UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2003
[ ] 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 0-13808
HOUSING PROGRAMS LIMITED
(Exact name of registrant as specified in its charter)
California 95-3906167
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOUSING PROGRAMS LIMITED
(a California limited partnership)
BALANCE SHEET
JUNE 30, 2003
(Unaudited)
(in thousands)
ASSETS
Investments in local limited partnerships (Note 3) $ --
Cash and cash equivalents 68
Total assets $ 68
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Notes payable in default (Note 1) $ 4,600
Accrued interest payable in default (Note 1) 7,543
Accrued fees due to affiliates (Note 4) 1,379
Accounts payable 58
Advances due to affiliates (Note 4) 101
13,681
Commitments and Contingencies (Note 5)
Partners' deficit:
General partners (387)
Limited partners (13,226)
(13,613)
Total liabilities and partners' deficit $ 68
See Accompanying Notes to Financial Statements
HOUSING PROGRAMS LIMITED
(a California limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per interest data)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
OPERATING EXPENSES:
Management fees - partners (Note 4) $ 49 $ 49 $ 98 $ 99
General and administrative (Note 4) 14 10 20 21
Legal and accounting 32 15 46 36
Interest 110 108 218 217
Total operating expenses 205 182 382 373
Loss from Partnership operations (205) (182) (382) (373)
Distributions from limited partnerships
recognized as income 205 11 205 11
Equity in loss of limited partnerships -- -- -- (30)
Net loss $ -- $ (171) $ (177) $ (392)
Net loss to general partners (1%) $ -- $ (2) $ (2) $ (4)
Net loss to limited partners (99%) -- (169) (175) (388)
$ -- $ (171) $ (177) $ (392)
Net loss per limited partnership
interest $ -- $(13.66) $(14.15) $(31.37)
See Accompanying Notes to Financial Statements
HOUSING PROGRAMS LIMITED
(a California limited partnership)
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except interest data)
General Limited
Partners Partners Total
Partners' deficit,
December 31, 2002 $ (385) $(13,051) $(13,436)
Net loss for the six months
ended June 30, 2003 (2) (175) (177)
Partners' deficit,
June 30, 2003 $ (387) $(13,226) $(13,613)
Percentage interest at
June 30, 2003 1% 99% 100%
(A)
(A) Consists of 12,260 partnership interests at June 30, 2003 and 12,368
partnership interests at December 31, 2002. During the six months ended
June 30, 2003, 108 interests were abandoned (Note 5).
See Accompanying Notes to Financial Statements
HOUSING PROGRAMS LIMITED
(a California limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (177) $ (392)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Equity in loss of limited partnerships -- 30
Increase (decrease) in:
Accrued interest payable 218 217
Accounts payable and accrued expenses (90) 23
Accrued fees due to partners 112 109
Net cash provided by (used in) operating activities 63 (13)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital contributions -- (30)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Operating advances from affiliates -- 46
NET INCREASE IN CASH AND CASH EQUIVALENTS 63 3
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5 8
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 68 $ 11
See Accompanying Notes to Financial Statements
HOUSING PROGRAMS LIMITED
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(Unaudited)
NOTE 1 - GOING CONCERN
The accompanying unaudited financial statements have been prepared assuming
Housing Programs Limited ("HPL" or the "Partnership") will continue as a going
concern. The Partnership continues to generate recurring operating losses and
suffers from a lack of cash as well as a partners' deficit. The Corporate
General Partner may approve advances to the Partnership to fund certain
operating expenses; however, it is not required to take such action. Management
is in discussions with the Corporate General Partner to fund the current
shortfall.
Two of the Partnership's investments, Evergreen and Plaza Village, involved
purchases of partnership interests from partners who subsequently withdrew from
the operating partnership. The Partnership is obligated for non-recourse notes
payable of $4,600,000 to the sellers of the partnership interests, bearing
interest at 9.5%. Total outstanding accrued interest at June 30, 2003 is
approximately $7,543,000. The notes matured in 1999. These obligations and
related interest are collateralized by the Partnership's investment in the local
limited partnership, as defined in the notes. Unpaid interest was due at
maturity of the notes. Apartment Investment and Management Company, a Maryland
corporation ("AIMCO"), which indirectly owns the Corporate General Partner of
the Partnership, has a 15% interest in and is the trustee for the Plaza Village
note payable.
The Partnership has not made any payments and is in default under the terms of
the notes. Management is attempting to negotiate extensions of the maturity
dates on the notes payable. If the negotiations are unsuccessful, the
Partnership could lose its investment in these limited partnerships to
foreclosure.
As a result of the above, there is substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects of the recoverability and
classification of assets or amounts and classification of liabilities that may
result from these uncertainties.
NOTE 2 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The information contained in the following notes to the unaudited financial
statements is condensed from that which would appear in the annual audited
financial statements; accordingly, the financial statements included herein
should be reviewed in conjunction with the financial statements and related
notes thereto contained in the Partnership's annual report for the year ended
December 31, 2002. Accounting measurements at interim dates inherently involve
greater reliance on estimates than at year end. The results of operations for
the interim period presented are not necessarily indicative of the results for
the entire year.
