Attached files
Exhibit 99.1
DAVENPORT
HOUSING VII, L.P.
FINANCIAL
STATEMENTS WITH SUPPLEMENTARY INFORMATION
December 31, 2016
and 2015
C O N T
E N T S
INDEPENDENT AUDITOR’S REPORT
|
1
|
FINANCIAL STATEMENTS
|
|
Balance
Sheets
|
3
|
Statements
of Operations
|
4
|
Statements
of Partners’ Equity
|
5
|
Statements
of Cash Flows
|
6
|
Notes
to Financial Statements
|
7
|
SUPPLEMENTARY INFORMATION
|
|
Schedules
of Operations Information
|
14
|
2
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Partners
Davenport Housing
VII, L.P. Davenport, Iowa
We have
audited the accompanying financial statements of Davenport Housing
VII, L.P., which comprise the balance sheets as of December 31,
2016 and 2015 and the related statements of operations, changes in
partners' equity and cash flows for the years the ended, and the
related notes to the financial statements.
Management's
Responsibility for the Financial Statements
Management is
responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to
fraud or error.
Auditor's
Responsibility
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 as established by the Auditing Standards Board (United
States) and in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement.
An
audit includes performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. We
are not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial
statements.
We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.z
3421 N. Causeway Blvd, Suite 701 · Metairie,
LA 70002 · 504-837-0770 · 504-837-7102 (fax)
· www.lh-cpa.net
3
Opinion
In our
opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Davenport
Housing VII, L.P. as of December 31, 2016 and 2015, and the results
of its operations and its cash flows for the years then ended in
accordance with accounting principles generally accepted in the
United States of America.
Report
on Supplemental Information
Our
audit was conducted for the purpose of forming an opinion on the
financial statements as a whole. The Schedule of Operations
Information is presented for purposes of additional analysis and is
not a required part of the financial statements. Such information
is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records
used to prepare the financial statements. The information has been
subjected to the auditing procedures applied in the audit of the
financial statements and certain additional procedures, including
comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the
financial statements or to the financial statements themselves, and
other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion,
the information is fairly stated in all material respects in
relation to the financial statements as a whole.
|
Metairie, Louisiana
May 9, 2017
4
DAVENPORT HOUSING VII, L.P.
BALANCE
SHEETS
December
31, 2016 and 2015
|
2016
|
2015
|
ASSETS
|
|
|
CURRENT
ASSETS
|
|
|
Cash
|
$11,064
|
$2,281
|
Tenant
receivables
|
-
|
652
|
Due
from affiliated entity
|
-
|
24,746
|
Total
current assets
|
11,064
|
27,679
|
RESTRICTED DEPOSITS AND ESCROWS
|
|
|
Security
deposits escrow
|
6,395
|
5,985
|
Tax
and insurance escrow
|
5,982
|
4,366
|
|
|
|
Total
restricted deposits and escrows
|
12,377
|
10,351
|
PROPERTY
AND EQUIPMENT
|
|
|
Land
|
50,000
|
50,000
|
Buildings
|
6,546,459
|
6,546,459
|
Equipment
and furnishings
|
48,776
|
48,776
|
Subtotal
|
6,645,235
|
6,645,235
|
Less
accumulated depreciation
|
(1,195,771)
|
(1,025,657)
|
Net
property and equipment
|
5,449,464
|
5,619,578
|
Capitalized
costs - net
|
40,799
|
45,952
|
Total assets
|
$5,513,704
|
$5,703,560
|
|
|
|
LIABILITIES AND PARTNERS' EQUITY
|
||
CURRENT
LIABILITIES
|
|
|
Accounts
payable and accrued expenses
|
$9,151
|
$19,527
|
Prepaid
rent
|
10
|
13
|
Current
portion of mortgage loan payables
|
11,806
|
11,148
|
Total
current liabilities
|
20,967
|
30,688
|
Asset
management fee payable
|
21,982
|
18,907
|
Tenants'
security deposits payable
|
6,396
|
6,046
|
Mortgage
loan payables, less current portion
|
496,019
|
507,825
|
Due
to limited partner
|
759,336
|
759,336
|
Due
to general partner
|
20,000
|
-
|
Total
liabilities
|
1,324,700
|
1,322,802
|
Partners'
equity
|
4,189,004
|
4,380,758
|
Total liabilities and partners' equity
|
$5,513,704
|
$5,703,560
|
See
accompanying notes.
|
5
DAVENPORT HOUSING VII, L.P.
STATEMENTS
OF OPERATIONS
Years
ended December 31, 2016 and 2015
|
2016
|
2015
|
Revenue
|
|
|
Rent
revenue
|
$118463
|
$111971
|
Financial
|
77
|
104
|
Cable
and other income
|
6858
|
5489
|
Total
revenue
|
125398
|
117564
|
Operating expenses:
|
|
|
Administrative
|
52202
|
29140
|
Utilities
|
22807
|
21600
|
Maintenance
and operating
|
36590
|
38113
|
Taxes
and insurance
|
16490
|
18227
|
Total
operating expenses
|
128089
|
107080
|
Net
operating income before financial expenses and
|
|
|
depreciation
and amortization
|
(2691)
|
10484
|
|
|
|
Financial expenses:
|
|
|
Interest
|
13795
|
14417
|
|
|
|
Net
income (loss) before depreciation and amortization
|
(16486)
|
(3933)
|
Depreciation
and amortization
|
175268
|
175529
|
Net loss
|
$(191754)
|
$(179462)
|
See
accompanying notes.
|
6
DAVENPORT HOUSING VII, L.P.
STATEMENTS
OF PARTNERS' EQUITY
Years
ended December 31, 2016 and 2015
|
General
|
Limited
|
Total Partners'
|
|
Partner
|
Partners
|
Equity
|
|
0.005%
|
99.995%
|
100.00%
|
Balance,
January 1, 2015
|
$1,191,634
|
$3,368,586
|
$4,560,220
|
Net
loss
|
(9)
|
(179453)
|
(179462)
|
Balance,
December 31, 2015
|
$1,191,625
|
$3,189,133
|
$4,380,758
|
Net
loss
|
(10)
|
(191744)
|
(191754)
|
Balance,
December 31, 2016
|
$1,191,615
|
$2,997,389
|
$4,189,004
|
See
accompanying notes.
|
7
DAVENPORT HOUSING VII, L.P.
