Attached files
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EX-32.2 - EX-32.2 - INDEPENDENCE TAX CREDIT PLUS LP IV | ind4-20170331ex322a1b5ed.htm |
EX-32.1 - EX-32.1 - INDEPENDENCE TAX CREDIT PLUS LP IV | ind4-20170331ex3216d5e84.htm |
EX-31.2 - EX-31.2 - INDEPENDENCE TAX CREDIT PLUS LP IV | ind4-20170331ex31260cdeb.htm |
EX-31.1 - EX-31.1 - INDEPENDENCE TAX CREDIT PLUS LP IV | ind4-20170331ex311a5edac.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2017
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 033-89968
INDEPENDENCE TAX CREDIT PLUS L.P. IV
(Exact name of registrant as specified in its charter)
Delaware |
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13-3809869 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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1225 17th Street, Denver, Colorado |
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80202 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code (303) 927-5000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests and Beneficial Assignment Certificates
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
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 ☑ 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 (§232.405 of this chapter) 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☑
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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer |
☐ |
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Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
(Do not check if a smaller reporting company) |
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Smaller reporting company |
☑ |
Emerging growth company |
☐ |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
If an emerging growth company, indicate by check mark if the registrant has elected not to use the elected transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act ☐
The approximate aggregate book value of the voting and non-voting common equity held by non-affiliates of the Registrant as of September 30, 2016 was $1,288,817, based on Limited Partner equity as of such date.
DOCUMENTS INCORPORATED BY REFERENCE
None
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General
Independence Tax Credit Plus L.P. IV (the “Partnership”) is a limited partnership which was formed under the laws of the State of Delaware on February 22, 1995. The general partner of the Partnership is Related Independence L.L.C., a Delaware limited liability company (the “General Partner”). Centerline Holding Company (“Centerline”) was the ultimate parent of Centerline Affordable Housing Advisors LLC (“CAHA”), the sole member of the Manager of the General Partner. On April 15, 2015, Alden Torch Financial LLC, a newly formed Delaware limited liability company (“ATF”), became the indirect owner of 100% of the equity interests in Centerline. Since April 15, 2015, ATF has been the ultimate parent and indirect owner of 100% of the equity interest in CAHA.
On July 6, 1995, the Partnership commenced a public offering (the "Offering") of Beneficial Assignment Certificates ("BACs") representing assignments of limited partnership interests in the Partnership ("Limited Partnership Interests"). The Partnership received $45,844,000 of gross proceeds from the Offering (the "Gross Proceeds") from 2,759 investors ("BACs holders"). The Offering was terminated on May 22, 1996.
The Partnership’s initial business was to invest in other partnerships (“Local Partnerships”, “subsidiaries” or “subsidiary partnerships”) owning leveraged apartment complexes (“Apartment Complexes” or “Properties”) that were eligible for the low-income housing tax credit (“Tax Credit”) enacted in the Tax Reform Act of 1986, some of which may have also been eligible for the historic rehabilitation tax credit. As of March 31, 2017, the Partnership had originally invested approximately $37,555,000 (not including acquisition fees of approximately $1,771,000) of the net proceeds of the Offering in fourteen Local Partnerships of which approximately $82,119 remains to be paid to the remaining Local Partnership (including approximately $82,119 being held in escrow) as certain benchmarks, such as occupancy level, are attained prior to the release of the funds. The Partnership does not intend to acquire interests in additional Local Partnerships, but the Partnership may be required to fund potential purchase price adjustments based on tax credit adjustor clauses. The Partnership is currently invested in one Local Partnership. The Partnership’s investment in the remaining Local Partnership represents a 98.99% interest in such Local Partnership. See Item 2, Properties, below.
The Partnership has developed a plan to dispose of its one remaining investment. It is anticipated that this process will take from six to twelve months. During the fiscal year ended March 31, 2017, the Partnership sold its limited partnership interest in one Local Partnerships. Through March 31, 2017, the Partnership has sold its limited partnership interest in nine Local Partnerships, and the property and the related assets and liabilities of four Local Partnerships have been sold. There can be no assurance as to when the Partnership will dispose of its remaining investment or the amount of proceeds which may be received. However, the proceeds from such sales received by the Partnership from the remaining investment will not be sufficient to return to the limited partners their original investments.
The investment objectives of the Partnership are described below:
1. |
Entitle qualified BACs holders to Tax Credits over the period of the Partnership’s entitlement to claim Tax Credits (for each Property, generally ten years from the date of investment or, if later, the date the Property is leased to qualified tenants; referred to herein as the “Credit Period”) with respect to each Apartment Complex. |
2. |
Preserve and protect the Partnership’s capital. |
3. |
Participate in any capital appreciation in the value of the Properties and provide distributions of Sale or Refinancing Proceeds upon the disposition of the Properties. |
4. |
Allocate passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investments and other passive activities, and allocate passive losses to corporate BACs holders to offset business income. |
One of the Partnership’s objectives has been to entitle qualified BACs holders to Tax Credits over the Credit Period. Each of the Local Partnerships in which the Partnership has acquired an interest has been allocated by the relevant state credit
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agencies the authority to recognize Tax Credits during the Credit Period provided that the Local Partnership satisfies the rent restriction, minimum set-aside and other requirements for recognition of the Tax Credits at all times during such period. Once a Local Partnership has become eligible to recognize Tax Credits, it may lose such eligibility and suffer an event of “recapture” if its Property fails to remain in compliance with the Tax Credit requirements during the 15-year period commencing at the beginning of the Credit Period (“Compliance Period”). As of December 31, 2012, all the Local Partnerships had completed their Credit Periods and Compliance Periods.
A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the Property on an undiscounted basis are below depreciated cost. At that time the Property investments themselves are reduced to estimated fair value (using the fair market value based on comparative sales). During the year ended March 31, 2017, the Partnership did not record any loss on impairment of assets or reduction to estimated value. Through March 31, 2017, the Partnership has recorded approximately $35,686,000 as an aggregate loss on impairment of assets.
There can be no assurance that the Partnership will achieve its investment objectives, as described above, and it will not meet objectives 2 and 3, also as noted above.
The Partnership is subject to the risks incidental to potential losses arising from the management and ownership of improved real estate and poor economic conditions.
Sale of Underlying Local Partnerships
The Partnership has developed a plan to dispose of its remaining investment. It is anticipated that this process will take from six to twelve months. During the fiscal year ended March 31, 2017, the Partnership sold its limited partnership interest in one Local Partnership. Through March 31, 2017, the Partnership has sold its limited partnership interest in nine Local Partnerships, and the property and the related assets and liabilities of four Local Partnerships have been sold. There can be no assurance as to when the Partnership will dispose of its remaining investment or the amount of proceeds which may be received. However, the proceeds from such sales received by the Partnership from the remaining investment will not be sufficient to return to the limited partners their original investments. All gains and losses on sales are included in discontinued operations.
On September 21, 2016, the Partnership sold its limited partnership interest in Bakery Village Urban Renewal Associates, L.P. (“Bakery Village”) to an affiliate of the Local General Partner for a sales price of approximately $2,200,000. The sale resulted in a gain of approximately $5,247,000 resulting from the write-off of the deficit basis in the Local Partnership plus the cash received by the Partnership, which was recorded during the quarter ended September 30, 2016. An adjustment to the gain of approximately $24,000 was recorded during the quarter ended March 31, 2017 resulting in an overall gain of $5,223,000.
On July 27, 2015, the Partnership sold its limited partnership interest in First African Kanisa Apartments (“First African”) to an affiliate of the Local General Partner for a sales price of $1. The sale resulted in a gain of approximately $1,603,000 resulting from the write-off of the deficit basis in the Local Partnership of the same amount at the date of the sale, which was recorded during the quarter ended September 30, 2015. An adjustment to the gain of approximately $88,000 was recorded during the quarter ended March 31, 2016 resulting in an overall gain of $1,515,000.
On June 1, 2015, the Partnership sold its limited partnership interest in KSD Village Apartments Phase II, Ltd. (“KSD Village”) to an unaffiliated third party purchaser for a sales price of $1. The sale resulted in a gain of approximately $293,000 resulting from the write-off of the deficit basis in the Local Partnership of the same amount at the date of the sale, which was recorded during the quarter ended June 30, 2015. An adjustment to the gain of approximately $61,000 was recorded during the quarter ended March 31, 2016 resulting in an overall gain of $232,000.
On June 15, 2015, the property and the related assets and liabilities of Kaneohe Limited Partnership (“Kaneohe”) were sold to an unaffiliated third party purchaser for a sales price of $10,100,000. The Partnership received $2,893,000 as a distribution from this sale after the repayment of the mortgages, other liabilities and closing costs of approximately $7,207,000. The sale resulted in a gain of approximately $4,587,000 which was recorded during the quarter ended June 30, 2015. An adjustment to the gain of approximately $4,073,000 was recorded during the quarter ended September 30,
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2015 due to a distribution from this sale in the form of a Security Agreement to the Local General Partner in the amount of $4,069,000. Additional adjustments to the gain of approximately $1,000 and $196,000 were recorded during the quarter ended March 31, 2016 and December 31, 2015, respectively resulting in an overall gain of $8,857,000.
Segments
The Partnership operates in one segment, which is the investment in multi-family residential property. Financial information about this segment is set forth in Item 8 herein.
Competition
The real estate business is highly competitive and substantially all of the properties acquired by the Partnership are expected to have active competition from similar properties in their respective vicinities. In addition, various other limited partnerships may, in the future, be formed by the General Partner and/or its affiliates to engage in businesses which may be competitive with the Partnership.
Employees
The Partnership does not have any direct employees. All services are performed for the Partnership by the General Partner and its affiliates. The General Partner receives compensation in connection with such activities as set forth in Items 11 and 13. In addition, the Partnership reimburses the General Partner and certain of its affiliates for expenses incurred in connection with the performance by their employees of services for the Partnership in accordance with the Partnership’s Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”).
Not applicable.
Item 1B. Unresolved Staff Comments.
Not applicable.
The Partnership’s investment in the last remaining Local Partnership represents 98.99% of the partnership interests in such Local Partnership. Through the rights of the Partnership and/or an affiliate of the General Partner, which affiliate has a contractual obligation to act on behalf of the Partnership, to remove the Local General Partner and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in all of the Local Partnerships in which it has invested. Set forth below is a schedule of the Local Partnerships including certain information concerning their respective Apartment Complexes (the “Local Partnership Schedule”). Further information concerning the Local Partnerships and their properties, including any encumbrances affecting the properties, may be found in Item 15, Schedule III.