In the opinion of the Partnership, the accompanying unaudited financial
statements contain all adjustments (consisting primarily of normal recurring
accruals) necessary to present fairly the financial position of the Partnership
at June 30, 2003 and the results of operations and changes in cash flows for the
three and six months ended June 30, 2003 and 2002.
Organization
The Partnership was organized under the California Uniform Limited Partnership
Act on May 15, 1984. The Partnership was formed to invest primarily in other
limited partnerships which own or lease and operate federal, state or local
government-assisted housing projects. The general partners of the Partnership
are National Partnership Investments Corp. ("NAPICO" or the "Corporate General
Partner"), Coast Housing Investment Associates (CHIA), a limited partnership,
and Housing Programs Corporation II (collectively, the "General Partners").
The general partners have a one percent interest in profits and losses of the
Partnership. The limited partners have the remaining 99 percent interest which
is allocated in proportion to their respective individual investments.
On December 3, 2001, Casden Properties Inc., entered into a merger agreement and
certain other transaction documents with AIMCO and certain of its subsidiaries,
pursuant to which, on March 11, 2002, AIMCO acquired Casden Properties Inc. and
its subsidiaries, including 100% of the stock of NAPICO. Prior to March 11,
2002, Casden Properties Inc. owned a 95.25% economic interest in NAPICO, with
the balance owned by Casden Investment Corporation ("CIC"). CIC, which is wholly
owned by Alan I. Casden, owned 95% of the voting common stock of NAPICO prior to
March 11, 2002. As a result of this transaction, the Corporate General Partner
became a subsidiary of AIMCO, a publicly traded real estate investment trust.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States.
Method of Accounting for Investment in Limited Partnerships
The investments in local limited partnerships are accounted for on the equity
method. Acquisition, selection fees and other costs related to the acquisition
of the projects have been capitalized to the investment account and are being
amortized by the straight line method over the estimated lives of the underlying
assets, which is generally 30 years.
Net Loss Per Limited Partnership Interest
Net loss per limited partnership interest was computed by dividing the limited
partners' share of net loss by the number of limited partnership interests
outstanding at the beginning of the period. The number of limited partnership
interests was 12,368 at both December 31, 2002 and 2001.
Recent Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities.
FIN 46 requires the consolidation of entities in which an enterprise absorbs a
majority of the entity's expected losses, receives a majority of the entity's
expected residual returns, or both, as a result of ownership, contractual or
other financial interests in the entity. Prior to the issuance of FIN 46,
entities were generally consolidated by an enterprise when it had a controlling
financial interest through ownership of a majority voting interest in the
entity. FIN 46 applied immediately to variable interest entities created after
January 31, 2003, and with respect to variable interests held before February 1,
2003, FIN 46 will apply beginning July 1, 2003.
The Partnership has not entered into any partnership investments subsequent to
January 31, 2003. The Partnership is in the process of evaluating its
investments in unconsolidated partnerships that may be deemed variable interest
entities under the provisions of FIN 46. At June 30, 2003, the Partnership's
maximum exposure to loss with regard to unconsolidated partnerships is zero due
to the recorded investment in these partnerships having been reduced to zero.
The Partnership has not yet determined the anticipated impact of adopting FIN 46
for its partnership agreements that existed as of January 31, 2003. However, FIN
46 may require the consolidation of the assets, liabilities and operations of
certain of the Partnership's unconsolidated partnership investments. Although
the Partnership does not believe the full adoption of FIN 46 will have an impact
on net earnings, the Partnership cannot make any definitive conclusion until it
completes its evaluation.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of June 30, 2003, the Partnership holds limited partnership interests in
seven local limited partnerships (the "Local Limited Partnerships"). As of June
30, 2003, the seven Local Limited Partnerships owned residential low income
rental projects consisting of 1,153 apartment units. The mortgage loans of these
projects are payable to or insured by various governmental agencies.
The Partnership, as a limited partner, does not exercise control over the
activities and operations, including refinancing or selling decisions, of the
Local Limited Partnerships. Accordingly, the Partnership accounts for its
investments in the Local Limited Partnerships using the equity method. The
Partnership is allocated profits and losses of the Local Limited Partnerships
based upon its respective ownership percentage of 99%. Distributions of surplus
cash from operations from most of the Local Limited Partnerships are restricted
by the Local Limited Partnerships' Regulatory Agreements with the United States
Department of Housing and Urban Development ("HUD"). These restrictions limit
the distribution to a portion, generally less than 10%, of the initial invested
capital. The excess surplus cash is deposited into a residual receipts reserve,
of which the ultimate realization by the Partnership is uncertain as HUD
frequently retains it upon sale or dissolution of the Local Limited Partnership.
The Partnership is allocated profits and losses and receives distributions from
refinancings and sales in accordance with the Local Limited Partnerships'
partnership agreements. These agreements usually limit the Partnership's
distributions to an amount substantially less than its ownership percentage in
the Local Limited Partnership.
