UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________to _________
Commission file number 0-16010
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
(Exact Name of Small Business Issuer as Specified in Its Charter)
California 94-3004963
(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)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No ___
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes __ No X_
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2005
Assets
Cash and cash equivalents $ 90
Receivables and deposits 8
Restricted escrow 33
Other assets 36
Assets held for sale (Note A) 1,564
$ 1,731
Liabilities and Partners' Deficit
Accounts payable $ 12
Other liabilities 86
Due to affiliates (Note B) 291
Liabilities related to assets held for sale (Note A) 5,503
Partners' Deficit
General partner $ (290)
Corporate limited partner on behalf of the
Unitholders (128,810 units issued and
Outstanding) (3,871) (4,161)
$ 1,731
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF DISCONTINUED OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues:
Rental income $ 274 $ 267 $ 789 $ 784
Other income 31 25 88 77
Casualty gain (Note C) -- -- 124 92
Total revenues 305 292 1,001 953
Expenses:
Operating 141 131 425 372
General and administrative 37 37 121 114
Depreciation 46 71 177 209
Interest 113 108 317 248
Property taxes 20 20 59 59
Total expenses 357 367 1,099 1,002
Net loss from discontinued
operations $ (52) $ (75) $ (98) $ (49)
Net loss allocated to general
partner (1%) $ (1) $ (1) $ (1) $ --
Net loss allocated to
limited partners (99%) (51) (74) (97) (49)
$ (52) $ (75) $ (98) $ (49)
Net loss per Unit of Depositary
Receipt $ (0.40) $ (0.57) $ (0.75) $ (0.38)
Distributions per Unit of
Depositary Receipt $ -- $ 12.22 $ -- $ 12.22
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Unitholders
Units of
Units of Depositary
Depositary General Receipt
Receipt Partner (Note A) Total
Original capital contributions 129,266 $ 1 $32,317 $32,318
Partners' deficit at
December 31, 2004 128,810 $ (289) $(3,774) $(4,063)
Net loss for the nine months
ended September 30, 2005 -- (1) (97) (98)
Partners' deficit at
September 30, 2005 128,810 $ (290) $(3,871) $(4,161)
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2005 2004
Cash flows from operating activities:
Net loss $ (98) $ (49)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 177 209
Amortization of loan costs 23 23
Casualty gain (124) (92)
Change in accounts:
Receivables and deposits (48) (68)
Other assets 19 --
Accounts payable (9) 10
Tenant security deposit liabilities -- (10)
Accrued property taxes 60 59
Other liabilities 23 (55)
Due to affiliates 90 --
Net cash provided by operating activities 113 27
Cash flows from investing activities:
Net deposits to restricted escrow (23) (8)
Property improvements and replacements (292) (247)
Insurance proceeds received 130 99
Net cash used in investing activities (185) (156)
Cash flows from financing activities:
Proceeds from mortgage note payable -- 1,830
Payments on mortgage note payable (23) (64)
Advances from affiliate 132 7
Payments on advances from affiliate -- (7)
Distributions to partners -- (1,590)
Loan costs paid -- (66)
Net cash provided by financing activities 109 110
Net increase (decrease) in cash and cash equivalents 37 (19)
Cash and cash equivalents at beginning of period 53 79
Cash and cash equivalents at end of period $ 90 $ 60
Supplemental disclosure of cash flow information:
Cash paid for interest $ 256 $ 227
Supplemental disclosure of non-cash activity:
Property improvements and replacements include in
accounts payable $ 5 $ --
At December 31, 2004, approximately $20,000 of property improvements and
replacements were included in accounts payable, which are included in property
improvements and replacements for the nine months ended September 30, 2005.
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Johnstown/Consolidated Income
Partners (the "Partnership" or "Registrant") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The Partnership's general partner is ConCap Equities, Inc. (the "General
Partner"). In the opinion of the General Partner, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 2005 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2005. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2004. The General Partner is a subsidiary of Apartment Investment and
Management Company ("AIMCO"), a publicly traded real estate investment trust.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying statements of operations for the three and nine months ended
September 30, 2004 and 2005 reflect the operations of Cedar Brooke Apartments as
loss from discontinued operations due to its sale on October 6, 2005. In
accordance with SFAS No. 144, the assets and liabilities of Cedar Brooke
Apartments have been classified as held for sale at September 30, 2005.