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Local Partnership Schedule
Name and Location |
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Percentage of Units Occupied at May 1 |
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(Number of Units) |
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Date Acquired |
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2017 |
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2016 |
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2015 |
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2014 |
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2013 |
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BX-8A Team Associates, L.P. |
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Bronx, NY (41) |
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October 1995 |
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(b) |
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(b) |
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(b) |
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(b) |
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(b) |
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Westminster Park Plaza |
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(a California Limited Partnership) |
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Los Angeles, CA (130) |
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June 1996 |
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(a) |
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(a) |
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(a) |
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(a) |
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(a) |
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Fawcett Street Limited Partnership |
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Tacoma, WA (60) |
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June 1996 |
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98 |
% |
98 |
% |
97 |
% |
97 |
% |
95 |
% |
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Figueroa Senior Housing Limited Partnership |
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Los Angeles, CA (66) |
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November 1996 |
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(g) |
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(g) |
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(g) |
% |
89 |
% |
97 |
% |
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NNPHI Senior Housing Limited Partnership |
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Los Angeles, CA (75) |
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December 1996 |
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(g) |
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(g) |
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(g) |
% |
92 |
% |
98 |
% |
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Belmont/McBride Apartments Limited Partnership |
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Paterson, NJ (42) |
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January 1997 |
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(d) |
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(d) |
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(d) |
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(d) |
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(d) |
% |
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Sojourner Douglass, L.P. |
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Paterson, NJ (20) |
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February 1997 |
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(c) |
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(c) |
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(c) |
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(c) |
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(c) |
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New Zion Apartments Limited Partnership |
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Shreveport, LA (100) |
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October 1997 |
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(e) |
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(e) |
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(e) |
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(e) |
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(e) |
% |
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Bakery Village Urban Renewal Associates, L.P. |
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Montclair, NJ (125) |
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December 1997 |
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(k) |
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98 |
% |
96 |
% |
96 |
% |
100 |
% |
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Marlton Housing Partnership, L.P. |
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(a Pennsylvania limited partnership) |
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Philadelphia, PA (25) |
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May 1998 |
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(d) |
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(d) |
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(d) |
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(d) |
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(d) |
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GP Kaneohe Limited Partnership |
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Kaneohe, HI (44) |
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July 1999 |
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(i) |
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(i) |
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98 |
% |
98 |
% |
98 |
% |
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KSD Village Apartments, Phase II, Ltd. |
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Danville, KY (16) |
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July 1999 |
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(h) |
|
(h) |
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88 |
% |
94 |
% |
88 |
% |
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Kanisa Apartments, Ltd. |
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Fayette County, KY (59) |
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October 1999 |
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(j) |
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(j) |
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95 |
% |
98 |
% |
88 |
% |
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Guymon Housing Partners, L.P. |
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Guymon, OK (92) |
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December 1999 |
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(f) |
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(f) |
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(f) |
|
(f) |
|
100 |
% |
(a) |
The property and the related assets and liabilities were sold during the fiscal year ended March 31, 2008 (see Note 10 in Item 8). |
(b) |
The Partnership’s limited partnership interest was sold during the fiscal year ended March 31, 2009 (see Note 10 in Item 8). |
(c) |
The Partnership’s limited partnership interest was sold during the fiscal year ended March 31, 2012 (see Note 10 in Item 8). |
(d) |
The Partnership’s limited partnership interest was sold during the fiscal year ended March 31, 2013 (see Note 10 in Item 8). |
(e) |
The property and the related assets and liabilities were sold during the fiscal year ended March 31, 2013 (see Note 10 in Item 8). |
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(f) |
The property and the related assets and liabilities were sold during the fiscal year ended March 31, 2014 (see Note 10 in Item 8). |
(g) |
The Partnership’s limited partnership interest was sold during the fiscal year ended March 31, 2015 (see Note 10 in Item 8). |
(h) |
The Partnership’s limited partnership interest was sold during the fiscal year ended March 31, 2016 (see Note 10 in Item 8). |
(i) |
The property and the related assets and liabilities were sold during the fiscal year ended March 31, 2016 (see Note 10 in Item 8). |
(j) |
The Partnership’s limited partnership interest was sold during the fiscal year ended March 31, 2016 (see Note 10 in Item 8). |
(k) |
The Partnership’s limited partnership interest was sold during the fiscal year ended March 31, 2017 (see Note 10 in item 8). |
Leases are generally for periods not greater than one to two years and no tenant occupies more than 10% of the total rentable square footage in any single Apartment Complex.
Management continuously reviews the physical state of the properties and suggests to the Local General Partners budget improvements which are generally funded from cash flow from operations or release of replacement reserve escrows.
Management periodically reviews the insurance coverage of the properties and believes such coverage is adequate.
See Item 1, Business, above for the general competitive conditions to which the Properties described above are subject.
Real estate taxes are calculated using rates and assessed valuations determined by the township or city in which the Property is located. Such taxes have approximated less than 1% of the aggregate cost of the Properties as shown in Schedule III included herein.
Tax Credits with respect to a given Apartment Complex were available for a ten-year period that commenced when the Property was rented to qualified tenants. However, the annual Tax Credits available in the year in which the Apartment Complex was placed in service were prorated based upon the months remaining in the year. The amount of the annual Tax Credit not available in the first year was available in the eleventh year. In certain cases, the Partnership acquired its interest in a Local Partnership after the Local Partnership had placed its Apartment Complex in service. In these cases, the Partnership was allocated Tax Credits only beginning in the month following the month in which it acquired its interest and Tax Credits allocated in any prior period were not available to the Partnership.
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
As of March 31, 2017, the Partnership had issued and outstanding 45,844 Limited Partnership Interests, each representing a $1,000 capital contribution to the Partnership, or an aggregate capital contribution of $45,844,000. All of the issued and outstanding Limited Partnership Interests have been issued to Independence Assignor Inc. (the “Assignor Limited Partner”), which has in turn issued 45,844 BACs to the purchasers thereof for an aggregate purchase price of $45,844,000. Each BAC represents all of the economic and virtually all of the ownership rights attributable to a Limited Partnership Interest held by the Assignor Limited Partner. BACs may be converted into Limited Partnership Interests at no cost to the holder (other than the payment of transfer costs not to exceed $100), but Limited Partnership Interests so acquired are not thereafter convertible into BACs.
Neither the BACs nor the Limited Partnership Interests are traded on any established trading market. The Partnership does not intend to include the BACs for quotation on NASDAQ or for listing on any national or regional stock exchange or any other established securities market. The Revenue Act of 1987 contained provisions which have an adverse impact on investors in “publicly traded partnerships.” Accordingly, the General Partner has imposed limited restrictions on the transferability of the BACs and the Limited Partnership Interests in secondary market transactions. Implementation of the restrictions should prevent a public trading market from developing and may adversely affect the ability of an investor to liquidate his or her investment quickly. It is expected that such procedures will remain in effect until such time, if ever, as further revision of the Revenue Act of 1987 may permit the Partnership to lessen the scope of the restrictions.
As of April 27, 2017, the Partnership has 2,508 registered holders of an aggregate of 45,844 BACs.
All of the Partnership’s general partnership interests, representing an aggregate capital contribution of $1,000, are held by the General Partner.
The Partnership has made no distributions to the BACs holders from inception through March 31, 2017. There are no material legal restrictions in the Partnership Agreement on the ability of the Partnership to make distributions. However, the Partnership does not anticipate providing cash distributions to its BACs holders other than from net refinancing or sales proceeds.
Transfer Procedures
The Partnership from time to time receives requests by unit holders and others to transfer BACs and/or limited partnership interests. Such requests may occur in connection with tender offers for the Partnership’s units. Such requests implicate the Partnership’s policies and procedures concerning transfers generally and tender offers in particular, which were adopted by the Partnership pursuant to the terms of its Partnership Agreement, to ensure compliance with applicable law, avoid adverse tax consequences for the Partnership and its investors, and preserve the Partnership’s advantageous tax status.
The Partnership relies on a 2% safe harbor established by an Internal Revenue Service (“IRS”) regulation to avoid being characterized as a “publicly-traded partnership” that is taxed as a corporation.
A brief summary of certain of the Partnership’s key policies, practices and requirements with respect to transfers and tender offers is as follows:
· |
No transfer (whether for substitution, assignment or otherwise) is effective or binding on the Partnership unless and until it is approved by the General Partner. |
· |
No transfer will be approved unless the transferor and transferee submit complete and properly executed forms of the Partnership’s own transfer documentation. The Partnership does not accept forms of transfer documentation other than its own and does not accept signatures made by power of attorney in lieu of original signatures by each of the transferors and transferees. |
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· |
The Partnership will not approve transfers that in the cumulative aggregate for any tax year exceed the IRS 2% safe harbor, unless a financially responsible person provides the Partnership and its partners with (i) an indemnity (in form and substance in all ways acceptable to the General Partner) for all liability (including, without limitation, any adverse tax consequences) arising from or relating to exceeding the 2% safe harbor and (ii) a legal opinion (in form and substance in all ways acceptable to the General Partner) that there will be no adverse tax consequences to the Partnership and its partners from exceeding the 2% safe harbor. |
· |
In order to avoid the undesirable situation of one or more tender offers consuming the entire safe harbor limitation early in the tax year and leaving the Partnership’s remaining investors with no liquidity opportunity for the rest of that tax year, the Partnership restricts the cumulative aggregate total of transfers made pursuant to all tender offers to 1.5% of its outstanding units in each tax year, unless a financially responsible person conducting such tender offer provides the Partnership with an acceptable indemnity and legal opinion of the type described above. At the end of each tax year, the General Partner, in its discretion, may allow the cumulative total number of transfers (including those by tender offer) to reach the 2% safe harbor limit. |
· |
The Partnership requires that all tender offers for its units be conducted in accordance with all applicable law including, without limitation, the federal securities laws. |
The foregoing is solely a summary of the Partnership’s policies, requirements and practices with respect to transfers and tender offers. More complete information, including a copy of the Partnership’s transfer documentation package, may be obtained from the Partnership.
Item 6. Selected Financial Data.
Not applicable.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
The Partnership originally invested approximately $37,555,000 (not including acquisition fees of approximately $1,771,000) of the net proceeds of the Offering in fourteen Local Partnerships, of which approximately $82,119 remains to be paid to the remaining Local Partnership (including approximately $82,119 being held in escrow) as certain benchmarks, such as occupancy level, are attained prior to the release of the funds. The Partnership does not anticipate acquiring additional properties, but the Partnership may be required to fund potential purchase price adjustments based on tax credit adjustor clauses.
The Partnership has developed a plan to dispose of its remaining investment. It is anticipated that this process will continue to take from six to twelve months. During the fiscal year ended March 31, 2017, the Partnership sold its limited partnership interest in one Local Partnership. Through March 31, 2017, the Partnership has sold its limited partnership interest in nine Local Partnerships, and the property and the related assets and liabilities of four Local Partnerships have been sold. There can be no assurance as to when the Partnership will dispose of its remaining investments or the amount of proceeds which may be received. However, the proceeds from such sales received by the Partnership from the remaining investment will not be sufficient to return to the limited partners their original investments.
Short-Term
The Partnership’s primary sources of funds include: (i) working capital reserves, exclusive of the Local Partnership working capital; (ii) interest earned on the working capital reserves; (iii) cash distributions from operations of the Local Partnerships; and (iv) sales and/or refinance proceeds and distributions. Such funds, although minimal (other than possible sales and/or refinance proceeds and distributions), are available to meet the obligations of the Partnership. During the years ended March 31, 2017 and 2016, no distributions were received from operations of the Local Partnerships. In addition, during the years ended March 31, 2017 and 2016, distributions from the Local Partnerships from sales proceeds amounted to approximately $2,123,000 and $2,893,000, respectively. The Partnership does not anticipate providing cash distributions to BACs holders in circumstances other than refinancing or sales.
For the year ended March 31, 2017, cash and cash equivalents of the Partnership and its consolidated Local Partnerships increased approximately $1,240,000. This increase was due to proceeds from sale of properties of $2,123,000, and a repayment from local general partners and affiliates of approximately $105,000, which exceeded cash used in operating activities of approximately ($810,000), a decrease in cash held in escrow relating to investing activities of approximately ($15,000), and a repayment of mortgage notes of approximately ($163,000). Included in the adjustments to reconcile the net income to net cash (used in) provided by operating activities is depreciation and amortization in the amount of approximately $9,000.
Total expenses from operations for the years ended March 31, 2017 and 2016, excluding depreciation and amortization, interest and general and administrative – related parties totaled $448,702 and $246,292, respectively.
Accounts payable and other liabilities arising from operations totaled $63,619 and $61,787 as of March 31, 2017 and 2016, respectively. Accounts payable and other liabilities are short term liabilities which are expected to be paid from operating cash flows, working capital balances at the Local Partnership level, Local General Partner advances and, in certain circumstances, advances from the Partnership. Accounts payable from discontinued operations totaled $12,071 and $63,007 as of March 31, 2017 and 2016, respectively. Accrued interest payable arising from operations as of March 31, 2017 and 2016 was $— and $—, respectively. Accrued interest from discontinued operations totaled $56,829 and $63,220 as of March 31, 2017 and 2016, respectively. Accrued interest payable represents the accrued interest on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which has been accumulating since the Partnership’s investment in the respective Local Partnerships) will be made from future refinancings or sales proceeds of the respective Local Partnerships. Furthermore, each Local Partnership’s mortgage notes are collateralized by the land and buildings of the respective Local Partnership, and are without further recourse to the Partnership. The maximum loss the Partnership would incur is its net investment in the remaining Local Partnership.
-10-
The Partnership has unconsolidated cash reserves of approximately $1,841,000 at March 31, 2017. Such amount is considered sufficient to cover the Partnership’s day to day operating expenses, excluding fees to the General Partner, for at least the next fiscal year.
At March 31, 2017, the Partnership’s assets exceeded liabilities by $576,200 and for the year ended March 31, 2017, the Partnership recognized net income of $4,629,845, including gain on sale of properties of $5,223,000. However, because 1) the provisions of the secondary loan defers the payment of accrued interest of the remaining Local Partnership and will be made from future refinancing or sales proceeds of the remaining Local Partnerships, 2) the General Partner continues to defer (pending the Partnership’s receipt of sales and refinancing proceeds) the payment of fees as discussed below and in Note 8 to the Financial Statements in Item 8, and 3) the Partnership has sufficient unconsolidated working capital reserves to cover the Partnership’s day to day operating expenses, the Partnership (and the applicable Local Partnerships) believes it has sufficient liquidity and ability to generate cash and to meet existing and known or reasonably likely future cash requirements over both the short and long term.
