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EXCEL - IDEA: XBRL DOCUMENT - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/v409695_ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/v409695_ex31-2.htm
EX-32.1 - EXHIBIT 32.1 - UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II /MI/v409695_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarter Ended March 31, 2015

 

¨TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 0-16701

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,

a Michigan Limited Partnership

(Exact name of registrant as specified in its charter)

 

MICHIGAN

(State or other jurisdiction of

incorporation or organization)

 

38-2702802

(I.R.S. employer

identification number)

 

 

280 Daines Street, Birmingham, Michigan 48009

(Address of principal executive offices) (Zip Code)

 

(248) 645-9220

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(g) of the Act:

units of beneficial assignments of limited partnership interest

 

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨   No ¨

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or 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. (Check one):

 

Large Accelerated filer    ¨ Accelerated filer     ¨ Non-accelerated filer     ¨  Smaller reporting company    x

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨     No x

 

As of March 31, 2015, the number of units of limited partnership interest of the registrant outstanding was 3,303,387. The Partnership units of interest are not traded in any public market.

 

 
 

 

 

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,

A MICHIGAN LIMITED PARTNERSHIP

 

INDEX

 

    Page
     
PART I FINANCIAL INFORMATION  
     
ITEM 1. FINANCIAL STATEMENTS  
   
  Balance Sheets
March 31, 2015 (Unaudited) and
December 31, 2014
3
     
  Statements of Operations
Three months ended March 31, 2015
and 2014 (Unaudited)
4
     
  Statement of Partners’ Equity
Three months ended March 31, 2015 (Unaudited)
4
   
  Statements of Cash Flows
Three months ended March 31, 2015
and 2014 (Unaudited
)
 5
     
  Notes to Financial Statements
March 31, 2015 (Unaudited)
6
     
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 11
     
ITEM 4. CONTROLS AND PROCEDURES 11
     
PART II OTHER INFORMATION  12
     
ITEM 1. LEGAL PROCEEDINGS 12
     
ITEM 1A. RISK FACTORS 13
     
ITEM 6. EXHIBITS 13

 

 

- 2 -
 

 

 

 

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,

A MICHIGAN LIMITED PARTNERSHIP

 

BALANCE SHEETS 

 

ASSETS  March 31,2015   December 31, 2014 
   (Unaudited)     
Properties:          
Land  $7,432,973   $7,432,973 
Buildings And Improvements   36,346,977    36,327,829 
Furniture And Equipment   656,511    656,511 
Manufactured Homes and Improvements   5,291,331    5,043,383 
    49,727,792    49,460,696 
           
Less Accumulated Depreciation   (32,261,094)   (31,894,057)
    17,466,698    17,566,639 
           
Cash And Cash Equivalents   7,241,326    7,326,491 
Unamortized Finance Costs   905,791    927,256 
Deferred Home Relocation Costs   261,545    330,595 
Other Assets   1,113,524    928,350 
Asset Held for Sale   2,624,021    2,596,859 
           
Total Assets  $29,612,905   $29,676,190 

 

LIABILITIES & PARTNERS' EQUITY  March 31,2015   December 31, 2014 
   (Unaudited)     
         
Accounts Payable  $83,727   $36,457 
Other Liabilities   655,431    511,757 
Notes Payable   24,445,358    24,595,065 
Liabilities of Asset Held for Sale   3,537,497    3,539,074 
           
Total Liabilities   28,722,013    28,682,353 
           
Partners’ Equity:          
General Partner   419,593    417,980 
Unit Holders   471,299    575,857 
           
Total Partners' Equity   890,892    993,837 
           
Total Liabilities And          
Partners’ Equity  $29,612,905   $29,676,190 

 

See Notes to Financial Statements

 

 

- 3 -
 

 

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,

 A MICHIGAN LIMITED PARTNERSHIP

 

STATEMENTS OF OPERATIONS

 

  THREE MONTHS ENDED 
   March 31, 2015   March 31, 2014 
   (unaudited)   (unaudited) 
         
Income:          
Rental Income  $1,606,618   $1,568,651 
Home Sale Income   19,796    139,404 
Other   286,841    210,062 
           