The individual investments are carried at cost plus the Partnership's share of
the Local Limited Partnership's profits less the Partnership's share of the
Local Limited Partnership's losses, distributions and impairment charges. The
Partnership is not legally liable for the obligations of the Local Limited
Partnerships and is not otherwise committed to provide additional support to
them. Therefore, it does not recognize losses once its investment in each of the
Local Limited Partnerships reaches zero. Distributions from the Local Limited
Partnerships are accounted for as a reduction of the investment balance until
the investment balance is reduced to zero. When the investment balance has been
reduced to zero, subsequent distributions received are recognized as income in
the accompanying statements of operations.
For those investments where the Partnership has determined that the carrying
value of its investments approximates the estimated fair value of those
investments, the Partnership's policy is to recognize equity in income of the
Local Limited Partnerships only to the extent of distributions received and
amortization of acquisition costs from those Local Limited Partnerships.
Therefore, the Partnership limits its recognition of equity earnings to the
amount it expects to ultimately realize.
The Partnership has no carrying value in investments in the Local Limited
Partnerships as of June 30, 2003.
The following are unaudited combined estimated statements of operations for the
three and six months ended June 30, 2003 and 2002 for the Local Limited
Partnerships in which the Partnership has investments (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Revenues
Rental and other $ 1,457 $ 1,885 $ 3,268 $ 3,770
Expenses
Operating 1,204 1,402 2,545 2,804
Interest 192 242 436 484
Depreciation 371 374 737 748
1,767 2,018 3,718 4,036
Net loss $ (310) $ (133) $ (450) $ (266)
NAPICO, or one of its affiliates, is the general partner and property manager
for certain of the Local Limited Partnerships included above. During the six
months ended June 30, 2003 and 2002, affiliates of the Corporate General Partner
were paid approximately $50,000 and $40,000, respectively, for providing
property management services.
Four of the Local Limited Partnerships have outstanding purchase money notes and
accrued interest that matured in December 2000. In addition, a fifth Local
Limited Partnership has a subordinated note and accrued interest that matured in
December 1999. Each of these Local Limited Partnerships is in default on these
obligations. During the six months ended June 30, 2003, one of the Local Limited
Partnerships refinanced the mortgage encumbering the investment property in
order to satisfy the notes. The remaining proceeds were distributed to the
partners of the Local Limited Partnership. The Partnership risks losing its
investments in the other Local Limited Partnerships through foreclosure. All of
the investments in these Local Limited Partnerships were zero at June 30, 2003.
Under recent adopted law and policy, the United States Department of Housing and
Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which may be the case under
existing HAP Contracts. The payments under the renewed HAP Contracts may not be
in an amount that would provide sufficient cash flow to permit owners of
properties subject to HAP Contracts to meet the debt service requirements of
existing loans insured by the Federal Housing Administration of HUD ("FHA")
unless such mortgage loans are restructured. In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA") provides for
the restructuring of mortgage loans insured by the FHA with respect to
properties subject to the Section 8 program. Under MAHRAA, an FHA-insured
mortgage loan can be restructured into a first mortgage loan which will be
amortized on a current basis and a low interest second mortgage loan payable to
FHA which will only be payable on maturity of the first mortgage loan. This
restructuring results in a reduction in annual debt service payable by the owner
of the FHA-insured mortgage loan and is expected to result in an insurance
payment from FHA to the holder of the FHA-insured loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties serving families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.
When the HAP Contracts are subject to renewal, there can be no assurance that
the Local Limited Partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.
NOTE 4 - FEES AND EXPENSES DUE TO GENERAL PARTNERS
Under the terms of the Restated Certificate and Agreement of the Limited
Partnership, the Partnership is obligated to pay to the general partners an
annual management fee equal to 0.5 percent of the original invested assets of
the Local Limited Partnerships. Invested assets is defined as the costs of
acquiring project interests including the proportionate amount of the mortgage
loans related to the Partnership's interests in the capital accounts of the
respective Local Limited Partnerships. For the six months ended June 30, 2003
and 2002, approximately $98,000 and $99,000, respectively, has been expensed.
The unpaid balance at June 30, 2003 is approximately $1,336,000.
The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was approximately $10,000 and $9,000 for the six months ended June 30,
2003 and 2002, respectively, and is included in general and administrative
expenses. The unpaid balance at June 30, 2003 is approximately $43,000.
In accordance with the Partnership Agreement, the Corporate General Partner has
advanced the Partnership funds to assist in paying for normal operating
expenses. These advances do not accrue interest. As of June 30, 2003, the
Corporate General Partner had advanced approximately $101,000 for such purposes.
As of June 30, 2003, the fees and expenses due the general partners exceeded the
Partnership's cash. The general partners, during the forthcoming year, are not
expected to demand payment of amounts due in excess of such cash or such that
the Partnership would not have sufficient operating cash; however, the
Partnership will remain liable for all such amounts.
AIMCO, which indirectly owns the Corporate General Partner of the Partnership,
has a 15% interest in, and is the trustee for, the Plaza Village note payable.
