UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the fiscal year endedMarch 31, 2014 or
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission file number 0-21718
BOSTON CAPITAL TAX CREDIT FUND III L.P.
(Exact name of registrant as specified in its charter)
Delaware | 52-1749505 |
(State or other jurisdiction | (I.R.S. Employer |
of incorporation or organization) | Identification No.) |
One Boston Place, Suite 2100, Boston, Massachusetts 02108
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code(617)624-8900
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class - Name of each exchange on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Title of class
Beneficial Assignee Certificates
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes¨ Nox
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¨ Nox
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.
Yesx No¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yesx No¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨ | Accelerated filer¨ |
Non-accelerated filer¨ | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes¨ Nox
DOCUMENTS INCORPORATED BY REFERENCE
None.
BOSTON CAPITAL TAX CREDIT FUND III L.P.
Form 10-K ANNUAL REPORT
FOR THE YEAR ENDED MARCH 31, 2014
TABLE OF CONTENTS
2 |
Item 1. | Business |
Organization
Boston Capital Tax Credit Fund III L.P. (the "Fund") is a limited partnership formed under the Delaware Revised Uniform Limited Partnership Act as of September 19, 1991. Effective as of June 1, 2001, there was a restructuring and, as a result, the Fund’s general partner was reorganized as follows. The general partner of the Fund continues to be Boston Capital Associates III L.P., a Delaware limited partnership. The general partner of the general partner is now BCA Associates Limited Partnership, a Massachusetts limited partnership, whose sole general partner is C&M Management, Inc., a Massachusetts corporation. John P. Manning is the principal of Boston Capital Partners, Inc. The limited partner of the general partner is Capital Investment Holdings, a general partnership whose partners are certain officers and employees of Boston Capital Partners, Inc., and its affiliates. The assignor limited partner is BCTC III Assignor Corp., a Delaware corporation which is wholly-owned by John P. Manning.
The assignor limited partner was formed for the purpose of serving in that capacity for the Fund and will not engage in any other business. Units of beneficial interest in the limited partnership interest of the assignor limited partner are assigned by the assignor limited partner by means of beneficial assignee certificates ("BACs") to investors and investors are entitled to all the rights and economic benefits of a limited partner of the Fund, including rights to a percentage of the income, gains, losses, deductions, credits and distributions of the Fund.
A Registration Statement on Form S-11 and the related prospectus,(together with each subsequently filed prospectus, the "Prospectus") was filed with the Securities and Exchange Commission and became effective January 24, 1992 in connection with a public offering (together with each subsequent offering of BACs described herein, the "Offering") in one or more series of a minimum of 250,000 BACs and a maximum of 20,000,000 BACs at $10 per BAC. On September 4, 1993 the Fund filed Form S-11 with the Securities and Exchange Commission which registered an additional 2,000,000 BACs at $10 per BAC for sale to the public in one or more series. The registration for additional BACs became effective on October 6, 1993. As of March 31, 2014, subscriptions had been received and accepted by the General Partner in Series 15, 16, 17, 18 and 19 for 21,996,102 BACs, representing capital contributions of $219,961,020. The Fund issued the last BACs in Series 19 on December 17, 1993. This concluded the Offering of the Fund.
3 |
Description of Business
The Fund's principal business is to invest as a limited partner in other limited partnerships (the "Operating Partnerships") each of which will own or lease and will operate an apartment complex exclusively or partially for low- and moderate-income tenants. Each Operating Partnership in which the Fund invests owns apartment complexes, which are completed, newly constructed, under construction or rehabilitation, or to-be constructed or rehabilitated, and which are expected to receive government assistance. Each apartment complex is expected to qualify for the low-income housing tax credit under Section 42 of the Code (the "Federal Housing Tax Credit"), providing tax benefits over a period of ten to twelve years in the form of tax credits which investors may use to offset income, subject to strict limitations, from other sources. Some apartment complexes may also qualify for the historic rehabilitation tax credit under Section 47 of the Code (the "Rehabilitation Tax Credit"). Section 236 (f) (ii) of the National Housing Act, as amended, and Section 101 of the Housing and Urban Development Act of 1965, as amended, each provide for the making by HUD of rent supplement payments to low income tenants in properties which receive other forms of federal assistance including tax credits. The payments for each tenant, which are made directly to the owner of their property, generally are in amounts to enable the tenant to pay rent equal to 30% of the adjusted family income. Some of the apartment complexes in which the Fund has invested are receiving such rent supplements from HUD. HUD has been in the process of converting rent supplement assistance to assistance paid not to the owner of the apartment complex, but directly to the individuals. At this time, the Fund is unable to predict whether Congress will continue rent supplement programs payable directly to owners of apartment complexes.
As of March 31, 2014 the Fund had invested in 24 Operating Partnerships on behalf of Series 15, 28 Operating Partnerships on behalf of Series 16, 17 Operating Partnerships on behalf of Series 17, 18 Operating Partnerships on behalf of Series 18 and 8 Operating Partnerships on behalf of Series 19. A description of these Operating Partnerships is set forth in Item 2 herein.
The business objectives of the Fund are to:
(1) | Provide current tax benefits to investors in the form of Federal Housing Tax Credits and, in limited instances, a small amount of Rehabilitation Tax Credits, which an investor may apply, subject to strict limitations, against the investor's federal income tax liability from active, portfolio and passive income; |
(2) | Preserve and protect the Fund's capital and provide capital appreciation and cash distributions through increases in value of the Fund's investments and, to the extent applicable, equity buildup through periodic payments on the mortgage indebtedness with respect to the apartment complexes; |
(3) | Provide tax benefits in the form of passive losses which an investor may apply to offset his passive income (if any); and |
(4) | Provide cash distributions (except with respect to the Fund's investment in some non-profit Operating Partnerships) from capital transaction proceeds. The Operating Partnerships intend to hold the apartment complexes for appreciation in value. The Operating Partnerships may sell the apartment complexes after a period of time if financial conditions in the future make such sales desirable and if such sales are permitted by government restrictions. |
4 |
Employees
The Fund does not have any employees. Services are performed by the general partner and its affiliates and agents retained by them.
As used in this Item 1A, references to “we, “us” and “our” mean the Fund.
An investment in our BACs and our investments in Operating Partnerships are subject to risks. These risks may impact the tax benefits of an investment in our BACs, and the amount of proceeds available for distribution to our limited partners, if any, on liquidation of our investments.
In addition to the other information set forth in this report, you should carefully consider the following factors which could materially affect our business, financial condition or results of operations. The risks described below are not the only risks we face. Additional factors not presently known to us or that we currently deem to be immaterial also may materially adversely affect our business operations.
The ability of limited partners to claim tax losses from their investment in us is limited.
The IRS may audit us or an Operating Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to the investors could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in our BACs. Changes in tax laws could also impact the tax benefits from an investment in our BACs and/or the value of the Operating Partnerships. Until the Operating Partnerships have completed a mandatory fifteen year Low Income Housing Tax Credit compliance period, investors are at risk for potential recapture of Low Income Housing Tax Credits that have already been claimed.
The Low Income Housing Tax Credits rules are extremely complicated and noncompliance with these rules may have adverse consequences for BAC holders.
Noncompliance with applicable tax regulations may result in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to the tax liability due on the person’s last $25,000 of taxable income. The Operating Partnerships may be sold at a price which would not result in our realizing cash distributions or proceeds from the transaction. Accordingly, we may be unable to distribute any cash to our investors. Low Income Housing Tax Credits may be the only benefit from an investment in our BACs.
5 |
Poor performance of one housing complex, or the real estate market generally, could impair our ability to satisfy our investment objectives.
Each housing complex is subject to mortgage indebtedness. If an Operating Partnership failed to pay its mortgage, it could lose its housing complex in foreclosure. If foreclosure were to occur during the first 15 years of the existence of the Fund, the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of previously claimed Low Income Housing Tax Credits, and a loss of our investment in the housing complex would occur. To the extent the Operating Partnerships receive government financing or operating subsidies, they may be subject to one or more of the following risks:
- | difficulties in obtaining rent increases; |
- | limitations on cash distributions; |
- | limitations on sales or refinancing of Operating Partnerships; |
- | limitations on transfers of interests in Operating Partnerships; |
- | limitations on removal of local general partners; |
- | limitations on subsidy programs; and |
- | possible changes in applicable regulations. |
The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others.
No trading market for the BACs exists or is expected to develop.
There is currently no active trading market for the BACs. Accordingly, limited partners may be unable to sell their BACs or may have to sell BACs at a discount. Limited partners should consider their BACs to be a long-term investment.
Investors may realize taxable gain on sale or disposition of BACs.
Upon the sale or other taxable disposition of BACs, investors will realize taxable income to the extent that their allocable share of the non-recourse mortgage indebtedness on the apartment complexes, together with the money they receive from the sale of the BACs, is greater than the original cost of their BACs. This realized taxable income is reduced to the extent that investors have suspended passive losses or credits. It is possible that the sale of BACs may not generate enough cash to pay the tax obligations arising from the sale.
Investors may have tax liability in excess of cash.
Investors eventually may be allocated profits for tax purposes, which exceed any cash distributed to them. Under these circumstances, unless an investor has passive losses or credits to reduce this tax liability, the investor will have to pay federal income tax without a corresponding cash distribution. Similarly, in the event of a sale or foreclosure of an apartment complex or a sale of BACs, an investor may be allocated taxable income, resulting in tax liability, in excess of any cash distributed to him or her as a result of the event.
6 |
Investors may not receive cash if apartment complexes are sold.
There is no assurance that investors will receive any cash distributions from the sale or refinancing of an apartment complex. The price at which an apartment complex is sold may not be large enough to pay the mortgage and other expenses which must be paid at such time. Even if there are net cash proceeds from a sale distributed to the Fund, expenses such as accrued management fees and unpaid loans will be deducted pursuant to Section 4.02(a) of the Fund Agreement. If any of these events happen, investors will not get all of their investment back, and the only benefit from an investment will be the tax credits received.
The sale or refinancing of the apartment complexes is dependent upon the following material factors:
- | The necessity of obtaining the consent of the operating general partners; |
- | The necessity of obtaining the approval of any governmental agency(ies) providing government assistance to the apartment complex; and |
- | The uncertainty of the market. |
Any sale may occur well after the fifteen-year federal housing tax credit compliance period.
We have insufficient sources of cash to pay our existing liabilities.
We currently do not have sufficient cash resources to satisfy our financial liabilities. Furthermore, we do not anticipate that we will have sufficient available cash to pay our future financial liabilities. Substantially all of our existing liabilities are payable to our general partner and its affiliates. Though the amounts payable to the General Partner and its affiliates are contractually currently payable, we do not believe that the General Partner or its affiliates will demand immediate payment of these contractual obligations in the near term; however, there can be no assurance that this will be the case. We would be materially adversely affected if the general partner or its affiliates demanded payment in the near term of our existing contractual liabilities or suspended the provision of services to us because of our inability to satisfy these obligations. All monies currently deposited, or that will be deposited in the future, into the Fund's working capital reserves are intended to be utilized to pay our existing and future liabilities.
7 |
Item 1B. | Unresolved Staff Comments |
Not applicable.
Item 2. | Properties |
The Fund has acquired a limited partnership interest in 95 Operating Partnerships in five series, identified in the table set forth below. In each instance the apartment complexes owned by the applicable Operating Partnership is eligible for the Federal Housing Tax Credit. Initial occupancy of a unit in each apartment complex which complied with the minimum set-aside test (i.e., initial occupancy by tenants with incomes equal to no more than a
designated percentage of area median income) and the rent restriction test (i.e., gross rent charged tenants does not exceed 30% of the applicable income standards) is referred to as "Qualified Occupancy." The general partner believes that there is adequate casualty insurance on the properties.
Please refer to Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a more detailed discussion of operational difficulties experienced by certain of the Operating Partnerships.