Long-Term
Partnership management fees owed to the General Partner amounting to approximately $— and $12,000 were accrued and unpaid as of March 31, 2017 and 2016, respectively, and are included in the line item Due to general partner and affiliates in the consolidated balance sheets. Unpaid partnership management fees for any year are to be deferred without interest and will be payable out of sales or refinancing proceeds only to the extent of available funds after payments on all Partnership liabilities have been made other than those owed to the General Partner and its affiliates.
All other payables are expected to be paid, if at all, from working capital and cash reserves. The General Partner does not anticipate making any future advances of operating funds to the remaining Local Partnership in which the Partnership has invested. Even if a situation arose where the General Partner and its affiliates needed to but were not able to make operating advances in the future due to lack of funds, the only impact on the Partnership would be that it would lose its investment in the remaining Local Partnership. The Partnership’s ability to continue its operations would not be affected.
The Partnership’s liquidity considerations are discussed in Note 12a in Item 8.
Since the maximum loss the Partnership would be liable for is its net investment in the remaining Local Partnership, the resolution of any existing contingencies is not anticipated to impact future liquidity or financial condition of the Partnership in a material way.
The last remaining Local Partnership is impacted by inflation in several ways. Inflation allows for increases in rental rates generally to reflect the impact of higher operating and replacement costs. Furthermore, inflation generally does not impact the fixed long-term financing under which real property investments were purchased. Inflation also affects the last remaining Local Partnership adversely by increasing operating costs, such as fuel, utilities, and labor. Since revenues from sales of assets are driven by market conditions, inflation has little impact on sales. However, continued inflation may result in appreciated values of the Local Partnership’s apartment complexes over a period of time as rental revenues and replacement costs continue to increase.
Except as described above, management is not aware of any trends or events, commitments or uncertainties, which have not otherwise been disclosed that will or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. The Partnership had originally invested the proceeds of its Offering in 14 Local Partnerships, all of which had their Tax Credits fully in place during the Credit Periods. As of December 31, 2012, all the Local Partnerships have completed their Credit Periods.
Sale of Underlying Properties/Local Partnership Interests
For a discussion of the sale of properties in which the Partnership owned direct and indirect interests, see Note 10 in Item 8.
Discontinued Operations
The Partnership has developed a plan to dispose of its last remaining investment. Any dispositions would meet the criteria established for recognition as a discontinued operation under ASC 360, Property, Plant and Equipment (“ASC 360”),
-11-
which specifically requires that such amounts must differentiate a component of a business comprised of operations and cash flows that can be clearly distinguished operationally and for financial reporting purposes, from the rest of the entity. The Partnership’s last remaining investment has been classified as property and equipment-held for sale at March 31, 2017.
Off-Balance Sheet Arrangements
The Partnership has no off-balance sheet arrangements.
Critical Accounting Policies
In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements.
Property and Equipment
Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring the Properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. The Partnership complies with ASC 360, Property, Plant and Equipment. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the Property on an undiscounted basis are below depreciated cost. At that time, Property investments themselves are reduced to estimated fair value (using the fair market value based on comparative sales) when the Property is considered to be impaired and the depreciated cost exceeds estimated fair value.
At the time management commits to a plan to dispose of a specific asset, said asset is adjusted to the lower of carrying amount or fair value less costs to sell. These assets are classified as property and equipment-held for sale and are not depreciated. Property and equipment that are held for sale are included in discontinued operations. The Partnership’s last remaining investment has been classified as property and equipment-held for sale at March 31, 2017.
During the year ended March 31, 2017, the Partnership did not record any loss on impairment of assets or reduction to estimated value. Through March 31, 2017, the Partnership has recorded approximately $35,686,000 as an aggregate loss on impairment of assets.
Fair Value Measurements
The estimated fair value of mortgage notes payable have been determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.
Fair value for the mortgage notes have been estimated using Level 3 inputs. The carrying amount of accounts payable and other liabilities and other assets approximates fair value due to their short-term nature. For further discussion, please see Note 3, Item 8.
Revenue Recognition
Rental income is earned under standard residential operating leases and is typically due the first day of each month, but can vary by property due to the terms of the tenant leases. Rental income is recognized when earned and charged to tenants’ accounts receivable if not received by the due date. If rental payments are received in advance of the due date, revenue is deferred until earned. Rental subsidies are recognized as rental income during the month in which they are earned.
-12-
Other revenues are recorded when earned and consist of the following items: interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income and other rental related items (see Item 8, Note 2e).
Related Parties
Under the terms of the Partnership Agreement, the Partnership has entered into certain arrangements with the General Partner and its affiliates, which provide for compensation to be paid to the General Partner and its affiliates. Such arrangements include (but are not limited to) agreements to pay annual Partnership management fees, nonrecurring acquisition fees, a nonaccountable acquisition expense allowance, an accountable expense reimbursement and subordinated disposition fees to the General Partner and/or its affiliates. In addition, the General Partner is entitled to a subordinated interest in cash from sales or refinancings and a 1% interest in net income, net loss and distributions of adjusted cash from operations and cash from sales or refinancings. Certain members and officers of the General Partner receive compensation from the General Partner and its affiliates for services performed for various affiliated entities which may include services performed for the Partnership. The maximum annual partnership management fee paid to the General Partner is 0.5% of invested assets. See Note 8 in Item 8, which is incorporated herein by reference.
Income Taxes
The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31.
Results of Operations
The following is a summary of the results of operations of the Partnership for the years ended March 31, 2017 and 2016, respectively, excluding the results of its discontinued operations which are not reflected in the following discussion (see Item 8, Note 11).
The net income for the years ended March 31, 2017 and 2016 totaled approximately $4,630,000 and $10,210,000, respectively.
2017 vs. 2016
General and administrative-related parties’ expenses decreased approximately $24,000 for the year ended March 31, 2017, as compared to the year ended March 31, 2016, primarily due to a decrease in asset management fees due to the sale of properties offset by an increase in expense reimbursement due to an increase in overhead expense allocation from CAHA at the Partnership level.
General and administrative non-related parties’ expenses increased approximately $202,000 for the year ended March 31, 2017, as compared to the year ended March 31, 2016, primarily due to an increase in legal expenses at the Partnership level.
During the year ended March 31, 2017, the Partnership has not recorded any loss on impairment of assets. Through March 31, 2017, the Partnership has recorded approximately $35,686,000 as an aggregate loss on impairment of property.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
-13-
Item 8. Financial Statements and Supplementary Data.
|
|
|
Sequential |
|
|
|
|
(a) 1. |
Consolidated Financial Statements |
|
|
|
|
|
|
|
|
15-17 |
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
Consolidated Statements of Operations for the Years Ended March 31, 2017 and 2016 |
|
19 |
|
|
|
|
|
|
20 |
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the Years Ended March 31, 2017 and 2016 |
|
21 |
|
|
|
|
|
|
22-36 |
-14-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
Independence Tax Credit Plus L.P. IV and Subsidiaries
We have audited the consolidated balance sheets of Independence Tax Credit Plus L.P. IV and Subsidiaries (the “Partnership”) as of March 31, 2017 and 2016, and the related consolidated statements of operations, changes in partners’ capital (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements for Bakery Village Urban Renewal Associates, L.P. (“Bakery”), a majority owned subsidiary, which statements reflect total assets of $0 and $708,358 as of March 31, 2017 and 2016, respectively and total revenues of $953,937 and $1,297,501 for the years then ended. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Bakery is based solely upon the report of the other auditors.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.
In our opinion, based upon our audits, and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Independence Tax Credit Plus L.P. IV and Subsidiaries as of March 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ RAICH ENDE MALTER & CO. LLP
RAICH ENDE MALTER & CO. LLP
New York, New York
June 29, 2017
-15-
[Letterhead of COHNREZNICK, LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
Bakery Village Urban Renewal Associates, L.P.
We have audited the accompanying financial statements of Bakery Village Urban Renewal Associates, L.P., which comprise the balance sheet as of September 21, 2016, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the period from January 1, 2016 through September 21, 2016 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves 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. 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.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bakery Village Urban Renewal Associates, L.P. as of September 21, 2016, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
New Adoption of Accounting Guidance
As discussed in Note 1 to the financial statements, in 2016, Bakery Village Urban Renewal Associates, L.P. adopted new accounting guidance related to the presentation of debt issuance costs. Our report is not modified with respect to this matter.
/s/ COHNREZNICK LLP
Baltimore, Maryland
January 17, 2017
-16-
[Letterhead of COHNREZNICK, LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
Bakery Village Urban Renewal Associates, L.P.
We have audited the accompanying financial statements of Bakery Village Urban Renewal Associates, L.P., which comprise the balance sheet as of December 31, 2016, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the year then 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves 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. 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.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bakery Village Urban Renewal Associates, L.P. as of December 31, 2016, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
/s/ COHNREZNICK LLP
Baltimore, Maryland
March 1, 2016
-17-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
|
|
March 31, |
|
||||
|
|
2017 |
|
2016* |
|
||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating assets |
|
|
|
|
|
|
|
Cash and cash equivalents (Notes 2 and 3) |
|
$ |
1,841,212 |
|
$ |
515,178 |
|
Cash held in escrow (Notes 2, 3 and 5) |
|
|
82,119 |
|
|
82,119 |
|
Due from general partners and affiliates (Note 8) |
|
|
56,111 |
|
|
— |
|
Other assets |
|
|
10,944 |
|
|
10,944 |
|
|
|
|
|
|
|
|
|
Total operating assets |
|
|
1,990,386 |
|
|
608,241 |
|
|
|
|
|
|
|
|
|
Assets from discontinued operations (Note 12) |
|
|
|
|
|
|
|
Property and equipment, at cost, less accumulated depreciation (Notes 2 and 4) |
|
|
51,133 |
|
|
181,152 |
|
Other assets held for sale |
|
|
429,411 |
|
|
978,331 |
|
Total assets from discontinued operations |
|
|
480,544 |
|
|
1,159,483 |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,470,930 |
|
$ |
1,767,724 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating liabilities |
|
|
|
|
|
|
|
Accounts payable and other liabilities |
|
$ |
63,619 |
|
$ |
61,787 |
|
Due to general partners and affiliates |
|
|
— |
|
|
12,852 |
|
|
|
|
|
|
|
|
|
Total operating liabilities |
|
|
63,619 |
|
|
74,639 |
|
|
|
|
|
|
|
|
|
Liabilities from discontinued operations (Note 12) |
|
|
|
|
|
|
|
Mortgage notes payable (Notes 2, 3 and 7) |
|
|
1,527,076 |
|
|
4,792,348 |
|
Other liabilities held for sale |
|
|
304,035 |
|
|
954,381 |
|
Total liabilities from discontinued operations |
|
|
1,831,111 |
|
|
5,746,729 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
1,894,730 |
|
|
5,821,368 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ capital (deficit) |
|
|
|
|
|
|
|
Limited partners (100,000 BACs authorized; 45,844 issued and outstanding) |
|
|
901,928 |
|
|
(3,812,073) |
|
General partner |
|
|
(380,989) |
|
|
(428,605) |
|
|
|
|
|
|
|
|
|
Independence Tax Credit Plus L.P. IV total |
|
|
520,939 |
|
|
(4,240,678) |
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
55,261 |
|
|
187,033 |
|
|
|
|
|
|
|
|
|
Total partners’ capital (deficit) |
|
|
576,200 |
|
|
(4,053,645) |
|
|
|
|
|
|
|
|
|
Total liabilities and partners’ capital (deficit) |
|
$ |
2,470,930 |
|
$ |
1,767,724 |
|
* Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
-18-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
For the Years Ended March 31, |
|
||||
|
|
2017 |
|
2016* |
|
||
Operations: |
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
Other |
|
$ |
— |
|
$ |
300 |
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
— |
|
|
300 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
General and administrative |
|
|
448,702 |
|
|
246,292 |
|
General and administrative-related parties |
|
|
281,597 |
|
|
305,696 |
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
730,299 |
|
|
551,988 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(730,299) |
|
|
(551,688) |
|
Income from discontinued operations |
|
|
5,360,144 |
|
|
10,762,208 |
|
|
|
|
|
|
|
|
|
Net income |
|
|
4,629,845 |
|
|
10,210,520 |
|
|
|
|
|
|
|
|
|
Less: net loss (income) attributable to noncontrolling interests from discontinued operations |
|
|
131,772 |
|
|
(3,527,228) |
|
|
|
|
|
|
|
|
|
Net income attributable to Independence Tax Credit Plus L.P. IV |
|
$ |
4,761,617 |
|
$ |
6,683,292 |
|
|
|
|
|
|
|
|
|
Loss from operations – limited partners |
|
$ |
(722,996) |
|
$ |
(546,171) |
|
Income from discontinued operations – limited partners |
|
|
5,436,997 |
|
|
7,162,630 |
|
|
|
|
|
|
|
|
|
Net income – limited partners |
|
$ |
4,714,001 |
|
$ |
6,616,459 |
|
|
|
|
|
|
|
|
|
Number of BACs outstanding |
|
|
45,844 |
|
|
45,844 |
|
|
|
|
|
|
|
|
|
Loss from operations- limited partners- per weighted average BAC |
|
$ |
(15.77) |
|
$ |
(11.91) |
|
Income from discontinued operations- limited partners- per weighted average BAC |
|
|
118.60 |
|
|
156.24 |
|
|
|
|
|
|
|
|
|
Net income - limited partners- per weighted average BAC |
|
$ |
102.83 |
|
$ |
144.33 |
|
* Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
-19-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 2017 AND 2016
|
|
|
|
|
Limited |
|
General |
|
Noncontrolling |
|
|||
|
|
Total |
|
Partners |
|
Partner |
|
Interests |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ (deficit) capital – April 1, 2015 |
|
$ |
(10,308,898) |
|
$ |
(10,428,532) |
|
$ |
(495,438) |
|
$ |
615,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
10,210,520 |
|
|
6,616,459 |
|
|
66,833 |
|
|
3,527,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions |
|
|
(4,091,448) |
|
|
— |
|
|
— |
|
|
(4,091,448) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions- write-off of related party debt |
|
|
136,181 |
|
|
— |
|
|
— |
|
|
136,181 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ (deficit) capital – March 31, 2016 |
|
|
(4,053,645) |
|
|
(3,812,073) |
|
|
(428,605) |
|
|
187,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
4,629,845 |
|
|
4,714,001 |
|
|
47,616 |
|
|
(131,772) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ capital (deficit) – March 31, 2017 |
|
$ |
576,200 |
|
$ |
901,928 |
|
$ |
(380,989) |
|
$ |
55,261 |
|
See accompanying notes to consolidated financial statements.