NOTE 5 - ABANDONMENT OF LIMITED PARTNERSHIP INTERESTS
During the six months ended June 30, 2003, the number of limited partnership
interests decreased by 108 units due to limited partners abandoning their
interests. In abandoning his or her limited partnership interest(s), a limited
partner relinquishes all right, title, and interest in the Partnership as of the
date of abandonments. However, the limited partner is allocated his or her share
of net income or loss for that year. The income or loss per limited partnership
interests in the accompanying statements of operations is calculated based on
the number of units outstanding at the beginning of the year. There were no such
abandonments during the six months ended June 30, 2002.
NOTE 6 - CONTINGENCIES
On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership interests in Real Estate Associates Limited III (an affiliated
partnership in which NAPICO is the corporate general partner) and two investors
holding an aggregate of five units of limited partnership interests in Real
Estate Associates Limited VI (another affiliated partnership in which NAPICO is
the corporate general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other defendants. The complaint alleged that the defendants breached
their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and violated securities laws by making materially false and
misleading statements in the consent solicitation statements sent to the limited
partners of such partnerships relating to approval of the transfer of
partnership interests in limited partnerships, owning certain of the properties,
to affiliates of Casden Properties Inc., organized by an affiliate of NAPICO.
The plaintiffs sought equitable relief, as well as compensatory damages and
litigation related costs. On August 4, 1999, one investor holding one unit of
limited partnership interest in the Partnership commenced a virtually identical
action in the United States District Court for the Central District of
California against the Partnership, NAPICO and certain other entities. The
second action was subsumed in the first action, and was certified as a class
action. On August 21, 2001, plaintiffs filed a supplemental complaint, which
added new claims, including a rescission of the transfer of partnership
interests and an accounting.
In November 2002, the jury returned special verdicts against NAPICO and certain
other defendants in the amount of approximately $25.2 million for violations of
securities laws and against NAPICO for approximately $67.3 million for breaches
of fiduciary duty. In addition, the jury awarded the plaintiffs punitive damages
against NAPICO of approximately $92.5 million. On April 29, 2003, the Court
entered judgment against NAPICO and certain other defendants in the amount of
$25.2 million for violations of securities laws and against NAPICO for $67.3
million for breaches of fiduciary duty, both amounts plus interest of $25.6
million, and for punitive damages against NAPICO in the amount of $2.6 million.
On May 30, 2003, NAPICO and certain other defendants entered into a memorandum
of understanding with the plaintiff class and their counsel relating to the
settlement of the litigation.
On August 11, 2003, NAPICO entered into a Stipulation of Settlement (the
"Stipulation of Settlement") with the plaintiff class (the "Plaintiffs") and
their counsel relating to the settlement of the litigation. The Stipulation of
Settlement remains subject to the preliminary and final approval of the court as
well as the approval of the Plaintiffs. Pursuant to the Stipulation of
Settlement, within two days after receiving the court's preliminary approval of
the proposed settlement, Alan I. Casden, on behalf of himself, NAPICO and other
defendants in the litigation, is responsible for depositing $29 million into an
escrow account for the benefit of the Plaintiffs. Upon final court approval,
approval by the Plaintiffs and the lapse of any time to appeal the court
approval of the settlement, the following shall occur:
1. Alan I. Casden, on behalf of himself, NAPICO and other defendants in
the litigation, will transfer to an agent for the Plaintiffs shares
of common stock ("Class A Common Stock") of AIMCO owned by certain
affiliates of Alan I. Casden with an aggregate market value of $19
million, subject to certain transfer restrictions, or at Alan I.
Casden's option, $19 million in cash.
2. NAPICO will issue an aggregate of $35 million in promissory notes
for the benefit of the Plaintiffs. An aggregate of $7 million of
notes are to be repaid each year. The notes will bear interest based
on applicable rates of U.S. Treasury bills with similar maturities.
The notes will be guaranteed by AIMCO Properties, L.P., an affiliate
of AIMCO.
3. The parties to the Stipulation of Settlement will release each other
and related parties from any and all claims associated with the
litigation and the Plaintiffs' investment in the Partnership and the
other affiliated partnerships.
4. The $29 million in the escrow account established by Alan I. Casden
will be released to the Plaintiffs.
Pursuant to the Stipulation of Settlement, upon final approval of the settlement
by the court, the parties shall jointly request that a new judgment be entered
in the litigation that will, among other things, expunge the judgment originally
entered against NAPICO and the other defendants on April 29, 2003.
On August 12, 2003, in connection with the proposed settlement pursuant to the
Stipulation of Settlement, NAPICO and AIMCO executed a Settlement Agreement (the
"Settlement Agreement") with the prior shareholders of Casden Properties Inc.
The principal terms of the Settlement Agreement include:
1. That NAPICO will voluntarily discontinue the action it commenced on
May 13, 2003 against the former shareholders of Casden Properties
Inc. and other indemnitors in AIMCO's March 2002 acquisition of
Casden Properties Inc. (the "Casden Merger").
2. That Alan I. Casden and certain related entities will resolve
certain pending claims for indemnification made by NAPICO, AIMCO and
their affiliates. These claims include indemnification related to
the litigation and certain other matters in connection with the
Casden Merger.