8 |
Boston Capital Tax Credit Fund III L.P. - Series 15
PROPERTY PROFILES AS OF MARCH 31, 2014
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
April Gardens Apts. III | Las Piedras, PR | 32 | $ | 1,362,986 | 09/92 | 05/93 | 100 | % | $ | 279,823 | ||||||||||||
Barton Village Apartments | Arlington, GA | 18 | 472,205 | 10/92 | 03/93 | 100 | % | 101,154 | ||||||||||||||
Bergen Meadows | Bergen, NY | 24 | 911,838 | 07/92 | 07/92 | 100 | % | 199,420 | ||||||||||||||
Calexico Senior Apts. | Calexico, CA | 38 | 1,789,003 | 09/92 | 09/92 | 100 | % | 366,220 | ||||||||||||||
Chestnut Hills Estates | Altoona, AL | 24 | 676,156 | 09/92 | 09/92 | 100 | % | 146,500 | ||||||||||||||
Columbia Heights Apts. | Camden, AR | 32 | 1,179,684 | 10/92 | 09/93 | 100 | % | 247,599 | ||||||||||||||
Deerfield Commons | Crewe, VA | 39 | 1,140,866 | 04/92 | 06/92 | 100 | % | 242,430 | ||||||||||||||
East Park Apts. I | Dilworth, MN | 24 | 685,653 | 06/94 | 01/94 | 100 | % | 406,100 | ||||||||||||||
Graham Village Apts. | Graham, NC | 50 | 883,851 | 10/94 | 06/95 | 100 | % | 919,461 | ||||||||||||||
Greenwood Village | Fort Gaines, GA | 24 | 619,299 | 08/92 | 05/93 | 100 | % | 131,268 | ||||||||||||||
Hadley's Lake Apts. | East Machias, ME | 18 | 962,492 | 09/92 | 01/93 | 100 | % | 291,400 | ||||||||||||||
Harvest Point Apts. | Madison, SD | 30 | 1,112,346 | 03/95 | 12/94 | 100 | % | 268,760 | ||||||||||||||
Lakeside Apts. | Lake Village, AR | 32 | 1,138,168 | 08/94 | 08/95 | 100 | % | 282,004 | ||||||||||||||
Laurelwood Apartments, Phase II | Winnsboro, SC | 32 | 991,254 | 03/92 | 02/92 | 100 | % | 229,986 |
9 |
Boston Capital Tax Credit Fund III L.P. - Series 15
PROPERTY PROFILES AS OF MARCH 31, 2014
Continued
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Livingston Plaza | Livingston, TX | 24 | $ | 611,208 | 12/92 | 11/93 | 100 | % | $ | 176,534 | ||||||||||||
Manning Lane Apts. | Manning, SC | 42 | 1,361,484 | 08/92 | 03/93 | 100 | % | 296,436 | ||||||||||||||
Marshall Lane Apts. | Marshallville,GA | 18 | 511,565 | 08/92 | 12/92 | 100 | % | 114,200 | ||||||||||||||
North Trail Apts. | Arkansas City, KS | 24 | 749,386 | 09/94 | 12/94 | 100 | % | 194,118 | ||||||||||||||
Rio Mimbres II Apts | Deming, NM | 24 | 718,124 | 04/92 | 04/92 | 100 | % | 149,811 | ||||||||||||||
Sunset Sq. Apts. | Scottsboro, AL | 24 | 681,607 | 09/92 | 08/92 | 100 | % | 143,900 | ||||||||||||||
University Meadows | Detroit, MI | 53 | 2,338,955 | 06/92 | 12/92 | 100 | % | 1,676,750 | ||||||||||||||
Village Woods | Healdton, OK | 24 | 637,443 | 08/94 | 12/94 | 100 | % | 173,616 | ||||||||||||||
Villas Del Mar | Urb.Corales de Hatillo, PR | 32 | 1,366,953 | 08/92 | 08/92 | 100 | % | 307,200 | ||||||||||||||
Whitewater Village Apts. | Ideal, GA | 18 | 486,177 | 08/92 | 11/92 | 100 | % | 108,000 |
10 |
Boston Capital Tax Credit Fund III L.P. - Series 16
PROPERTY PROFILES AS OF MARCH 31, 2014
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Bernice Villa Apts. | Bernice, LA | 32 | $ | 750,850 | 05/93 | 10/93 | 100 | % | $ | 200,476 | ||||||||||||
Canterfield Manor | Denmark, SC | 20 | 709,769 | 11/92 | 01/93 | 100 | % | 175,959 | ||||||||||||||
Carriage Park Village | Westville, OK | 24 | 609,673 | 02/93 | 07/93 | 100 | % | 144,714 | ||||||||||||||
Cumberland Woods Apts. | Middlesboro, KY | 40 | 1,342,566 | 12/93 | 10/94 | 100 | % | 412,700 | ||||||||||||||
Fairmeadow Apts. | Latta, SC | 24 | 811,489 | 01/93 | 07/93 | 100 | % | 195,400 | ||||||||||||||
Falcon Ridge Apts. | Beattyville, KY | 32 | 950,860 | 04/94 | 01/95 | 100 | % | 247,200 | ||||||||||||||
Forest Pointe Apts. | Butler, GA | 25 | 682,370 | 12/92 | 09/93 | 100 | % | 162,397 | ||||||||||||||
Greenfield Properties | Greenfield, MO | 20 | 482,902 | 01/93 | 05/93 | 100 | % | 126,046 | ||||||||||||||
Harmony House Apts. | Galax, VA | 40 | 1,320,325 | 11/92 | 07/93 | 100 | % | 285,588 | ||||||||||||||
Holly Tree Manor | Holly Hill, SC | 24 | 818,437 | 11/92 | 02/93 | 100 | % | 201,490 | ||||||||||||||
Laurel Ridge Apts. | Idabel, OK | 52 | 1,252,403 | 04/93 | 12/93 | 100 | % | 282,606 | ||||||||||||||
Lawtell Manor Apts. | Lawtell, LA | 32 | 786,469 | 04/93 | 08/93 | 100 | % | 202,603 | ||||||||||||||
Logan Lane Apts | Ridgeland, SC | 36 | 1,202,009 | 09/92 | 03/93 | 100 | % | 274,750 | ||||||||||||||
Mendota Village Apts | Mendota, CA | 44 | 1,811,911 | 12/92 | 05/93 | 100 | % | 438,300 | ||||||||||||||
Mid City Apts. | Jersey City, NJ | 58 | 2,219,350 | 09/93 | 06/94 | 100 | % | 3,097,210 |
11 |
Boston Capital Tax Credit Fund III L.P. - Series 16
PROPERTY PROFILES AS OF MARCH 31, 2014
Continued
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Newport Elderly Apts. | Newport, VT | 24 | $ | 862,596 | 02/93 | 10/93 | 100 | % | $ | 221,626 | ||||||||||||
Parkwoods Apts. | Anson, ME | 24 | 1,183,192 | 12/92 | 09/93 | 100 | % | 320,206 | ||||||||||||||
Ransom St. Apartments | Blowing Rock, NC | 13 | 478,383 | 12/93 | 11/94 | 100 | % | 100,249 | ||||||||||||||
Simmesport Square Apts. | Simmesport, LA | 32 | 794,064 | 04/93 | 06/93 | 100 | % | 198,500 | ||||||||||||||
St. Croix Commons Apts. | Woodville, WI | 40 | 1,257,546 | 10/94 | 12/94 | 100 | % | 534,847 | ||||||||||||||
St. Joseph Square Apts. | St. Joseph, LA | 32 | 867,789 | 05/93 | 09/93 | 100 | % | 206,086 | ||||||||||||||
Stony Ground Villas | St. Croix, VI | 22 | 1,301,891 | 12/92 | 06/93 | 100 | % | 358,414 | ||||||||||||||
Tan Yard Branch Apts. I | Blairsville, GA | 24 | 709,584 | 12/92 | 09/94 | 100 | % | 151,154 | ||||||||||||||
Tan Yard Branch Apts. II | Blairsville, GA | 25 | 694,198 | 12/92 | 07/94 | 100 | % | 144,304 | ||||||||||||||
The Woodlands | Tupper Lake, NY | 18 | 872,800 | 09/94 | 02/95 | 100 | % | 214,045 | ||||||||||||||
Tuolumne City Senior Apts. | Tuolumne, CA | 30 | 1,471,944 | 12/92 | 08/93 | 100 | % | 376,535 | ||||||||||||||
Vista Linda Apartments | Sabana Grande, PR | 50 | 2,350,824 | 01/93 | 12/93 | 100 | % | 445,530 | ||||||||||||||
West End Manor | Union, SC | 28 | 908,238 | 05/93 | 05/93 | 100 | % | 231,741 |
12 |
Boston Capital Tax Credit Fund III L.P. - Series 17
PROPERTY PROFILES AS OF MARCH 31, 2014
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Briarwood Apartments | Clio, SC | 24 | $ | 820,373 | 12/93 | 08/94 | 100 | % | $ | 211,133 | ||||||||||||
Cairo Senior Housing | Cairo, NY | 24 | 991,807 | 05/93 | 04/93 | 100 | % | 201,711 | ||||||||||||||
Fuera Bush Senior Housing | Fuera Bush, NY | 24 | 1,010,551 | 07/93 | 05/93 | 100 | % | 189,364 | ||||||||||||||
Glenridge Apartments | Bullhead City, AZ | 52 | 1,901,149 | 06/94 | 06/94 | 100 | % | 520,500 | ||||||||||||||
Green Acres Estates | West Bath, ME | 48 | 842,947 | 01/95 | 11/94 | 100 | % | 135,849 | ||||||||||||||
Green Court Apartments | Mt. Vernon, NY | 76 | 2,009,533 | 11/94 | 11/94 | 100 | % | 964,813 | ||||||||||||||
Henson Creek Manor | Fort Washington, MD | 105 | 3,570,318 | 05/93 | 04/94 | 100 | % | 2,980,421 | ||||||||||||||
Hill Estates, II | Bladenboro, NC | 24 | 928,999 | 03/95 | 07/95 | 100 | % | 132,300 | ||||||||||||||
Oakwood Manor of Bennettsville | Bennettsville, SC | 24 | 806,927 | 09/93 | 12/93 | 100 | % | 89,200 | ||||||||||||||
Opelousas Point Apts. | Opelousas, LA | 44 | 1,262,563 | 11/93 | 03/94 | 100 | % | 439,277 | ||||||||||||||
Pinehurst Senior Apts. | Farwell, MI | 24 | 732,259 | 02/94 | 02/94 | 100 | % | 183,176 | ||||||||||||||
Quail Village | Reedsville, GA | 31 | 799,779 | 09/93 | 02/94 | 100 | % | 171,855 |
13 |
Boston Capital Tax Credit Fund III L.P. - Series 17
PROPERTY PROFILES AS OF MARCH 31, 2014
Continued
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Royale Townhomes | Glen Muskegon, MI | 79 | $ | 1,651,492 | 12/93 | 12/94 | 100 | % | $ | 909,231 | ||||||||||||
Waynesburg House Apts. | Waynesburg, PA | 34 | 1,382,627 | 07/94 | 12/95 | 100 | % | 501,140 | ||||||||||||||
West Front Residence | Skowhegan, ME | 30 | 1,309,220 | 09/94 | 08/94 | 100 | % | 487,390 | ||||||||||||||
West Oaks Apartments | Raleigh, NC | 50 | 1,417,815 | 06/93 | 07/93 | 100 | % | 811,994 | ||||||||||||||
White Castle Manor | White Castle, LA | 24 | 720,996 | 06/94 | 05/94 | 100 | % | 198,684 |
14 |
Boston Capital Tax Credit Fund III L.P. - Series 18
PROPERTY PROFILES AS OF MARCH 31, 2014
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Briarwood Apartments | Humbolt, IA | 20 | $ | 666,090 | 08/94 | 04/95 | 100 | % | $ | 162,536 | ||||||||||||
Chelsea Sq. Apartments | Chelsea, MA | 6 | 301,393 | 08/94 | 12/94 | 100 | % | 451,929 | ||||||||||||||
Cox Creek Apartments | Ellijay, GA | 25 | 784,598 | 01/94 | 01/95 | 100 | % | 214,824 | ||||||||||||||
Harris Music Building | West Palm Beach, FL | 38 | 1,434,724 | 06/94 | 11/95 | 100 | % | 1,286,304 | ||||||||||||||
Kristine Apartments | Bakersfield, CA | 60 | 780,001 | 10/94 | 10/94 | 100 | % | 1,636,293 | ||||||||||||||
Lakeview Meadows II | Battle Creek, MI | 60 | 1,286,524 | 08/93 | 05/94 | 100 | % | 1,029,000 | ||||||||||||||
Leesville Elderly Apts. | Leesville, LA | 54 | 2,029,864 | 06/94 | 06/94 | 100 | % | 776,500 | ||||||||||||||
Lockport Seniors Apts. | Lockport, LA | 40 | 1,108,162 | 07/94 | 09/94 | 100 | % | 595,439 | ||||||||||||||
Marengo Park Apts. | Marengo, IA | 24 | 688,220 | 10/93 | 03/94 | 100 | % | 133,552 | ||||||||||||||
Meadowbrook Apartments | Oskaloosa, IA | 16 | 447,401 | 11/93 | 09/94 | 100 | % | 96,908 | ||||||||||||||
Meadows Apartments | Show Low, AZ | 40 | 1,375,400 | 03/94 | 05/94 | 100 | % | 420,302 | ||||||||||||||
Natchitoches Senior Apartments | Natchitoches, LA | 40 | 1,538,768 | 06/94 | 12/94 | 100 | % | 644,175 |
15 |
Boston Capital Tax Credit Fund III L.P. - Series 18
PROPERTY PROFILES AS OF MARCH 31, 2014
Continued
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Newton Plaza Apts. | Newton, IA | 24 | $ | 749,425 | 11/93 | 09/94 | 100 | % | $ | 166,441 | ||||||||||||
Oakhaven Apartments | Ripley, MS | 24 | 441,556 | 01/94 | 07/94 | 100 | % | 116,860 | ||||||||||||||
Peach Tree Apartments | Felton, DE | 32 | 1,364,003 | 01/94 | 07/93 | 100 | % | 206,100 | ||||||||||||||
Pepperton Villas | Jackson, GA | 29 | 799,229 | 01/94 | 06/94 | 100 | % | 222,762 | ||||||||||||||
Vista Loma Apartments | Bullhead City, AZ | 41 | 1,492,436 | 05/94 | 09/94 | 100 | % | 465,650 | ||||||||||||||
Vivian Seniors Apts. | Vivian, LA | 40 | 1,602,976 | 07/94 | 09/94 | 100 | % | 625,691 |
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Boston Capital Tax Credit Fund III L.P. - Series 19
PROPERTY PROFILES AS OF MARCH 31, 2014
Property Name | Location | Units | Mortgage Balance As of 12/31/13 | Acq Date | Const Comp | Qualified Occupancy 3/31/14 | Cap Con Paid Thru 3/31/14 | |||||||||||||||
Carrollton Villa | Carrollton, MO | 48 | $ | 1,322,464 | 06/94 | 03/95 | 100 | % | $ | 1,121,758 | ||||||||||||
Mansura Villa II Apartments | Mansura, LA | 32 | 884,661 | 05/94 | 08/95 | 100 | % | 227,910 | ||||||||||||||
Munford Village | Munford, AL | 24 | 738,119 | 10/93 | 04/94 | 100 | % | 165,800 | ||||||||||||||