STATEMENTS
OF CASH FLOWS
Years
ended December 31, 2016 and 2015
|
2016
|
2015
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
Net
loss
|
$(191754)
|
$(179462)
|
Adjustments
to reconcile net loss to net
|
|
|
cash
provided by (used in) operating activities:
|
|
|
Depreciation
and amortization
|
175268
|
175529
|
Provision
for bad debt
|
515
|
1515
|
Write-off
of affiliated entity advance
|
24746
|
-
|
(Increase)
decrease in assets:
|
|
|
Tenant
receivables
|
137
|
(1907)
|
Prepaid
expenses
|
-
|
-
|
Restricted
deposits and escrows
|
(2025)
|
10373
|
Increase
(decrease) in liabilities:
|
|
|
Accounts
payable and accrued expenses
|
(10378)
|
6875
|
Prepaid
rent
|
(3)
|
(15)
|
Asset
management fee payable
|
3075
|
2985
|
Tenants'
security deposits payable
|
350
|
1319
|
Net cash provided by (used in) operating activities
|
(69)
|
17212
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
Purchases
of property and equipment
|
-
|
(3557)
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
Increase
in due to general partner
|
20000
|
-
|
Repayment
of mortgage loan
|
(11148)
|
(10527)
|
Net cash provided by (used in) financing activities
|
8852
|
(10527)
|
Net
decrease in cash
|
8783
|
3128
|
Cash
- beginning of year
|
2281
|
(847)
|
Cash - end of year
|
$11064
|
$2281
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
Cash
paid for interest
|
$13795
|
$14417
|
8
DAVENPORT HOUSING VII, L.P.
NOTES
TO FINANCIAL STATEMENTS
December 31, 2016
and 2015
NOTE 1
– NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES
Davenport Housing
VII, L.P. (the Partnership) was formed as a limited partnership
under the laws of the State of Iowa in 2005 for the purpose of
constructing and operating a 20-unit apartment complex intended for
rental to low or moderate income households. Rehabilitation of the
historic project was substantially completed and operations began
in December 2009. The apartment complex is located in Davenport,
Iowa.
The
Partnership has received an allocation of federal low-income
housing tax credits from the State of Iowa pursuant to Internal
Revenue Code Section 42 (Section 42), which regulates the use of
the project as to occupant eligibility and unit gross rent, among
other requirements. The project must meet the provisions of these
regulations during each of fifteen consecutive years in order to
remain qualifiedto receive tax credits. The credit allocation will
be allowed annually for 10 years if the project remains in
compliance. Failure to comply with occupant eligibility and/or unit
gross rents or to correct noncompliance within a specified time
period could result in recapture of previously taken low-income
housing tax credits plus interest. Such potential noncompliance may
require an adjustment to the contributed capital by the limited
partners.
Basis
of Accounting
The
financial statements of the Partnership are prepared on the accrual
basis of accounting and in accordance with accounting principles
generally accepted in the United States of America.
Cash
Cash
includes cash in a checking account. For purposes of the statement
of cash flows, the Partnership considers all unrestricted
investment instruments purchased with maturities of three months or
less to be cash equivalents, with the exception of cash contained
in restricted escrows and deposits. At December 31, 2016 and 2015,
there were no cash equivalents.
Tenant
Receivables and Bad Debts
Tenant
accounts receivable have been adjusted for all know uncollectible
accounts. Tenant receivables are charged against operations when
they are determined to be uncollectible based upon a periodic
review of the accounts by management. Accounting principles
generally accepted by the United States of America require that the
allowance method be used to recognize baddebts; however, the effect
of using the direct write off method is not materially different
from the results that would have been obtained under the allowance
method. Bad debt expense for the years ended December 31, 2016 and
2015 totaled $515 and $1,515, respectively.
Rental
Income and Prepaid Rents
Rental
income is recognized as rentals become due. Rental payments
received in advance are deferred until earned. All leases between
the Partnership and its tenants are operating leases.
9
DAVENPORT HOUSING VII, L.P.
NOTES
TO FINANCIAL STATEMENTS
December 31, 2016
and 2015
NOTE 1
– NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(continued)
Property
and Equipment
Property and
equipment are recorded at cost. Improvements are capitalized, while
expenditures for maintenance and repairs are expensed. Upon
disposal of depreciable property, the appropriate property accounts
are reduced by the related costs and accumulated depreciation. Any
resulting gains and losses are reflected in the statement of
operations. Depreciation is provided using the straight-line method
over the following estimated service lives. The estimated service
lives of the assets for depreciation purposes may be different than
their actual economic useful lives.
|
Estimated
|
|
Lives
|
Method
|
|
Buildings and
improvements
|
15 -
27.5 years
|
Straight-Line
|
Equipment and
furnishings
|
5
years
|
Straight-Line
|
Capitalized
Costs
Tax
credit application costs are being amortized on the straight-line
basis over fifteen years. Amortization expense during 2016 and 2015
totaled $5,153.
Impairment
of Long-Lived Assets
The
Partnership reviews long-lived assets, including property and
equipment and intangible assets, for impairment whenever events or
changes in business circumstances indicate the carrying amount of
an asset may not be fully recoverable. An impairment loss would be
recognized when the estimated future cash flows from the use of the
asset are less than the carrying amount of that asset. To date,
there have been no such losses.
Income
Taxes
As a
partnership, the taxable income or loss of the Partnership is
attributable to, and is required to be reported by, the partners on
their respective income tax returns. The Partnership has also
analyzed the income tax positions that affect the partnership
entity itself for both the federal and the state jurisdictions
where it operates. The Partnership believes that the tax positions
will be sustained upon examination and does not anticipate any
adjustments that would result in a material effect on the financial
statements. For these reasons, no income tax provision or benefit
has been included in the financial statements.