3. AIMCO, or an affiliate, will deposit $25 million of the $29 million
that Alan I. Casden is responsible for depositing into the escrow
account for the benefit of the Plaintiffs pursuant to the terms of the
Stipulation of Settlement. In connection with this deposit by AIMCO,
The Casden Company will transfer to AIMCO 531,915 shares of AIMCO
Class A Common Stock owned by The Casden Company, which shares are to
be held in escrow by AIMCO until final approval of the Stipulation of
Settlement by the court and the Plaintiffs. Upon such approval, AIMCO
will become the owner of the 531,915 shares. If final approval by the
court and the Plaintiffs is not obtained, the $25 million deposited by
AIMCO into the escrow account will be returned to AIMCO and AIMCO will
return to The Casden Company the 531,915 shares.
4. The Casden Company will promise to pay an aggregate amount of $35
million on a secured, nonrecourse basis to NAPICO. The Casden Company
will be obligated to repay an aggregate of $7 million of the
obligation each year. The obligation to repay the $35 million will
bear the same interest and mature on the same schedule as the
promissory notes issued by NAPICO to the plaintiffs pursuant to the
Stipulation of Settlement. Payment of these obligations will be
secured by (i) a pledge of 744,681 shares of AIMCO Class A Common
Stock owned by Alan I. Casden or an affiliated entity, plus up to
60,000 additional shares for accrued interest, and (ii) cash proceeds
of recoveries or settlements that Alan I. Casden or any of his
affiliates, or any of the former shareholders of Casden Properties
Inc., receive in connection with or related to the litigation
(collectively, "Recoveries"). The payment obligations to NAPICO will
be required to be prepaid with any Recoveries received. Payment may be
made in cash or in shares of AIMCO Class A Common Stock, except
payments with respect to Recoveries must be made in cash.
In addition to the litigation discussed above, the Corporate General Partner is
involved in various other lawsuits arising from transactions in the ordinary
course of business. In the opinion of management and the Corporate General
Partner, the claims will not result in any material liability to the
Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Corporate General Partner monitors developments in the area of legal and
regulatory compliance and is studying new federal laws, including the
Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 mandates or suggests
additional compliance measures with regard to governance, disclosure, audit and
other areas. In light of these changes, the Partnership expects that it will
incur higher expenses related to compliance, including increased legal and audit
fees.
Liquidity and Capital Resources
The properties in which the Partnership has invested, through its investments in
the Local Limited Partnerships, receive one or more forms of assistance from the
Federal Government. As a result, the Local Limited Partnerships' ability to
transfer funds either to the Partnership or among themselves in the form of cash
distributions, loans or advances is generally restricted by those government
assistance programs.
The Partnership's primary sources of funds include interest income earned from
investing available cash and distributions from Local Limited Partnerships in
which the Partnership has invested. It is not expected that any of the Local
Limited Partnerships in which the Partnership has invested will generate cash
flow sufficient to provide for distributions to the Partnership's limited
partners in any material amount.
The accompanying financial statements have been prepared assuming the
Partnership will continue as a going concern. The Partnership continues to
generate recurring operating losses and suffers from a lack of cash as well as a
partners' deficit. The Corporate General Partner may approve advances to the
Partnership to fund certain operating expenses; however, it is not required to
take such action. In addition, the Partnership is in default on notes payable
and related accrued interest payable that matured in December 1999.
Two of the Partnership's investments, Evergreen and Plaza Village, involved
purchases of partnership interests from partners who subsequently withdrew from
the operating partnership. The Partnership is obligated for non-recourse notes
payable of $4,600,000 to the sellers of the partnership interests, bearing
interest at 9.5 percent. Total outstanding accrued interest at June 30, 2003 is
approximately $7,543,000. The notes matured in December 1999. These obligations
and the related interest are collateralized by the Partnership's investment in
the local limited partnerships and are payable only out of cash distributions
from the local limited partnerships, as defined in the notes. Unpaid interest
was due at maturity of the notes. The Partnership has not made any payments and
is in default under the terms of the notes. Management is attempting to
negotiate extensions of the maturity dates on the notes payable. If the
negotiations are unsuccessful, the Partnership could lose its investment in
these Local Limited Partnerships to foreclosure. AIMCO, which indirectly owns
the Corporate General Partner of the Partnership, has a 15% interest in and is
the trustee for the Plaza Village note payable.
As a result of the above, there is substantial doubt about the Partnership's
ability to continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effects of the recoverability and
classification of assets or amounts and classifications of liabilities that may
result from these uncertainties.
Four of the Local Limited Partnerships have outstanding purchase money notes and
accrued interest that matured in December 2000. In addition, a fifth Local
Limited Partnership has a subordinated note and accrued interest that matured in
December 1999. Each of these Local Limited Partnerships is in default on these
obligations. During the six months ended June 30, 2003, one of the Local Limited
Partnerships refinanced the mortgage encumbering the investment property in
order to satisfy the notes. The remaining proceeds were distributed to the
partners of the Local Limited Partnership. The Partnership risks losing its
investments in the other Local Limited Partnerships through foreclosure. All of
the investments in these Local Limited Partnerships were zero at June 30, 2003.
