local Limited Partnership related to advances made in previous years. The Fund
has also recorded a valuation allowance for its investments in certain Local
Limited Partnerships in order to appropriately reflect the estimated net
realizable value of these investments.
The Fund's share of the net losses of the Local Limited Partnerships for the six
months ended September 30, 2009 and 2008 is $213,384 and $497,930, respectively.
For the six months ended September 30, 2009 and 2008, the Fund has not
recognized $353,989 and $602,585, respectively, of equity in losses relating to
certain Local Limited Partnerships in which cumulative equity in losses and
cumulative distributions exceeded its total investment in these Local Limited
Partnerships.
During the six months ended September 30, 2009, the Fund sold its interests in
three Local Limited Partnerships, resulting in a net gain of $4,550. In
addition, sale proceeds of $5,000 were received during the six months ended
September 30, 2009 related to the prior year sale of one Local Limited
Partnership. During the six months ended September 30, 2008, the Fund sold its
interests in four Local Limited Partnerships, resulting in a net gain of
$2,185,821.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Other Investments
Other investments consists of the aggregate cost of the Treasury STRIPS
purchased by the Fund for the benefit of the Class B Limited Partners. The
amortized cost at September 30 and March 31, 2009 is composed of the following:
September 30 March 31
-------------- ----------------
Aggregate cost of Treasury STRIPS $ 255,923 $ 373,553
Accumulated accretion of
Original Issue Discount 644,377 905,324
--------------- ---------------
$ 900,300 $ 1,278,877
=============== ===============
The fair value of these securities at September 30, 2009 is $924,841. Maturity
dates for the STRIPS range from November 15, 2009 to May 15, 2010 with a final
maturity value of $925,000.
3. Fair Value Measurements
In September 2006, the Financial Accounting Standards Board ("FASB") issued
authoritative guidance which provided enhanced guidance for using fair value to
measure assets and liabilities. The authoritative guidance, which is effective
for financial statements issued in fiscal years beginning after November 15,
2007 and interim periods within those fiscal years, established a common
definition of fair value, providing a framework for measuring fair value under
U.S. generally accepted accounting principles and expanding disclosure
requirements about fair value measurements. In February 2008, additional
authoritative guidance was issued which delays the above effective date for fair
value measurement of all nonfinancial assets and liabilities except those that
are recognized or disclosed at fair value in the financial statements on at
least an annual basis until November 15, 2008. The Fund adopted certain
provisions of the authoritative guidance for financial assets and liabilities
recognized at fair value on a recurring basis effective April 1, 2008. This
partial adoption of did not have a material impact on the Fund's Financial
Statements. The Fund does not expect the adoption of the remaining provisions to
have a material effect on the Fund's financial position, operations or cash
flow. This authoritative guidance requires that a Fund measure its financial
assets and liabilities using inputs from the three levels of the fair value
hierarchy. A financial asset or liability classification within the hierarchy is
determined based on the lowest level input that is significant to the fair value
measurement. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Fund has the ability to
access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active,
inputs other than quoted prices that are observable for the
asset or liability and inputs that are derived principally from
or corroborated by observable market data by correlation or
other means (market corroborated inputs).
Level 3 - Unobservable inputs reflect the Fund's judgments about the
assumptions market participants would use in pricing the asset
or liability since limited market data exists. The Fund develops
these inputs based on the best information available, including
the Fund's own data.
Financial assets accounted for at fair value on a recurring basis at September
30 and March 31, 2009 include cash equivalents of $4,528,705 and $4,400,689,
respectively.
In February 2007, the FASB issued authoritative guidance which permits entities
to choose to measure many financial assets and financial liabilities at fair
value. Unrealized gains and losses on items for which the fair value option has
been elected are reported in earnings. This guidance is effective for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years. The Fund has not elected to measure any financial assets and financial
liabilities at fair value.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
4. New Accounting Principles
Accounting for Uncertainty in Income Taxes
In June 2006, the FASB issued authoritative guidance which provides guidance for
how uncertain tax positions should be recognized, measured, presented and
disclosed in the financial statements. As required, the Fund adopted this
authoritative guidance effective April 1, 2007 and concluded that the effect was
not material to its financial statements. In December 2008, the FASB issued
additional authoritative guidance which deferred the effective date for certain
nonpublic organizations. The deferred effective date is intended to give the
FASB additional time to develop guidance on the application of this
authoritative guidance by pass through and not-for-profit entities. If required,
the General Partner may modify the Fund's disclosures in accordance with the
FASB's guidance.