The
Partnership’s Federal and Iowa income tax returns are subject
to examination by the Internal Revenue Service and/or the Iowa
Department of Revenue for a limited period of time after they are
filed. Federal and Iowa tax returns for years prior to 2013
generally are no longer subject to such examinations. The
Partnership is not currently under examination by any taxing
jurisdictions.
Advertising
Advertising costs
are charged to operations when incurred.
10
DAVENPORT HOUSING VII, L.P.
NOTES
TO FINANCIAL STATEMENTS
December 31, 2016
and 2015
NOTE 1
– NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(continued)
Use
of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
NOTE 2
– RESTRICTED DEPOSITS AND ESCROWS
According to the
partnership, loan and other regulatory agreements, the Partnership
is required to maintain the following escrow deposits and
reserves:
Security
Deposit Escrow
The
tenants' security deposits are maintained in an interest-bearing
savings account separate from the operating account of the
Partnership. Withdrawals are restricted to reimbursements of
tenants' security deposits and assessments for damages. Security
deposit liabilities exceed the security deposit cash account
balance by $1 and $61 at December 31, 2016 and 2015,
respectively.
Tax
and Insurance Reserve
The
Partnership agreement also calls for the establishment of a tax and
insurance reserve to fund tax and insurance payments. At December
31, 2016 and 2015, the balance of this account totaled $5,982 and
$4,366, respectively.
Reserve
for Replacements
The
Partnership Agreement requires the Partnership to establish a
reserve fund for replacements. The Partnership is to deposit $300
per unit per year commencing the month after issuance of a
certificate of occupancy. The deposits are to increase at a rate of
3% every 12 months. The replacement reserve is to be used for
working capital needs, improvements, replacements, and other
contingencies of the Partnership. Withdrawals from the reserve
require the Special Limited Partner’s signature for
withdrawals over $750 and over an aggregate total of
$4,000
for the year. As of December 31, 2016, the Partnership had not yet
established the replacement reserve account.
Real
Estate Tax Reserve
The
Partnership Agreement requires the Partnership to purchase a
Certificate of Deposit in the amount of $25,000 from a banking
institution. The funds shall be used to pay the increased real
estate taxes upon expiration of the Urban Revitalization tax
exemption. The reserve shall require the joint signature of the
Special Limited Partner for any withdrawals. As of December 31,
2016, the Partnership had not yet established the real estate tax
reserve.
11
DAVENPORT HOUSING VII, L.P.
NOTES
TO FINANCIAL STATEMENTS
December 31, 2016
and 2015
NOTE 3
– MORTGAGE LOAN PAYABLES
At
December 31, 2016 the Partnership had a mortgage loan payable to
Scott County Housing Council. The balance on the loan at December
31, 2016 and 2015 totaled $233,825 and
$244,973,
respectively. The loan bears a 5.75% rate of interest and requires
monthly installments of principal and interest of $2,079 through
maturity date of January 2026 when a final balloon payment is
due.
At
December 31, 2016 the Partnership had a mortgage loan payable to
the City of Davenport’s Home Investment Partnership (HOME)
Program. The 0% loan is payable in annual installments of interest
only in the amount of $6,850 through maturity date of February 2026
when a final balloon payment is due. The balance on the loan at
December 31, 2016 and 2015 totaled $274,000.
The
above note is secured by property and equipment of the Partnership
and by the assignment of all accounts, rents, deposits or other
amounts receivable arising out of the operation of the project.
Mortgage interest expense for the years ended December 31, 2016 and
2015 totaled
$13,795
and $14,417, respectively.
Aggregate annual
maturities of the mortgage loans are as follows:
Year ending
December 31:
|
|
2017
|
$11,806
|
2018
|
12,503
|
2019
|
13,242
|
2020
|
14,023
|
2021
|
14,851
|
Thereafter
|
441,400
|
Total
|
$507,825
|
NOTE 4
– MANAGEMENT FEES
The
Partnership incurred management fees of $5,930 and $5,502 during
the years ended December 31, 2016 and 2015, respectively, to
Pioneer Property Management, Inc. (PPMI). Management fees are
computed based on 5.0% of collected rental income.
NOTE 5
– PARTNERS, PARTNERS’ EQUITY AND RELATED PARTY
TRANSACTIONS
As of
December 31, 2016, the Partnership had one general partner,
Davenport Housing V GP, LLC (0.005%), a limited partner, WNC
Institutional Tax Credit Fund XIX, LP (99.98%), and a special
limited partner, WNC Housing LP (0.015%). Profits, losses and tax
credits were allocated among the partners based on their respective
ownership interests above.
Per the
Limited Partnership Agreement, the General Partner is entitled to
an annual tax compliance fee equal to 40% of the net operating
income. The tax credit compliance fee is noncumulative. No fee was
paid in 2016 or 2015.
12
DAVENPORT HOUSING VII, L.P.
NOTES
TO FINANCIAL STATEMENTS
December 31, 2016
and 2015
NOTE 5
– PARTNERS, PARTNERS’ EQUITY AND RELATED PARTY
TRANSACTIONS (Continued)
The
General Partner is entitled to an annual incentive management fee
equal to 40% of net operating income as required by the Partnership
Agreement. The incentive management fee is noncumulative. No fee
was paid in 2016 and 2015.
As of
December 31, 2016 and 2015, the Partnership was owed $- from
Davenport Housing V, L.P. for loan
interest paid by the Partnership on behalf of the related project
in a prior year. The Limited Partner in Davenport Housing V, L.P.
is WNC Institutional Tax Credit Fund XIV, L.P., which is a related
entity to the Limited Partner.
The
Limited Partner has made capital advances to the Partnership to
secure permanent financing as well as for routine operating
expenses. As of December 31, 2016 and 2015, the Partnership owed
$759,336 to the Limited Partner for capital advances.
Pursuant to the
Partnership Agreement, the Limited Partner is to receive a
cumulative asset management fee of $2,500 increasing annually at
3%. Asset management fees earned in 2016 and 2015, totaled $3,075
and $2,985, respectively. As of December 31, 2016 and 2015,
cumulative unpaid fees under this agreement owed to the Limited
Partner totaled $21,982 and $18,907,
respectively.