Units of Depositary Receipt
Johnstown/Consolidated Depositary Corporation (the "Corporate Limited Partner"),
an affiliate of the General Partner, serves as a depositary of certain units of
depositary receipt ("Units"). The Units represent economic rights attributable
to the limited partnership interests in the Partnership and entitle the
unitholders thereof ("Unitholders") to certain economic benefits, allocations
and distributions of the Partnership. For this reason, partners' deficit is
herein represented as an interest of the Unitholders.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and depends on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
The Partnership Agreement provides that the Partnership shall pay in monthly
installments to the General Partner, or an affiliate, a yearly asset management
fee equal to: (i) 3/8 of 1% of the original principal balance of mortgage loans
outstanding at the end of the month preceding the installment payment; (ii) 1/8
of 1% of the market value of guaranteed mortgage-backed securities as of the end
of the Partnership quarter immediately preceding the installment payment; and
(iii) 5/8 of 1% of the purchase price of the properties plus improvements for
managing the Partnership's assets. In the event the property was not owned at
the beginning or end of the year, such fee shall be pro-rated for the short-year
period of ownership. Under this provision, fees of approximately $41,000 and
$35,000 were incurred to the General Partner and its affiliates for the nine
months ended September 30, 2005 and 2004, respectively, which are included in
general and administrative expenses. Approximately $57,000 in asset management
fees are owed to the General Partner at September 30, 2005 and are included in
due to affiliates.
Affiliates of the General Partner receive 5% of gross receipts from the
Partnership's investment property as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$43,000 and $42,000 for the nine month periods ended September 30, 2005 and
2004, respectively. These amounts are included in operating expenses.
Affiliates of the General Partner charged the Partnership for reimbursement of
accountable administrative expenses amounting to approximately $75,000 and
$72,000 for the nine months ended September 30, 2005 and 2004, respectively,
which are included in general and administrative expenses and assets held for
sale. The portion of these reimbursements included in assets held for sale for
the nine months ended September 30, 2005 and 2004 are fees related to
construction management services provided by an affiliate of the General Partner
of approximately $29,000 and $21,000, respectively. The construction management
service fees are calculated based on a percentage of additions to investment
property. Approximately $55,000 of the accountable administrative expenses
remain unpaid as of September 30, 2005, and are included in due to affiliates.
In accordance with the Partnership Agreement, during the nine months ended
September 30, 2005, an affiliate of the General Partner advanced the Partnership
approximately $132,000 to fund casualty repairs related to the fire that
occurred at the property in January 2005 (see "Note C - Casualty Events" for
further discussion), mortgage payments prior to sale, capital improvements, and
partnership expenses. During the nine months ended September 30, 2004, an
affiliate of the General Partner advanced the Partnership approximately $7,000
to fund Partnership expenses. Principal and interest was repaid in full during
the nine months ended September 30, 2004. Interest accrues at the prime rate
plus 2% (8.75% at September 30, 2005). Interest expense was approximately $5,000
for the nine months ended September 30, 2005 and less than $1,000 for the nine
months ended September 30, 2004. At September 30, 2005, the total amount of
advances and related accrued interest due to an affiliate of the General Partner
was approximately $179,000 and is included in due to affiliates.
The Partnership insures its property up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers' compensation, property casualty, general
liability and vehicle liability. The Partnership insures its property above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the nine months ended September
30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates
approximately $16,000 and $15,000, respectively, for insurance coverage and fees
associated with policy claims administration.
Subsequent to September 30, 2005 the Partnership paid the General Partner and
its affiliates approximately $57,000 in asset management fees, approximately
$75,000 of accountable administrative expenses and approximately $179,000 of
advances and related accrued interest out of the proceeds from the sale of Cedar
Brooke Apartments (see "Note D").
Note C - Casualty Events
On January 7, 2005, a fire occurred at Cedar Brooke Apartments causing damage to
two apartment units. The property incurred damages of approximately $140,000.
During the nine months ended September 30, 2005, insurance proceeds of
approximately $130,000 were received to cover the damages. After writing off the
undepreciated cost of the damaged asset of approximately $6,000, the Partnership
recognized a casualty gain of approximately $124,000 for the nine months ended
September 30, 2005. During reconstruction of the damaged units approximately
$2,000 of interest, approximately $1,000 of property taxes and approximately
$1,000 of operating expenses were capitalized related to this project.
On February 25, 2004, a fire occurred at Cedar Brooke Apartments, causing damage
to four apartment units. The property incurred damages of approximately
$144,000. During the nine months ended September 30, 2004, insurance proceeds of
approximately $99,000 were received to cover the damages to the property. After
writing off the undepreciated cost of the damaged asset, the Partnership
recognized a casualty gain of approximately $92,000 for the nine months ended
September 30, 2004.