Codification and Hierarchy of Generally Accepted Accounting Principles
In June 2009, the FASB issued authoritative guidance which establishes the FASB
Standards Accounting Codification ("Codification") as the source of
authoritative GAAP recognized by the FASB to be applied to nongovernmental
entities. It is effective for interim and annual reporting periods ending after
September 15, 2009. The Fund has adopted this authoritative guidance with its
September 30, 2009 reporting. The only other source of authoritative GAAP is the
rules and interpretive releases of the SEC which only apply to SEC registrants.
The Codification supersedes all the existing non-SEC accounting and reporting
standards upon its effective date. Since the issuance of the Codification is not
intended to change or alter existing GAAP, adoption of this statement did not
have an impact on the Fund's financial position or results of operations, but
did change the way in which GAAP is referenced in the Fund's financial
statements.
Subsequent Events
In May 2009, the FASB issued authoritative guidance which establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before the financial statements are issued or are
available to be issued. The Fund adopted this authoritative guidance for the
quarter ended June 30, 2009 and has evaluated subsequent events after the
balance sheet date of September 30, 2009 through November 16, 2009, the date the
financial statements were issued.
Interim Disclosures about Fair Value Measurement
In April 2009, the FASB issued authoritative guidance which amends previous
professional standards, to require disclosures about the fair value of financial
instruments for interim reporting periods. The authoritative guidance, effective
for interim and annual reporting periods ending after June 15, 2009, also
requires companies to disclose the methods and significant assumptions used to
estimate the fair value of financial instruments in financial statements on an
interim basis and to describe any changes during the period. The Fund adopted
this authoritative guidance for the quarter ended June 30, 2009 and the adoption
did not have a material impact on the Fund's financial position or results of
operations.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
5. Significant Subsidiaries
The following Local Limited Partnerships invested in by the Fund represent more
than 20% of the Fund's total assets or equity as of September 30, 2009 or 2008
or net losses for the three months then ended. The following financial
information represents the performance of these Local Limited Partnerships for
the three months ended June 30, 2009 and 2008:
2009 2008
--------------- -------------
Pilot House Associates Limited Partnership
Revenue $ 320,849 $ 321,225
Net Income $ 45,198 $ 53,617
Preston Place Associates Limited Partnership
Revenue $ 269,084 $ 259,927
Net Income $ 34,785 $ 18,610
Hudson Square Apartments Limited Partnership N/A
Revenue $ 158,052
Net Income N/A
$ 33,080
Linden Square Ltd. Div. Housing Assoc. LP
-----------------------------------------
Revenue $ 172,599 $ 166,967
Net Loss $ (19,605) $ (40,641)
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The use of
words like "anticipate," "estimate," "intend," "project," "plan," "expect,"
"believe," "could," and similar expressions are intended to identify such
forward-looking statements. The Fund intends such forward-looking statements to
be covered by the safe harbor provisions for forward-looking statements and is
including this statement for purposes of complying with these safe harbor
provisions. Although the Fund believes the forward-looking statements are based
on reasonable assumptions, the Fund can give no assurance that its expectations
will be attained. Actual results and timing of certain events could differ
materially from those projected in or contemplated by the forward-looking
statements due to a number of factors, including, without limitation, general
economic and real estate conditions and interest rates.
Critical Accounting Policies
The Fund's accounting policies include those that relate to its recognition of
investments in Local Limited Partnerships using the equity method of accounting.
The Fund's policy is as follows:
The Local Limited Partnerships in which the Fund invests are Variable Interest
Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling
limited partner equity holder. The investments in the Local Limited Partnerships
are made primarily to obtain tax credits on behalf of the Fund's investors. The
general partners of the Local Limited Partnerships, who are considered to be the
primary beneficiaries, control the day-to-day operations of the Local Limited
Partnerships. The general partners are also responsible for maintaining
compliance with the tax credit program and for providing subordinated financial
support in the event operations cannot support debt and property tax payments.
The Fund, through its ownership percentages, may participate in property
disposition proceeds. The timing and amounts of these proceeds are unknown but
can impact the Fund's financial position, results of operations or cash flows.