Pursuant to the
Partnership Agreement, if at any time between when the first
apartment unit is available and three consecutive months of
breakeven operations, an operating deficit exists, the General
Partner shall fund the operating deficit as to amount through
operating deficit loans up to
$61,214. All
operating loans are to repayable out of 50% of the net operating
income or sale or refinancing proceeds, as defined in the
Partnership Agreement. There were no operating deficit loans as of
December 31, 2016 and 2015.
NOTE 6
– PARTNERSHIP DISTRIBUTIONS OF NET OPERATING
INCOME
The
Limited Partnership Agreement provides that all net operating
income available for distribution will be paid as
follows:
(i)
To pay the deferred
management fee, if any;
(ii)
To pay the balance
of the current asset management fee that was not paid monthly and
then to pay any accrued asset management fee which have not been
paid in full from previous years;
(iii)
To pay the interest
and then principal on the development fee not to exceed the amount
set forth in the development fee agreement;
(iv)
Repayment of any
Operating Deficit Loans, with a limit of 50% of the net operating
income remaining after the previous distributions have been
made;
(v)
The balance shall
then be allocated and distributed 9.99% to the Limited Partner,
.01% to the Special Limited Partner, .005% to the Class B Limited
Partner and 89.995% shall be paid as follows: 89.99% to pay the
Incentive Management Fe and the Tax Credit Compliance Fee, and the
balance following payment of such fees shall be paid to the General
Partner.
13
DAVENPORT HOUSING VII, L.P.
NOTES
TO FINANCIAL STATEMENTS
December 31, 2016
and 2015
NOTE 7
– LOW INCOME HOUSING TAX CREDITS
The
following Housing Tax Credits are allocable to the Partnership
during the Credit Period:
Year
|
Amount
|
2010
|
$420,809
|
2011
|
603,015
|
2012
|
603,015
|
2013
|
603,015
|
2014
|
603,015
|
2015
|
603,015
|
2016
|
603,015
|
2017
|
603,015
|
2018
|
603,015
|
2019
|
603,015
|
2020
|
182,206
|
|
$6,030,150
|
NOTE 8
– COMMITMENTS AND CONTINGENCIES
Each
building of the Project qualifies for and has been allocated
low-income housing tax credits pursuant to Section 42 of the
Internal Revenue Code of 1986. Internal Revenue Code Section 42
regulates the use of the Property as to occupant eligibility
andunit gross rent, among other requirements. Each building of the
Property must meet the provisions of these regulations during each
of the fifteen consecutive years in order to continue to qualify to
receive the tax credits. The Partnership is obligated torecertify
tenant eligibility on an annual basis. Under this agreement, the
Partnership must continuously comply with Section 42 and other
applicable sections of the IRC. If the Partnership fails to comply
with this agreement or with the IRC, it may be ineligible for
low-income housing tax credits and the members may be required to
recapture a portion of the tax credits previously claimed on their
income tax returns.
NOTE 9
– EVALUATION OF SUBSEQUENT EVENTS
The
Partnership has evaluated subsequent events occurring through May
9, 2017, the date the financial statements were available to be
issued, for events requiring recording or disclosure in the
Partnership’s financial statements.
NOTE 10
– RECONCILIATION OF TAXABLE AND ACCOUNTING
INCOME
A
reconciliation of the Partnership’s financial statement loss
to the loss reported on its tax return is as follows:
|
2016
|
2015
|
Financial statement
net loss
|
$(191,754)
|
$(179,462)
|
Tax depreciation
and amortization in excess of book depreciation and
amortization
|
(63,569)
|
(69,698)
|
loss reported on
tax return
|
$(255,323)
|
$(249,160)
|
14
FINANCIAL
STATEMENTS AND
INDEPENDENT
AUDITOR'S REPORT
DAVENPORT
HOUSING VII, L.P.
DECEMBER
31, 2015 AND 2014
15
DAVENPORT HOUSING VII,
L.P.
TABLE OF
CONTENTS
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
17
|
FINANCIAL
STATEMENTS:
|
|
BALANCE
SHEETS
|
19
|
STATEMENTS OF
OPERATIONS
|
20
|
STATEMENTS OF
CHANGES IN PARTNERS' EQUITY
|
21
|
STATEMENTS OF CASH
FLOWS
|
22
|
NOTES TO FINANCIAL
STATEMENTS
|
23
|
16
PAILET, MEUNIER and
LeBLANC, L.L.P.
Certified Public
Accountants Management Consultants
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the
Partners
Davenport Housing
VII, L.P. Davenport, Iowa
We have audited the
accompanying financial statements of Davenport Housing VII, L.P.,
which comprise the balance sheets as of December 31, 2015 and 2014
and the related statements of operations, changes in partners'
equity and cash flows for the years the ended, and the related
notes to the financial statements.
Management's
Responsibility for the Financial
Statements
Management is
responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to
fraud or error.
Auditor's
Responsibility
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 as established
by the Auditing Standards Board (United States) and in accordance
with auditing standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material
misstatement.
An audit includes
performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. We are not
required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial
statements.
We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Member
of: PCAOB - Public Company Accounting Oversight
Board
AICPA:
Center for Public Company Audit Firms (SEC) • Governmental
Audit Quality Center • Private Companies Practice Section
(PCPS)
3421
N. Causeway Blvd., Suite 701 • Metairie, LA 70002 •
Telephone (504) 837-0770 • Fax (504) 837-7102
www.pmlcpa.com
17
Opinion
In our opinion, the
financial statements referred to above present fairly, in all
material respects, the financial position of Davenport Housing VII,
L.P. as of December 31, 2015 and 2014, and the results of its
operations and its cash flows for the years then ended in
accordance with accounting principles generally accepted in the
United States of America.
Report
on Supplemental Information
Our audit was
conducted for the purpose of forming an opinion on the financial
statements as a whole. The Schedule of Expenses is presented for
purposes of additional analysis and is not a required part of the
financial statements. Such information is the responsibility of
management and was derived from and relates directly to the
underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the
auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying
accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion,
the information is fairly stated in all material respects in
relation to the financial statements as a whole.
Metairie, Louisiana
April 13, 2016
18
DAVENPORT
HOUSING VII, L.P.