Total Income  $1,913,255   $1,918,117 
           
Operating Expenses:          
Administrative Expenses (Including $110,685 and $103,990, in Property Management Fees Paid to an Affiliate for the Three Month Period Ended March 31, 2015 and 2014 Respectively)   644,308    604,676 
Property Taxes   156,104    176,922 
Utilities   130,861    121,400 
Property Operations   184,184    177,329 
Depreciation   367,037    360,290 
Interest   332,164    339,410 
Home Sale Expense   14,265    105,670 
           
Total Operating Expenses  $1,828,923   $1,885,697 
           
Income from Continuing Operations  $84,332   $32,420 
           
Income (Loss) from Discontinued Operations  $76,994   ($17,476)
           
Net Income  $161,326   $14,944 
           
Income Per Unit:          
Continuing Operations   0.03    0.01 
Discontinued Operations   0.02    (0.01)
           
Total Income Per Unit   0.05    0.00 
           
Distribution Per Unit:   0.08    0.08 
           
Weighted Average Number Of Units Of Beneficial Assignment Of Limited Partnership Interest Outstanding During The Period Ending  March  31, 2015 and 2014   3,303,387    3,303,387 

 

STATEMENT OF PARTNERS' EQUITY (Unaudited)

 

   General Partner   Unit Holders   Total 
             
Balance, December 31, 2014  $417,980   $575,857   $993,837 
Distributions        (264,271)   (264,271)
Net Income   1,613    159,713   $161,326 
                
Balance as of March 31, 2015  $419,593   $471,299   $890,892 

 

See Notes to Financial Statements

 

- 4 -
 

 

 

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,

A MICHIGAN LIMITED PARTNERSHIP

  

STATEMENTS OF CASH FLOWS

(Unaudited)

 

   THREE MONTHS ENDED 
   March 31,2015   March 31,2014 
         
Cash Flows From Operating Activities:          
  Net Income  $161,326   $14,944 
           
Adjustments To Reconcile Net Income          
 To Net Cash Provided By          
  Operating Activities:          
  Depreciation   367,037    414,987 
  Amortization of Financing Costs   21,464    21,464 
  Amortization of Home Relocation Costs   69,050    69,036 
  Payment of Home Relocation Costs   0    (1,500)
  Gain on Sale of Manufactured Homes   5,533    29,685 
  Increase In Other Assets   (190,228)   (316,124)
  Increase In Accounts Payable   71,944    36,616 
  Increase In Other Liabilities   145,024    122,562 
           
Total Adjustments   489,824    376,726 
           
Net Cash Provided By (Used In) Operating Activities   651,150    391,670 
           
Cash Flows Used In Investing Activities:          
  Investment in Manufactured Homes and Improvements   (273,279)   (248,609)
  Purchase of Property and Equipment   (19,147)   (8,512)
  Proceeds from Sale of Manufactured Homes   19,798    139,455 
           
Net Cash Used In Investing Activities   (272,628)   (117,666)
           
Cash Flows Used In Financing Activities:          
  Distributions To Unit Holders   (264,271)   (264,271)
  Payments On Notes Payable   (177,308)   (168,749)
           
Net Cash Used In Financing Activities   (441,579)   (433,020)
           
Decrease In Cash   (63,057)   (159,016)
Cash, Beginning   7,317,400    8,584,140 
           
Cash, Ending  $7,254,343   $8,425,124 

 

See Notes to Financial Statements

 

- 5 -
 

 

 

 

UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,

A MICHIGAN LIMITED PARTNERSHIP

 

 

NOTES TO FINANCIAL STATEMENTS

March 31, 2015 (Unaudited)

 

1.Basis of Presentation and Accounting Policies:

 

The accompanying unaudited 2015 financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The balance sheet at December 31, 2014 has been derived from the audited financial statements at that date. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015, or for any other interim period. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership’s Form 10-K for the year ended December 31, 2014.

 

During the fourth quarter of 2012, Management initiated the Sunshine Village Paid Home Relocation Program (“Program”). The Program was offered exclusively to residents of Seminole Estates, a 704 site, 55 and over manufactured home community in Hollywood, Florida that announced its closure. The Program expired in the first quarter of 2013. By the end of the first quarter of 2014, all 41 residents have successfully relocated. The Partnership has incurred expenditures of $903,232, of which $816,203 has been capitalized and is being amortized as a reduction of rental revenue over the life of the residents’ three year rental period. The Program is completed and Management estimates no additional relocation costs will be incurred. At March 31, 2015, $261,545 remains unamortized.