Because the Fund is not the primary beneficiary of these VIEs, it accounts for
its investments in the Local Limited Partnerships using the equity method of
accounting. As a result of its involvement with the VIEs, the Fund's exposure to
economic and financial statement losses is limited to its investments in the
VIEs ($1,830,495 and $2,099,831 at September 30 and March 31, 2009,
respectively). The Fund may be subject to additional losses to the extent of any
financial support that the Fund voluntarily provides in the future. Under the
equity method, the investment is carried at cost, adjusted for the Fund's share
of net income or loss and for cash distributions from the Local Limited
Partnerships; equity in income or loss of the Local Limited Partnerships is
included currently in the Fund's operations. A liability is recorded for delayed
equity capital contributions to Local Limited Partnerships. Under the equity
method, a Local Limited Partnership investment will not be carried below zero.
To the extent that equity in losses are incurred when the Fund's carrying value
of the respective Local Limited Partnership has been reduced to a zero balance,
the losses will be suspended and offset against future income. Income from Local
Limited Partnerships, where cumulative equity in losses plus cumulative
distributions have exceeded the total investment in Local Limited Partnerships,
will not be recorded until all of the related unrecorded losses have been
offset. To the extent that a Local Limited Partnership with a carrying value of
zero distributes cash to the Fund, that distribution is recorded as income on
the books of the Fund.
The Fund has implemented policies and practices for assessing
other-than-temporary declines in the values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are tested
for other-than-temporary impairment. If an other-than-temporary decline in
carrying value exists, a provision to reduce the investment to the sum of the
estimated remaining benefits will be recorded in the Fund's financial
statements. The estimated remaining benefits for each Local Limited Partnership
consist of estimated future tax losses and tax credits over the estimated life
of the investment and estimated residual proceeds at disposition. Included in
the estimated residual proceeds calculation is current net operating income
capitalized at a regional rate specific to each Local Limited Partnership less
the debt of the Local Limited Partnership. Generally, the carrying values of
most Local Limited Partnerships will decline through losses and distributions in
amounts sufficient to prevent other-than-temporary impairments. However, the
Fund may record similar impairment losses in the future if the expiration of tax
credits outpaces losses and distributions from any of the Local Limited
Partnerships.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources
At September 30, 2009, the Fund had cash and cash equivalents of $4,528,705, as
compared to $4,400,689 at March 31, 2009. The increase is primarily attributable
to cash distributions received from Local Limited Partnerships and reimbursement
of advances from a Local Limited Partnership, partially offset by cash used for
operating activities and payment of asset management fees.
The Managing General Partner initially designated 4% of the Adjusted Gross
Proceeds (which generally means Gross Proceeds minus the amounts committed to
the acquisition of Treasury STRIPS) as Reserves, as defined in the Partnership
Agreement. The Reserves were established to be used for working capital of the
Fund and contingencies related to the ownership of Local Limited Partnership
interests. The Managing General Partner may increase or decrease such Reserves
from time to time, as it deems appropriate. At September 30 and March 31, 2009,
approximately $4,471,000 and $4,284,000, respectively, has been designated as
Reserves.
To date, professional fees relating to various Property issues totaling
approximately $465,000 have been paid from Reserves. In the event a Local
Limited Partnership encounters operating difficulties requiring additional
funds, the Fund's management might deem it in its best interest to voluntarily
provide such funds in order to protect its investment. As of September 30, 2009,
the Fund has advanced approximately $228,000 to Local Limited Partnerships to
fund operating deficits.
The Managing General Partner believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the Fund's
ongoing operations. Reserves may be used to fund operating deficits, if the
Managing General Partner deems funding appropriate. To date, the Fund has not
used any of Reserves to fund operations. If Reserves are not adequate to cover
the Fund's operations, the Fund will seek other financing sources including, but
not limited to, the deferral of Asset Management Fees paid to an affiliate of
the Managing General Partner or working with Local Limited Partnerships to
increase cash distributions.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of September 30, 2009, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for.
Cash Distributions
Cash distributions of $419,000 were made to the Investor Limited Partners, Class
B, during the six months ended September 30, 2009.