Northpoint Commons | Kansas City, MO | 158 | 3,430,659 | 07/94 | 06/95 | 100 | % | 2,124,024 | ||||||||||||||
Poplar Ridge Apts. | Madison, VA | 16 | 602,637 | 12/93 | 10/94 | 100 | % | 124,704 | ||||||||||||||
Sherwood Knoll | Rainsville, AL | 24 | 719,569 | 10/93 | 04/94 | 100 | % | 162,500 | ||||||||||||||
Summerset Apartments | Swainsboro, GA | 30 | 874,101 | 01/94 | 11/95 | 100 | % | 223,029 | ||||||||||||||
Village North I | Independence, KS | 24 | 779,447 | 06/94 | 12/94 | 100 | % | 190,471 |
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Item 3. | Legal Proceedings | |
None. |
Item 4. | Mine Safety Disclosures | |
Not Applicable. |
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Item 5. | Market for the Fund's Limited Partnership Interests, Related Fund Matters and Issuer Purchases of Fund Interests |
(a) | Market Information | |
The Fund is classified as a limited partnership and does not have common stock. There is no established public trading market for the BACs and it is not anticipated that any public market will develop. | ||
(b) | Approximate number of security holders | |
As of March 31, 2014 the Fund has 12,709 BAC holders for an aggregate of 21,996,102 BACs, at a subscription price of $10 per BAC, received and accepted. | ||
The BACs were issued in series. Series 15 consists of 2,363 investors holding 3,870,500 BACs, Series 16 consists of 3,266 investors holding 5,429,402 BACs, Series 17 consists of 2,792 investors holding 5,000,000 BACs, Series 18 consists of 2,042 investors holding 3,616,200 BACs, and Series 19 consists of 2,246 investors holding 4,080,000 BACs at March 31, 2014. | ||
(c) | Dividend history and restriction | |
The Fund has made no distributions of net cash flow to its BAC holders from its inception, September 19, 1991 through March 31, 2014. | ||
During the year ended March 31, 2005, the Fund made a return of equity distribution to the Series 15 and 17 BAC holders in the amount of $107,567 and $24,767, respectively. The distributions were the result of proceeds available from the sale or transfer of one or more Operating Partnerships. | ||
During the year ended March 31, 2007, the Fund made a return of equity distribution to the Series 15 and 17 BAC holders in the amount of $940,481 and $865,443, respectively. The distributions were the result of proceeds available from the sale or transfer of one or more Operating Partnerships. | ||
During the year ended March 31, 2011, the Fund made a return of equity distribution to the Series 19 BAC holders in the amount of $1,500,000. The distributions were the result of proceeds available from the sale or transfer of one or more Operating Partnerships. | ||
During the year ended March 31, 2012, the Fund made a return of equity distribution to the Series 19 BAC holders in the amount of $261,830. The distributions were the result of proceeds available from the sale or transfer of one or more Operating Partnerships. |
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During the year ended March 31, 2013, the Fund did not make a return of equity distribution to the BAC holders. | ||
During the year ended March 31, 2014, the Fund made a return of equity distribution to the Series 17 and 19 BAC holders in the amount of $382,881 and $4,080,000, respectively. The distributions were the result of proceeds available from the sale or transfer of one or more Operating Partnerships. | ||
The Fund Agreement provides that profits, losses and credits will be allocated each month to the holder of record of a BAC as of the last day of such month. Allocation of profits, losses and credits among BAC holders are made in proportion to the number of BACs held by each BAC holder. | ||
Any distributions of net cash flow or liquidation, sale or refinancing proceeds will be made within 180 days of the end of the annual period to which they relate. Distributions will be made to the holders of record of a BAC as of the last day of each month in the ratio which (i) the BACs held by the holder on the last day of the calendar month bears to (ii) the aggregate number of BACs outstanding on the last day of such month. |
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
This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements including our intentions, hopes, beliefs, expectations, strategies and predictions of our future activities, or other future events or conditions. These statements are "forward looking statements" within the meaning of Section 27A of the Securities Act of 1993, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created by these acts. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including, for example, the factors identified in Part I, Item 1A of this Report. Although we believe that the assumptions underlying these forward-looking statements are reasonable, any of the assumptions could be inaccurate, and there can be no assurance that the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.
Liquidity
The Fund's primary source of funds is the proceeds of each Offering. Other sources of liquidity include (i) interest earned on capital contributions held pending investment or on working capital reserves and (ii) cash distributions from operations of the Operating Partnerships in which the Fund has and will invest. All sources of liquidity are available to meet the obligations of the Fund. The Fund does not anticipate significant cash distributions in the long or short term from operations of the Operating Partnerships.
The Fund is currently accruing the annual fund management fee to enable each series to meet current and future third party obligations. Fund management fees accrued during the year ended March 31, 2014 were $847,406, and total fund management fees accrued as of March 31, 2014 were $18,154,145. During the year ended March 31, 2014 the Fund paid fees of $5,890,621 which were applied to prior year accruals.
Pursuant to the Partnership Agreement, such liabilities will be deferred until the Fund receives sale or refinancing proceeds from Operating Partnerships, and at that time proceeds from such sales or refinancing would be used to satisfy such liabilities.
Capital Resources
The Fund offered BACs in the Offering declared effective by the Securities and Exchange Commission on January 24, 1992. The Fund received and accepted subscriptions for $219,961,020 representing 21,996,102 BACs from investors admitted as BAC holders in Series 15 through 19 of the Fund. The Fund issued the last BACs in Series 19 on December 17, 1993. This concluded the Public Offering of the Fund.
(Series 15). The Fund commenced offering BACs in Series 15 on January 24, 1992. The Fund received and accepted subscriptions for $38,705,000 representing 3,870,500 BACs from investors admitted as BAC holders in Series 15. Offers and sales of BACs in Series 15 were completed and the last of BACs in Series 15 were issued by the Fund on June 26, 1992.
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During the fiscal year ended March 31, 2014, the Fund did not use any of Series 15 net offering proceeds to pay outstanding installments of its capital contributions. As of March 31, 2014, proceeds from the offer and sale of BACs in Series 15 had been used to invest in a total of 68 Operating Partnerships in an aggregate amount of $29,390,546. As of March 31, 2014, 44 of the properties have been disposed of and 24 remain. The Fund had completed payment of all installments of its capital contributions to the Operating Partnerships.
(Series 16). The Fund commenced offering BACs in Series 16 on July 10, 1992. The Fund received and accepted subscriptions for $54,293,000, representing 5,429,402 BACs in Series 16. Offers and sales of BACs in Series 16 were completed and the last of the BACs in Series 16 were issued by the Fund on December 28, 1992.
During the fiscal year ended March 31, 2014, the Fund did not use any of Series 16 net offering proceeds to pay outstanding installments of its capital contributions. As of March 31, 2014, the net proceeds from the offer and sale of BACs in Series 16 had been used to invest in a total of 64 Operating Partnerships in an aggregate amount of $40,829,228. As of March 31, 2014, 36 of the properties have been disposed of and 28 remain. The Fund had completed payment of all installments of its capital contributions to 63 of the 64 Operating Partnerships. Series 16 has $50,008 in capital contributions that remain to be paid to 1 Operating Partnership. The remaining contributions will be released when the Operating Partnership has achieved the conditions set forth in their partnership agreements.
(Series 17). The Fund commenced offering BACs in Series 17 on January 24, 1993. The Fund received and accepted subscriptions for $50,000,000 representing 5,000,000 BACs from investors admitted as BAC holders in Series 17. Offers and sales of BACs in Series 17 were completed and the last of the BACs in Series 17 were issued on June 17, 1993.
During the fiscal year ended March 31, 2014, the Fund did not use any of Series 17 net offering proceeds to pay outstanding installments of its capital contributions. As of March 31, 2014, proceeds from the offer and sale of BACs in Series 17 had been used to invest in a total of 49 Operating Partnerships in an aggregate amount of $37,062,980. As of March 31, 2014, 32 of the properties have been disposed of and 17 remain. The Fund had completed payments of all installments of its capital contributions to 47 of the 49 Operating Partnerships. Series 17 has outstanding contributions payable to 2 Operating Partnerships in the amount of $16,712 as of March 31, 2014. The remaining contributions will be released when the Operating Partnerships have achieved the conditions set forth in their partnership agreements.
(Series 18). The Fund commenced offering BACs in Series 18 on June 17,1993. The Fund received and accepted subscriptions for $36,162,000 representing 3,616,200 BACs from investors admitted as BAC holders in Series 18. Offers and sales of BACs in Series 18 were completed and the last of the BACs in Series 18 were issued on September 22, 1993.
During the fiscal year ended March 31, 2014, the Fund did not use any of Series 18 net offering proceeds to pay outstanding installments of its capital contributions. As of March 31, 2014, proceeds from the offer and sale of BACs in Series 18 had been used to invest in a total of 34 Operating Partnerships in an aggregate amount of $26,652,205. As of March 31, 2014, 16 of the properties have been disposed of and 18 remain. The Fund had completed payments of all installments of its capital contributions to 32 of the 34
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Operating Partnerships. Series 18 has $18,554 in capital contributions that remain to be paid to the other 2 Operating Partnerships. The remaining contributions will be released when the Operating Partnerships have achieved the conditions set forth in their partnership agreements.