BALANCE
SHEETS
DECEMBER
31, 2015 AND 2014
|
|
2015
|
|
|
2014
|
|
||
ASSETS
|
|
|
|
|
|
|
||
Current
Assets
|
|
|
|
|
|
|
||
Cash and
Equivalents
|
|
$
|
2,281
|
|
|
$
|
-
|
|
Accounts Receivable
- Tenant
|
|
|
652
|
|
|
|
260
|
|
Accounts Receivable
- Related Party
|
|
|
24,746
|
|
|
|
24,746
|
|
Total Current
Assets
|
|
|
27,679
|
|
|
|
25,006
|
|
Restricted Deposits
and Funded Reserves
|
|
|
|
|
|
|
|
|
Tax and Insurance
Escrow
|
|
|
4,366
|
|
|
|
16,106
|
|
Security
Deposits
|
|
|
5,985
|
|
|
|
4,619
|
|
Total Restricted
Cash
|
|
|
10,351
|
|
|
|
20,725
|
|
Property and
Equipment
|
|
|
|
|
|
|
|
|
Land
|
|
|
50,000
|
|
|
|
50,000
|
|
Building
|
|
|
6,546,459
|
|
|
|
6,546,459
|
|
Furniture &
Fixtures
|
|
|
48,776
|
|
|
|
45,219
|
|
Total Property and
Equipment
|
|
|
6,645,235
|
|
|
|
6,641,678
|
|
Less: Accumulated
Depreciation
|
|
|
(1,025,657
|
)
|
|
|
(855,281
|
)
|
Total Property and
Equipment, Net
|
|
|
5,619,578
|
|
|
|
5,786,397
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
Intangible
Assets, Net
|
|
|
45,952
|
|
|
|
51,106
|
|
Total
Assets
|
|
$
|
5,703,560
|
|
|
$
|
5,883,234
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
PARTNERS' CAPITAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Bank
Overdraft
|
|
$
|
-
|
|
|
$
|
847
|
|
Accounts
Payable
|
|
|
10,713
|
|
|
|
1,109
|
|
Accrued Real Estate
Taxes
|
|
|
8,814
|
|
|
|
11,545
|
|
Prepaid
Rent
|
|
|
13
|
|
|
|
28
|
|
Current Portion of
Long Term Debt
|
|
|
11,148
|
|
|
|
10,527
|
|
Total Current
Liabilities
|
|
|
30,688
|
|
|
|
24,056
|
|
Deposits &
Prepayment Liabilities
|
|
|
|
|
|
|
|
|
Tenant
Security Deposits Payable
|
|
|
6,046
|
|
|
|
4,727
|
|
Long Term
Liabilities
|
|
|
|
|
|
|
|
|
Mortgage Notes
Payable
|
|
|
518,973
|
|
|
|
529,500
|
|
Less: Current
Portion
|
|
|
(11,148
|
)
|
|
|
(10,527
|
)
|
Asset Management
Fee Payable
|
|
|
18,907
|
|
|
|
15,922
|
|
Due to Related
Party
|
|
|
759,336
|
|
|
|
759,336
|
|
Total Long Term
Liabilities
|
|
|
1,286,068
|
|
|
|
1,294,231
|
|
Total
Liabilities
|
|
|
1,322,802
|
|
|
|
1,323,014
|
|
Partners'
Equity
|
|
|
|
|
|
|
|
|
Partners'
Equity
|
|
|
4,380,758
|
|
|
|
4,560,220
|
|
Total Liabilities
and Partners' Equity
|
|
$
|
5,703,560
|
|
|
$
|
5,883,234
|
|
See auditor's
report and notes to financial statements
19
DAVENPORT
HOUSING VII, L.P.
STATEMENTS
OF OPERATIONS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
|
|
2015
|
|
|
2014
|
|
||
Revenue
|
|
|
|
|||||
Rent
Revenue
|
|
$
|
111,971
|
|
|
$
|
115,959
|
|
Other
Revenue
|
|
|
5,144
|
|
|
|
5,224
|
|
NSF, Late Fees
& Other Revenue
|
|
|
345
|
|
|
|
511
|
|
Interest
Income
|
|
|
104
|
|
|
|
186
|
|
Total
Revenue
|
|
|
117,564
|
|
|
|
121,880
|
|
Expenses
|
|
|
|
|
|
|
|
|
Administrative
|
|
|
28,785
|
|
|
|
26,132
|
|
Utilities
|
|
|
27,547
|
|
|
|
28,671
|
|
Operating and
Maintenance
|
|
|
29,536
|
|
|
|
34,408
|
|
Taxes and
Insurance
|
|
|
18,227
|
|
|
|
19,967
|
|
Interest
|
|
|
14,417
|
|
|
|
15,004
|
|
Depreciation and
Amortization
|
|
|
175,529
|
|
|
|
175,137
|
|
Total
Expenses
|
|
|
294,041
|
|
|
|
299,319
|
|
Net Loss from
Operations
|
|
|
(176,477
|
)
|
|
|
(177,439
|
)
|
Other Income and
(Expenses) Asset Management Fees
|
|
|
(2,985
|
)
|
|
|
(4,898
|
)
|
Net Income
(Loss)
|
|
$
|
(179,462
|
)
|
|
$
|
(182,337
|
)
|
See auditor's
report and notes to financial statements
20
DAVENPORT
HOUSING VII, L.P.
STATEMENTS
OF CHANGES IN PARTNERS' EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
|
|
General
Partner .005%
|
|
|
Limited
Partners 99.995%
|
|
|
Total
Partners' Equity
|
|
|||
Balance - January
1, 2014
|
|
$
|
1,191,643
|
|
|
$
|
3,550,914
|
|
|
$
|
4,742,557
|
|
Net Income
(Loss)
|
|
|
(9
|
)
|
|
|
(182,328
|
)
|
|
|
(182,337
|
)
|
Balance - December
31, 2014
|
|
$
|
1,191,634
|
|
|
$
|
3,368,586
|
|
|
$
|
4,560,220
|
|
Net Income
(Loss)
|
|
|
(9
|
)
|
|
|
(179,453
|
)
|
|
|
(179,462
|
)
|
Balance - December
31, 2015
|
|
$
|
1,191,625
|
|
|
$
|
3,189,133
|
|
|
$
|
4,380,758
|
|
See auditor's
report and notes to financial statements
21
DAVENPORT
HOUSING VII, L.P.