-20-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
For the Years Ended March 31, |
|
||||
|
|
2017 |
|
2016 |
|
||
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income |
|
$ |
4,629,845 |
|
$ |
10,210,520 |
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
5,415 |
|
|
30,272 |
|
Amortization of debt issuance costs |
|
|
3,712 |
|
|
110,991 |
|
Gain on sale of property |
|
|
(5,223,004) |
|
|
(10,604,339) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Decrease (increase) in cash held in escrow |
|
|
11,004 |
|
|
(31,211) |
|
Decrease in due from local general partners and affiliates |
|
|
— |
|
|
427 |
|
(Increase) decrease in other assets |
|
|
(233,413) |
|
|
29,853 |
|
Increase in accounts payable |
|
|
55,122 |
|
|
33,101 |
|
Increase in accrued interest payable |
|
|
2,209 |
|
|
2,411 |
|
(Decrease) increase in security deposit payable |
|
|
(802) |
|
|
13,916 |
|
Increase in due to local general partners and affiliates |
|
|
— |
|
|
96,261 |
|
Increase in due from general partner and affiliates |
|
|
(56,111) |
|
|
— |
|
Decrease in due to general partner and affiliates |
|
|
(3,692) |
|
|
(2,320,806) |
|
|
|
|
|
|
|
|
|
Total adjustments |
|
|
(5,439,560) |
|
|
(12,639,124) |
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(809,715) |
|
|
(2,428,604) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
(Increase) decrease in cash held in escrow |
|
|
(15,206) |
|
|
18,872 |
|
Acquisition of property and equipment |
|
|
— |
|
|
(66,498) |
|
Proceeds from sale of property |
|
|
2,123,462 |
|
|
10,100,000 |
|
Costs paid relating to sale of property |
|
|
— |
|
|
(3,189,917) |
|
Net repayments from local general partners and affiliates |
|
|
105,224 |
|
|
— |
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
|
2,213,480 |
|
|
6,862,457 |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Repayments of mortgage notes |
|
|
(163,373) |
|
|
(181,693) |
|
Distributions to noncontrolling interests |
|
|
— |
|
|
(4,091,448) |
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(163,373) |
|
|
(4,273,141) |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
1,240,392 |
|
|
160,712 |
|
Cash and cash equivalents at beginning of year |
|
|
867,364 |
|
|
706,652 |
|
Cash and cash equivalents at end of year |
|
$ |
2,107,756 |
|
$ |
867,364 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flows information: |
|
|
|
|
|
|
|
Cash paid during the year for interest |
|
$ |
133,543 |
|
$ |
282,674 |
|
|
|
|
|
|
|
|
|
Summarized below are the components of the gain on sale of property: |
|
|
|
|
|
|
|
Proceeds from sale of property |
|
$ |
(2,123,462) |
|
$ |
(10,100,000) |
|
Costs paid relating to sale of property |
|
|
— |
|
|
3,189,917 |
|
Property and equipment, net of accumulated depreciation |
|
|
125,814 |
|
|
946,193 |
|
Other assets |
|
|
298,500 |
|
|
135,180 |
|
Cash held in escrow |
|
|
401,180 |
|
|
174,430 |
|
Accounts payable and other liabilities |
|
|
(104,217) |
|
|
(110,193) |
|
Mortgage payable |
|
|
(3,106,769) |
|
|
(4,388,430) |
|
Accrued interest |
|
|
(8,590) |
|
|
(69,244) |
|
Security deposits |
|
|
(132,033) |
|
|
(36,198) |
|
Due to local general partners and affiliates |
|
|
(491,572) |
|
|
(323,993) |
|
Due to general partners and affiliates |
|
|
(81,855) |
|
|
(138,182) |
|
Interest rate swap |
|
|
— |
|
|
(20,000) |
|
Capital contributions (distributions) |
|
|
— |
|
|
136,181 |
|
See accompanying notes to consolidated financial statements.
-21-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
Independence Tax Credit Plus L.P. IV (a Delaware limited partnership) (the “Partnership”) was organized on February 22, 1995 and commenced its public offering on July 6, 1995. The general partner of the Partnership is Related Independence L.L.C., a Delaware limited liability company (the “General Partner”). Centerline Holding Company (“Centerline”) was the ultimate parent of Centerline Affordable Housing Advisors LLC (“CAHA”), the sole member of the Manager of the General Partner. On April 15, 2015, Alden Torch Financial LLC, a newly formed limited liability company (“ATF”), became the indirect owner of 100% of the equity interests in Centerline. Since April 15, 2015, ATF has been the ultimate parent and indirect owner of 100% of the equity interest in CAHA.
The Partnership’s business is primarily to invest in other partnerships (“Local Partnerships,” “subsidiaries” or “subsidiary partnerships”) owning leveraged apartment complexes (“Apartment Complexes” or “Properties”) that were eligible for the low-income housing tax credit (“Tax Credit”) enacted in the Tax Reform Act of 1986, some of which may have also been eligible for the historic rehabilitation tax credit. Qualified Beneficial Assignment Certificates (“BACs”) holders were entitled to Tax Credits over the period of the Partnership’s entitlement to claim Tax Credits (for each Property, generally ten years from the date of investment or, if later, the date the Property was placed in service; referred to herein as the “Credit Period”) with respect to each Apartment Complex.
The Partnership had originally acquired limited partnership interests in fourteen subsidiary partnerships, all of which have been, or were, consolidated. The Partnership does not anticipate acquiring limited partnership interests in additional subsidiary partnerships. The Partnership’s investment in the last remaining Local Partnerships represents a 98.99% interest, in such Partnership.
The Partnership was authorized to issue a total of 100,000 ($100,000,000) Beneficial Assignment Certificates (“BACs”) which have been registered with the Securities and Exchange Commission for sale to the public. Each BAC represents all of the economic and virtually all of the ownership rights attributable to a limited partnership interest. The Partnership had raised a total of $45,844,000 representing 45,844 BACs.
NOTE 2 – Summary of Significant Accounting Policies
a) Basis of Accounting
For financial reporting purposes, the Partnership’s fiscal year ends on March 31. All subsidiaries have fiscal years ending December 31. Accounts of the subsidiaries have been adjusted for intercompany transactions from January 1 through March 31. The Partnership’s fiscal year ends March 31 in order to allow adequate time for the subsidiaries’ financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
b) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership and its two and five subsidiary partnerships for the years ended March 31, 2017 and 2016, respectively, in which the Partnership is a limited partner. Through the rights of the Partnership and/or an affiliate of the General Partner, which affiliate has a contractual obligation to act on behalf of the Partnership, to remove the general partner of the subsidiary local partnerships (the “Local General Partner”) and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation.
Loss (income) attributable to noncontrolling interests amounted to approximately $132,000 and $(3,527,000) for the years ended March 31, 2017 and 2016, respectively. The Partnership’s investment in each subsidiary is equal to the respective subsidiary’s partners’ equity less noncontrolling interest capital, if any.
-22-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and investments in short-term highly liquid investments purchased with original maturities of three months or less.
d) Cash Held in Escrow
Cash held in escrow represent reserves established pursuant to the debt agreements as described in Note 5, as well as deposits that are required by statutory law to be segregated.
e) Property and Equipment
Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. The determination of asset impairment is a two-step process. First, management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis. If such estimates are below depreciated cost, management estimates fair value (using the fair market value based on comparative sales). The property is considered to be impaired when the depreciated cost exceeds estimated fair value.
At the time management commits to a plan to dispose of a specific asset, said asset is adjusted to the lower of carrying amount or fair value less costs to sell. These assets are classified as property and equipment-held for sale and are not depreciated. Property and equipment that are held for sale are included in discontinued operations. The Partnership’s last remaining investment has been classified as property and equipment-held for sale at March 31, 2017.
f) Revenue Recognition
Rental income is earned under standard residential operating leases and is typically due the first day of each month, but can vary by property due to the terms of the tenant leases. Rental income is recognized when earned and charged to tenants’ accounts receivable if not received by the due date. Rental payments received in advance of the due date are deferred until earned. Rental subsidies are recognized as rental income during the month in which they are earned.
Other revenues are recorded when earned and consist of the following items: Interest income earned on cash and cash equivalent balances and cash held in escrow balances, income from forfeited security deposits, late charges, laundry and vending income and other rental related items.
g) Income Taxes
The Partnership is not a tax paying entity for income tax purposes and, accordingly, no provision has been made for income taxes. The Partnership may be subject to state and local taxes in jurisdictions in which it operates.
The Partnership has no material liability for unrecognized tax benefits and no material change to the beginning partners’ capital of the Partnership. As of and during the year ended March 31, 2017, the Partnership did not have a liability for any unrecognized tax benefits or related interest and penalties.
The Partnership relies on a 2% safe harbor established by an Internal Revenue Service (“IRS”) regulation to avoid being characterized as a “publicly-traded partnership” that is taxed as a corporation.
Income tax returns for the years prior to 2013 are no longer subject to examination by tax authorities.
-23-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
h) Offering Costs
Costs incurred to sell BACs, including brokerage fees and the nonaccountable expense allowance, are considered selling and offering expenses. These costs are charged directly to limited partners’ capital.
i) Deferred Costs
Deferred costs and fees incurred in connection with the purchase of interests in certain subsidiary partnerships have been capitalized as property costs and are being amortized over the lives of the related properties.
j) Loss Contingencies
The Partnership records loss contingencies as a charge to income when information becomes available which indicates that it is probable that an asset has been impaired or a liability has been incurred as of the date of the consolidated financial statements and the amount of loss can be reasonably estimated.
k) Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
l) Recently Issued Accounting Pronouncements
In March of 2016, the Financial Accounting Standards Board issued Accounting Standards Update ASU No. 2016-09, “Compensation – Stock Compensation: Improvements to Employee Shared Based Payment Accounting: Topic 718” (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of how companies account for share-based compensation, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statements of cash flows. ASU 2016-09 is affective for annual periods beginning after December 15, 2016 and early adoption is permitted. The new guidance will not have an impact on the Partnership’s consolidated financial statements.
In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02 “Leases – Topic 842” (“ASU 2016-02”). ASU 2016-02 requires recognition of lease assets and lease liabilities by lessees for all leases greater than one year in duration and classified as operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and for interim periods within that fiscal year. The new guidance will not have an impact on the Partnership’s consolidated financial statements.