(Series 19). The Fund commenced offering BACs in Series 19 on October 8, 1993. The Fund received and accepted subscriptions for $40,800,000 representing 4,080,000 BACs from investors admitted as BAC holders in Series 19. Offers and sales of BACs in Series 19 were completed and the last of the BACs in Series 19 were issued on December 17, 1993.
During the fiscal year ended March 31, 2014, the Fund did not use any of Series 19 net offering proceeds to pay outstanding installments of its capital contributions. As of March 31, 2014, proceeds from the offer and sale of BACs in Series 19 had been used to invest in a total of 26 Operating Partnerships in an aggregate amount of $30,164,485. As of March 31, 2014, 18 of the properties have been disposed of and 8 remain. The Fund had completed payments of all installments of its capital contributions to the Operating Partnerships.
Results of Operations
The Fund incurred an annual fund management fee to the general partner and/or its affiliates in an amount equal to 0.5% of the aggregate cost of the apartment complexes owned by the Operating Partnerships, less the amount of various partnership management and reporting fees paid or payable by the Operating Partnerships. The annual fund management fee incurred, net of reporting fees received for the fiscal years ended March 31, 2014 and 2013, was $566,582 and $742,295, respectively.
The Fund's investment objectives do not include receipt of significant cash distributions from the Operating Partnerships in which it has invested or intends to invest. The Fund's investments in Operating Partnerships have been and will be made principally with a view towards realization of Federal Housing Tax Credits for allocation to its partners and BAC holders.
(Series 15). As of March 31, 2014 and 2013, the average Qualified Occupancy for the series was 100%. The series had a total of 24 properties at March 31, 2014, all of which were at 100% Qualified Occupancy.
For the tax years ended December 31, 2013 and 2012, the series, in total, generated $(258,693) and $1,219,508, respectively, in passive tax income (losses) that were passed through to the investors. All of the Operating Partnerships in the Series have completed their respective credit periods prior to the year ended December 31, 2008, and it is not expected that any additional tax credits will be generated.
As of March 31, 2014 and 2013, Investments in Operating Partnerships for Series 15 was $0. Investments in Operating Partnerships was affected by the way the Fund accounts for its investments, the equity method. By using the equity method the Fund adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued.
For the years ended March 31, 2014 and 2013, the net income (loss) for series 15 was $(117,270) and $(152,736), respectively. The major components of these amounts are the Fund's share of income from Operating Partnerships and the partnership management fee.
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Beckwood Manor Eight Limited Partnership (Lakeside Apartments) is a 32-unit senior property located in Lake Village, Arkansas. The property receives rental assistance for 23 units and is more successful renting these units. It remains difficult to rent the units that do not have rental assistance. There are several other low income tax credit developments in the area offering rental assistance, and the property’s continued low occupancy is attributed to this competition. Management advertises the property in Lake Village’s local paper and in several other regional newspapers. The property also distributes fliers to all surrounding communities; however, management believes word of mouth and referrals are the most effective forms of marketing. Management also noted that crime is an issue in the area and has hired two police officers to work at the property to offset potential security concerns. One officer serves as property manager while the other officer handles maintenance responsibilities. As there have been no major security incidents reported at the property, the addition of security is a proactive measure. In 2013, the property occupancy averaged 57%, which was a slight improvement from the prior year’s average of 50%, and the property continued to operate below breakeven. The deficit was primarily funded by accruing management fees and management payroll due to an affiliate of the operating partner. This is historically how deficits have been funded. For the first three months of 2014, average occupancy was 53% and the property operated below breakeven through March 2014. The mortgage payments, taxes, insurance, and accounts payable are all current. On December 31, 2010, the 15-year low income housing tax credit compliance period expired with respect to Beckwood Manor Eight.
Livingston Plaza, Limited (Livingston Plaza) is a 24-unit, family property located in Livingston, Texas. The property has struggled with occupancy levels for several years. Despite efforts to improve the reputation of the property and reduce resident turnover and evictions, occupancy averaged 67% through March 31, 2014, compared to 66% in 2013. The continued low occupancy is partially due to economic conditions in the area and lack of qualified applicants. Management reports that trailer home ownership is very affordable in the area and often monthly mortgage payments are at a similar level as the rents at Livingston Plaza. There are also several competitive properties less than a mile from the property. Marketing consists of advertisements in local newspapers and distributing fliers to local businesses, churches, and schools. Despite the low occupancy, with operating expenses tightly controlled by the operating general partner including its affiliated management company not charging a management fee to manage the property, Livingston Plaza was able to operate at a breakeven level during the first quarter of 2014 and in 2013. The mortgage payments, real estate taxes, insurance, and accounts payable are current as of March 31, 2014. The operating general partner guarantee is unlimited in time and amount. On December 31, 2008, the 15-year low income housing tax credit compliance period expired with respect to Livingston Plaza. The investment general partner has investigated various disposition strategies for this property that would be consistent with the investment objectives of the investment partnership and has concluded that it is unlikely that any proceeds will be available for distribution to the investment limited partners from the disposition of the property or the Operating Partnership.
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In September 2012, the investment general partner transferred its interest in Investment Group of Payson to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,394,713 and cash proceeds to the investment partnership of $25,000. Of the total proceeds received, $763 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $3,500 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $20,737 were returned to cash reserves held by Series 15. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $20,737 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In November 2012,the investment general partner transferred its interest in Grantsville Associates LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,398,355 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $3,500 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $6,500 were returned to cash reserves held by Series 15. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,500 as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
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In November 2012, the investment general partner transferred its interest in Shenandoah Village LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,385,751 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $3,500 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $6,500 were returned to cash reserves held by Series 15. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,500 as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In November 2012, the investment general partner transferred its interest in Westernport Associates LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,400,157 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $3,500 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $6,500 were returned to cash reserves held by Series 15. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,500 as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
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In December 2012, the investment general partner transferred its interest in Bridlewood, LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $726,108 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $6,875 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $2,600 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $525 were returned to cash reserves held by Series 15. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $525 as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In December 2013, the investment general partner transferred its interest in Ridgeview Apartments of Brainerd, LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $804,186 and cash proceeds to the investment partnership of $24,326. Of the total proceeds received, $1,080 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $2,500 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $20,746 were returned to cash reserves held by Series 15. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $20,746 as of December 31, 2013.
In February 2014, the investment general partner of East Park Apartments I, LP approved an agreement to sell the property to a third party buyer and the transaction closed in June 2014. The sales price for the property is $850,000, which includes the outstanding mortgage balance of approximately $685,000 and cash proceeds to the investment partnership of $335,000. Of the proceeds received by the investment partnership, $21,300 represents reporting fees due to an affiliate of the investment partnership and $5,000 will be paid to BCAMLP for expenses related to the sale, which include third party legal costs. The remaining proceeds from the sale of approximately $308,700 will be returned to cash reserves held by Series 15. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution.
(Series 16). As of March 31, 2014 and 2013, the average Qualified Occupancy for the series was 100%. The series had a total of 28 properties at March 31, 2014, all of which were at 100% Qualified Occupancy.
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For the tax years ended December 31, 2013 and 2012, the series, in total, generated $(1,011,704) and $806,237, respectively, in passive tax income (losses) that were passed through to the investors. All of the Operating Partnerships in the Series have completed their respective credit periods prior to the year ended December 31, 2008, and it is not expected that any additional tax credits will be generated.
As of March 31, 2014 and 2013, Investments in Operating Partnerships for Series 16 was $0. Investments in Operating Partnerships was affected by the way the Fund accounts for these investments, the equity method. By using the equity method the Fund adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued.
For the years ended March 31, 2014, and 2013, the net income (loss) for series 16 was $508,571 and $(165,922), respectively. The major components of these amounts are the Fund's share of income from Operating Partnerships and the partnership management fee.
Butler Rental Housing LP (Forest Pointe Apartments) is a 25-unit family property located in Butler, Georgia. In 2013 the property operated below breakeven due to low occupancy caused by a weak rental market. Occupancy began to decline in June 2011 and continued to show weakness through all of 2012, averaging 80% for the year. However, occupancy showed some improvement in 2013, averaging 84% for the year. The market suffers from high unemployment and an overall market trend of household consolidation. New onsite and district managers were hired in 2012 and they improved operations by increasing marketing efforts and offering tenant referral incentives to counter the effects of the competitive rental market. As a result, the property was 100% occupied as of March 31, 2014. Property performance was below breakeven in 2013 primarily due to the vacancy losses. The property continued to operate slightly below breakeven in the first quarter of 2014. The property’s cash flow is expected to improve with the increased occupancy and reduced marketing costs. The operating general partner is funding deficits as needed. The mortgage payments, taxes, and insurance are all current. On December 31, 2008, the 15-year low income housing tax credit compliance period expired with respect to Butler Rental Housing LP.
Blairsville Rental Housing, Limited Partnership (Tan Yard Branch Apartments I) is a 24-unit family property located in Blairsville, GA. The property has performed poorly over the last several years due to locally weak economic conditions. As a result of the tenant base being largely composed of hourly-wage employees, evictions and move-outs continue to keep occupancy low. The property’s rural location also limits property traffic and exposure, further contributing to the weak occupancy. Management has aggressively marketed the community by distributing fliers throughout the area and by having directional signage installed. In addition, a tenant referral program was implemented and move-in specials are being offered. Occupancy increased slightly from an average of 84% in 2012 to 85% in 2013. Through the first quarter of 2014 the property has continued to operate below breakeven and has averaged 80% occupancy. The operating general partner continues to fund deficits as needed. The mortgage, real estate taxes, and insurance payments are all current. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Blairsville Rental Housing.
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St. Croix Commons Limited Partnership (St. Croix Commons Apartments) is a 40-unit family property located in Woodville, Wisconsin. In the first quarter of 2012, the investment general partner learned that the property was ten months in arrears on its mortgage and the lender had issued a notice of default. The operating general partner contacted the lender in the hope of gaining an interest only forbearance for a four year period. The lender did not agree to modify the terms of the loan and demanded a payment of $736,851 to be made by November 15, 2011 to cure the default. The operating general partner failed to make the payment and the lender commenced foreclosure proceedings. The redemption period for the foreclosure in this action was six months. The default foreclosure judgment was entered on February 23, 2012; the redemption period ended on August 23, 2012. The resulting foreclosure sale in 2012 did not result in any recapture or penalties because the property was beyond the compliance period. A local developer bought the loan at sheriff’s sale from the lender. The operating general partner then bought the property back from the developer. In 2013 the partnership obtained a mortgage from a credit union. The new mortgage agreement allowed the property to generate positive cash flow. Occupancy at the end of the first quarter of 2014 was 95% and the property has continued to operate above breakeven. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to St. Croix Commons.
Greenfield Properties, Limited Partnership (Greenfield Properties) is a 20-unit elderly property located in Greenfield, Missouri. The property continued to operate below breakeven in the first quarter of 2014 due to low occupancy and high utility expenses. The property averaged 68% occupancy through the first quarter of 2014, and it ended March 2014 at 75% occupied. Management continues to advertise in the local newspaper and place fliers in area schools and at the local community center, but persistent low employment and a depressed local economy continue to present leasing challenges. Management has worked to improve controllable expenses, but utility costs continue to be high as the property is carrying the vacant unit costs on the house meters longer than expected. All taxes, insurance and mortgage payments are current as of March 31, 2014. On December 31, 2008, the 15-year low income housing tax credit compliance period expired with respect to Greenfield Properties, Limited Partnership. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
In June 2013, the operating general partner of Meadows of Southgate L.D.H.A. LP entered into an agreement to sell the property to a non-affiliated third party buyer and the transaction closed on June 28, 2013. The sales price of the property was $2,739,000, which included the outstanding mortgage balance of approximately $1,744,202 and cash proceeds to the investment partnership of $727,000. Of the total proceeds received by the investment partnership, $7,500 was paid to BCAMLP for expenses related to the sale, which include third party legal costs. The remaining proceeds from the sale of $719,500 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $719,500 as of June 30, 2013.