 

The carrying amounts of cash, accounts payable and notes payable approximate their fair values due to their short-term nature. The fair value of mortgage notes payable approximates their carrying amounts based on current borrowing rates.

 

We have evaluated subsequent events through the date of this filing. We do not believe there are any material subsequent events which would require further disclosure.

 

2.Mortgage Payable:

 

The Partnership has two mortgage notes payable with Cantor Commercial Real Estate collateralized by Sunshine Village, located in Davie, Florida and West Valley, located in Las Vegas, Nevada. The mortgages are payable in monthly installments of interest and principal through August, 2023. These refinanced notes bear interest at a fixed rate of 5.09% with principal payments based on a twenty-five year amortization period. As of March 31, 2015 the balance on these notes was $18,708,365.

 

The Partnership also has five mortgage notes payable with StanCorp Mortgage Investors LLC (“StanCorp”) collateralized by the five remaining properties of the Partnership. These mortgages are payable in monthly installments of interest and principal through September 2033. Effective September 1, 2013, the available interest rate re-set option was accepted on the five remaining mortgage notes with StanCorp. The new rate on these five notes is 5.00% and the amortization period is twenty years. Another rate re-set option is available in 2018. As of March 31, 2015 the balance on these five notes was $9,114,287.

 

- 6 -
 

 

Future maturities on the notes payable for the next five years and thereafter are as follows: 2015 - $532,277; 2016 - $744,498; 2017 - $785,396; 2018 - $826,361; 2019 - $869,465 and thereafter - $24,064,655.

 

3.Asset Held for Sale:

 

A long-lived asset is required to be classified as “held for sale” in the period in which certain criteria are met. The Partnership classified real estate assets as held for sale after the following conditions have been satisfied: (1) management, having the appropriate authority, commits to a plan to sell the asset, (2) the initiation of an active program to sell the asset, and (3) the asset is available for immediate sale and it is probable that the sale of the asset will be completed within one year.

 

During March 2015, the Board of Directors and Consultant approved a sale of the El Adobe Community located in Las Vegas, Nevada. Subsequent to the period end, as described in Form 8-K dated April 8, 2015, Uniprop Manufactured Housing Communities Income Fund II (the “Fund”) has entered into a Contract for Sale and Purchase of Real and Personal Property with a potential buyer for the sale of El Adobe, with an expected closing date in June 2015. Based on the information outlined, the Partnership has concluded that the property meets the criteria as an asset held for sale on the accompanying Balance Sheets. Similarly, the El Adobe community and associated financial results are classified as “discontinued operations” on the accompanying Statements of Operations.

 

The assets and liabilities related to the El Adobe community as of March 31, 2015 are as follows:

 

Total Assets of $2,624,021 consist of Current Assets of $49,344 and Fixed Assets of $8,324,391 less Accumulated Depreciation of $5,749,714. Total Liabilities of $3,537,497 consist of Current Liabilities of $160,203 and Long Term Liabilities of $3,377,294. The assets and liabilities related to the El Adobe community as of December 31, 2014 are as follows: Total Assets of $2,596,859 consist of Current Assets of $22,182 and Fixed Assets of $8,324,391 less Accumulated Depreciation of $5,749,714. Total Liabilities of $3,539,074 consist of Current Liabilities of $134,179 and Long Term Liabilities of $3,404.895.

 

The following is a summary of results of operations of the property classified as discontinued operations for the periods ended March 31, 2015 and 2014: Total Revenue was $265,555 and Total Operating Expenses were $188,561 for the period ended March 31, 2015. For the same period in 2014, Total Revenue was $244,847 and Total Operating Expenses were $262,323.

 

Total Cash Flows provided by Operating Activities of the property classified as discontinued operations for the periods ended March 31, 2015 and 2014 were $97,964 and $13,320, respectively.  In addition, Total Cash Flows used in Investing Activities of the property classified as discontinued operations for the periods ended March 31, 2015 and 2014 were $0, and $3,200, respectively.

 

 

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Critical Accounting Policies

 

See Part II, Item 7 – Critical Accounting Policies, our consolidated financial statements and related notes in Part IV, Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 17, 2015 for accounting policies and related estimates we believe are the most critical to understanding condensed consolidated financial statements, financial conditions and results of operations and which require complex management judgment and assumptions or involve uncertainties. There have been no material changes to the critical accounting policies and estimates previously disclosed in that report.