Results of Operations
Partnership revenues consist primarily of interest income earned on investment
of funds. The Partnership also receives distributions from the Local Limited
Partnerships in which it has invested. During the six months ended June 30, 2003
approximately $55,000 of distributions from the operations of the Local Limited
Partnerships and approximately $150,000 from the refinancing of the investment
property at one of the Local Limited Partnerships were received and recognized
as income.
Except for investing cash in money market funds, the Partnership's investments
consist entirely of interests in Local Limited Partnerships owning
government-assisted housing projects. Available cash not invested in Local
Limited Partnerships is invested in these money market funds to provide interest
income as reflected in the statements of operations. These funds can be
converted to cash to meet obligations as they arise. The Partnership intends to
continue investing available funds in this manner.
An annual management fee is payable to the general partners of the Partnership
and is calculated at 0.5 percent of the Partnership's invested assets. The
management fee is paid to the general partners for their continuing management
of partnership affairs. The fee is payable beginning with the month following
the Partnership's initial investment in a local limited partnership. Management
fees were approximately $98,000 and $99,000 for the six months ended June 30,
2003 and 2002, respectively.
In accordance with the Partnership Agreement, the Corporate General Partner has
advanced the Partnership funds to assist in paying for normal operating
expenses. These advances do not accrue interest. As of June 30, 2003, the
Corporate General Partner had advanced approximately $101,000 for such purposes.
Operating expenses, other than management fees and interest expense, consist of
legal and accounting fees for services rendered to the Partnership and general
and administrative expenses. Legal and accounting fees were approximately
$46,000 and $36,000 for the six months ended June 30, 2003 and 2002,
respectively. General and administrative expenses were approximately $20,000 and
$21,000 for the six months ended June 30, 2003 and 2002, respectively.
The Partnership, as a limited partner, does not exercise control over the
activities and operations, including refinancing or selling decisions of the
Local Limited Partnerships. Accordingly, the Partnership accounts for its
investment in the Local Limited Partnerships using the equity method. Thus the
individual investments are carried at cost plus the Partnership's share of the
Local Limited Partnership's profits less the Partnership's share of the Local
Limited Partnership's losses, distributions and impairment charges. However,
since the Partnership is not legally liable for the obligations of the Local
Limited Partnerships, or is not otherwise committed to provide additional
support to them, it does not recognize losses once its investment in each of the
Local Limited Partnerships reaches zero. Distributions from the Local Limited
Partnerships are accounted for as a reduction of the investment balance until
the investment balance is reduced to zero. Subsequent distributions received are
recognized as income in the accompanying statements of operations. For those
investments where the Partnership has determined that the carrying value of its
investments approximates the estimated fair value of those investments, the
Partnership's policy is to recognize equity in income of the Local Limited
Partnerships only to the extent of distributions received and amortization of
acquisition costs from those Local Limited Partnerships. During the six months
ended June 30, 2002 the Partnership recognized equity in loss of approximately
$30,000 resulting from advances made to Local Limited Partnerships. Management
believed that repayment of these advances was doubtful and fully reserved them
in 2002. The Partnership did not make any advances in the same period in 2003.
Under recent adopted law and policy, the United States Department of Housing and
Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which may be the case under
existing HAP Contracts. The payments under the renewed HAP Contracts may not be
in an amount that would provide sufficient cash flow to permit owners of
properties subject to HAP Contracts to meet the debt service requirements of
existing loans insured by the Federal Housing Administration of HUD ("FHA")
unless such mortgage loans are restructured. In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA") provides for
the restructuring of mortgage loans insured by the FHA with respect to
properties subject to the Section 8 program. Under MAHRAA, an FHA-insured
mortgage loan can be restructured into a first mortgage loan which will be
amortized on a current basis and a low interest second mortgage loan payable to
FHA which will only be payable on maturity of the first mortgage loan. This
restructuring results in a reduction in annual debt service payable by the owner
of the FHA-insured mortgage loan and is expected to result in an insurance
payment from FHA to the holder of the FHA-insured loan due to the reduction in
the principal amount. MAHRAA also phases out project-based subsidies on selected
properties serving families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy.
When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.
Other
AIMCO and its affiliates owned 374 limited partnership units (the "Units") or
748 limited partnership interests in the Partnership representing 6.10% of the
outstanding Units at June 30, 2003. A Unit consists of two limited partnership
interests. It is possible that AIMCO or its affiliates will acquire additional
Units in exchange for cash or a combination of cash and units in the operating
partnership of AIMCO. Pursuant to the Partnership Agreement, unitholders holding
a majority of the Units are entitled to take action with respect to a variety of
matters that include, but are not limited to, voting on certain amendments to
the Partnership Agreement and voting to remove the Corporate General Partner.
Although the Corporate General Partner owes fiduciary duties to the limited
partners of the Partnership, the Corporate General partner also owes fiduciary
duties to AIMCO as its sole stockholder. As a result, the duties of the
Corporate General Partner, as corporate general partner, to the Partnership and
its limited partners may come into conflict with the duties of the Corporate
General Partner to AIMCO, as its sole stockholder.
Recent Accounting Pronouncements
In January 2003, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities.