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In August 2012, the investment general partner transferred its interest in Eastman Elderly Housing LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,089,806 and receipt of a Promissory Note (the “Note”) to the investment partnership in the amount of $78,516 maturing on December 31, 2012. The Note was paid on November 7, 2012. Of the amounts paid under the Note, $5,000 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $73,516 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $73,516 as of September 30, 2012. In December 2012, additional proceeds of $557 were received and returned to the cash reserves held by Series 16.
In September 2012, the investment general partner transferred its interest in Willcox Investment Group II, An AZ Limited Partnership to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,025,098 and cash proceeds to the investment partnership of $25,000. Of the total proceeds received, $563 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $3,500 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $20,937 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $20,937 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
Anson Limited Partnership (Parkwood Apartments) is a 24-unit, elderly property located in Anson, ME. Rural Development approved a change in management in December 2012. The change was made without the consent of the investment general partner. After discussions with Rural Development, the operating general partner believed the change was in the best interest of the Operating Partnership. The new management company has been focused on correcting deferred maintenance issues and maintaining high occupancy. As of March 31, 2014, the property was 88% occupied but it operated at an average occupancy of 92% through the first quarter 2014. The property operated above breakeven in 2013 and continued to do so through the first quarter of 2014. The mortgage, taxes, and insurance are all current. On December 31, 2008, the 15-year low income housing tax credit compliance period expired with respect to Anson Limited Partnership. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
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In December 2012, the investment general partner transferred its interest in Bentonia Elderly, LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $783,133 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $1,050 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $2,600 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $6,350 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,350 as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In December 2012, the investment general partner transferred its interest in Joiner Elderly, LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $681,441 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $6,361 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $2,600 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $1,039 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $1,039 as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
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In December 2012, the investment general partner transferred its interest in Tchula Elderly, LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $760,436 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $2,150 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $2,600 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $5,250 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $5,250 as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In December 2012, the investment general partner transferred its interest in Turtle Creek Family LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $790,251 and cash proceeds to the investment partnership of $10,000. Of the total proceeds received, $7,400 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $2,600 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. There were no remaining proceeds returned to cash reserves held by Series 16. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, no gain on the transfer of the Operating Partnership was recorded as of December 31, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
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In December 2012, the investment general partner transferred its interest in Twin Oaks Associates LP (VA) to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,343,303 and receipt of a Promissory Note (the “Note”) to the investment partnership in the amount of $70,000 maturing on June 30, 2013. The maturity date of the Note was extended to September 30, 2013 and was further extended to December 31, 2013. The Note was repaid in the amount of $69,488 on December 9, 2013. The remaining $512 of the Note balance is not expected to be collected, and accordingly, has been written off. Of the amounts payable under the Note, $4,488 will be paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $65,000 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $65,000 as of December 31, 2012.
Falcon Ridge L.P. (Falcon Ridge Apartments) is a 32-unit family property located in Beattyville, Kentucky. Since 2012, occupancy has been stable at 97%, however, the property continued to have below breakeven operations in 2013. The deficit resulted from high utilities and real estate tax expenses. The investment general partner has repeatedly requested, but has had difficulties receiving, up-to-date information and monthly financials. The 15-year low income housing tax credit compliance period expired on December 31, 2008.
In July 2013, the investment general partner transferred its interest in Talbot Village II LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $635,180 and cash proceeds to the investment partnership of $57,337. Of the total proceeds received, $2,120 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $50,217 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $50,217 as of September 30, 2013.
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In September 2013, the investment general partner transferred its interest in Isola Square LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $903,802 and cash proceeds to the investment partnership of $27,114. Of the total proceeds received, $800 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $21,314 were returned to cash reserves held by Series 16. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $21,314 as of September 30, 2013.
(Series 17). As of March 31, 2014 and 2013, the average Qualified Occupancy for the Series was 100%. The series had a total of 17 properties at March 31, 2014, all of which were at 100% Qualified Occupancy.
For the tax years ended December 31, 2013 and 2012, the series, in total, generated $5,071,394 and $(1,091,245), respectively, in passive tax income (losses) that were passed through to the investors. All of the Operating Partnerships in the Series have completed their respective credit periods prior to the year ended December 31, 2008, and it is not expected that any additional tax credits will be generated.
As of March 31, 2014 and 2013, Investments in Operating Partnerships for Series 17 was $0. Investments in Operating Partnerships was affected by the way the Fund accounts for these investments, the equity method. By using the
equity method the Fund adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued.
For the years ended March 31, 2014 and 2013, the net income (loss) for series 17 was $5,558,239 and $85,976, respectively. The major components of these amounts are the Fund's share of income from Operating Partnerships and the partnership management fee.
Skowhegan Housing, LP (West Front Residence) is a 30-unit, 100% LIHTC property located in Skowhegan, Maine. The property continues to operate below breakeven due to high vacancy, insufficient rental rates, and high operating expenses. The mortgage has been placed in default and the operating general partner filed for bankruptcy protection. Although the property continued to operate below breakeven through 2013, the replacement reserve account is being funded and the accounts payable have decreased substantially. There was a $10 per unit per month rent increase that took effect in January 2013. Occupancy is 100% as of March 31, 2014.
On October 11, 2011, Maine State Housing Authority (MSHA), the mortgage lender, issued a notice of default due to unpaid taxes, delays in past insurance payments, and underfunded tax, insurance, and replacement reserve escrow accounts. As of the end of the fourth quarter of 2011, the insurance payment issue had been resolved and the operating general partner had submitted a payment plan to MSHA to address the remaining default issues. To date, the operating general partner continues to outline a workout plan with MSHA and is working to reduce the interest rate down to 6%. This will produce a savings of more than $50,000 annually, and would likely allow the property to operate above breakeven. If approved, at the end of year five, the operating general partner plans to explore various disposition opportunities consistent with the investment objectives of the investment partnership. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Skowhegan Housing, LP.
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Green Acres Limited Partnership (Green Acres Estates) is a 48-unit (20 tax credit units) property located in West Bath, Maine. The property operated below breakeven in 2013 due to high vacancy, tenant receivables, and high operating expenses. The mortgage has been placed in default and the operating general partner filed for bankruptcy protection. Although the property continues to operate below breakeven through 2013, accounts payable have decreased substantially, the replacement reserve account is being funded, taxes are current, and the tax escrow is sufficient to cover the tax payment due in October. Management is working to evict non-paying tenants and replace them with quality, paying residents. The on-site manager has been instructed to take a harder line with tenants who do not pay on time. In addition, management is in the process of establishing performance metrics for the managers, which includes a section on improving tenant receivables. Several units have been rehabbed with owner support, and the overall outlook for the property has been improved. The property manager is aggressively marketing the property in the local area. As a result, physical occupancy was 94% as of March 31, 2014.
On October 11, 2011, MSHA, the mortgage lender, issued a notice of default due to unpaid taxes, delays in past insurance payments, and underfunded tax, insurance, and replacement reserve escrow accounts. At of the end of the fourth quarter of 2011, the insurance payment issue had been resolved and the operating general partner had submitted a payment plan to MSHA to address the remaining default issues. To date, the operating general partner continues to outline a workout plan with MSHA and is working to reduce the interest rate down to 6%. This will produce a savings of more than $50,000 annually, and would likely allow the property to operate above breakeven. If approved, at the end of year five, the operating general partner plans to explore various disposition opportunities consistent with the investment objectives of the investment partnership. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Green Acres Limited Partnership.
Mt. Vernon Associates, LP (Green Court Apartments) is a 76-unit property located in Mt. Vernon, New York. In 2012 the property had average occupancy of 89% and operated above breakeven. Occupancy remains unchanged through the first quarter of 2014 averaging 89% and operations continued above breakeven. In 2012 the investment general partner was notified that the second mortgage in the amount of $250,000 held by the Mount Vernon Urban Renewal Agency (MVURA) was delinquent. The operating general partner successfully negotiated a debt restructuring with MVURA and no payments are required until the restructuring occurs in 2014. MVURA did not issue a default notice. The operating general partner anticipates that the debt restructure will allow the property to meet its debt service and will resolve the delinquent debt payment issue.
The investment general partner performed a site visit in November 2013 and noted several issues of deferred maintenance. The operating general partner is not turning vacant units as they plan on doing a significant rehabilitation once the debt re-structuring is approved. Quarterly reporting is an ongoing issue with management and the investment general partner is working with the operating general partner to resolve the issue. The investment general partner did receive the 2013 audited financial statement which shows the property operating above breakeven and generating cash. All taxes, insurance, and payments on the first mortgage were current at the end of March 31, 2014. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Mt. Vernon Associates. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
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In September 2012, the investment general partner transferred its interest in Soledad Enterprises, A CA Limited Partnership to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,790,189 and cash proceeds to the investment partnership of $25,000. Of the total proceeds received, $563 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $3,500 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $20,937 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $20,937 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In December 2012, the investment general partner of Briarwood of DeKalb, LP entered into an agreement to sell the property to a non-affiliated third party buyer and the transaction closed on December 20, 2012. The sales price of the property was $1,200,000, which included the outstanding mortgage balance of approximately $612,300 and cash proceeds to the investment partnership of $386,367. Of the total proceeds received by the investment partnership, $63,242 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the sale. Of the remaining proceeds, $7,500 was paid to BCAMLP for expenses related to the sale, which include third party legal costs. The remaining proceeds from the sale of $315,625 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $315,625 as of December 31, 2012.
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In July 2013, the investment general partner transferred its interest in Briarwood Village LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,064,784 and cash proceeds to the investment partnership of $118,109. Of the total proceeds received, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $113,109 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $113,109 as of September 30, 2013.
In July 2013, the investment general partner transferred its interest in Deerwood Village LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $598,232 and cash proceeds to the investment partnership of $60,267. Of the total proceeds received, $861 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $54,406 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $54,406 as of September 30, 2013.
In July 2013, the investment general partner transferred its interest in Doyle Village LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,098,025 and cash proceeds to the investment partnership of $131,328. Of the total proceeds received, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $126,328 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $126,328 as of September 30, 2013.
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In July 2013, the investment general partner transferred its interest in Houston Village L.P. to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $630,245 and cash proceeds to the investment partnership of $72,780. Of the total proceeds received, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $67,780 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $67,780 as of September 30, 2013.
In September 2013 the investment general partner transferred its interest in Greenwood Place LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,003,200 and cash proceeds to the investment partnership of $30,096. Of the total proceeds received, $900 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $24,196 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $24,196 as of September 30, 2013.
In September 2013, the investment general partner transferred its interest in Jonestown Manor LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $810,589 and cash proceeds to the investment partnership of $24,318. Of the total proceeds received, $750 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $18,568 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $18,568 as of September 30, 2013.
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In June 2013, the operating general partner of Largo Center Apartments LP entered into an agreement to sell the property to a third party buyer and the transaction closed on September 30, 2013. The sales price of the property was $11,600,000, which included the outstanding mortgage balance of approximately $3,980,341 and cash proceeds to the investment partnership of $5,200,000. Of the total proceeds received by the investment partnership, $16,667 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the sale. Of the remaining proceeds, $7,500 will be paid to BCAMLP for expenses related to the sale, which include third party legal costs. The remaining proceeds from the sale of $5,175,833 were returned to cash reserves held by Series 17. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $5,175,833 as of September 30, 2013. In addition, equity outstanding for the Operating Partnership in the amount of $6,086 was recorded as gain on the sale of the Operating Partnership as of September 30, 2013. In October 2013, additional proceeds of $50,000 were received and returned to the cash reserves held by Series 17. In February 2014, additional proceeds of $65,300 were received and returned to the cash reserves held by Series 17.
In December 2013, the investment general partner transferred 99% of its interest in Quail Village LP to a non-affiliated entity for its assumption of the outstanding mortgage balance of approximately $799,778 and cash proceeds to the investment partnership of $20,000. Of the total proceeds received, $8,221 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 will be paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $6,779 were returned to cash reserves held by Series 17. The remaining 1% investment limited partner interest in the Operating Partnership is scheduled to be transferred in June 2014. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the 99% transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,779 as of December 31, 2013.
