The names and locations of the Properties in which the Operating Partnerships hold beneficial interests at December 31, 2005 are as follows:
The following combined statements of operations are prepared in accordance with accounting principles generally accepted in the United States of America and summarize the operations of the Operating Partnerships for the three months ended December 31, 2005 and December 31, 2004 and for the nine months ended December 31, 2005 and December 31, 2004.
In May 2005, an Operating Partnership, Harriet Tubman Terrace, located in Berkeley, California, sold a property for $6,650,937 for a gain of $4,232,477. Cash proceeds of $3,008,942, net of a mortgage receivable of $2,471,882 provided by the Operating Partnership to the buyer, were used to satisfy obligations of the Operating Partnership.
In March 2005, an Operating Partnership, Ascension Towers, located in Memphis, Tennessee, defaulted on its HUD-insured non-recourse mortgage. In May 2005, this mortgage was assigned to HUD who foreclosed upon and subsequently sold the property in June 2006 for $3,015,000. Cash proceeds of $846,519 were used to satisfy obligations of the Operating Partnership.
Back to Contents
In June 2004, an Operating Partnership, Atlantis Apartments, located in Virginia Beach, Virginia, was sold for a gain of $3,797,669. In August 2004, an Operating Partnership, Sunset Park, located in Denver, Colorado, was sold for a gain of $3,998,295. In December 2004, two Operating Partnerships, Rockwell Villa and London Square, both located in Oklahoma City, Oklahoma, were sold for $5,000,000 resulting in a combined gain of $1,079,642. There were no cash proceeds resulting from these sales.
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS |
Results of Operations
Three months ended December 31, 2005 compared to three months ended December 31, 2004
For the three month periods ended December 31, 2005 and 2004, the Partnership recorded net losses of $15,000 and $15,000, respectively. The net losses are equal to the reimbursement paid to Century Pacific Equity Corporation (CPEC), an affiliate, for overhead allocations.
In accordance with the equity method of accounting for limited partnership interests, the Partnership does not recognize losses from investment properties when losses exceed the Partnership’s equity method basis in these properties. All of the Partnership’s investments have an equity method basis of zero at December 31, 2005.
The average occupancy level of the Operating Partnerships decreased to approximately 82% from 92% for the three months ended December 31, 2005 and 2004. This is due primarily to vacancies at a property which sustained damage from Hurricane Katrina in 2005.
The majority of the properties owned by the Operating Partnerships are in a position of functional obsolescence and need substantial rehabilitation. The Operating Partnerships do not have the funds to address the growing deferred maintenance. Infusion of capital is necessary to keep the projects viable and maintain them as decent, safe and quality housing. Refinancing is not an option in view of the indebtedness on the properties surpassing their fair market value.
Nine months ended December 31, 2005 compared to nine months ended December 31, 2004
For the nine month periods ended December 31, 2005 and 2004, the Partnership recorded net losses of $49,934 and $45,000, respectively. The net losses are substantially equal to the reimbursement paid to Century Pacific Equity Corporation (CPEC), an affiliate, for overhead allocations.
In accordance with the equity method of accounting for limited partnership interests, the Partnership does not recognize losses from investment properties when losses exceed the Partnership’s equity method basis in these properties. All of the Partnership’s investments have an equity method basis of zero at December 31, 2005.
The average occupancy level of the Operating Partnerships decreased to approximately 82% from 92% for the nine months ended December 31, 2005 and 2004. This is due primarily to vacancies at a property which sustained damage from Hurricane Katrina in 2005.
12
Back to Contents
The majority of the properties owned by the Operating Partnerships are in a position of functional obsolescence and need substantial rehabilitation. The Operating Partnerships do not have the funds to address the growing deferred maintenance. Infusion of capital is necessary to keep the projects viable and maintain them as decent, safe and quality housing. Refinancing is not an option in view of the indebtedness on the properties surpassing their fair market value.
Liquidity and Capital Resources
As of December 31, 2005, the Partnership’s portfolio consists of 8 properties. The properties are located in 8 states and contain 1,194 residential units. The average occupancy level for all properties at December 31, 2005 was approximately 82% and most properties generated sufficient revenue to cover operating costs, debt service, and the funding of reserves.
The government restricts rental rate increases. A substantial amount of the revenue generated by these properties comes from rental subsidy payments made by federal or state housing agencies. These features, which are characteristic of all low-income housing properties, limit the pool of potential buyers for these real estate assets. As a limited partner of the Operating Partnerships, the Partnership does not control property disposition decisions, and management is aware of the intention of the General Partners of the Partnership to sell the investment properties in the near future.