FIN 46 requires the consolidation of entities in which an enterprise absorbs a
majority of the entity's expected losses, receives a majority of the entity's
expected residual returns, or both, as a result of ownership, contractual or
other financial interests in the entity. Prior to the issuance of FIN 46,
entities were generally consolidated by an enterprise when it had a controlling
financial interest through ownership of a majority voting interest in the
entity. FIN 46 applied immediately to variable interest entities created after
January 31, 2003, and with respect to variable interests held before February 1,
2003, FIN 46 will apply beginning July 1, 2003.
The Partnership has not entered into any partnership investments subsequent to
January 31, 2003. The Partnership is in the process of evaluating its
investments in unconsolidated partnerships that may be deemed variable interest
entities under the provisions of FIN 46. At June 30, 2003, the Partnership's
maximum exposure to loss with regard to unconsolidated partnerships is zero due
to the recorded investment in these partnerships having been reduced to zero.
The Partnership has not yet determined the anticipated impact of adopting FIN 46
for its partnership agreements that existed as of January 31, 2003. However, FIN
46 may require the consolidation of the assets, liabilities and operations of
certain of the Partnership's unconsolidated partnership investments. Although
the Partnership does not believe the full adoption of FIN 46 will have an impact
on net earnings, the Partnership cannot make any definitive conclusion until it
completes its evaluation.
ITEM 3. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the Corporate General Partner, who are the equivalent of the Partnership's
principal executive officer and principal financial officer, respectively, has
evaluated the effectiveness of the Partnership's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this report. Based on such evaluation, the principal
executive officer and principal financial officer of the Corporate General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have concluded that, as of the
end of such period, the Partnership's disclosure controls and procedures are
effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership interests in Real Estate Associates Limited III (an affiliated
partnership in which NAPICO is the corporate general partner) and two investors
holding an aggregate of five units of limited partnership interests in Real
Estate Associates Limited VI (another affiliated partnership in which NAPICO is
the corporate general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other defendants. The complaint alleged that the defendants breached
their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and violated securities laws by making materially false and
misleading statements in the consent solicitation statements sent to the limited
partners of such partnerships relating to approval of the transfer of
partnership interests in limited partnerships, owning certain of the properties,
to affiliates of Casden Properties Inc., organized by an affiliate of NAPICO.
The plaintiffs sought equitable relief, as well as compensatory damages and
litigation related costs. On August 4, 1999, one investor holding one unit of
limited partnership interest in the Partnership commenced a virtually identical
action in the United States District Court for the Central District of
California against the Partnership, NAPICO and certain other entities. The
second action was subsumed in the first action, and was certified as a class
action. On August 21, 2001, plaintiffs filed a supplemental complaint, which
added new claims, including a rescission of the transfer of partnership
interests and an accounting.
In November 2002, the jury returned special verdicts against NAPICO and certain
other defendants in the amount of approximately $25.2 million for violations of
securities laws and against NAPICO for approximately $67.3 million for breaches
of fiduciary duty. In addition, the jury awarded the plaintiffs punitive damages
against NAPICO of approximately $92.5 million. On April 29, 2003, the Court
entered judgment against NAPICO and certain other defendants in the amount of
$25.2 million for violations of securities laws and against NAPICO for $67.3
million for breaches of fiduciary duty, both amounts plus interest of $25.6
million, and for punitive damages against NAPICO in the amount of $2.6 million.
On May 30, 2003, NAPICO and certain other defendants entered into a memorandum
of understanding with the plaintiff class and their counsel relating to the
settlement of the litigation.
On August 11, 2003, NAPICO entered into a Stipulation of Settlement (the
"Stipulation of Settlement") with the plaintiff class (the "Plaintiffs") and
their counsel relating to the settlement of the litigation. The Stipulation of
Settlement remains subject to the preliminary and final approval of the court as
well as the approval of the Plaintiffs. Pursuant to the Stipulation of
Settlement, within two days after receiving the court's preliminary approval of
the proposed settlement, Alan I. Casden, on behalf of himself, NAPICO and other
defendants in the litigation, is responsible for depositing $29 million into an
escrow account for the benefit of the Plaintiffs. Upon final court approval,
approval by the Plaintiffs and the lapse of any time to appeal the court
approval of the settlement, the following shall occur:
1. Alan I. Casden, on behalf of himself, NAPICO and other defendants in
the litigation, will transfer to an agent for the Plaintiffs shares
of common stock ("Class A Common Stock") of AIMCO owned by certain
affiliates of Alan I. Casden with an aggregate market value of $19
million, subject to certain transfer restrictions, or at Alan I.
Casden's option, $19 million in cash.
2. NAPICO will issue an aggregate of $35 million in promissory notes
for the benefit of the Plaintiffs. An aggregate of $7 million of
notes are to be repaid each year. The notes will bear interest based
on applicable rates of U.S. Treasury bills with similar maturities.
The notes will be guaranteed by AIMCO Properties, L.P., an affiliate
of AIMCO.
3. The parties to the Stipulation of Settlement will release each other
and related parties from any and all claims associated with the
litigation and the Plaintiffs' investment in the Partnership and the
other affiliated partnerships.
4. The $29 million in the escrow account established by Alan I. Casden
will be released to the Plaintiffs.