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In January 2014, the investment general partner transferred its interest in Annadale Housing Partners to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $13,785,001 and cash proceeds to the investment partnership of $7,500. Of the total proceeds received, $7,500 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. There were no remaining proceeds returned to cash reserves held by Series 17. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership’s investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, no gain or loss on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded as of March 31, 2014.
(Series 18). As of March 31, 2014 and 2013, the average Qualified Occupancy for the series was 100%. The series had a total of 18 properties at March 31, 2014, all of which were at 100% Qualified Occupancy.
For the tax years ended December 31, 2013 and 2012, the series, in total, generated $493,920 and $3,070,339, respectively, in passive tax income (losses) that were passed through to the investors. All of the Operating Partnerships in the Series have completed their respective credit periods prior to the year ended December 31, 2008, and it is not expected that any additional tax credits will be generated.
As of March 31, 2014 and 2013, Investments in Operating Partnerships for Series 18 was $0. Investments in Operating Partnerships were affected by the way the Fund accounts for these investments, the equity method. By using the equity method the Fund adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued.
For the years ended March 31, 2014 and 2013, the net income (loss) for series 18 was $(21,394) and $681,398, respectively. The major components of these amounts are the Fund's share of reporting fees from Operating Partnerships and the partnership management fee.
Harris Housing Limited Partnership (Harris Music Lofts) is a 38-unit property located in West Palm Beach, Florida. The property has an expired first mortgage maturity that became due February 1, 2014, and a soft second and third mortgage with a maturity date of May 31, 2014. The operating general partner had marketed the property and initially identified a buyer willing to pay sale proceeds that would have extinguished the first mortgage note but only 40% of the principal balances of the subordinate debt. The operating general partner had numerous meetings with the mortgage holder to request that they accept the short sale, but this proposal was rejected. They also had rejected any such extensions or modifications on their debt and as a result, the operating general partner has been unable to refinance. The operating general partner believes that at maturity, the mortgage holder will foreclose on the project to extinguish the tax credit affordability restrictions. The operating general partner has confirmed that a Notice of Default has been sent by the mortgage holder due to the past due maturity date on the first mortgage note. The collective loan balances maturing on and before May 31, 2014 is $1,434,724. The 2013 audited financial statement reflected above breakeven operations. High occupancy and lower operating expenses have resulted in the property generating surplus cash. Through March 31, 2014, the property was 100% occupied. The low income tax credit compliance period expired on December 31, 2010.
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Ripley Housing, Limited Partnership (Oakhaven Apartments) is a 24-unit family property located in Ripley, Mississippi. Occupancy has trended downward since 2009, causing below breakeven operations. The vacancy is a direct reflection of economic conditions in Ripley, where ongoing job losses led to increased evictions and migration from the area. Management focused on marketing efforts, particularly internet advertising, in order to increase occupancy. They also performed outreach to the local HUD office, the Mississippi Housing Authority, and the Tippah County housing agencies. As of March 31, 2014 occupancy was 79% and the property was operating below breakeven. All real estate taxes, mortgage and insurance payments are current. On December 31, 2008, the 15-year low income housing tax credit compliance period expired with respect to Ripley Housing, LP. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
Natchitoches Elderly Apartments LP (Natchitoches Seniors Apartments) is a 40-unit property located in Natchitoches, Louisiana. Throughout 2013 occupancy declined significantly, ending the year with an average occupancy of 69%, and below breakeven operations for 2013. The operating general partner resumed direct management in January 2013; however, the on-site manager position was not filled until March 2013. Operations suffered during the lapse of on-site management and the property has been unable to fully recover. In the first quarter of 2014, management continued to offer a leasing concession of the option to pay the security deposit over the first three months of occupancy rather than in a lump sum at move-in. Advertising for the property consists of newspaper ads and flyers posted at local businesses. Average occupancy has increased slightly to 73% in the first quarter of 2014; however, the property continued to operate below breakeven during the quarter. The operating general partner has stated that any operating deficits will be funded by deferring related party management fees and, if necessary, they will advance funds to the Operating Partnership. The investment general partner inspected the property on June 10, 2013, and found it to be in fair condition, due to noticeable damage to the exterior brick and the condition of the common area corridors. The operating general partner stated that the areas of concern will be addressed and repaired. All mortgage, tax, and insurance payments are current. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Natchitoches Elderly Apartments LP. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
Newton I, Limited Partnership (Newton Plaza Apartments) is a 24-unit family development located in Newton, Iowa. Occupancy has trended downward since 2009, causing below breakeven operations. The management company attributed the poor occupancy to soft market conditions. In 2012, occupancy averaged 77%, but operating expenses were low and the property operated above breakeven. In 2013, management increased advertising in the local area and began offering rental incentives. As a result, occupancy improved to 85% during the year. However, the property operated below breakeven in 2013 primarily due to an increase in maintenance costs associated with flooring repairs. Occupancy in the first quarter of 2014 has improved to 92% and the property is operating above breakeven because of the increased occupancy and stabilized operating expenses. A site visit was completed in June 2012 and the property was found to be in good condition. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Newton I, LP. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
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In November 2012, the operating general partner of Bear Creek of Naples entered into an agreement to sell the property to a non-affiliated third party buyer and the transaction closed on December 12, 2012. The sales price of the property was $6,960,000, which included the outstanding mortgage balance of approximately $4,608,790 and cash proceeds to the investment partnership of $833,501. Of the total proceeds received by the investment partnership, $15,000 was paid to BCAMLP for expenses related to the sale, which include third party legal costs. The remaining proceeds from the sale of $818,501 were returned to cash reserves held by Series 18. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the sale of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $818,501 as of December 31, 2012. The gain on the sale includes a receivable in the amount of $70,000, which was recorded for Series 18 as of December 31, 2012. In February 2013, additional sale proceeds of $20,000 were received and returned to the cash reserves held by Series 18. In May 2013, additional sale proceeds of $13,000 were received and returned to the cash reserves held by Series 18.
Marengo Park Apartments LP (West Pine Homes) is a 24-unit property located in Marengo Park, IA. Occupancy has historically been an issue at the property, mainly due to evictions for nonpayment of rent and residents vacating because of job losses. Occupancy averaged 80% in 2013 but showed improvement in the last four months of the year. Occupancy continued to improve in 2014 and averaged 93% in the first quarter. Improvements in occupancy follow a recent increase in marketing efforts including advertising on Rent.com and in the Local Free Shopper (which covers three cities/towns), posting fliers in the local community, frequent contacts with local housing agencies, as well as ‘for rent’ signs located on the property. Due to expense control and the improvement in occupancy at year-end, the property operated above breakeven in 2013. The property continued to operate above breakeven in the first quarter of 2014. All debt service, taxes, and insurance are current. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Marengo Park Apartments. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
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In September 2012, the investment general partner transferred its interest in San Joaquin Enterprises III, A CA Limited Partnership to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,681,071 and cash proceeds to the investment partnership of $25,000. Of the total proceeds received, $563 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $3,500 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $20,937 were returned to cash reserves held by Series 18. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $20,937 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In January 2013, the operating general partner of Lakeview Meadows II LDHA LP approved an agreement to sell the property to an unaffiliated third party buyer and the transaction was scheduled to close in December 2013. However, the transaction is not moving forward due to the buyer’s inability to obtain financing.
In February 2013, the operating general partner of Westminster Meadow LDHA Limited Partnership entered into an agreement to sell the property to an unaffiliated third party buyer and the transaction closed on March 26, 2013. The sales price of the property was $1,817,470, which included the outstanding mortgage balance of approximately $1,767,470 and cash proceeds to the investment partnership of $1,000. Of the total proceeds received by the investment partnership, $1,000 was paid to BCAMLP for expenses related to the sale, which include third party legal costs. There were no remaining proceeds from the sale returned to cash reserves held by Series 18. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, no gain on the sale of the Operating Partnership was recorded as of March 31, 2013.
In August 2013, the investment general partner of Series 18 and Series 19 transferred their interests in Clarke School LP, to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $2,716,511 and cash proceeds to the investment partnerships of $14,150 and $5,850, for Series 18 and Series 19, respectively. Of the total proceeds received, $9,150 and $5,850, for Series 18 and 19, respectively, represents reporting fees due to an affiliate of the investment partnerships and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. No proceeds were returned to cash reserves held by Series 18 and Series 19, respectively. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership’s investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, no gain or loss on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded as of September 30, 2013. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there were a capital transaction involving the property owned by the Operating Partnership at any time within five years from the initial transfer date, there would be residual payment of 50% of any net distributable proceeds due to the investment partnership in effect at the date the investment limited partners transferred their respective interests.
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In December 2013, the investment general partner transferred its interest in Rio Grande Apartments, LTD. to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,767,137 and cash proceeds to the investment partnership of $63,305. Of the total proceeds received, $45,787 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $2,500 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $15,018 were returned to cash reserves held by Series 18. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $15,018 as of December 31, 2013. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 5 years from the initial transfer date, there would be residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
(Series 19). As of March 31, 2014 and 2013, the average Qualified Occupancy for the series was 100%. The series had a total of 8 properties at March 31, 2014, all of which were at 100% Qualified Occupancy.
For the tax year ended December 31, 2013 and 2012, the series, in total, generated $(351,106) and $489,430, respectively, in passive tax income (losses) that were passed through to the investors. All of the Operating Partnerships in the Series have completed their respective credit periods prior to the year ended December 31, 2008, and it is not expected that any additional tax credits will be generated.
As of March 31, 2014 and 2013, Investments in Operating Partnerships for Series 19 was $0. Investments in Operating Partnerships are affected by the way the Fund accounts for these investments, the equity method. By using the
equity method the Fund adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued.
For the years ended March 31, 2014 and 2013, the net income (loss) for series 19 was $(112,942) and $1,175,048, respectively. The major components of these amounts are the Fund's share of income from Operating Partnerships and partnership management fee.
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Carrollton Villa, L.P. (Meadow Ridge Apartments), is a 35-unit family project in Carrollton, Missouri. The property entered into a mortgage modification agreement in 2010 that converted the hard debt note to a soft note payable from surplus cash. The Missouri Housing Development Commission approved a rent increase effective May 1, 2013, that will increase potential revenue by $8,820 annually. In order to maintain strong occupancy, which averaged 98% in 2013, management applied the rent increase mostly to new move-ins. Occupancy is 100% as of March 31, 2014. High vacancy loss and expenses, specifically administrative and maintenance, have been the primary cause of the deficit. The increase in maintenance costs is due to unit turnover. The real estate taxes, mortgage and insurance are all current. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Carrollton Villas. The investment general partner continues to look at various disposition opportunities consistent with the investment objectives of the investment partnership.
Sherwood Knoll L.P. (Sherwood Knoll Apartments) is a 24-unit family project in Rainsville, Alabama. Management has struggled to maintain an average occupancy of 90% since 2011 despite changes in site staff that were expected to improve operations. Although the site manager has improved rent collection, the property is still struggling to maintain occupancy. Average occupancy in 2013 and year to date in 2014 is 88%; with above breakeven operations. In 2013, the property reported an underfunded tax and insurance escrow. The operating deficit guarantee is unlimited in time and amount. Mortgage and insurance are all current. The operating general partner and affiliated management company have been unresponsive to the investment general partner’s requests for information. The investment general partner will continue to request updates from the management company. On December 31, 2008, the 15-year low income housing tax credit compliance period expired with respect to Sherwood Knoll, L.P. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
Northpointe, L.P. (Northpointe Apartments) is a 158-unit family property located in Kansas City, MO. The property averaged 89% occupancy through the first quarter of 2014 and operated below breakeven. The property is located in a very competitive market in close proximity to two tax credit properties and two similarly priced market rate properties. The competition has reduced management’s ability to increase rents and at times created a concession driven market; however, concessions were not offered during the first quarter. Further, market demand increased for larger units during 2013. Accordingly, management began increasing rental rates for large two bedroom units and three bedroom units by $10 and $15 per month. During the first quarter of 2014, management considered raising rents for one bedroom units. However, one bedroom rental rates were left as-is since demand was not strong enough. To help mitigate operating expenses management has implemented proactive measures such as increasing the frequency of unit inspections to identify damages and water leaks. The operating general partner and investment general partner had previously explored refinancing options but the $770,000 loan prepayment penalty prevented a refinance. The operating general partner plans to continue funding deficits at the property and anticipates refinancing when the loan matures in August of 2014. Written documentation received by the investment general partner confirms that the property’s mortgage, real estate taxes, and insurance payments are current. On December 31, 2009, the 15-year low income housing tax credit compliance period expired with respect to Northpointe Limited Partnership. The investment general partner is in the process of exploring various disposition opportunities consistent with the investment objectives of the investment partnership.