Results of Operations
Three Month Period
For the three months ended September 30, 2009, the Fund's operations resulted in
net loss of $110,770, as compared to net loss of $280,493 for the same period in
2008. The decrease in net loss is primarily attributable to a decrease in
impairment on investments in Local Limited Partnerships and a decrease in
general and administrative expenses, partially offset by a decrease in income
from accretion of Original Issue Discount and a decrease in gain on sale of
investments in Local Limited Partnerships. The decrease in impairment on
investments in Local Limited Partnerships is due to the Fund recording a lower
impairment allowance for its investment in a Local Limited Partnership. General
and administrative expenses decreased primarily due to decreased charges for
operations and administrative expenses necessary for the operation of the Fund.
The decrease in income from accretion of Original Issue Discount is due to
T-STRIPS that have matured resulting in the reduction of accretion income for
the current quarter. The decrease in gain on sale of investments in Local
Limited Partnerships is primarily due to a decrease in proceeds received from
the sale of one property during the current quarter compared to proceeds
received from the sale of three properties during the same quarter of the prior
year.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Six Month Period
For the six months ended September 30, 2009, the Fund's operations resulted in
net loss of $66,242, as compared to net income of $1,915,326 for the same period
in 2008. The decrease in net income is primarily attributable to a decrease in
gain on sale of investments in Local Limited Partnerships and a decrease in
income from accretion of Original Issue Discount, partially offset by a decrease
in impairment on investments in Local Limited Partnerships, an increase in
equity in income of Local Limited Partnerships, and a decrease in general and
administrative expenses. The decrease in gain on sale of investments in Local
Limited Partnerships is primarily due to a decrease in proceeds received from
the sale of three properties during the six months ended September 30, 2009
compared to the proceeds received from the sale of four properties during the
same period of the prior year. The decrease in income from accretion of Original
Issue Discount is due to T-STRIPS that have matured resulting in the reduction
of accretion income for the current quarter. The decrease in impairment on
investments in Local Limited Partnerships is due to the Fund recording a lower
impairment allowance for its investment in a Local Limited Partnership. The
increase in equity in income of Local Limited Partnerships is primarily due to
an increase in unrecognized losses by the Fund from Local Limited Partnerships
with carrying values of zero. General and administrative expenses decreased
primarily due to decreased charges for operations and administrative expenses
necessary for the operation of the Fund.
Portfolio Update
The Fund is a Massachusetts limited partnership organized to invest in Local
Limited Partnerships which own and operate apartment complexes which are
eligible for low income housing tax credits that may be applied against the
federal income tax liability of an investor. The Fund also invests in, for the
benefit of the Class B Limited Partners, United States Treasury obligations from
which the interest coupons have been stripped or in such interest coupons
themselves (collectively "Treasury STRIPS"). The Fund used approximately 28% of
the Class B Limited Partners' capital contributions to purchase Treasury STRIPS
with maturities of 13 to 18 years, with a total redemption amount equal to the
Class B Limited Partners' capital contributions. The Fund's objectives are to:
(i) provide annual tax benefits in the form of tax credits which Limited
Partners may use to offset their Federal income tax liability; (ii) preserve and
protect the Fund's capital committed to Local Limited Partnerships; (iii)
provide cash distributions from operations of Local Limited Partnerships; (iv)
provide cash distributions from Sale or Refinancing transactions with the
possibility of long term capital appreciation; and (v) provide cash
distributions derived from investment in Treasury STRIPS to Class B Limited
Partners after a period of approximately thirteen to eighteen years equal to
their Capital Contributions. The fiscal year of the Fund ends on March 31.
Municipal Mortgage & Equity, LLC ("MuniMae") has now sold substantially all of
the assets of its Low Income Housing Tax Credit ("LIHTC") business to a venture
consisting of JEN Partners, LLC or its affiliates ("JEN") and Real Estate
Capital Partners, LP or its affiliates ("RECP"). The first stage of this sale
closed on July 30, 2009 and the second stage closed on October 13, 2009. The
business is owned by Boston Financial Investment Management, LP, a Delaware
limited partnership, which is directly and indirectly owned by JEN and RECP
("Boston Financial"). The general partner of Boston Financial is BFIM
Management, LLC, a JEN affiliate. From July 30, 2009 through October 13, 2009,
MuniMae had engaged BFIM Asset Management, LLC ("BFIM"), an affiliate of Boston
Financial, to provide asset management to the Fund. Most of the employees of
MuniMae's LIHTC business have joined Boston Financial, the operations of the
business are to remain intact in the Boston office and the Fund will continue to
be managed and administered in the ordinary course.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update (continued)
Arch Street VIII, Inc. is the Managing General Partner of the Fund ("Arch
Street") and Arch Street VI Limited Partnership is the co-General Partner of the
Fund ("Arch Street LP"). The general partner of Arch Street LP is Arch Street.