STATEMENTS
OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
|
|
2015
|
|
|
2014
|
|
||
Cash flows from
operating activities:
|
|
|
|
|
|
|
||
Net
Income
|
|
$
|
(179,462
|
)
|
|
$
|
(182,337
|
)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
175,529
|
|
|
|
175,137
|
|
(Increase) decrease
in accounts receivable
|
|
|
(392
|
)
|
|
|
(111
|
)
|
Increase (decrease)
in accounts payable
|
|
|
9,605
|
|
|
|
797
|
|
Increase (decrease)
in management fee payable
|
|
|
-
|
|
|
|
(493
|
)
|
Increase (decrease)
in asset management fee payable
|
|
|
2,985
|
|
|
|
4,898
|
|
Increase (decrease)
in accrued expenses
|
|
|
(2,746
|
)
|
|
|
(2,427
|
)
|
Increase (decrease)
in security deposits payable
|
|
|
1,319
|
|
|
|
51
|
|
Total
adjustments
|
|
|
186,300
|
|
|
|
177,852
|
|
Net cash provided
(used) by operating activities
|
|
|
6,838
|
|
|
|
(4,485
|
)
|
Cash flows from
investing activities: (Deposit) withdrawal security
deposits
|
|
|
(1,366
|
)
|
|
|
(92
|
)
|
(Deposit)
withdrawal tax & insurance escrows
|
|
|
11,740
|
|
|
|
1,965
|
|
Purchase of fixed
assets
|
|
|
(3,557
|
)
|
|
|
(1,936
|
)
|
Net cash provided
(used) by investing activities
|
|
|
6,817
|
|
|
|
(63
|
)
|
Cash flows from
financing activities: Payment on mortgage notes
|
|
|
(10,527
|
)
|
|
|
(9,940
|
)
|
Net cash used by
financing activities
|
|
|
(10,527
|
)
|
|
|
(9,940
|
)
|
Net increase
(decrease) in cash and equivalents
|
|
|
3,128
|
|
|
|
(14,488
|
)
|
Cash and
equivalents, beginning of year
|
|
|
(847
|
)
|
|
|
13,641
|
|
Cash and
equivalents, end of year
|
|
$
|
2,281
|
|
|
$
|
(847
|
)
|
Supplemental
disclosures of cash flow information: Cash paid during the year
for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
14,417
|
|
|
$
|
15,004
|
|
See auditor's
report and notes to financial statements
22
DAVENPORT
HOUSING VII, L.P.
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
NOTE
A - ORGANIZATION
Davenport Housing
VII, L.P. (the Partnership) was formed October 17, 2005, as a
limited partnership under the laws of the State of Iowa and shall
continue until December 31, 2500 or until certain events as defined
in the partnership agreement occur. The partnership was formed for
the purpose of owning and operating a 20-unit apartment complex in
Davenport, Iowa for residents with low or moderate income.
Rehabilitation of the historic project was substantially completed
and operations began in December 2009. Substantially all of the
Partnership's income is expected to be derived from the rental of
its apartment units. All units within this project are expected to
be subject to the contract restrictions regarding rental charges
and other operating policies under the Low Income Housing Tax
Credit Program.
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Accounting
The financial
statements of the partnership are prepared on the accrual basis of
accounting and in accordance with accounting principles generally
accepted in the United States of America.
Cash and Cash
Equivalents
For purposes of
statements of cash flows, cash and cash equivalents represent
unrestricted cash and certificates of deposit with original
maturities of 90 days or less. The carrying amount approximates
fair value because of the short period to maturity of the
instruments.
Cash and Other
Deposits
The Partnership
maintains its cash in financial institutions insured by the Federal
Deposit Insurance Corporation (FDIC). Deposit accounts, at times,
may exceed federally insured limits. All deposits are fully insured
by the FDIC up to $250,000 per bank. The Partnership has not
experienced any losses in such accounts and believes it is not
exposed to any significant credit risk on cash and cash
equivalents.
Tenant Receivables
Tenant receivables
are recorded at the amount the Partnership expects to collect on
balances outstanding at December 31, 2015 and 2014. Management
closely monitors outstanding balances and writes off, as of
year-end, all balances that are not collectible. In 2015 and 2014 a
bad debt in the amount of $1,515 and $505, respectively,
was written off. Tenant accounts receivable are considered
collectible in full, and accordingly, an allowance for doubtful
accounts has not been provided.
Other Assets
Other assets
consist of tax credit fees and interest costs that have been
capitalized. Tax credit fees are being amortized over a 15-year
life using the straight-line method of amortization.
23
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Capitalization and
Depreciation
Land, buildings and
improvements are recorded at cost. Depreciation is provided
for in amounts sufficient to relate the cost
of depreciable assets to operations over their estimated service
lives using the straight-line method. Improvements are
capitalized, while expenditures for maintenance and repairs are
charged to expense as incurred. Upon disposal of depreciable
property, the appropriate property accounts are reduced by the
related costs and accumulated depreciation. The
resulting gains and losses are reflected in the
statement of operations. The rental property is depreciated over
estimated service lives as follows:
Buildings &
Improvements
|
40
years
|
Straight-Line
|
Furnishings &
Equipment
|
7
years
|
Straight-Line
|
Impairment of Long-Lived Assets
|
|
|
The Partnership has
adopted Accounting Standards Codification 360-10-05-4, Accounting
for the Impairment or Disposal of Long-Lived Assets. The
Partnership reviews its investment in real estate for impairment
whenever events or changes in circumstances indicate that the
carrying value of such property may not be recoverable.
Recoverability is measured by a comparison of the carrying amount
of the real estate to the future net undiscounted cash flow
expected to be generated by the rental property including the low
income housing tax credits and any estimated proceeds from the
eventual disposition of the real estate. If the real
estate is considered to be impaired, the impairment to be
recognized is measured at the amount by which the carrying amount
of the real estate exceeds the fair value of such
property. There were no impairment losses recognized in
2015 or 2014.