In May 2015, the FASB issued Accounting Standards Update No. 2015-07 ("ASU 2015-07") regarding ASC Topic 820 "Fair Value Measurement: Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)." The amendments in ASU 2015-07 remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also limit certain disclosures to investments for which the entity has elected to measure at fair value using the net asset value per share practical expedient. The amendments in ASU 2015-07 are effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The amendments should be applied retrospectively by removing from the fair value hierarchy any investments for which fair value is measured using the net asset value per share practical expedient. The new guidance did not have an impact on the Partnership’s consolidated financial statements.
On April 7, 2015, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2015-03, which changed the presentation of deferred financing costs. The new standard requires these costs to be capitalized and presented as a reduction of the carrying amount of the associated debt. The new guidance required the amortization of the deferred financing costs to be reported as interest expense. The ASU was effective for periods beginning after December
-24-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
15, 2015 and required retrospective application. As such, the net amount of deferred financing costs amounting to $17,290 and $85,761 at March 31, 2017 and 2016, respectively, have been reclassified and offset against the related mortgage payable. The result of implementing the ASU had no effect on 2016 net income as previously reported.
In February 2015, the Financial Accounting Standards Board issued (“ASU”) 2015-02, Consolidation (Topic 810): Amendments to the consolidation Analysis. The ASU modifies existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of variable interests for fees paid to decision makers or service providers, (iii) the effect of fee arrangements and related parties on the primary beneficiary determination, and (iv) certain investment funds. These changes are expected to limit the number of consolidation models and place more emphasis on risk of loss when determining a controlling financial interest. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2015 and early adoption is permitted. The new guidance did not have an impact on the Partnership’s consolidated financial statements.
In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08 “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 provides narrower definition of discontinued operations than under previous GAAP. The standard update requires that only disposal of components of an entity (or group of components) that represent a strategic shift that has or will have a major effect on the reporting entity’s operations are reported in the financial statements as discontinued operations. The standard also provides guidance on the financial statement presentation and disclosures of discontinued operations. The ASU is effective prospectively for disposals (or classifications of business as held-for-sale) or components of an entity that occur in annual or interim periods beginning after December 15, 2014. As such, the net amount of assets amounting to $1,159,483 and net amount of liabilities amounting to $5,746,729 at March 31, 2016 have been reclassified as discontinued operations. The result of implementing the ASU had no effect on 2016 net income as previously reported.
In May 2014, FASB and the IASB issued a new joint revenue recognition standard that supersedes nearly all US GAAP guidance on revenue recognition. The core principal of the standard is that revenue recognition should depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard is effective for the Partnership for the fiscal year beginning April 1, 2018 and the effects of the standard on the Partnership’s consolidated financial statements are not known at this time.
In August 2014, FASB issued ASU No 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. This standard update provides guidance about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as going concern and to provide related footnote disclosure. The new guidance is effective for all annual and interim periods ending after December 16, 2016. The new guidance did not have an impact on the Partnership’s consolidated financial statements.
NOTE 3 – Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments (all of which are held for nontrading purposes) for which it is practicable to estimate that value:
Cash and Cash Equivalents and Cash Held in Escrow
The Partnership’s cash and cash equivalents include cash on hand and deposits in banks. Due to their short term nature, the carrying amounts reported in the condensed consolidated balance sheets approximate fair value.
Accounts Payable and Other Liabilities
The carrying amounts approximate fair value due to their short-term nature.
-25-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
Mortgage Notes Payable and Accrued Interest
The Partnership has categorized the fair value of financial assets and liabilities based upon the fair value hierarchy specified by ASC Topic 820, Fair Value Measurements (“ASC 820”). This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). This standard provides for a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: |
Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
Level 2: |
Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
Level 3: |
Unobservable inputs that reflect the Partnership’s own assumptions. |
The estimated fair value of mortgage notes payable has been determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.
|
|
At March 31, 2017 |
|
At March 31, 2016 |
|
||||||||
|
|
Carrying |
|
|
|
|
Carrying |
|
|
|
|
||
|
|
Amount |
|
Fair Value |
|
Amount |
|
Fair Value |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage notes |
|
$ |
1,544,366 |
|
$ |
1,360,695 |
|
$ |
4,879,265 |
|
$ |
3,794,072 |
|
For the mortgage notes, fair value is estimated using Level 3 inputs and calculated using present value cash flow models based on a discount rate. It was determined that the Tender Option Bond market, through which these bonds have been securitized in the past, continued to see a dramatic slowdown with limited liquidity and significantly reduced transaction levels. To assist in valuing these notes, the Partnership held separate discussions with various third party investment banks who are leaders in the municipal bond business. The discussions produced assumptions that were based on market conditions as well as the credit quality of the underlying property partnerships, which held the mortgage notes, to determine what discount rates to utilize.
-26-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
Due to General Partner and Affiliates and Due to/from Local General Partners and Affiliates
Management believes it is not practical to estimate the fair value of due to General Partner and affiliates and due to/from Local General Partners and affiliates because market information on such obligations is not currently available.
NOTE 4 – Property and Equipment
The components of property and equipment from discontinued operations and their estimated useful lives are as follows:
|
|
|
|
|
|
|
|
Estimated |
|
||
|
|
March 31, |
|
Useful Lives |
|
||||||
|
|
2017 |
|
2016 |
|
(Years) |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
396,383 |
|
$ |
449,082 |
|
|
- |
|
|
Building and improvements |
|
|
1,836,587 |
|
|
7,046,127 |
|
27.5 |
- |
40 |
|
Furniture and fixtures |
|
|
102,331 |
|
|
632,751 |
|
3 |
- |
10 |
|
|
|
|
2,335,301 |
|
|
8,127,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated depreciation |
|
|
(2,284,168) |
|
|
(7,946,808) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
51,133 |
|
$ |
181,152 |
|
|
|
|
|
Depreciation expense for the discontinued property and equipment for the years ended March 31, 2017 and 2016 amounted to $4,205 and $29,062, respectively. During the year ended March 31, 2017, there was a decrease in accumulated depreciation on dispositions in the amount of $5,666,845.
Impairments
During the years ended March 31, 2017 and 2016, the Partnership performed a fair value analysis on all of its property investments. Impairment of assets is a two-step process. First, management estimated amounts recoverable through future operations and sale of the property on an undiscounted basis. If such estimates were below depreciated cost, property investments themselves were reduced to estimated fair value (using the fair market value based on comparative sales). As of December 31, 2012, all Local Partnerships had completed their Credit Periods and Compliance Periods. Therefore, a 5-year cash flow projection was used, as this period is indicative of the average holding period left on the remaining investments. Based on this analysis, the Partnership did not record any loss on impairment of assets or a reduction to estimated value for the year ended March 31, 2017. Impairments have been estimated using Level 3 inputs.
During the year ended March 31, 2017, the Partnership has not recorded any loss on impairment of assets. Through March 31, 2017, the Partnership has recorded approximately $35,686,000 as an aggregate loss on impairment of property.
-27-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
NOTE 5 – Cash Held in Escrow
Cash held in escrow from operations consists of the following:
|
|
March 31, |
|
||||
|
|
2017 |
|
2016 |
|
||
|
|
|
|
|
|
|
|
Purchase price payments* |
|
$ |
82,119 |
|
$ |
82,119 |
|
|
|
|
|
|
|
|
|
Total cash held in escrow |
|
$ |
82,119 |
|
$ |
82,119 |
|
*Represents amounts to be paid to seller upon meeting specified rental achievement criteria.
Cash held in escrow from discontinued operations consist of the following:
|
|
March 31, |
||||
|
|
2017 |
|
2016 |
||
|
|
|
|
|
|
|
Real estate taxes, insurance and other |
|
$ |
8,532 |
|
$ |
155,289 |
Reserve for replacements |
|
|
120,000 |
|
|
237,386 |
Tenant security deposits |
|
|
14,391 |
|
|
147,226 |
|
|
|
|
|
|
|
Total cash held in escrow |
|
$ |
142,923 |
|
$ |
539,901 |
NOTE 6 – Deferred Costs
The components of deferred costs and their periods of amortization from discontinued operating assets are as follows:
|
|
March 31, |
|
|
|
|
|
||||
|
|
2017 |
|
2016 |
|
Period |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
Tax credit fees |
|
$ |
33,281 |
|
$ |
33,281 |
|
15 |
through |
30 |
years |
Syndication fees (non-amortizable) |
|
|
6,500 |
|
|
6,500 |
|
|
|
|
|
Less: Accumulated amortization |
|
|
(24,363) |
|
|
(23,153) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred costs |
|
$ |
15,418 |
|
$ |
16,628 |
|
|
|
|
|
Amortization expense from operations for the years ended March 31, 2017 and 2016 amounted to $1,210 and $1,210, respectively. Amortization expense for each of the next five years will approximate $1,210.
-28-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
NOTE 7 – Mortgage Notes Payable
The mortgage loans from discontinued operations are payable in aggregate monthly installments of approximately $8,000 including principal and interest with rates varying from 1% to 8.13% per annum and have maturity dates ranging from 2026 through 2046. The remaining subsidiary partnership’s mortgage note payable is collateralized by the land and buildings of the subsidiary partnership, subject to performance under Housing Assistance Contract Number 96-493-204 and without further recourse to the Partnership. Deed of trust is held by the Washington State Department of the Community and by Washington State Community Reinvestment Association.
Accrued interest from discontinued operations amounted to approximately $57,000 and $63,220 as of March 31, 2017 and 2016, respectively. Interest accrues on all mortgage loans, which include primary and secondary loans. Certain secondary loans have provisions such that interest is accrued but not payable until a future date. The Partnership anticipates the payment of accrued interest on the secondary loans (which make up the majority of the accrued interest payable amount and which have been accumulating since the Partnership’s investment in the respective Local Partnership) will be made from future refinancings or sales proceeds of the respective Local Partnership or through assumption by the buyer upon sale of the Partnership’s interest in the remaining Local Partnership. In addition, the remaining Local Partnership’s mortgage notes are collateralized by the land and buildings of such Local Partnership, and are without further recourse to the Partnership.
The mortgage agreements generally require monthly deposits to replacement reserves. Monthly deposits of approximately $1,000 from discontinued operations were made to escrow accounts for real estate taxes, hazard and mortgage insurance and other expenses.
Annual principal payments on the permanent debt requirements for mortgage notes payable from discontinued operations for each of the next five calendar years and thereafter are as follows:
Years Ending December 31, |
|
Amount |
|
|
|
|
|
|
|
2017 |
|
$ |
46,647 |
|
2018 |
|
|
49,784 |
|
2019 |
|
|
53,179 |
|
2020 |
|
|
56,852 |
|
2021 |
|
|
61,872 |
|
Thereafter |
|
|
1,276,032 |
|
|
|
|
1,544,366 |
|
Less unamortized debt issuance costs |
|
|
(17,290) |
|
|
|
|
|
|
|
|
$ |
1,527,076 |
|
NOTE 8 – Related Party Transactions
An affiliate of the General Partner has a 0.01% interest as a special limited partner in the remaining Local Partnership.
Pursuant to the Partnership Agreement and the remaining Local Partnership Agreement, the General Partner, the Local General Partner and their respective affiliates receive their pro-rata share of profits, losses and tax credits.
-29-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
A) Related Party Expenses
Expenses incurred to related parties from operations for the years ended March 31, 2017 and 2016 were as follows:
|
|
Years Ended March 31, |
|
||||
|
|
2017 |
|
2016* |
|
||
Partnership management fees (a) |
|
$ |
59,712 |
|
$ |
108,979 |
|
Expense reimbursement (b) |
|
|
221,885 |
|
|
196,717 |
|
Total general and administrative-General Partners |
|
$ |
281,597 |
|
$ |
305,696 |
|
*Reclassified for comparative purposes.
Expenses incurred to related parties from discontinued operations for the years ended March 31, 2017 and 2016 were as follows:
|
|
Years Ended March 31, |
|
||||
|
|
2017 |
|
2016* |
|
||
Local administrative fee (c) |
|
$ |
9,160 |
|
$ |
14,533 |
|
Total general and administrative-General Partner |
|
|
9,160 |
|
|
14,533 |
|
Property management fees incurred to affiliates of the subsidiary partnerships' general partners |
|
|
79,047 |
|
|
278,454 |
|
|
|
|
|
|
|
|
|
Total general and administrative-related parties |
|
$ |
88,207 |
|
$ |
292,987 |
|
*Reclassified for comparative purposes.