Pursuant to the Stipulation of Settlement, upon final approval of the settlement
by the court, the parties shall jointly request that a new judgment be entered
in the litigation that will, among other things, expunge the judgment originally
entered against NAPICO and the other defendants on April 29, 2003.
On August 12, 2003, in connection with the proposed settlement pursuant to the
Stipulation of Settlement, NAPICO and AIMCO executed a Settlement Agreement (the
"Settlement Agreement") with the prior shareholders of Casden Properties Inc.
The principal terms of the Settlement Agreement include:
1. That NAPICO will voluntarily discontinue the action it commenced on
May 13, 2003 against the former shareholders of Casden Properties
Inc. and other indemnitors in AIMCO's March 2002 acquisition of
Casden Properties Inc. (the "Casden Merger").
2. That Alan I. Casden and certain related entities will resolve
certain pending claims for indemnification made by NAPICO, AIMCO and
their affiliates. These claims include indemnification related to
the litigation and certain other matters in connection with the
Casden Merger.
3. AIMCO, or an affiliate, will deposit $25 million of the $29 million
that Alan I. Casden is responsible for depositing into the escrow
account for the benefit of the Plaintiffs pursuant to the terms of the
Stipulation of Settlement. In connection with this deposit by AIMCO,
The Casden Company will transfer to AIMCO 531,915 shares of AIMCO
Class A Common Stock owned by The Casden Company, which shares are to
be held in escrow by AIMCO until final approval of the Stipulation of
Settlement by the court and the Plaintiffs. Upon such approval, AIMCO
will become the owner of the 531,915 shares. If final approval by the
court and the Plaintiffs is not obtained, the $25 million deposited by
AIMCO into the escrow account will be returned to AIMCO and AIMCO will
return to The Casden Company the 531,915 shares.
4. The Casden Company will promise to pay an aggregate amount of $35
million on a secured, nonrecourse basis to NAPICO. The Casden Company
will be obligated to repay an aggregate of $7 million of the
obligation each year. The obligation to repay the $35 million will
bear the same interest and mature on the same schedule as the
promissory notes issued by NAPICO to the plaintiffs pursuant to the
Stipulation of Settlement. Payment of these obligations will be
secured by (i) a pledge of 744,681 shares of AIMCO Class A Common
Stock owned by Alan I. Casden or an affiliated entity, plus up to
60,000 additional shares for accrued interest, and (ii) cash proceeds
of recoveries or settlements that Alan I. Casden or any of his
affiliates, or any of the former shareholders of Casden Properties
Inc., receive in connection with or related to the litigation
(collectively, "Recoveries"). The payment obligations to NAPICO will
be required to be prepaid with any Recoveries received. Payment may be
made in cash or in shares of AIMCO Class A Common Stock, except
payments with respect to Recoveries must be made in cash.
In addition to the litigation discussed above, the Corporate General Partner is
involved in various other lawsuits arising from transactions in the ordinary
course of business. In the opinion of management and the Corporate General
Partner, the claims will not result in any material liability to the
Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 3, Restated Certificate and Agreement of Limited
Partnership dated May 15, 1984 filed with the Securities and
Exchange Commission Form S-11 No. 2-92352, which is hereby
incorporated by reference.
Exhibit 31.1, Certification of equivalent of Chief Executive
Officer pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.2, Certification of equivalent of Chief Financial
Officer pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1, Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
b) Reports on Form 8-K:
Current Report on Form 8-K dated April 30, 2003 and filed with
the Securities and Exchange Commission on April 30, 2003
disclosing the initial judgment entered against NAPICO as the
Corporate General Partner of the Partnership.
Current Report on Form 8-K dated May 30, 2003 and filed with
the Securities and Exchange Commission on June 2, 2003
disclosing the initial memorandum of understanding relating to
a settlement of the litigation against NAPICO as the Corporate
General Partner of the Partnership.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HOUSING PROGRAMS LIMITED
(a California limited partnership)
By: National Partnership Investments Corp.
Corporate General Partner
By: /s/David R. Robertson
David R. Robertson
President, Chief Executive Officer
and Director
By: /s/Brian H. Shuman
Brian H. Shuman
Senior Vice President and
Chief Financial Officer
Date: August 13, 2003
Exhibit 31.1
CERTIFICATION
I, David R. Robertson, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Housing Programs
Limited;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 13, 2003
/s/David R. Robertson
David R. Robertson
President and Chief Executive Officer of
National Partnership Investments Corp.,
equivalent of the chief executive officer of
the Partnership
Exhibit 31.2
CERTIFICATION
I, Brian H. Shuman, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Housing Programs
Limited;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 13, 2003
/s/Brian H. Shuman
Brian H. Shuman
Senior Vice President and Chief Financial
Officer of National Partnership Investments
Corp., equivalent of the chief financial
officer of the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Housing Programs Ltd.
(the "Partnership"), for the quarterly period ended June 30, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), David
R. Robertson, as the equivalent of the chief executive officer of the
Partnership, and Brian H. Shuman, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/David R. Robertson
Name: David R. Robertson
Date: August 13, 2003
/s/Brian H. Shuman
Name: Brian H. Shuman
Date: August 13, 2003
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.