 

Liquidity and Capital Resources

 

Uniprop Manufactured Housing Communities Income Fund II, a Michigan Limited Partnership’s (the “Partnership”) liquidity is based, in part, upon its investment strategy. Upon acquisition, the Partnership anticipated owning the properties for seven to ten years. All of the properties have been owned by the Partnership for more than ten years. The General Partner may elect to have the Partnership own the properties for as long as, in the opinion of the General Partner, it is in the best interest of the Partnership to do so.

 

The Partnership expects to meet its short-term liquidity needs generally through its working capital and cash provided by operating activities.

 

The Partnership's capital resources consist primarily of its seven manufactured home communities. As described in Note 2, the Partnership refinanced its existing mortgage note payable and executed seven new mortgage notes payable with StanCorp Mortgage Investors, LLC (the “StanCorp Financing”) in the aggregate amount of $23,225,000 secured by the seven properties of the Partnership in August, 2008. To pay off the prior mortgage balance of $25,277,523 and the costs of refinancing, the Partnership transferred $2,735,555 from cash reserves. The mortgages were payable in monthly installments of interest and principal through September 2033. The Partnership incurred $693,798 in financing costs as a result of the 2008 refinancing which were being amortized over the term of the loans. These costs included a 1% fee payable to an affiliate of the General Partner.

 

On July 18, 2013, the Partnership refinanced two of the existing mortgage notes payable and executed two new mortgages payable in the amount of $19,320,000 secured by Sunshine Village, located in Davie, FL and West Valley, located in Las Vegas, NV with a new lender, namely Cantor Commercial Real Estate. The mortgage notes are payable in monthly installments of interest and principal through August, 2023. The refinanced notes bear interest at a fixed rate of 5.09% with principal payments based on a twenty-five year amortization period. As of March 31, 2015 the balance on these notes was $18,708,365.

 

The Partnership incurred $676,321 in financing costs as a result of the 2013 refinancing which is being amortized over the term of the loans. These costs included a 1% fee payable to an affiliate of the General Partner.

 

- 8 -
 

Effective September 1, 2013, the interest rate re-set option was accepted on the five remaining notes with StanCorp. The new rate on these five notes is 5.00% and the amortization period is twenty years. Another rate re-set option is available in five years. As of March 31, 2015 the balance on these notes was $9,114,287.

 

The General Partner has decided to distribute $264,271, or $.08 per unit, to the unit holders for the first quarter ended March 31, 2015. The General Partner will continue to monitor cash flow generated by the Partnership’s properties during the coming quarters. If cash flow generated is greater or lesser than the amount needed to maintain the current distribution level, the General Partner may elect to reduce or increase the level of future distributions paid to Unit Holders.

 

As of March 31, 2015, the Partnership’s cash balance amounted to $7,254,343. The level of cash balance maintained is at the discretion of the General Partner.

 

On April 7, 2015, the Partnership entered, into a Contract for Sale and Purchase of Real and Personal Property with Casa Feliz LLC for the sale of El Adobe, one of the Fund’s communities located in Las Vegas, Nevada for a selling price of $8,000,000, following an affirmative recommendation from the Consultant and approval of the Board of Directors. There is a forty-five (45) day Due Diligence period, with a subsequent Closing Date thirty (30) days upon expiration of the Due Diligence period. According to the most recent appraisal in February 2015, the community had a market value of $5,700,000. Net cash proceeds from the sale upon closing, are estimated to be approximately $3,500,000.

 

While the Fund’s management believes that the buyer is financially capable of completing the proposed transaction and fully intends to consummate the purchase, there can be no assurance that the closing will occur.

 

Results of Operations

 

Overall, as illustrated in the following table, the Partnership's seven properties reported combined occupancy of 49% at the end of March 2015, versus 48% at the end of March 2014. The average monthly homesite rent as of March 31, 2015 was approximately $534 versus $523 from March 2014 (average rent not a weighted average).