(a) |
The General Partner is entitled to receive a partnership management fee, after payment of all Partnership expenses, which together with the annual local administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership Agreement), for administering the affairs of the Partnership. Subject to the foregoing limitation, the partnership management fee will be determined by the General Partner in its sole discretion based upon its review of the Partnership’s investments. Unpaid partnership management fees for any year are accrued without interest and will be payable out of sales or refinancing proceeds only to the extent of available funds after payments on all Partnership liabilities have been made other than those owed to the General Partner and its affiliates. Partnership management fees owed to the General Partner amounting to approximately $— and $12,000 were accrued and unpaid as of March 31, 2017 and 2016, respectively. Current year partnership management fees may be paid out of operating reserves or refinancing and sales proceeds. During the year ended March 31, 2016, the Partnership paid approximately $2,373,000 of deferred management fees to the General Partner from sale proceeds. During the year ended March 31, 2017, the Partnership prepaid 2017 management fees to the General Partner in the amount of $7,365, this prepayment is included in Due from general partners and affiliates in the consolidated balance sheet. |
(b) |
The Partnership reimburses the General Partner and its affiliates for actual Partnership operating expenses incurred by the General Partner and its affiliates on the Partnership’s behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partner performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships’ performance. During the year ended March 31, 2017, the Partnership prepaid 2017 operating expenses to the General Partner in the amount of $48,746, this prepayment is included in Due from general partners and affiliates in the consolidated balance sheet. |
(c) |
Independence SLP IV L.P., a special limited partner of the subsidiary partnerships, was entitled to receive a local administrative fee of up to $5,000 per year from such subsidiary partnership. Local administrative fees owed to Independence SLP IV L.P. amounting to approximately $0 and $73,000 were accrued and unpaid as of March 31, 2017 and 2016, respectively. During the year ended March 31, 2016, accrued administrative fees owed to |
-30-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
Independence SLP IV L.P. from two Local Partnerships were forgiven. These fees amounted to $136,181, and are included as contributions - write-off of related party debt in the consolidated statements of changes in partners’ capital (deficit). |
As of March 31, 2017 and 2016, the Partnership owed $0 and $1,000, respectively, to the General Partner for expenses it paid on the Partnership’s behalf.
B) Due to/from Local General Partners and Affiliates
Due to Local General Partners and affiliates from discontinued operations consists of the following which are reported as a component of other liabilities held for sale in the accompanying consolidated balance sheets:
|
|
March 31, |
|
||||
|
|
2017 |
|
2016 |
|
||
Development fee payable |
|
$ |
— |
|
$ |
481,597 |
|
Operating advances |
|
|
220,734 |
|
|
125,485 |
|
|
|
|
|
|
|
|
|
|
|
$ |
220,734 |
|
$ |
607,082 |
|
NOTE 9 – Taxable Net Income
A reconciliation of net income attributable to Independence Tax Credit Plus L.P. IV to net (loss) income per tax return is as follows:
|
|
Years Ended March 31, |
|
||||
|
|
2017 |
|
2016 |
|
||
|
|
|
|
|
|
|
|
Net income attributable to Independence Tax Credit Plus L.P. IV |
|
$ |
4,761,617 |
|
$ |
6,683,292 |
|
|
|
|
|
|
|
|
|
Differences between depreciation and amortization expense for financial reporting purposes and income tax purposes |
|
|
(568,750) |
|
|
(876,364) |
|
|
|
|
|
|
|
|
|
Differences resulting from Partnership having a different fiscal year for tax and financial reporting purposes |
|
|
— |
|
|
708 |
|
|
|
|
|
|
|
|
|
Tax exempt interest income |
|
|
(10) |
|
|
(18) |
|
|
|
|
|
|
|
|
|
Difference between gain on sale for financial reporting purposes and gain on sale for income tax purposes |
|
|
(10,010,436) |
|
|
(4,843,016) |
|
|
|
|
|
|
|
|
|
Other, including accruals for financial reporting purposes not deductible for tax purposes until paid |
|
|
1,234,917 |
|
|
1,373,131 |
|
|
|
|
|
|
|
|
|
Net (loss) income per income tax return |
|
$ |
(4,582,662) |
|
$ |
2,337,733 |
|
No provision for income taxes related to the operations of the Partnership has been included in the accompanying consolidated financial statements because, as a partnership, it is not subject to federal or material state income taxes and the tax effect of its activities accrues to the BACs holders. Net income for financial statement purposes may differ significantly from taxable income reportable to BACs holders as a result of differences between the tax bases and financial
-31-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
reporting bases of assets and liabilities and the taxable income allocation requirements under its Partnership Agreement. In the event of an examination of the Partnership’s tax return, the tax liability of the partners could be changed if an adjustment in the Partnership’s income is ultimately sustained by the taxing authorities. At March 31, 2017, the tax basis net assets exceeded the financial statement net assets by approximately $1,500,000 due to depreciation differences, impairments of property and equipment, and related party accruals.
NOTE 10 – Sale of Properties
The Partnership has developed a plan to dispose of its last remaining investment. It is anticipated that this process will take from six to twelve months. During the fiscal year ended March 31, 2017, the Partnership sold its limited partnership interest in one Local Partnerships. Through March 31, 2017, the Partnership has sold its limited partnership interest in nine Local Partnerships, and the property and the related assets and liabilities of four Local Partnerships have been sold. There can be no assurance as to when the Partnership will dispose of its remaining investment or the amount of proceeds which may be received. However, the proceeds from such sales received by the Partnership from the remaining investment will not be sufficient to return to the limited partners their original investments. All gains and losses on sales are included in discontinued operations.
On September 21, 2016, the Partnership sold its limited partnership interest in Bakery Village Urban Renewal Associates, L.P. (“Bakery Village”) to an affiliate of the Local General Partner for a sales price of approximately $2,200,000 which included the repayment of accrued administrative fees owed to Independence SLP L.P in the amount of $79,000. The sale resulted in a gain of approximately $5,247,000 resulting from the write-off of the deficit basis in the Local Partnership plus the cash received by the Partnership, which was recorded during the quarter ended September 30, 2016. An adjustment to the gain of approximately $24,000 was recorded during the quarter ended March 31, 2017 resulting in an overall gain of approximately $5,223,000.
On July 27, 2015, the Partnership sold its limited partnership interest in First African Kanisa Apartments (“First African”) to an affiliate of the Local General Partner for a sales price of $1. The sale resulted in a gain of approximately $1,603,000 resulting from the write-off of the deficit basis in the Local Partnership of the same amount at the date of the sale, which was recorded during the quarter ended September 30, 2015. An adjustment to the gain of approximately $88,000 was recorded during the quarter ended March 31, 2016 resulting in an overall gain of $1,515,000. During the year ended March 31, 2016, accrued administrative fees owed to Independence SLP IV L.P. from two Local Partnerships were forgiven. These fees amounted to $77,807, and are included as contributions write-off of related party debt in the consolidated statements of changes in partners’ (deficit) capital.
On June 1, 2015, the Partnership sold its limited partnership interest in KSD Village Apartments Phase II, Ltd. (“KSD Village”) to an unaffiliated third party purchaser for a sales price of $1. The sale resulted in a gain of approximately $293,000 resulting from the write-off of the deficit basis in the Local Partnership of the same amount at the date of the sale, which was recorded during the quarter ended June 30, 2015. An adjustment to the gain of approximately $61,000 was recorded during the quarter ended March 31, 2016 resulting in an overall gain of $232,000. During the year ended March 31, 2016, accrued administrative fees owed to Independence SLP IV L.P. from two Local Partnerships were forgiven. These fees amounted to $58,374, and are included as contributions write-off of related party debt in the consolidated statements of changes in partners’ (deficit) capital.
On June 15, 2015, the property and the related assets and liabilities of Kaneohe Limited Partnership (“Kaneohe”) were sold to an unaffiliated third party purchaser for a sales price of $10,100,000. The Partnership received $2,893,000 as a distribution from this sale after the repayment of the mortgages, other liabilities and closing costs of approximately $7,207,000. The sale resulted in a gain of approximately $4,587,000 which was recorded during the quarter ended June 30, 2015. An adjustment to the gain of approximately $4,073,000 was recorded during the quarter ended September 30, 2015 due to a distribution from this sale in the form of a Security Agreement to the Local General Partner in the amount
-32-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
of $4,069,000. Additional adjustments to the gain of approximately $1,000 and $196,000 were recorded during the quarter ended March 31, 2016 and December 31, 2015, respectively, resulting in an overall gain of $8,857,000.
NOTE 11 – Assets Held for Sale
On September 12, 2016 Fawcett Street Limited Partnership (“Fawcett”) entered into a sale agreement with Shelter Resources Inc., an unaffiliated third party purchaser, to sell its property and the related assets and liabilities for a sale price of $2,125,000. The sale is contingent on the fulfillment of due diligence and financing obligations by buyer and seller on or before the closing date. It is anticipated that this process will take from six to twelve months. The sale is expected to result in a gain of approximately $3,500,000.
NOTE 12 – Discontinued Operations
The following table summarizes the financial position and results of operations of the Local Partnerships that are classified as discontinued operations. For the year ended March 31, 2017, Fawcett was classified as held for sale and Bakery Village, which was sold during the year ended March 31, 2017, was classified as discontinued operations in the consolidated financial statements. For the year ended March 31, 2016, Kaneohe, KSD Village and First African, which were sold during the year ended March 31, 2016, Bakery Village and Fawcett in order to present comparable results to the year ended March 31, 2016, were classified as discontinued operations in the consolidated financial statements.
|
|
Years Ended March 31, |
|
||||
|
|
2017 |
|
2016* |
|
||
Assets |
|
|
|
|
|
|
|
Property and equipment, at cost, less accumulated depreciation |
|
$ |
51,133 |
|
$ |
181,152 |
|
Cash and cash equivalents |
|
|
266,544 |
|
|
352,186 |
|
Cash held in escrow |
|
|
142,923 |
|
|
539,901 |
|
Other assets |
|
|
19,944 |
|
|
86,244 |
|
Total assets |
|
$ |
480,544 |
|
$ |
1,159,483 |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Mortgage notes payable |
|
$ |
1,527,076 |
|
$ |
4,792,348 |
|
Accounts payable and other liabilities |
|
|
12,071 |
|
|
63,006 |
|
Accrued interest payable |
|
|
56,839 |
|
|
64,372 |
|
Security deposits payable |
|
|
14,391 |
|
|
147,226 |
|
Due to local general partners and affiliates |
|
|
220,734 |
|
|
607,082 |
|
Due to general partners and affiliates |
|
|
— |
|
|
72,695 |
|
Total liabilities |
|
$ |
1,831,111 |
|
$ |
5,746,729 |
|
-33-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
Consolidated Statements of Discontinued Operations:
|
|
For the Years Ended March 31, |
|
||||
|
|
2017 |
|
2016* |
|
||
Revenues |
|
|
|
|
|
|
|
Rental income |
|
$ |
1,291,947 |
|
$ |
2,270,335 |
|
Other |
|
|
58,949 |
|
|
80,496 |
|
Gain on sale of property |
|
|
5,223,004 |
|
|
10,604,339 |
|
Total revenue |
|
|
6,573,900 |
|
|
12,955,170 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
General and administrative |
|
|
375,164 |
|
|
564,609 |
|
General and administrative-related parties |
|
|
88,207 |
|
|
292,987 |
|
Repairs and maintenance |
|
|
251,691 |
|
|
425,843 |
|
Operating and other |
|
|
230,010 |
|
|
324,192 |
|
Real estate taxes |
|
|
65,085 |
|
|
89,665 |
|
Insurance |
|
|
58,719 |
|
|
95,277 |
|
Interest |
|
|
139,465 |
|
|
370,117 |
|
Depreciation and amortization |
|
|
5,415 |
|
|
30,272 |
|
Total expenses |
|
|
1,213,756 |
|
|
2,192,962 |
|
|
|
|
|
|
|
|
|
Income from discontinued operations |
|
|
5,360,144 |
|
|
10,762,208 |
|
|
|
|
|
|
|
|
|
Noncontrolling interest in (income) loss of subsidiaries from discontinued operations |
|
|
131,772 |
|
|
(3,527,228) |
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations – Independence Tax Credit Plus L.P. IV |
|
$ |
5,491,916 |
|
$ |
7,234,981 |
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations – limited partners |
|
$ |
5,436,997 |
|
$ |
7,162,630 |
|
|
|
|
|
|
|
|
|
Number of BACs outstanding |
|
|
45,844 |
|
|
45,844 |
|
|
|
|
|
|
|
|
|
Income from discontinued operations – limited partners- per weighted average BAC |
|
$ |
118.60 |
|
$ |
156.24 |
|
*Reclassified for comparative purposes.