The partnership is currently experiencing a liquidity problem. Under the Partnership Agreement, the Partnership is entitled to receive distributions of surplus cash from the Operating Partnerships, which is to provide the funds necessary for the Partnership to meet its operating costs. At the present time, the Operating Partnerships have not generated sufficient cash distributions to enable the Partnership to meet its current obligations. As a result of the foregoing, the Partnership has been dependent upon its affiliates and the General Partners for continued financial support to meet its expenses. Though there can be no assurance, management believes that affiliates and/or the General Partners, though not required to do so, will continue to fund operations of the Partnership and defer receipt of payment of allocated overhead administrative expenses and partnership management fees. Allocated administrative expenses paid or accrued to affiliates and the General Partners represent reimbursement of the actual cost of goods and materials used for or by the Partnership, salaries, related payroll costs and other administrative items incurred or allocated, and direct expenses incurred in rendering legal, accounting/bookkeeping, computer, printing and public relations services. Items excluded from the overhead allocation include overhead expenses of the General Partners, including rent and salaries of employees not specifically performing the services described above. Unpaid allocated administrative expenses and partnership management fees, an annual amount up to .5% of invested assets, will accrue for payment in future operating years.
Management believes the possibility exists that one or several Operating Partnerships may require additional capital, in addition to that previously contributed by the Partnership, to sustain operations. In such case, the source of the required capital needs may be from (i) limited reserves from the Partnership (which may include distributions received from the Operating Partnerships that would otherwise be available for distribution to partners), (ii) debt financing at the Operating Partnership level (which may not be available), or (iii) additional equity contributions from the general partner of the Operating Partnerships (which may not be available). There can be no assurance that any of these sources would be readily available to provide for possible additional capital requirements which may be necessary to sustain the operations of the Operating Partnerships. However, the Partnership is under no obligation to fund operating deficits of the Operating Partnerships in the form of additional contributions or loans.
13
Back to Contents
Due to the uncertainty of the continuation of the Section 8 program, management has been forced to consider several options to prepare for the possible lack of subsidy income to the Operating Partnerships. The loss of subsidy income to the Operating Partnerships will make it more difficult for the Operating Partnerships to provide sufficient cash distributions to the Partnership. Management has identified the courses of action they will take as a result of the potential changes to the Section 8 program.
CRITICAL ACCOUNTING POLICIES
Management’s discussion and analysis of financial condition and results of operations are based upon our unaudited financial statements which have been prepared in accordance with accounting principles generally accepted in the United States. Such financial statement preparation requires management to make judgments and use estimates regarding significant accounting policies. We consider an accounting policy to be significant if it is important to our financial condition and results, and requires significant judgment and estimates on the part of management in its application. A summary of our significant accounting policies is included in Note 2 to our financial statements for the year ended March 31, 2005, which are included in the Form 10-K. Our significant accounting estimates and the related assumptions are evaluated periodically as conditions warrant, and changes to such estimates are recorded as new information or changed conditions require revision. Application of the critical accounting policies requires management’s significant judgments, often as the result of the need to make estimates for matters that are inherently uncertain. If actual results were to differ materially from the estimates made, the reported results could be materially affected. There have been no significant changes in the application of the critical accounting policies, or in the assumptions or estimates relating thereto, since March 31, 2005.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Due to the nature of our operations, we have concluded that there is no material market risk exposure and, therefore, no quantitative tabular disclosures are required.
ITEM 4. | CONTROLS AND PROCEDURES |
(a) Evaluation of Disclosure Controls and Procedures
The Partnership’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-15(e)and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, they have concluded that the Partnership’s current disclosure controls and procedures are effective in timely providing them with material information relating to the Partnership required to be disclosed in the reports of the Partnership files or submits under the Exchange Act.
(b) Changes in Internal Controls
During the period covered by this report, there have not been any significant changes in the Partnership’s internal controls or in other factors that could significantly affect these controls. There were no significant deficiencies or material weaknesses, and, therefore, no corrective actions were taken.
14
Back to Contents
Operating Partnerships – Ascension Towers
In May 2005, HUD initiated foreclosure proceedings against an Operating Partnership, Ascension Towers, in which the Partnership has an equity investment. The proceedings resulted from the Operating Partnership defaulting on its HUD-insured non-recourse mortgage in March 2005. The property was foreclosed upon in April 2006 and sold in June 2006.
Other
There are no pending legal proceedings against the Partnership or any other Operating Partnership in which the Partnership has an investment as of the date of this report.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS – None |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES – None |
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS – None |
ITEM 5. | OTHER INFORMATION – None |
ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K |
(a) Exhibits
We have listed the exhibits by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K on the Exhibit list attached to this report.
(b) Reports on Form 8-K
None
15
Back to Contents
* * * SIGNATURE * * *
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.
Dated: October 12, 2006
| | CENTURY PACIFIC HOUSING FUND-I
a California limited partnership |
| | By: | Century Pacific Capital Corporation, a California Corporation General Partner |
| | By: |
/s/ Irwin J. Deutch
|
| | | |
|
| | | Irwin J. Deutch
President |
Back to Contents
EXHIBITS
Exhibit Number | | Description |
| |
|
31.1 | | Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
| | |
31.2 | | Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
| | |
32.1 | | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
| | |
32.2 | | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
| | |