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In June 2012, the investment general partners of Series 19 and Boston Capital Tax Credit Fund IV LP – Series 24 and Series 42 transferred their respective interests in Jeremy Associates LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $2,804,427 and cash proceeds to the investment partnerships of $18,200, $4,536, and $2,264, for Series 19, Series 24 and Series 42, respectively. Of the total proceeds received $13,200, $4,536, and $2,264, for Series 19, Series 24 and Series 42, respectively, represents reporting fees due to an affiliate of the respective investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds $5,000 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. No proceeds were returned to cash reserves held by Series 19, Series 24 and Series 42, respectively. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, no gain on the transfer of the Operating Partnership was recorded as of June 30, 2012.
In July 2012, the investment general partner transferred its interest in Hebbronville Apartments, Limited to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $480,322 and cash proceeds to the investment partnership of $9,000. Of the total proceeds received, $2,625 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $6,375 were returned to cash reserves held by Series 19. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,375 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest. The investment general partner on behalf of the investment partnership, also executed a Transfer and Assignment of Mineral Rights preserving the investment partnership’s right to any potential proceeds that may be distributed from production of minerals at the property.
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In July 2012, the investment general partner transferred its interest in Lone Star Seniors Apartments, Ltd. to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $566,795 and cash proceeds to the investment partnership of $9,000. Of the total proceeds received, $2,625 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $6,375 were returned to cash reserves held by Series 19. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,375 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest. The investment general partner on behalf of the investment partnership, also executed a Transfer and Assignment of Mineral Rights preserving the investment partnership’s right to any potential proceeds that may be distributed from production of minerals at the property.
In July 2012, the investment general partner transferred its interest in Martindale Apartments, Ltd. to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $619,411 and cash proceeds to the investment partnership of $9,000. Of the total proceeds received, $2,625 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $6,375 were returned to cash reserves held by Series 19. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $6,375 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within 15 years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest. The investment general partner on behalf of the investment partnership, also executed a Transfer and Assignment of Mineral Rights preserving the investment partnership’s right to any potential proceeds that may be distributed from production of minerals at the property.
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In September 2012, the investment general partner transferred its interest in Hollister Investment Group V to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,635,390 and cash proceeds to the investment partnership of $25,000. Of the total proceeds received, $1,313 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $3,500 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $20,187 were returned to cash reserves held by Series 19. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $20,187 as of September 30, 2012. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there is a capital transaction involving the property owned by the Operating Partnership at any time within ten years from the initial transfer date, there would be a residual payment distributable to the investment partnership in accordance with the Operating Partnership Agreement in effect at the date the investment limited partner transferred its interest.
In September 2012, the investment general partner transferred its interest in Jefferson Square to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $1,889,271 and cash proceeds to the investment partnership of $1,200,000. Of the total proceeds received, $68,587 represents reporting fees due to an affiliate of the investment partnership; and the balance represents proceeds from the transfer. Of the remaining proceeds, $13,400 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. The remaining proceeds of approximately $1,118,013 were returned to cash reserves held by Series 19. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $1,118,013 as of September 30, 2012.
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In December 2012, the investment general partner transferred its interest in Holts Summit Square, LP to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $997,010 and cash proceeds to the investment partnership of $51,360. Of the total proceeds received, $8,125 represents reporting fees due to an affiliate of the investment partnership and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which include third party legal costs. The remaining proceeds of approximately $38,235 were returned to cash reserves held by Series 19. The monies held in cash reserves will be utilized to pay current operating expenses, accrued but unpaid asset management fees, and accrued but unpaid expenses of the investment partnership. After all outstanding obligations of the investment partnership are satisfied, any remaining monies will be distributed based on the number of BACs held by each investor at the time of distribution. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, a gain on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded in the amount of $38,235 as of December 31, 2012.
Munford Village Ltd. (Munford Village) is a 24-unit family property in Munford, Alabama. Occupancy increased from 84% in 2012 to 87% in 2013, but is still insufficient for the property to breakeven. The operating general partner and affiliated management company have been unresponsive to all calls and written attempts to discuss the property’s operations. The 15-year low income housing tax credit compliance period expired on December 31, 2008.
In August 2013, the investment general partner of Series 18 and Series 19 transferred their interests in Clarke School LP, to an entity affiliated with the operating general partner for its assumption of the outstanding mortgage balance of approximately $2,716,511 and cash proceeds to the investment partnerships of $14,150 and $5,850, for Series 18 and Series 19, respectively. Of the total proceeds received, $9,150 and $5,850, for Series 18 and 19, respectively, represents reporting fees due to an affiliate of the investment partnerships and the balance represents proceeds from the transfer. Of the remaining proceeds, $5,000 was paid to BCAMLP for expenses related to the transfer, which includes third party legal costs. No proceeds were returned to cash reserves held by Series 18 and Series 19, respectively. Annual losses generated by the Operating Partnership, which were applied against the investment limited partnership’s investment in the Operating Partnership in accordance with the equity method of accounting, had previously reduced the investment limited partnership investment in the Operating Partnership to zero. Accordingly, no gain or loss on the transfer of the Operating Partnership, net of the overhead and expense reimbursement, has been recorded as of September 30, 2013. In addition, the investment general partner on behalf of the investment partnership entered into a residual receipt promissory note (the RRN) with the Operating Partnership for receipt of a residual payment. Under the terms of the RRN, if there were a capital transaction involving the property owned by the Operating Partnership at any time within five years from the initial transfer date, there would be residual payment of 50% of any net distributable proceeds due to the investment partnership in effect at the date the investment limited partners transferred their respective interests.
Contractual Obligations
Not Applicable
Off Balance Sheet Arrangements
None
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Principal Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP), which require the Fund to make various estimates and assumptions. The following section is a summary of some aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of the Fund’s financial condition and results of operations. The Fund believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the financial statements.
The Fund is required to assess potential impairments to its long-lived assets, which are primarily investments in limited partnerships. The Fund accounts for its investment in limited partnerships in accordance with the equity method of accounting since the Fund does not control the operations of the Operating Partnerships. The purpose of an impairment analysis is to verify that the real estate investment balance reflected on the balance sheet does not exceed the value of the underlying investments.
If the book value of the Fund’s investment in an Operating Partnership exceeds the estimated value derived by management, which generally consists of the remaining future Low-Income Housing Credits allocable to the Fund and the estimated residual value to the Fund, the Fund reduces its investment in the Operating Partnership.
In accordance with the accounting guidance for the consolidation of variable interest entities, the Fund determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.
Based on this guidance, the Operating Partnerships in which the Fund invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, management does not consolidate the Fund’s interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Fund currently records the amount of its investment in these partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Fund’s balance in investment in Operating Partnerships plus advances made to Operating Partnerships represents its maximum exposure to loss. The Fund’s exposure to loss on these partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the general partners and their guarantee against credit recapture to the investors of the Fund.
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Item 7a. | Quantitative and Qualitative Disclosure About Market Risk |
Not Applicable
Item 8. | Financial Statements and Supplementary Data |
The information required by this item is contained in Part IV, Item 15 of this Annual Report on Form 10-K.
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
None
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Item 9a. | Controls and Procedures |
(a) | Evaluation of Disclosure Controls and Procedures |
As of the end of the period covered by this report, the Fund’s general partner, under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer of C&M Management, Inc., carried out an evaluation of the effectiveness of the Fund’s “disclosure controls and procedures” as defined in the Securities Exchange Act of 1934 Rules 13a-15 and 15d-15 with respect to each series individually, as well as the Fund as a whole. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer have concluded that as of the end of the period covered by this report, the disclosure controls and procedures with respect to each series individually, as well as the Fund as a whole, were adequate and effective in timely alerting them to material information relating to any series or the Fund as a whole required to be included in the Fund’s periodic SEC filings.
(b) | Management’s Annual Report on Internal Control over Financial Reporting |
Management of the Fund is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) of each series individually, as well as the Fund as a whole. The Fund’s internal control system over financial reporting is designed to provide reasonable assurance to the Fund’s management regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
Due to inherent limitations, an internal control system over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
The Fund's general partner, under the supervision and with the participation of the Principal Executive Officer and Principal Financial Officer of Boston Capital Associates III LP, assessed the effectiveness of the internal controls and procedures over financial reporting with respect to each series individually, as well as the Fund as a whole, as of March 31, 2014. In making this assessment, the Fund's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on this assessment, management believes that, as of March 31, 2014, its internal control over financial reporting with respect to each series individually, as well as the Fund as a whole was effective.
(c) | Changes in Internal Controls |
There were no changes in the Fund management's internal control over financial reporting that occurred during the quarter ended March 31, 2014 that materially affected, or are reasonably likely to materially affect, the Fund management's internal control over financial reporting.
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Item 10. | Directors, Executive Officers and Corporate Governance of the Fund |
(a), (b), (c), (d) and (e)
The Fund has no directors or executive officers of its own. The following biographical information is presented for the partners of the general partners and affiliates of those partners (including Boston Capital Partners, Inc. ("Boston Capital")) with principal responsibility for the Fund's affairs.
John P. Manning, age 65, is co-founder, and since 1974 has been the President and Chief Executive Officer, of Boston Capital Corporation. As co-founder and CEO of Boston Capital, Mr. Manning’s primary responsibilities include strategic planning, business development and the continued oversight of newopportunities.In addition to his responsibilities at Boston Capital Corporation, Mr. Manning is a proactive leader in the multifamily real estate industry. He served in 1990 as a member of the Mitchell-Danforth Task Force, which reviewed and suggested reforms to the Low Income Housing Tax Credit program. He was the founding President of the Affordable Housing Tax Credit Coalition and is a former member of the board of the National Leased Housing Association. During the 1980s, he served as a member of the Massachusetts Housing Policy Committee as an appointee of the Governor of Massachusetts. In addition, Mr. Manning has testified before the U.S. House Ways and Means Committee and the U.S. Senate Finance Committee on the critical role of the private sector in the success of the Low Income Housing Tax Credit. In 1996, President Clinton appointed him to the President’s Advisory Committee on the Arts at the John F. Kennedy Center for the Performing Arts. In 1998, President Clinton appointed Mr. Manning to the President’s Export Council, the premiere committee comprised of major corporate CEOs that advise the President on matters of foreign trade and commerce. In 2003, he was appointed by Boston Mayor Tom Menino to the Mayors Advisory Panel on Housing. Mr. Manning sits on the Board of Directors of the John F. Kennedy Presidential Library in Boston where he serves as Chairman of the Distinguished Visitors Program. He is also on the Board of Directors of the Beth Israel Deaconess Medical Center in Boston. Mr. Manning is a graduate of Boston College.
Mr. Manning is the managing member of Boston Associates. Mr. Manning is also the principal of Boston Capital Corporation. While Boston Capital is not a direct subsidiary of Boston Capital Corporation, it is under the common control of Mr. Manning.
Jeffrey H. Goldstein,age 52, is Chief Operating Officer and has been the Director of Real Estate of Boston Capital Corporation since 1996. He directs Boston Capital Corporation’s comprehensive real estate services, which include all aspects of origination, underwriting, due diligence and acquisition. As COO, Mr. Goldstein is responsible for the financial and operational areas of Boston Capital Corporation and assists in the design and implementation of business development and strategic planning objectives. Mr. Goldstein previously served as the Director of the Asset Management division as well as the head of the dispositions and troubled assets group. Utilizing his 16 years experience in the real estate syndication and development industry, Mr. Goldstein has been instrumental in the diversification and expansion of Boston Capital Corporation’s businesses. Prior to joining Boston Capital Corporation in 1990, Mr. Goldstein was Manager of Finance for A.J. Lane & Co., where he was responsible for placing debt on all new construction projects and debt structure for existing apartment properties. Prior to that, he served as Manager for Homeowner Financial Services, a financial consulting firm for residential and commercial properties, and worked as an analyst responsible for budgeting and forecasting for the New York City Council Finance Division. He graduated from the University of Colorado and received his MBA from Northeastern University.