Rental Income
Rental income is
recognized as rentals become due. Rental payments received in
advance are deferred until earned. All leases between
the partnership and the tenants of the property are operating
leases. All rental property is rented under leases
with terms of one year or less.
Income Taxes
No provision or
benefit for income taxes has been included in these financial
statements since taxable income or loss passes through to, and is
reportable by, the Partners individually.
The Partnership's
tax filings are subject to audit by various taxing authorities, and
the open audit periods are 2012 through 2014.
24
NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Income Taxes,
continued
The Partnership has
adopted provisions of FASB Accounting Standards Codification Topic
ASC 740-10 (previously Financial Interpretation No. 48, Accounting
for Uncertainty in Income Taxes), on January 1,
2009. The implementation of this standard had no impact
on the financial statements.
Accounting Standards
Codification
The Financial
Accounting Standards Board ("FASB ASC") became the sole
authoritative source of generally accepted accounting principles in
the United States of America for periods ending after September 15,
2009. The FASB ASC incorporates all authoritative literature
previously issued by a standard setter. Adoption of the FASB ASC
has no effect on the Partnership's financial position, results from
operations, partners' equity (deficit) or cash flows. References to
the authoritative accounting literature in the notes to the
financial statements are the FASB ASC references.
NOTE
C - USE OF ESTIMATES IN PREPARATION OF FINANCIAL
STATEMENTS
The preparation of
financial statements in conformity with accounting principles
generally accepted in the United States of America requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from
those estimates.
NOTE
D - RESTRICTED DEPOSITS AND FUNDED RESERVES
Replacement
Reserve
Pursuant to the
partnership agreements, the Partnership is required to establish a
replacement reserve account. The Partnership is to deposit $300 per
unit per year commencing the month after issuance of a certificate
of occupancy. The deposits are to increase at a rate of 3 percent
every 12 months. The replacement reserve is to be used for working
capital needs, improvements, replacements, and other contingencies
of the Partnership. Withdrawals from the replacement reserve
require the Special Limited Partner's signature for withdrawals
over $750 and over an aggregate total of $4,000 for the year. As of
December 31, 2015, the Partnership had not yet established the
replacement reserve account.
25
NOTE
D - RESTRICTED DEPOSITS AND FUNDED RESERVES
(CONTINUED)
Real Estate Tax
Reserve
Pursuant to the
terms of the partnership agreement, the Partnership is required to
purchase a Certificate of Deposit in the amount of $25,000 from a
banking institution. The funds shall be used to pay the increased
real estate taxes upon expiration of the Urban Revitalization tax
exemption. The reserve shall require the joint signature of the
Special Limited Partner for any withdrawals. As of December 31,
2015, the Partnership had not yet established the real estate tax
reserve.
Tax and Insurance
Escrow
Pursuant to the
partnership agreement, the Partnership is required to maintain a
tax and insurance escrow account. The escrow account is to be used
to pay next year's insurance premium payments and real estate
taxes. Withdrawals from the tax and insurance escrow shall require
the joint signature of the Special Limited Partner. At December 31,
2015 and 2014, the balance in the Tax and Insurance Escrow totaled
$4,366 and $16,106, respectively.
Tenants' Security
Deposits
Tenants' security
deposits are held in a separate bank account in the name of the
project. At December 31, 2015 and 2014, the balance of this account
was $5,985 and $4,619, respectively, which was not funded in an
amount equal to or greater than the security deposit
liability.
NOTE
E - OTHER ASSETS
Tax Credit Fees at
December 31, 2015 and 2014 were net of accumulated amortization of
$31,350 and
$26,196,
respectively. Amortization expense for the same years ended was
$5,153 and $5,153, respectively. Estimated aggregated amortization
expense for each of the next five years is:
2016
|
|
$
|
5,153
|
|
2017
|
|
|
5,153
|
|
2018
|
|
|
5,153
|
|
2019
|
|
|
5,153
|
|
2020
|
|
|
5,153
|
|
26
NOTE
F - LONG TERM DEBT
Scott County Housing
Council
The project is now
financed by a mortgage loan payable to Scott County Housing Council
in the original amount of $296,064. The 5.75% loan is payable in
monthly installments of principal and interest in the amount of
$2,079 through the maturity date of January 2026 when a final
balloon payment is due. Outstanding balances on the note were
$244,973 and $255,500 as of December 31, 2015 and 2014,
respectively. There was no accrued interest as of
December 31, 2015 and 2014.
City of Davenport
The project is also
financed by a mortgage loan payable to the City of Davenport's Home
Investment Partnership (HOME) Program in the original amount of
$274,000. The 0% loan is payable in annual installments of interest
only in the amount of $6,850 through the maturity date of February
2026 when a final balloon payment is due. Outstanding balances on
the note were $274,000 as of December 31, 2015 and
2014.
The apartment
project is pledged as collateral for the mortgages. The mortgage
loans are nonrecourse debt secured by deeds of trust on the related
real estate. The fair value of the mortgage notes payable are
estimated based on the current rates offered to the project for
debt of the same remaining maturities. At December 31, 2015, the
fair value of the mortgages approximate the amount recorded in the
financial statements.
Aggregate
maturities of long-term debt for the next five years are as
follows:
December 31,
2016
|
|
$
|
11,148
|
|
2017
|
|
|
11,806
|
|
2018
|
|
|
12,503
|
|
2019
|
|
|
13,241
|
|
2020
|
|
|
14,023
|
|
and
Thereafter
|
|
|
456,252
|
|
Totals
|
|
$
|
518,973
|
|
NOTE
G - MANAGEMENT FEES
The Partnership
engaged Pioneer Property Management, Inc. as the management company
in 2010. Pioneer Property Management, Inc. is not related in any
form to any owners, either general or limited partners, of the
Partnership. As of December
31, 2015 and
2014, management fees of $5,502 and
$6,260 were paid to
Pioneer Property Management, respectively. At December 31, 2015 and
2014, accrued management fees totaled $519 and $0, respectively,
which are included in accounts payable on the balance
sheet.