In connection with the above-described transaction, on October 13, 2009,
ownership and control of the Managing General Partner and control of the
co-General Partner were directly and/or indirectly transferred from an affiliate
of MuniMae to Boston Financial. The transfer will not change the organizational
structure of the Fund. The principal office and place of business of the Fund
will continue to be 101 Arch Street, 13th Floor, Boston, Massachusetts 02110.
On August 15, 2009, the Fund received $183,000, or approximately $55.62 per
Class B Unit, as the Fund's investment in one U.S. Treasury STRIPS matured. The
Managing General Partner distributed these funds to Class B Limited Partners in
August 2009.
On May 15, 2009, the Fund received $236,000, or approximately $71.73 per Class B
Unit, as the Fund's investment in one U.S. Treasury STRIPS matured. The Managing
General Partner distributed these funds to Class B Limited Partners in May 2009.
On November 15, 2008, the Fund received $880,000, or approximately $267.47 per
Class B Unit, as the Fund's investment in four U. S. Treasury STRIPS matured.
The Managing General Partner distributed these funds to Class B Limited Partners
in November 2008. On August 15, 2008 the Fund received $537,000, or $163.22 per
Class B Unit, as the Fund's investment in four Treasury STRIPS matured. The
Managing General Partner distributed these funds to Class B Limited Partners in
August 2008.
The next scheduled maturity date is November 15, 2009, when three U.S. Treasury
STRIPS, in the amount of $473,000, or approximately $143.77 per Class B Unit,
will mature. The Managing General Partner will distribute these proceeds in
November 2009, to the Limited Partners recognized as holders of the Class B
Units. One additional security, totaling $452,000, or approximately $137.39 per
Class B Unit, is scheduled to mature on May 15, 2010.
As of September 30, 2009, the Fund's investment portfolio consisted of limited
partnership interests in seven Local Limited Partnerships, each of which owns
and operates a multi-family apartment complex and each of which has generated
Tax Credits. Since inception, the Fund generated Tax Credits, net of recapture,
of approximately $1,467 per Class A Unit. Class B Unit investors have received
Tax Credits, net of recapture, of approximately $1,056 per Limited Partner Unit.
Properties that receive low income housing tax credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 calendar years
from the date the Property is placed in service. Failure to do so would result
in the recapture of a portion of the Property's Tax Credits. The Compliance
Period for six of the remaining seven properties expired on or before December
31, 2008, while one property's Compliance Period ends December 31, 2009. The
Fund disposed of three Local Limited Partnership interests during the six months
ending September 30, 2009. Currently, the Managing General Partner has
negotiated an agreement to dispose of the Fund's interest in one of the Local
Limited Partnerships in 2009. In addition, the Fund is in negotiations with
potential buyers to dispose of its interest in two other Local Limited
Partnerships in 2009.
The Managing General Partner will continue to closely monitor the operations of
the Properties and will formulate disposition strategies with respect to the
Fund's remaining Local Limited Partnership interests. It is unlikely that the
Managing General Partner's efforts will result in the Fund disposing of all of
its remaining Local Limited Partnership interests concurrently with the
expiration of each Property's Compliance Period. The Fund shall dissolve and its
affairs shall be wound up upon the disposition of the final Local Limited
Partnership interest and other assets of the Fund. Investors will continue to be
Limited Partners, receiving K-1s and quarterly and annual reports, until the
Fund is dissolved.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update (continued)
The Fund is not a party to any pending legal or administrative proceeding, and
to the best of its knowledge, no legal or administrative proceeding is
threatened or contemplated against it.
Property Discussions
Two of the Properties in which the Fund has an interest had stabilized
operations and operated above breakeven through June 30, 2009. Five Properties
generated cash flow deficits that the Local General Partners of those Properties
funded through project expense loans, subordinated loans or operating escrows.