Cash flows from discontinued operations:
|
|
For the Years Ended March 31, |
|
||||
|
|
2017 |
|
2016* |
|
||
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
$ |
(399,788) |
|
$ |
8,052,135 |
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
$ |
477,518 |
|
$ |
780,737 |
|
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
$ |
(163,372) |
|
$ |
(8,675,174) |
|
*Reclassified for comparative purposes.
-34-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
NOTE 13 – Commitments and Contingencies
a) Liquidity
At March 31, 2017, the Partnership’s assets exceeded liabilities by approximately $576,000 and for the year ended March 31, 2017, the Partnership recognized net income of approximately $4,630,000, including gain on sale of properties of approximately $5,223,000. The Partnership is planning to dispose of its remaining investment. It is anticipated that this process will continue to take from six to 12 months. However, the proceeds from such sales received by the Partnership from the remaining investment will not be sufficient to return to the limited partners their original investments.
All of the mortgage payable balance of $1,544,366 and the accrued interest payable balance of $57,991 is of a nonrecourse nature and secured by the remaining property. The Partnership is currently in the process of developing a plan to dispose of its last remaining investment. Historically, the mortgage notes and accrued interest thereon have been assumed by the buyer in instances of sales of the Partnership’s interest or have been paid off from sales proceeds in instances of sales of the property. In most instances when the Partnership’s interest was sold and liabilities were assumed, the Partnership recognized a gain from the sale. The Partnership owns the limited partner interest in its remaining investment, and as such has no financial responsibility to fund operating losses incurred by the Local Partnership. The maximum loss the Partnership would incur is its net investment in the Local Partnership. Dispositions of any investment in the remaining Local Partnership are not anticipated to impact the future results of liquidity or financial condition of the Partnership.
The Partnership has unconsolidated cash reserves of approximately $1,841,000 at March 31, 2017. Such amount is considered sufficient to cover the Partnership’s day to day operating expenses, excluding fees to the General Partner, for at least the next fiscal year. The Partnership’s operating expenses, excluding the Local Partnerships’ expenses and related party expenses amounted to approximately $448,000 for the year ended March 31, 2017.
b) Uninsured Cash and Cash Equivalents
The Partnership and its subsidiary partnerships maintain their cash and cash equivalents in various banks. The accounts at each bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per entity per institution. At March 31, 2017, uninsured cash and cash equivalents amounted to approximately $1,591,000.
c) Cash Distributions
Cash distributions from the Local Partnerships to the Partnership are restricted by the provisions of the respective agreements of limited partnership of the Local Partnerships.
e) Property Management Fees
Property management fees incurred by the Local Partnerships amounted to $79,047 and $290,793 for the years ended March 31, 2017 and 2016, respectively. Of these fees $79,047 and $278,454 were incurred to the Local General Partners for the years ended March 31, 2017 and 2016, respectively, all of which relate to discontinued operations for the years ended March 31, 2017 and 2016, respectively.
e) Other
The Partnership is subject to the risks incidental to potential losses arising from the management and ownership of improved real estate and poor economic conditions.
The Partnership and BACs holders began to recognize Tax Credits with respect to a Property when the Credit Period for such Property commenced. The Credit Period generally runs for ten years from the date it commenced with respect to each eligible Property. Because of the time required for the acquisition, completion and rent-up of Properties, as expected, the amount of Tax Credits per BAC gradually increased over the first three years of the Partnership. Tax Credits not
-35-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017 AND 2016
recognized in the first three years were recognized in the 11th through 13th years. As of December 31, 2012, the remaining Local Partnership had completed its Credit Period and Compliance Period.
f) Subsequent Events
We evaluated all subsequent events from the consolidated balance sheet date through the issuance date of this report and determined that there were no events or transactions occurring during this subsequent event reporting period, which require recognition or disclosure in the consolidated financial statements.
-36-
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Principal Executive Officer and Principal Accounting Officer of Related Independence L.L.C, the general partner of the Partnership, have evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.
(b) Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). In evaluating the Partnership’s internal control over financial reporting, management has adopted the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring organizations of the Treadway Commission (the “COSO Framework”). Under the supervision and with the participation of our management, including the President and Principal Executive Officer and Chief Financial Officer of the General Partner, the Partnership conducted an evaluation of the effectiveness of its internal control over financial reporting as of March 31, 2017. The Partnership’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. However, because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Based on management’s evaluation under the COSO Framework, it has concluded that the Partnership’s internal control over financial reporting, was, as of March 31, 2017, (1) effective at the Partnership level, in that they provide reasonable assurance that information required to be disclosed by the Partnership in the reports it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (2) ineffective at the subsidiary level due to certain control deficiencies. Management will attempt to cause the Local General Partner’s to remedy such deficiencies; however, the General Partner does not have control over the internal controls at the subsidiary level. Management believes they have sufficient controls at the Partnership level to mitigate these deficiencies, and such deficiencies do not have a material impact on the consolidated financial statements.
(c) Changes in Internal Controls over Financial Reporting. During the period ended March 31, 2017, there were no changes in the Partnership’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
Not applicable.
-37-
Item 10. Directors, Executive Officers and Corporate Governance.
The Partnership has no directors or executive officers. The Partnership’s affairs are managed and controlled by Related Independence LLC (“RILLC”), a Delaware limited liability company (“the General Partner”), which was managed by an affiliate of Centerline Holdings Company (“Centerline”). Centerline was the ultimate parent of Centerline Affordable Housing Advisors LLC (“CAHA”), the sole member of the Manager of the General Partner. On April 15, 2015, Alden Torch Financial LLC, a newly formed Delaware limited liability company (“ATF”), became the indirect owner of 100% of the equity interests in Centerline. Since April 15, 2015, ATF has been the ultimate parent and indirect owner of 100% of the equity interest in CAHA. The Partnership has not adopted a separate code of ethics because the Partnership has no directors or executive officers. However, ATF which controls the General Partner has adopted a code of ethics. To obtain a copy free of charge of ATF’s code of ethics, send a written request to: Alden Torch Financial Attn: Legal Department-Code of Ethics, 1225 17th Street, Suite 1400, Denver CO 80202.
Certain information concerning the executive officers of the General Partner is set forth below.
|
|
|
Name |
|
Position |
|
|
|
Ivyl T. Boyce |
|
Chief Financial Officer |
Alan T. Fair |
|
President and Chief Executive Officer |
Ivyl T. Boyce, is the Chief Financial Officer of RILLC and Alden Torch Financial LLC. MR. Boyce joined ATF in 2011 and leads the firm’s investment valuation division. Mr. Boyce helped establish the firm’s corporate accounting and information technology activities. He oversees the Corporate Accounting, Finance and IT departments. Mr. Boyce has more than 10 years of experience in the affordable housing industry including working with tax exempt debt and complex equity investments. He is based in Denver, Colorado.
ALAN T. FAIR is the Chief Executive Officer of RILLC and President and Chief Executive Officer of ATF. Mr. Fair has over 26 years of experience in the affordable housing industry including underwriting, structuring, and placement of affordable multifamily housing debt, both tax exempt and taxable. Prior to forming ATF, Mr. Fair was President of Hunt Capital Partners, LLC and Executive Director of HCP Pacific Asset Management LLC. Mr. Fair consulted to the multifamily industry, and was a Senior Vice President with AIMCO between 2007 and 2008. From 1996 through 2007, Mr. Fair was Senior Vice President Finance and Senior Managing Director of Sun America Affordable Housing Partners Inc. He was responsible for the development of credit and debt structures for both taxable and tax-exempt financed tax credit properties and the coordinating of the underwriting and financing process. During his time at Sun America Mr. Fair was involved in the origination of over 1,000 tax credit partnerships, $5 billion of debt relating to tax credit partnerships (in excess of $5 billion in equity raised) and over 100,000 units of affordable housing. Previously from 1991-1996, Mr. Fair was Senior Vice President for First Interstate Bank responsible for all multifamily housing capital market activities. From 1983 to 1991, Mr. Fair worked for Kemper Securities Group as a Vice President in Investment Banking, and prior thereto as a staff attorney. Mr. Fair is a graduate of Michigan State University and received his J.D. degree from the University of Denver College Of Law. He is a member of the State Bar in Colorado.
-38-
Item 11. Executive Compensation.
The Partnership has no officers or directors. The Partnership does not pay or accrue any fees, salaries or other forms of compensation to members or officers of the General Partner for their services. However, under the terms of the Partnership Agreement, the Partnership has entered into certain arrangements with the General Partner and its affiliates, which provide for compensation to be paid to the General Partner and its affiliates. Such arrangements include (but are not limited to) agreements to pay annual partnership management fees, nonrecurring acquisition fees, a nonaccountable acquisition expense allowance, an accountable expense reimbursement and subordinated disposition fees to the General Partner and/or its affiliates. In addition, the General Partner is entitled to a subordinated interest in cash from sales or refinancings and a 1% interest in net income, net loss, and distributions of adjusted cash from operations and cash from sales or refinancings. Certain members and officers of the General Partner receive compensation from the General Partner and its affiliates for services performed for various affiliated entities which may include services performed for the Partnership. The maximum annual partnership management fee paid to the General Partner is 0.5% of invested assets. See Note 8 in Item 8 above, which is incorporated herein by reference.
Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in this annual report. As noted above, the Partnership has no executive officers. The levels of compensation payable to the General Partner and/or its affiliates is limited by the terms of the Partnership Agreement and may not be increased therefrom on a discretionary basis.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
|
Name and Address of |
|
Amount and Nature of |
|
Percentage |
|
|
Title of Class |
|
Beneficial Ownership |
|
Beneficial Ownership |
|
of Class |
|
|
General Partnership Interest in the Partnership |
|
Related Independence L.L.C. |
|
$ |
1,000 capital contribution – |
|
100 |
% |
|
|
1225 17th Street |
|
|
directly owned |
|
|
|
|
|
Denver, Colorado 80202 |
|
|
|
|
|
|
Independence SLP IV L.P., a limited partnership whose general partner is the General Partner of the Partnership and which acts as the special limited partner of each Local Partnership, holds a .01% limited partnership interest in the Local Partnerships. See Note 8 in Item 8 above, which information is incorporated herein by reference thereto.
Except as set forth below no person is known by the Partnership to be the beneficial owner of more than five percent of the Limited Partnership Interests and/or BACs; and neither the General Partner nor any officer of the General Partner beneficially owns any Limited Partnership Interests or BACs. The following table sets forth the number of BACs beneficially owned as of May 27, 2017 by (i) each BACs holder known to the Partnership to be a beneficial owner of more than 5% of the BACs, (ii) each executive officer of the General Partner of RILLC and (iii) the directors and executive
-39-
officers of the general partner of RILLC as a group. Unless otherwise noted, all BACs are owned directly with sole voting and dispositive powers.
|
|
Amount and Nature of |
|
Percentage |
|
Name of Beneficial Owner (1) |
|
Beneficial Ownership |
|
of Class |
|
|
|
|
|
|
|
Lehigh Tax Credit Partners, Inc. |
|
2,868.06 |
(2) |
6.3 |
% |
J. Michael Fried |
|
2,868.06 |
(2)(3) |
6.3 |
% |
Alan P. Hirmes |
|
2,868.06 |
(2)(3) |
6.3 |
% |
Stuart J. Boesky |
|
2,868.06 |
(2)(3) |
6.3 |
% |
Stephen M. Ross |
|
2,868.06 |
(2)(3) |
6.3 |
% |
Marc D. Schnitzer |
|
2,868.06 |
(2)(3) |
6.3 |
% |
Ivyl T. Boyce |
|
- |
|
|
- |
Alan T. Fair |
|
- |
|
|
- |
|
|
|
|
|
|
All executive officers of the general partner of the Related |
|
|
|
|
|
General Partner as a group (two persons) |
|
- |
|
|
- |
(1) |
The address for each of the persons in the table is 1225 17th Street, Denver Colorado 80202. |
(2) |
As set forth in Schedule 13D filed by Lehigh Tax Credit Partners III L.L.C. and Lehigh Tax Credit Partners, Inc. (the “Managing Member”) on January 25, 1999 with the Securities and Exchange Commission. |
(3) |
Only owns an economic interest in the Managing Member. |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The Partnership has and will continue to have certain relationships with the General Partner and its affiliates, as discussed in Item 11 and also Note 8 in Item 8 above, which are incorporated herein by reference thereto. However, there have been no direct financial transactions between the Partnership and the members and officers of the General Partner.
Item 14. Principal Accountant Fees and Services.