27
NOTE
H - RELATED PARTY TRANSACTIONS
Due from / to Related
Party
As of December 31,
2015 and 2014, the Partnership was owed $24,746 from Davenport
Housing V, L.P. for loan interest paid by the Partnership on behalf
of the related project in a prior year. The Limited Partner in
Davenport Housing V, L.P. is WNC Institutional Tax Credit Fund XIV,
L.P., which is a related entity to the Limited
Partner.
The Limited Partner
has made capital advances to the Partnership to secure permanent
financing as well as for routine operating expenses. As of December
31, 2015 and 2014, the Partnership owed $759,336 and $759,336,
respectively, to the Limited Partner for capital
advances.
Asset Management
Fee
Pursuant to the
partnership agreement, the Limited Partner is to receive a
cumulative asset management fee of $2,500 increasing annually at
3%. Asset management fees earned in 2015 and 2014
totaled
$2,985 and $4,898,
respectively. As of December 31, 2015 and 2014, cumulative unpaid
fees under this agreement owed to the Limited Partner were $18,907
and $15,922, respectively.
Incentive Management
Fee
Pursuant to the
partnership agreement, the General Partner is to receive an annual
non-cumulative incentive management fee in the amount equal to 40%
of net operating income for duties outlined in the partnership
agreement. No expense was incurred in 2015 and
2014.
Tax Credit Compliance
Fee
Pursuant to the
partnership agreement, the General Partner is to receive an annual
non-cumulative tax credit compliance fee of 40 percent of net
operating income for ensuring compliance by the Partnership with
all tax credit rules and regulations. No expense was
incurred in 2015 and 2014.
Operating Deficit
Loans
Pursuant to the
partnership agreement, if at any time between when the first
apartment unit is available and three consecutive months of
breakeven operations, an operating deficit exists, the General
Partner shall fund the operating deficit as to amount through
operating deficit loans up to $61,214. All operating loans are to
be repayable out of 50% of the available Net Operating Income or
Sale or Refinancing Proceeds, as defined in the partnership
agreement. There were no Operating Deficit Loans as of December 31,
2015.
28
NOTE
I - PARTNERS' EQUITY
Partners
|
|
Ownership
Percentages
|
|
|
|
|
|
|
|
General Partner -
Shelter Resource Corporation
|
|
|
0.01
|
%
|
|
|
|
|
|
Limited Partner -
WNC Housing Tax Credit Fund VI,
|
|
|
|
|
Series 13, Limited
Partnership
|
|
|
99.98
|
%
|
|
|
|
|
|
Class B Limited
Partner - Iowa Tax Credit Fund X,
|
|
|
|
|
Limited
Partnership
|
|
|
0.01
|
%
|
|
|
|
|
|
Special Limited
Partner - WNC Housing Limited
|
|
|
|
|
Partnership
|
|
|
0.01
|
%
|
Pursuant to the partnership agreement, the Limited Partner is to make capital contributions
of $2,253,208. An
amendment to the Partnership Agreement was executed in 2011 with
the Limited Partner contributing an additional $2,255,306. As of
December 31, 2015, the Limited Partner had made capital
contributions totaling $4,508,514.
Pursuant to the
partnership agreement, Shelter Resource Corporation, the General
Partner, is to make capital contributions of $985,000. As of
December 31, 2015, Shelter Resource Corporation has made capital
contributions totaling $1,230,225.
Pursuant to the
partnership agreement, the Special Limited Partner is to make
capital contributions of $226.
As of December 31, 2015, the Special Limited Partner had
made capital contributions totaling $226.
29
NOTE
J - LOW INCOME HOUSING TAX CREDITS
The following
Housing Tax Credits are allocable to the Partnership during the
Credit Period:
Year
|
|
Housing
Tax Credits
|
|
|
2010
|
|
$
|
420,809
|
|
2011
|
|
|
603,015
|
|
2012
|
|
|
603,015
|
|
2013
|
|
|
603,015
|
|
2014
|
|
|
603,015
|
|
2015
|
|
|
603,015
|
|
2016
|
|
|
603,015
|
|
2017
|
|
|
603,015
|
|
2018
|
|
|
603,015
|
|
2019
|
|
|
603,015
|
|
2020
|
|
|
182,206
|
|
TOTAL
|
|
$
|
6,030,150
|
|
NOTE
K - CONTINGENCY
The Project's
Low-Income Housing Credits are contingent on its ability to
maintain compliance with applicable sections of Section 42. Failure
to maintain compliance with occupant eligibility, and/or unit gross
rent, or to correct noncompliance within a specified time period,
could result in recapture of previously taken tax credits plus
interest.
NOTE
L - CURRENT VULNERABILITY DUE TO CERTAIN
CONCENTRATIONS
The Partnership's
sole asset is the apartment complex. The Partnership's
operations are concentrated in the affordable housing
real estate market. In addition, the Partnership operates in a
heavily regulated environment. The operations of the Partnership
are subject to the administrative directives, rules and regulations
of federal, state and local regulatory agencies. Such
administrative directives, rules and regulations may occur with
little notice or inadequate funding to pay for the related cost,
including the additional administrative burden, to comply with a
change.
NOTE
M - ADVERTISING
The partnership
incurred advertising costs of $683 in 2015 and $89 in 2014. These
costs are expensed in the financial statements as
incurred.
30
NOTE
N - SUBSEQUENT EVENTS
FASB Accounting
Standards Codification Topic 855, Subsequent Events, addresses events
which occur after the balance sheet date but before the issuance of
financial statements. An entity must record the effects of
subsequent events that provide evidence about conditions that
existed at the balance sheet date and must disclose but not record
the effects of subsequent events which provide evidence about
conditions that existed after the balance sheet date. Additionally,
Topic 855 requires disclosure relative to the date
through which subsequent events have been evaluated and whether
that is the date on which the financial statements were issued or
were available to be issued. Management evaluated the activity of
Davenport Housing VII, L.P. through April 13, 2016, the date the
financial statements were issued, and concluded that no subsequent
events have occurred that would require recognition in the
Financial Statements or disclosure in the Notes to the Financial
Statements.
|
31