However, some Properties have had persistent operating difficulties that could
either: (i) have an adverse impact on the Fund's liquidity; (ii) result in their
foreclosure; or (iii) result in the Managing General Partner deeming it
appropriate for the Fund to dispose of its interest in the Local Limited
Partnership prior to the expiration of the Compliance Period. Also, the Managing
General Partner, in the normal course of the Fund's business, may arrange for
the future disposition of its interest in certain Local Limited Partnerships.
The following Property discussions focus only on such Properties.
As previously reported, the Managing General Partner anticipated that the Fund's
interest in the Local Limited Partnership that owns Cottages of Aspen, located
in Oakdale, Minnesota, would be terminated upon the sale of the underlying
Property in mid-2008. On June 4, 2008, the underlying Property was sold,
resulting in net sales proceeds to the Fund of $2,570,481, or $67.76 per Unit.
The Managing General Partner reported a 2008 taxable loss of $43,073, or $1.14,
per Unit, as a result of the sale. The Fund no longer has an interest in this
Local Limited Partnership.
As previously reported, the Fund's interest in the Local Limited Partnership
that owns Livingston Arms, located in Poughkeepsie, New York, was transferred on
September 1, 2008, resulting in net sales proceeds to the Fund of $10,000, or
$0.26 per Unit. The Managing General Partner reported a 2008 loss of $347,141,
or $8.38 per Unit. The Fund no longer has an interest in this Local Limited
Partnership.
As previously reported, the Managing General Partner estimated a late 2008
disposition, via a transfer to the Local General Partner, of the Fund's interest
in the Local Limited Partnership that owns Atkins Glen, located in Stoneville,
South Carolina. On October 1, 2008, the Fund's interest was transferred. The
Fund received $3,334, or $0.09 per Unit. The Managing General Partner reported a
2008 taxable income of $283,085, or $7.46 per Unit. The Fund no longer has an
interest in this Local Limited Partnership.
As previously reported, occupancy for the three month period ending September
30, 2008, improved to 89%; however, working capital and debt service coverage
levels remained below acceptable levels at 45th and Vincennes, located in
Chicago, Illinois. A representative of the Managing General Partner visited the
Property in December 2007 to reassess the management agent and physical
condition of the Property and noted that the Property was in need of significant
improvement. Although advances from the Local General Partner enabled the
Property to remain current on its loan obligations, the Managing General Partner
believed that the Local General Partner and its affiliated management company
were not adequately performing their responsibilities with respect to the
Property. The Managing General Partner expressed their concerns to the Local
General Partner. Based on the results of a market valuation, which confirmed the
Property's value to be less than its outstanding debt, the Managing General
Partner assigned the Fund's interest to the Local General Partner, upon receipt
of official documentation from HUD approving the Transfer of Physical Assets
application. The Assignment was dated October 31, 2008, effectively terminating
the Fund's interest in the Local Limited Partnership. The disposition did not
result in any proceeds to the Fund. The Managing General Partner reported 2008
taxable income of $29,879, or $0.79 per Unit. The Property's Compliance Period
ended on December 31, 2007. The Fund no longer has an interest in this Local
Limited Partnership.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
As previously reported, the Managing General Partner anticipated that the Fund's
interest in the Local Limited Partnership that owns and operates Hudson Square,
located in Baton Rouge, Louisiana, will be terminated either upon the sale of
the underlying Property, or a sale of the Fund's interest, in early 2009. Based
on a 2007 valuation, the Managing General Partner expected a sale to result in
approximately $1,200,000, or $31.63 per Unit. However, due to current market
conditions, the disposition resulted in net sales proceeds of $925,000, or
$24.39 per Unit, and a 2008 loss of $931,590, or $24.56 per Unit. The sale took
place on December 12, 2008. The Fund no longer has an interest in this Local
Limited Partnership.