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Kevin P. Costello,age 67, is Executive Vice President and has been the Director of Institutional Investing of Boston Capital Corporation since 1992 and serves on the firm’s Executive Committee. He is responsible for all corporate investment activity and has spent over 20 years in the real estate syndication and investment business. Mr. Costello’s prior responsibilities at Boston Capital Corporation have involved the management of the Acquisitions Department and the structuring and distribution of conventional and tax credit private placements. Prior to joining Boston Capital Corporation in 1987, he held positions with First Winthrop, Reynolds Securities and Bache & Company. Mr. Costello graduated from Stonehill College and received his MBA with honors from Rutgers’ Graduate School of Business Administration.
Marc N. Teal,age 50, has been Chief Financial Officer of Boston Capital Corporation since May2003. Mr. Teal previously served as Senior Vice President and Director of Accounting and prior to that served as Vice President of Partnership Accounting. He has been with Boston Capital Corporation since 1990. In his current role as CFO he oversees all of the accounting, financial reporting, SEC reporting, budgeting, audit, tax and compliance for Boston Capital Corporation, its affiliated entities and all Boston Capital Corporation sponsored programs. Additionally, Mr. Teal is responsible for maintaining all banking and borrowing relationships of Boston Capital Corporation and treasury management of all working capital reserves. He also oversees Boston Capital Corporation's information and technology areas, including the strategic planning for Boston Capital Corporation and its affiliaties. Prior to joining Boston Capital Corporation in 1990, Mr. Teal was a Senior Accountant for Cabot, Cabot & Forbes, a multifaceted real estate company, and prior to that was a Senior Accountant for Liberty Real Estate Corp. He received a Bachelor of Science Accountancy from Bentley College and a Masters in Finance from Suffolk University.
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The Fund has no officers or directors and no compensation committee. However, under the terms of the Amended and Restated Agreement and Certificate of Limited Partnership of the Fund, the Fund has paid or accrued obligations to the general partner and its affiliates for the following fees during the 2014 fiscal year:
1. An annual fund management fee based on .5 percent of the aggregate cost of all apartment complexes acquired by the Operating Partnerships has been accrued or paid to Boston Capital Asset Management Limited Partnership. The annual fund management fee charged to operations, net of reporting fees received, during the year ended March 31, 2014 was $566,582.
2. The Fund has reimbursed an affiliate of the general partner a total of $76,787 for amounts charged to operations during the year ended March 31, 2014. The reimbursement includes postage, printing, travel, and overhead allocations.
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
(a) | Security ownership of certain beneficial owners. |
As of March 31, 2014, 21,996,102 BACs had been issued. The following Series are known to have one investor, Everest Housing, 199 South Los Robles Ave. Suite 200, Pasadena, CA 91101, with holdings in excess of 5% of the total outstanding BACs in the series.
Series | % of BACs held | |||
Series 15 | 8.25 | % | ||
Series 16 | 10.24 | % | ||
Series 17 | 9.71 | % | ||
Series 18 | 9.32 | % | ||
Series 19 | 6.97 | % |
(b) | Security ownership of management. |
The general partner has a 1% interest in all profits, losses, credits and distributions of the Fund.
(c) | Changes in control. |
There exists no arrangement known to the Fund the operation of which may at a subsequent date result in a change in control of the Fund. There is a provision in the Fund's Partnership Agreement which allows, under certain circumstances, the ability to change control.
The Fund has no compensation plans under which interests in the Fund are authorized for issuance.
Item 13. | Certain Relationships and Related Transactions, and Director Independence. |
(a) | Transactions with related persons. |
The Fund has no officers or directors. However, under the terms of the Offering, various kinds of compensation and fees are payable to the general partner and its affiliates during the organization and operation of the Fund. Additionally, the general partner will receive distributions from the Fund if there is cash available for distribution or residual proceeds as defined in the Partnership Agreement. See Note B of Notes to Financial Statements in Item 15 of this Annual Report on Form 10-K for amounts accrued or paid to the general partner and its affiliates during the period from April 1, 1995 through March 31, 2014.
(b) | Review, Approval or Ratification of transactions with related persons. |
The Fund response to Item 13(a) is incorporated herein by reference.
(c) | Transactions with Promoters and certain control persons. |
Not applicable.
(d) | Independence. |
The Fund has no directors.
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Item 14. | Principal Accountant Fees and Services |
Fees paid to the Fund’s independent auditors for fiscal year 2014 were comprised of the following:
Fee Type | Ser. 15 | Ser. 16 | Ser. 17 | Ser. 18 | Ser. 19 | |||||||||||||||
Audit Fees | $ | 23,515 | $ | 27,815 | $ | 20,665 | $ | 19,615 | $ | 19,015 | ||||||||||
Audit Related Fees | - | - | - | - | - | |||||||||||||||
Tax Fees | 8,790 | 10,430 | 8,175 | 7,560 | 5,920 | |||||||||||||||
All Other Fees | - | - | - | - | - | |||||||||||||||
Total | $ | 32,305 | $ | 38,245 | $ | 28,840 | $ | 27,175 | $ | 24,935 |
Fees paid to the Fund’s independent auditors for fiscal year 2013 were comprised of the following:
Fee Type | Ser. 15 | Ser. 16 | Ser. 17 | Ser. 18 | Ser. 19 | |||||||||||||||
Audit Fees | $ | 21,665 | $ | 24,325 | $ | 20,145 | $ | 17,105 | $ | 14,445 | ||||||||||
Audit Related Fees | - | - | - | - | - | |||||||||||||||
Tax Fees | 10,170 | 11,370 | 9,170 | 7,370 | 6,170 | |||||||||||||||
All Other Fees | - | - | - | - | - | |||||||||||||||
Total | $ | 31,835 | $ | 35,695 | $ | 29,315 | $ | 24,475 | $ | 20,615 |
Audit Committee
The Fund has no Audit Committee. All audit services and any permitted non-audit services performed by the Fund’s independent auditors are pre-approved by C&M Management, Inc.
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Item 15. | Exhibits and Financial Statement Schedules |
(a) 1 and 2. | Financial Statements and Financial Statement Schedules, filed herein as Exhibit 13 - |
Report of Independent Registered Public Accounting Firm
Balance Sheets, March 31, 2014 and 2013.
Statements of Operations for the years ended March 31, 2014 and 2013.
Statements of Changes in Partners' Capital (Deficit) for the years ended March 31, 2014 and 2013.
Statements of Cash Flows for the years ended March 31, 2014 and 2013.
Notes to Financial Statements March 31, 2014 and 2013.
Schedules not listed are omitted because of the absence of the conditions under which they are required or because the information is included in the financial statements or the notes hereto.
(b) | 1.Exhibits (listed according to the number assigned in the table in Item 601 of Regulation S-K) |
Exhibit No. 3 - Organization Documents.
a. | Certificate of Limited Partnership of Boston Capital Tax Credit Fund III L.P. (Incorporated by reference from Exhibit 3 to the Fund's Registration Statement No. 33-42999 on Form S-11 as filed with the Securities and Exchange Commission on September 26, 1991.) |
Exhibit No. 4 - Instruments defining the rights of security holders, including indentures.
a. | Agreement of Limited Partnership of Boston Capital Tax Credit Fund III L.P. (Incorporated by reference from Exhibit 4 to the Fund's Registration Statement No. 33-42999 on Form S-11 as filed with the Securities and Exchange Commission on September 26, 1991.) |
Exhibit No. 10 - Material contracts.
a. | Beneficial Assignee Certificate. (Incorporated by reference from Exhibit 10A to the Fund's Registration Statement No. 33-42999 on Form S-11 as filed with the Securities and Exchange Commission on September 26, 1991.) |
Exhibit No. 13 - Financial Statements.
a. | Financial Statement of Boston Capital Tax Credit Fund III L.P., filed herein |
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Exhibit No. 28 - Additional exhibits.
a. | Agreement of Limited Partnership of Branson Christian County (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on April 4, 1994). |
b. | Agreement of Limited Partnership of Peachtree L.P. (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on April 4, 1994). |
c. | Agreement of Limited Partnership of Cass Partners, L.P. (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on April 7, 1994). |
d. | Agreement of Limited Partnership of Sable Chase of McDonough L.P. (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on April 8, 1994). |
e. | Agreement of Limited Partnership of Ponderosa Meadows Limited Partnership (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on April 12, 1994). |
f. | Agreement of Limited Partnership of Hackley-Barclay LDHA (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on April 14, 1994). |
g. | Agreement of Limited Partnership of Sugarwood Park (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on May 12, 1994). |
h. | Agreement of Limited Partnership of West End Manor of Union Limited Partnership (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on May 29, 1994). |
i. | Agreement of Limited Partnership of Vista Loma (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on May 31, 1994). |
j. | Agreement of Limited Partnership of Palmetto Properties (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on June 16, 1994). |
k. | Agreement of Limited Partnership of Jefferson Square (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on June 27, 1994). |
l. | Agreement of Limited Partnership of Holts Summit Square (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on June 27, 1994). |
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m. | Agreement of Limited Partnership of Harris Housing (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on July 8, 1994). |
n. | Agreement of Limited Partnership of Branson Christian County II (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on September 1, 1994). |
o. | Agreement of Limited Partnership of Chelsea Square (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on September 12, 1994). |
p. | Agreement of Limited Partnership of Palatine Limited Partnership (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on September 21, 1994). |
q. | Agreement of Limited Partnership of Mansura Villa II Limited Partnership (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on October 19, 1994). |
r. | Agreement of Limited Partnership of Haynes House Associates II Limited Partnership (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on October 25, 1994). |
s. | Agreement of Limited Partnership of Skowhegan Limited Partnership (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on October 28, 1994). |
t. | Agreement of Limited Partnership of Mt. Vernon Associates, L.P. (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on November 19, 1994). |
u. | Agreement of Limited Partnership of Clinton Estates, L.P. (Incorporated by reference from Registrant's current report on Form 8-K as filed with the Securities and Exchange Commission on February 1, 1995.) |
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Exhibit No. 31 Certification 302
a. | Certification pursuant to 18 U.S.C. Section 1350, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herein |
b. | Certification pursuant to 18 U.S.C. Section 1350, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herein |
Exhibit No. 32 Certification 906
a. | Certification pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein |
b. | Certification pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein |
Exhibit No. 101
The following materials from the Boston Capital Tax Credit Fund III, L.P. Annual Report on Form 10-K for the period ended March 31, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Changes in Partners' Capital (Deficit), (iv) the Statements of Cash Flows and (v) related notes, furnished herewith
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Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Fund has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Boston Capital Tax Credit Fund III L.P. | |||
By: | Boston Capital Associates III L.P. | ||
General Partner | |||
By: | BCA Associates Limited Partnership, | ||
General Partner | |||
By: | C&M Management Inc., | ||
Date: | General Partner | ||
June 20, 2014 | By: | /s/ John P. Manning | |
John P. Manning |
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 Fund and in the capacities and on the dates indicated:
DATE: | SIGNATURE: | TITLE: | ||
June 20, 2014 | /s/ John P. Manning | Director, President | ||
John P. Manning | (Principal Executive | |||
Officer) C&M Management | ||||
Inc.; Director, | ||||
President (Principal | ||||
Executive Officer) | ||||
BCTC III Assignor Corp. |
DATE: | SIGNATURE: | TITLE: | ||
June 20, 2014 | /s/ Marc N. Teal | Chief Financial Officer | ||
Marc N. Teal | (Principal Financial | |||
and Accounting Officer) | ||||
C&M Management Inc.; | ||||
Chief Financial Officer | ||||
(Principal Financial | ||||
and Accounting Officer) | ||||
BCTC III Assignor Corp. |
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