Audit Fees
The aggregate fees billed by Raich Ende Malter & Co LLP for professional services rendered for the audit of the Partnership’s annual consolidated financial statements for the years ended March 31, 2017 and 2016 and for the reviews of the financial information included in the Partnership’s quarterly reports on Form 10-Q for those years were $66,500 and $88,000, respectively.
Audit Related Fees
None.
Tax Fees
None.
All Other Fees
None.
The Partnership is not required to have, and does not have, a stand-alone audit committee.
-40-
Item 15. |
|
|
|
|
|
|
Sequential |
|
|
|
|
(a) 1. |
Financial Statements |
|
|
|
|
|
|
|
|
15-17 |
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
Consolidated Statements of Operations for the years ended March 31, 2017 and 2016 |
|
19 |
|
|
|
|
|
|
20 |
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended March 31, 2017 and 2016 |
|
21 |
|
|
|
|
|
|
22 |
|
|
|
|
|
(a) 2. |
Condensed Financial Statement Schedules |
|
|
|
|
|
|
|
Report of Independent Registered Public Accounting Firm on Supplementary Information |
|
45 |
|
|
|
|
|
|
46 |
|
|
|
|
|
|
|
49 |
|
|
|
|
|
|
All other schedules have been omitted because they are not required or because the required information is contained in the consolidated financial statements or notes thereto. |
|
|
|
|
|
|
(a) 3. |
Exhibits |
|
|
|
|
|
|
(3A) |
Agreement of Limited Partnership of Independence Tax Credit Plus L.P. IV as adopted on February 22, 1995* |
|
|
|
|
|
|
(3B) |
Form of Amended and Restated Agreement of Limited Partnership of Independence Tax Credit Plus L.P. IV, attached to the Prospectus as Exhibit A** |
|
|
|
|
|
|
(3C) |
Certificate of Limited Partnership of Independence Tax Credit Plus L.P. IV as filed on February 22, 1995* |
|
|
|
|
|
|
(10A) |
Form of Subscription Agreement attached to the Prospectus as Exhibit B** |
|
|
|
|
|
|
(10B) |
Escrow Agreement between Independence Tax Credit Plus L.P. IV and Bankers Trust Company* |
|
|
|
|
|
|
(10C) |
Form of Purchase and Sales Agreement pertaining to the Partnership’s acquisition of Local Partnership Interests* |
|
|
|
|
|
|
(10D) |
Form of Amended and Restated Agreement of Limited Partnership of Local Partnerships* |
|
|
|
|
|
|
(21) |
Subsidiaries of the Registrant |
|
42 |
|
|
|
|
(31.1)+ |
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
|
|
|
|
|
|
(31.2)+ |
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
|
|
|
|
|
|
(32.1)+ |
Certification Pursuant to Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350) |
|
|
|
|
|
|
(32.2)+ |
Certification Pursuant to Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350) |
|
|
|
|
|
|
(101)+ |
The following items from this Year End Report on Form 10-K formatted in Extensible Business Reporting Language: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statement of Operations (unaudited), (iii) Consolidated Statement of Changes in Partner's (Deficit) Capital (unaudited), (iv) Consolidated Statement of Cash Flows (unaudited), and (v) Notes to the Consolidated Financial Statements. |
|
|
+Filed herewith.
*Incorporated herein as an exhibit by reference to exhibits filed with Post-Effective Amendment No. 4 to the Registration Statement on Form S-11 {Registration No. 33-89968}
**Incorporated herein as an exhibit by reference to exhibits filed with Post-Effective Amendment No. 8 to the Registration Statement on Form S-11 {Registration No. 33-89968}
-41-
PART IV
Item 15. |
Exhibits, Financial Statement Schedules (continued). |
|
|
(c) |
|
Jurisdiction of |
|
|
|
|
|
|
Fawcett Street Limited Partnership |
|
WA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) |
Not applicable |
|
|
-42-
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INDEPENDENCE TAX CREDIT PLUS L.P. IV
(Registrant)
|
|
|
By: |
RELATED INDEPENDENCE L.L.C., |
||
|
|
|
|
General Partner |
||
|
|
|
|
|
|
|
|
|
|
By: |
CENTERLINE MANAGER LLC, |
||
|
|
|
|
Manager |
||
|
|
|
|
|
||
|
|
|
By: |
CENTERLINE AFFORDABLE HOUSING ADVISORS LLC, Sole Member
|
||
|
|
|
By: |
CENTERLINE CAPITAL GROUP LLC, |
||
|
|
|
|
Sole Member |
||
|
|
|
|
|
|
|
Date: |
June 29, 2017 |
|
|
|
By: |
/s/ Ivyl T. Boyce |
|
|
|
|
|
|
Ivyl T. Boyce |
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
|
Date: |
June 29, 2017 |
|
|
|
By: |
/s/ Alan T. Fair |
|
|
|
|
|
|
Alan T. Fair |
|
|
|
|
|
|
President and Chief Executive Officer |
-43-
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Ivyl T. Boyce |
|
Chief Financial Officer of Centerline Capital Group LLC |
|
June 29, 2017 |
Ivyl T. Boyce |
|
|
|
|
|
|
|
|
|
/s/ Alan T. Fair |
|
President and Chief Executive Officer of Centerline Capital Group LLC |
|
June 29, 2017 |
Alan T. Fair |
|
|
|
|
-44-
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM ON SUPPLEMENTARY INFORMATION
To the Partners
Independence Tax Credit Plus L.P. IV and Subsidiaries
We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Independence Tax Credit Plus L.P IV and Subsidiaries as of March 31, 2017 and 2016 and the related consolidated statements of operations, changes in partners’ capital (deficit) and cash flows for the years then ended (not presented herein); and in our report dated June 29, 2017, and based upon the report of other auditors, we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying Schedule I and Schedule III is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived.
/s/ RAICH ENDE MALTER & CO. LLP
New York, New York
June 29, 2017
-45-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
CONDENSED SCHEDULE OF FINANCIAL INFORMATION OF REGISTRANT
(Not Including Consolidated Subsidiary Partnerships)
CONDENSED BALANCE SHEETS
|
|
March 31, |
|
||||
|
|
2017 |
|
2016 |
|
||
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,841,212 |
|
$ |
515,178 |
|
Cash held in escrow |
|
|
82,119 |
|
|
82,119 |
|
Other assets |
|
|
67,052 |
|
|
10,942 |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,990,383 |
|
$ |
608,239 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS' CAPITAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to general partner and affiliates |
|
$ |
— |
|
$ |
12,852 |
|
Other liabilities |
|
|
63,579 |
|
|
61,750 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
63,579 |
|
|
74,602 |
|
|
|
|
|
|
|
|
|
Partners’ capital |
|
|
1,926,804 |
|
|
533,637 |
|
|
|
|
|
|
|
|
|
Total liabilities and partners’ capital |
|
$ |
1,990,383 |
|
$ |
608,239 |
|
See Report of Independent Registered Public Accounting Firm on Supplementary Information.
-46-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
SCHEDULE I
CONDENSED SCHEDULE OF FINANCIAL INFORMATION OF REGISTRANT
(Not Including Consolidated Subsidiary Partnerships)
CONDENSED STATEMENTS OF OPERATIONS
|
|
For the Years Ended March 31, |
|
||||
|
|
2017 |
|
2016 |
|
||
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
$ |
— |
|
$ |
300 |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative and management |
|
|
448,700 |
|
|
246,293 |
|
Administrative and management-related parties |
|
|
281,597 |
|
|
305,695 |
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
730,297 |
|
|
551,988 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(730,297) |
|
|
(551,688) |
|
|
|
|
|
|
|
|
|
Gain on sale of investments in subsidiary partnerships |
|
|
5,358,628 |
|
|
2,742,986 |
|
|
|
|
|
|
|
|
|
Equity in loss of subsidiary partnerships * |
|
|
(3,235,164) |
|
|
(2,788,920) |
|
|
|
|
|
|
|
|
|
Distribution income from subsidiary partnership |
|
|
— |
|
|
2,893,071 |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,393,167 |
|
$ |
2,295,449 |
|
See Report of Independent Registered Public Accounting Firm on Supplementary Information.
*Includes suspended prior year losses of investments in accordance with equity method of accounting, amounting to ($3,418,786) and ($4,738,944) for the years ended March 31, 2017 and 2016, respectively.
-47-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
SCHEDULE I
CONDENSED SCHEDULE OF FINANCIAL INFORMATION OF REGISTRANT
(Not Including Consolidated Subsidiary Partnerships)
CONDENSED STATEMENTS OF CASH FLOWS
|
|
For the Years Ended March 31, |
|
||||
|
|
2017 |
|
2016 |
|
||
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,393,167 |
|
$ |
2,295,449 |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
Equity in loss on subsidiary partnerships |
|
|
3,235,164 |
|
|
2,788,920 |
|
Gain on sale of investments in subsidiary partnerships |
|
|
(5,358,628) |
|
|
(2,742,986) |
|
Distribution income from subsidiary partnership |
|
|
— |
|
|
(2,893,071) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
(Decrease) increase in other assets |
|
|
(56,110) |
|
|
5,944 |
|
Decrease in due to general partner and affiliates |
|
|
(12,852) |
|
|
(2,334,840) |
|
Decrease in other liabilities |
|
|
1,831 |
|
|
(9,473) |
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(797,428) |
|
|
(2,890,057) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of investments in subsidiary partnerships |
|
|
2,123,462 |
|
|
— |
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
|
2,123,462 |
|
|
— |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions from subsidiary partnerships |
|
|
— |
|
|
2,893,071 |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
— |
|
|
2,893,071 |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
1,326,034 |
|
|
3,014 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year |
|
|
515,178 |
|
|
512,164 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year |
|
$ |
1,841,212 |
|
$ |
515,178 |
|
See Report of Independent Registered Public Accounting Firm on Supplementary Information.
-48-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2017
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Initial Cost to Partnership |
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Gross Amount at which Carried at Close of Period |
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Cost |
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Life on which |
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Capitalized |
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Depreciation in |
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Subsequent to |
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Latest Income |
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Buildings and |
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Acquisition: |
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Buildings and |
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Accumulated |
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Year of |
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Date |
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Statements is |
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Description |
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Encumbrances |
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Land |
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Improvements |
|
Improvements |
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Land |
|
Improvements |
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Total |
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Depreciation* |
|
Construction/Renovation |
|
Acquired |
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Computed |
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Apartment Complexes |
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Fawcett Street Limited Partnership |
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Tacoma, WA |
|
|
1,544,366 |
|
|
390,654 |
|
|
4,247,465 |
|
|
(2,302,818) |
|
|
396,383 |
|
|
1,938,918 |
|
|
2,335,301 |
|
$ |
2,284,168 |
|
1996 - 97 |
|
June 1996 |
|
27.5 years |
|
|
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$ |
1,544,366 |
|
$ |
390,654 |
|
$ |
4,247,465 |
|
$ |
(2,302,818) |
|
$ |
396,383 |
|
$ |
1,938,918 |
|
$ |
2,335,301 |
|
$ |
2,284,168 |
|
|
|
|
|
|
|
* Depreciation is computed using primarily the straight-line method over the estimated useful lives determined by the Partnership at the date of acquisition.
See Report of Independent Registered Public Accounting Firm on Supplementary Information.
-49-
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
SCHEDULE III
CONSOLIDATED SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2017
(continued)
|
|
Cost of Property and Equipment |
|
Accumulated Depreciation |
|
||||||||
|
|
For the Years Ended March 31, |
|
||||||||||
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
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|
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|
Balance at beginning of year |
|
$ |
8,127,960 |
|
$ |
12,118,890 |
|
$ |
7,946,808 |
|
$ |
11,028,981 |
|
(Adjustment to) additions during year: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Land, building and improvements |
|
|
— |
|
|
46,171 |
|
|
- |
|
|
- |
|
Discontinued operations, dispositions and impairments |
|
|
(5,792,659) |
|
|
(4,037,101) |
|
|
(5,666,845) |
|
|
(3,111,235) |
|
Depreciation expense |
|
|
- |
|
|
- |
|
|
4,205 |
|
|
29,062 |
|
Balance at close of year |
|
$ |
2,335,301 |
|
$ |
8,127,960 |
|
$ |
2,284,168 |
|
$ |
7,946,808 |
|
At the time the Local Partnerships were acquired by Independence Tax Credit Plus L.P. IV, the entire purchase price paid by Independence Tax Credit Plus L.P. IV was pushed down to the Local Partnerships as property and equipment with an offsetting credit to capital.
See Report of Independent Registered Public Accounting Firm on Supplementary Information.
-50-