As previously reported, as a result of concerns regarding the then-existing
operating deficits and capital requirements of Findley Place, located in
Minneapolis, Minnesota, in 1999, the Managing General Partner developed a plan
that will ultimately result in the transfer of the Fund's interest in the Local
Limited Partnership. On March 1, 2000, the Managing General Partner consummated
the transfer of 1% of the Fund's interest in losses, 48.5% of its interest in
profits and 30% of its capital account to the Local General Partner. The
Managing General Partner had the right to put the Fund's remaining interest to
the Local General Partner any time after March 1, 2001. In addition, the Local
General Partner had the right to call the remaining interest after the
Compliance Period has expired, which was December 31, 2008. The Property
operated below breakeven for the year ending December 31, 2008, due to
maintenance and capital expenses. The disposition of the Fund's interest in
Findley Place took place on January 16, 2009. This transaction resulted in net
proceeds to the Fund of $5,000, or $0.13 per Unit. The Managing General Partner,
in accordance with and as permitted by the Partnership Agreement, retained the
entire amount of sales proceeds in Reserves. The Managing General Partner
currently estimates 2009 taxable income of $308,000, or $8.12 per Unit. The Fund
no longer has an interest in this Local Limited Partnership.
As previously reported, New Garden Place, located in Gilmer, North Carolina, in
early 2004 the Local General Partner requested and the Fund provided its
approval to a refinancing of the Property's first mortgage. The new first
mortgage, which closed in April 2004, had a lower interest rate and lower annual
debt service payment than the original mortgage, thereby increasing the
Property's cash flow. In connection with the Fund's approval of this
refinancing, the Fund and the Local General Partner entered into a put agreement
whereby the Fund could transfer its interest in the Local Limited Partnership to
the Local General Partner for a nominal amount any time after the Property's
Compliance Period, which ended on December 31, 2008. On March 26, 2009, the
Managing General Partner exercised the Fund's put option and transferred its
interest in the Local Limited Partnership that owned New Garden Place effective
January 1, 2009. This transaction resulted in net proceeds to the Fund of
$5,000, or $0.13 per Unit. The Managing General Partner, in accordance with and
as permitted by the Partnership Agreement, retained the entire amount of sales
proceeds in Reserves. The Managing General Partner currently estimates 2009
taxable income of $244,000, or $6.43 per Unit. The Fund no longer has an
interest in this Local Limited Partnership.
As previously reported, working capital and debt service coverage levels
remained below acceptable standards at Metropolitan Apartments, located in
Chicago, Illinois. In addition, occupancy decreased from 86% for the three
months ending September 30, 2008 to 79% for the three months ending December 31,
2008. In addition to low occupancy levels, the decline in operations was
attributable to the rising cost of natural gas and, more significantly, an
increase in debt service caused by the Property's five year adjustable rate
first mortgage being reset in late 2007. The deficit was funded by advances from
the Management Agent, an affiliate of the Local General Partner. The Local
General Partner, having exceeded their working capital obligation, would no
longer continue to fund deficits. The Managing General Partner, as part of a
disposition agreement with the Local General Partners to jointly fund operating
deficits from Fund reserves, advanced $50,000 in 2007 and $32,223 more in 2008,
to address the need for structural repairs as cited in the City of Chicago's
report of recent building code violations. On April 16, 2009, the Managing
General Partner disposed of its interest in the Local Limited Partnership that
owned Metropolitan Apartments; however, benefits were transferred as of January
1, 2009. The Managing General Partner was able to recover a majority, $74,990,
of its advances upon disposition. The Compliance Period for the Property ended
December 31, 2008. The Managing General Partner currently estimates 2009 taxable
income of $270,000, or $7.12 per Unit. The Fund no longer has an interest in
this Local Limited Partnership.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
As previously reported, the Managing General Partner was exploring an exit
strategy for Kings Grant Court, located in Statesville, North Carolina. The
Managing General Partner agreed to sell its interest to an affiliate of the
Local General Partner, originally expected for January 2009. A sale of the
Fund's interest occurred on May 29, 2009; however, the transfer of benefits is
effective March 31, 2009. The sale resulted in $4,540, or $0.12 per Unit, in
proceeds. The Managing General Partner currently estimates a 2009 tax loss of
$97,000, or $2.56 per Unit. The Fund no longer has an interest in this Local
Limited Partnership.