 

Total Occupied Occupancy Average*  Capacity Sites  Rate   Rent 
Ardmor Village  339   149   44%  $568 
Camelot Manor  335   112   33%   433 
Dutch Hills  278   107   38%   428 
El Adobe  367   168   46%   574 
Stonegate Manor  308   102   33%   418 
Sunshine Village  356   255   72%   665 
West Valley  421   291   69%   654 
                  
Total on 3/31/15:  2,404   1,184   49%  $534 
Total on 3/31/14:  2,404   1,182   48%  $523 

 

*Not a weighted average

 

- 9 -
 

 

 

 

 

  Gross Revenue   Net Operating Income  (Loss) and Net Income  
   3/31/2015   3/31/2014   3/31/2015   3/31/2014 
   three months ended   three months ended 
                     
Ardmor  $275,529   $249,559   $138,020   $110,332 
Camelot Manor   202,125    223,956    88,247    89,641 
Dutch Hills   175,990    163,480    67,699    57,766 
Stonegate   173,720    171,463    50,784    44,121 
Sunshine   484,153    509,070    246,196    217,576 
West Valley   596,566    596,061    394,788    426,649 
    1,908,083    1,913,589    985,734    946.085 
Partnership Management   5,172    4,528    (144,946)   (149,496)
Other Expense   -    -    (57,255)   (64,469)
                     
Interest Expense   -    -    (332,164)   (339,410)
                     
Depreciation    -    -    (367,037)   (360,290)
Continuing Operations  $1,913,255   $1,918,117   $84,332   $32,420 
 
Discontinued Operations
  $265,555   $244,847   $76,994   ($17,476)
   $2,178,810   $2,162,964   $161,326   $14,944 

 

Net Operating Income (“NOI”) is a non-GAAP financial measure equal to net income, the most comparable GAAP financial measure, plus depreciation, interest expense, partnership management expense, and other expenses. The Partnership believes that NOI is useful to investors and the Partnership’s management as an indication of the Partnership’s ability to service debt and pay cash distributions. NOI presented by the Partnership may not be comparable to NOI reported by other companies that define NOI differently, and should not be considered as an alternative to net income as an indication of performance or to cash flows as a measure of liquidity or ability to make distributions.

 

Comparison of Quarter Ended March 31, 2015 to Quarter Ended March 31, 2014

 

Gross revenues from continuing operations decreased slightly by $4,862 to $1,913,255 in 2015, from $1,918,117 in 2014. This was mainly due to decreased home sale income, which was offset by increased rental and other income. Gross revenues from discontinued operations increased by $20,708 to $265,555 in 2015 from $244,847 in 2014. This was mainly due to an increase in market rent value from the prior year.

 

As described in the Statements of Operations, total operating expenses from continuing operations decreased $56,774 to $1,828,923 in 2015, as compared to $1,885,697 in 2014. This was mainly due to decreased expenses associated with home sales, and property tax expense, offset by increases in administrative, utilities and property operations expenses. Total operating expenses from discontinued operations decreased $73,762 to $188,561 in 2015, as compared to $262,323 in 2014. This was mainly due to the discontinuance of depreciation expense as an Asset Held for Sale.

 

- 10 -
 

 

As a result of the aforementioned factors, the Partnership experienced Net Income from continuing operations of $84,332 for the first quarter of 2015 compared to Net Income of $32,420 for the first quarter of 2014. Net Income from discontinued operations for the first quarter of 2015 was $76,994, compared to a Net Loss of $17,476 for the same period in 2014.

 

 

ITEM 3. 

QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

 

The Partnership is exposed to interest rate rise primarily through its borrowing activities. There is inherent roll over risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and the Partnership’s future financing requirements.

 

Notes Payable: At March 31, 2015 the Partnership had notes payable outstanding in the amount of $27,822,652. Interest on two of these notes is at a fixed annual rate of 5.09% through August 2023. Interest on the five remaining notes is at a fixed rate of 5.00% through August 2018, at which time a rate reset option is available.

 

The Partnership does not enter into financial instruments transactions for trading or other speculative purposes or to manage its interest rate exposure. 

 

ITEM 4.

CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Partnership carried out an evaluation, under the supervision and with the participation of the Principal Executive Officer and the Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon, and as of the date of, this evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the quarterly report is recorded, processed, summarized and reported as and when required.