As previously reported, the Managing General Partner estimated a 2009
disposition, via a transfer to the Local General Partner, of the Fund's interest
in the Local Limited Partnership that owns Vista Villa, located in Saginaw
County, Michigan. The Fund and the Local General Partner entered into a put
agreement whereby the Fund could transfer its interest in the Local Limited
Partnership to the Local General Partner for a nominal amount any time after the
Property's Compliance Period, which ended on December 31, 2008. An exercise of
the put occurred on July 10, 2009, effective June 1, 2009. This transaction did
not result in any net sales proceeds to the Fund. The Managing General Partner
currently projects 2009 taxable income of approximately $280,000, or $7.38 per
Unit. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner and Local General Partner
of Tree Trail, located in Gainesville, Florida, were exploring an exit strategy
that would have allowed for a late summer 2008 disposal of the Fund's interest,
via a sale of the underlying Property, in the Local Limited Partnership that
owns and operates Tree Trail. Due to current market conditions, the Managing
General Partner is reexamining the exit strategy for the Fund's interest in this
Local Limited Partnership and anticipates a June 2010 disposition.
As previously reported, the Managing General Partner and Local General Partner
of Pilot House, located in Newport News, Virginia, were exploring an exit
strategy that could have resulted in a mid-2008 disposal of the Fund's interest
in the Local Limited Partnership that owns Pilot House, for approximately
$1,650,000 or $43.50 per Unit. The Managing General Partner is negotiating an
exit strategy that will dispose of the Fund's interest, via a sale of the
underlying Property, in the Local Limited Partnership that owns and operates
Pilot House to occur in June 2010 for $1,400,000, or approximately $36.91 per
Unit. Terms of a possible disposition have not been agreed upon at this time.
As previously reported, the Managing General Partner anticipated that the Fund's
interest in the Local Limited Partnership that owns Walker Woods II, located in
Dover, Delaware, would be terminated upon the sale of the Property in late 2008.
The Fund and the Local General Partner are currently negotiating a put agreement
whereby the Fund could transfer its interest in the Local Limited Partnership to
the Local General Partner for a nominal amount any time after the Property's
Compliance Period, which ended on December 31, 2007. The Managing General
Partner expects the put to be exercised in January 2010.
As previously reported, the Managing General Partner is currently exploring an
exit strategy for Jardines de Juncos, located in Juncos, Puerto Rico, that could
lead to a 2009 disposition. Net sales proceeds are projected to be $29,751, or
approximately $0.78 per Unit. The Managing General Partner estimates the 2009
taxable gain to be $1,150,000, or approximately $30.32 per Unit.
The Managing General Partner is currently exploring an exit strategy for Long
Creek Court, located in Kittrell, North Carolina, that could lead to the Fund
transferring its interest in the Local Limited Partnership in December 2009. Net
sales proceeds to the Fund, if any, are unknown at this time.
The Managing General Partner is currently exploring an exit strategy for Linden
Square, located in Flint, Michigan, that could lead to the Fund transferring its
interest in the Local Limited Partnership in January 2010. Net sales proceeds to
the Fund, if any, are unknown at this time.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Non Applicable
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Fund maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934 ("Exchange Act") is recorded, processed, summarized and
reported within the specified time periods. The Fund's Chief Executive Officer
and its Chief Financial Officer (collectively, the "Certifying Officers") are
responsible for maintaining disclosure controls for the Fund. The controls and
procedures established by the Fund are designed to provide reasonable assurance
that information required to be disclosed by the issuer in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Commission's rules and forms.
As of the end of the period covered by this report, the Certifying Officers
evaluated the effectiveness of the Fund's disclosure controls and procedures.
Based on the evaluation, the Certifying Officers concluded that as of September
30, 2009, the Fund's disclosure controls and procedures were effective to
provide reasonable assurance that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
applicable rules and forms, and that it is accumulated and communicated to our
management, including the Certifying Officers, as appropriate to allow timely
decisions regarding required disclosure.
Internal Control over Financial Reporting
The Certifying Officers have also concluded that there was no change in the
Fund's internal controls over financial reporting identified in connection with
the evaluation that occurred during the Fund's second fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Fund's
internal control over financial reporting.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a) Exhibits
31.1 Certification of Principal Executive Officer and Principal
Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer and Principal
Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.2 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended September 30, 2009.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
SIGNATURE
Pursuant to the requirements 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.
Date: November 16, 2009 BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A LIMITED PARTNERSHIP
By: Arch Street VIII, Inc.,
its Managing General Partner
/s/Kenneth J. Cutillo
-------------------------
Kenneth J. Cutillo
President
Arch Street VIII, Inc.