 

There was no change in the Partnership’s internal controls over financial reporting that occurred during the most recent completed quarter that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

 

 

- 11 -
 

 

PART II - OTHER INFORMATION

 

 

ITEM 1. LEGAL PROCEEDINGS

 

A hearing was held before Judge Stefany Miley on December 9, 2014 in the District Court of Clark County, Nevada. The Plaintiff is Uniprop Manufactured Housing Income Fund II on behalf of El Adobe, and the Defendant is the City of Las Vegas.

 

On March 6, 2015 the Court issued the following orders:

 

Court orders Defendant’s Motion for Summary Judgement GRANTED as to the dismissal of Plaintiff’s Equal Protection Claim and General Applicability Clause claim;

 

Court finds a genuine issue of material fact exists as to whether assessing a service fee on a capped sewer line with no occupant does qualify as a service fee;

 

Court orders Defendants Motion for Summary Judgment DENIED as to the dismissal of Plaintiff’s claim that the city’s sewer billing procedure conflicts with the City charter;

 

Court orders Plaintiff’s Motion for Summary Judgment DENIED as to the claim that the subject provisions of Section 14.04 of the City Code violate the Equal Protection Clause of the 14th Amendment of the U. S. Constitution as applied to vacant sites in manufactured home communities;

 

Court orders Plaintiff’s Motion for Summary Judgment DENIED as to the claim that the subject provisions of Section 14.04 of the City Code violate the General Applicability Clause of Article 4, Section 21 of the Nevada State Constitution as applied to vacant sites in manufactured home communities.

 

Court orders the Plaintiff’s Motion for Summary Judgement DENIED as to the claim that the provisions of Section 14.04 of the City Code identified herein are invalid because they are not authorized by Section 2.290(3) of the Las Vegas city charter.

 

In summary, the Court denied three of the Plaintiff’s Motions for Summary Judgment, however, the Court found a “genuine issue of material facts exists as to whether assessing a service fee on a capped sewer line with no occupant does qualify as a service fee”, and denied the Defendant’s Motion for Summary Judgment on that issue.

 

We believe our claim still has merit and that the Court allowed us a narrow avenue to pursue a claim regarding a service fee on a vacant site for which Plaintiff has already paid a connection fee, and no service is provided. Clark County reclamation, which provides sewer treatment to West Valley, has already agreed to waive the service fee for West Valley; Clark County reclamation also provides the treatment services for the City of Las Vegas at El Adobe, but the City is the intermediary between El Adobe and Clark County Reclamation. We expect to have a trial in July or August of this year.

 

During the litigation, the City of Las Vegas has placed liens on El Adobe for unpaid sewer service fees. El Adobe has accrued those fees on its financial statements, and management has made arrangements to pay those fees in full, if necessary, in order to close on the sale of El Adobe pursuant to the Purchase and Sale Agreement with Casa Feliz, LLC. Management also made provisions in the Purchase and Sale Agreement for El Adobe to deal with the costs and potential future benefits of the litigation in the event that a sale of the community closes before the outcome of the trial is known.

 

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ITEM 1A. RISK FACTORS

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item IA. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition and/or operating results.

  

ITEM 6. EXHIBITS

 

Exhibit 31.1  Principal Executive Officer Certification pursuant to Rule 13a-14(a)/15d-14(a) of The Securities and Exchange Act of 1934, as amended
   
Exhibit 31.2  Principal Financial Officer Certification pursuant to Rule 13a-14(a)/15d-14(a) of The Securities and Exchange Act of 1934, as amended
   
Exhibit 32.1  Certifications pursuant to 18 U.S C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes –Oxley Act of 2002.
   
101.INS XBRL Instance Document
   
101.SCH XBRL Taxonomy Extension Schema
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase
   
101.DEF XBRL Taxonomy Extension Definition Linkbase
   
101.LAB XBRL Taxonomy Extension Label Linkbase
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase

 

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SIGNATURES

 

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.

 

  Uniprop Manufactured Housing Communities
  Income Fund II, a Michigan Limited Partnership
   
  BY: Genesis Associates Limited Partnership,
General Partner
         
    BY: Uniprop, Inc.,
      Its Managing General Partner
         
      By: /s/ Roger I. Zlotoff
        Roger I. Zlotoff, President
         
      By: /s/ Susann Kehrig
        Susann Kehrig, Principal Financial Officer

 

 

Dated: May 8, 2015

 

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