Note D - Subsequent Event
On October 6, 2005, the Registrant sold its sole investment property, Cedar
Brooke Apartments, a 158-unit apartment complex located in Independence,
Missouri to three unrelated third parties for a gross purchase price of
$7,300,000. After payment of closing costs and the assumption of the first
mortgage of approximately $3,555,000 by the purchaser, the net proceeds received
by the Partnership were approximately $3,594,000. The Partnership used a portion
of the proceeds to repay the second mortgage of approximately $1,830,000. The
sale of the property resulted in a gain during the fourth quarter of 2005 of
approximately $5,704,000. In addition, a loss on early extinguishment of debt of
approximately $141,000 was recorded due to the write off of unamortized loan
costs. In accordance with SFAS No. 144, the assets and liabilities of Cedar
Brooke Apartments have been classified as held for sale at September 30, 2005
and its operations have been shown as loss from discontinued operations for the
three and nine months ended September 30, 2005 and 2004.
On October 28, 2005, the Partnership made a distribution of sale proceeds of
approximately $931,000 ($7.14 per limited partnership unit). Because Cedar
Brooke Apartments was the only property held by the Partnership, the General
Partner is considering liquidating the Partnership pending the resolution of the
items discussed in "Note F - Contingencies."
Note E - Additional Financing
On June 25, 2004, the Partnership obtained a second mortgage, in the amount of
$1,830,000 on Cedar Brooke Apartments. The second mortgage requires monthly
payments of interest beginning on August 1, 2004 until the loan matures July 1,
2007, with interest being equal to the one month LIBOR rate plus 300 basis
points (6.85% at September 30, 2005). Loan costs of approximately $66,000 that
were paid in connection with the second mortgage were capitalized during the
nine months ended September 30, 2004 and are included in assets held for sale.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Cedar Brooke Apartments.
The modification of terms consisted of an interest rate of 7.74%, monthly
payments of approximately $26,000, commencing August 1, 2004 through its
maturity of July 1, 2014, with a balloon payment of approximately $3,121,000 due
at maturity. The previous terms consisted of monthly payments of approximately
$31,000 with a stated interest rate of 7.44% through its maturity of July 1,
2021, at which time the loan was scheduled to be fully amortized. This property
was sold on October 6, 2005.
Note F - Contingencies
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same defendants that are named in the Nuanes action. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution. On January 28, 2002, the trial
court granted defendants motion to strike the complaint. Plaintiffs took an
appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On June 13, 2003, the
court granted final approval of the settlement and entered judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeals reversed the trial court's order striking
the first amended complaint.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
AIMCO Properties L.P. and NHP Management Company, both affiliates of the General
Partner, are defendants in a lawsuit alleging that they willfully violated the
Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week. The complaint, filed in the
United States District Court for the District of Columbia, attempts to bring a
collective action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. and NHP Management Company failed to
compensate maintenance workers for time that they were required to be "on-call".
Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management
Company failed to comply with the FLSA in compensating maintenance workers for
time that they worked in excess of 40 hours in a week. In June 2005 the Court
conditionally certified the collective action on both the on-call and overtime
issues, which allows the plaintiffs to provide notice of the collective action
to all non-exempt maintenance workers from August 7, 2000 through the present.
Those employees will have the opportunity to opt-in to the collective action,
and AIMCO Properties, L.P. and NHP Management Company will have the opportunity
to move to decertify the collective action. Because the court denied plaintiffs'
motion to certify state subclasses, on September 26, 2005, the plaintiffs filed
a class action with the same allegations in the Superior Court of California
(Contra Costa County). Although the outcome of any litigation is uncertain,
AIMCO Properties, L.P. does not believe that the ultimate outcome will have a
material adverse effect on its consolidated financial condition or results of
operations. Similarly, the General Partner does not believe that the ultimate
outcome will have a material adverse effect on the Partnership's financial
condition or results of operations.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment property that are not of a routine nature
arising in the ordinary course of business.
Environmental
Various Federal, state and local laws subject property owners or operators to
liability for management, and the costs of removal or remediation, of certain
hazardous substances present on a property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the hazardous substances. The presence of, or the
failure to manage or remedy properly, hazardous substances may adversely affect
occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and
remediation actions brought by government agencies, and potential fines or
penalties imposed by such agencies in connection therewith, the presence of
hazardous substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose liability for the cost of removal, remediation or disposal of hazardous
substances through a licensed disposal or treatment facility. Anyone who
arranges for the disposal or treatment of hazardous substances is potentially
liable under such laws. These laws often impose liability whether or not the
person arranging for the disposal ever owned or operated the disposal facility.
In connection with the ownership, operation and management of its property, the
Partnership could potentially be liable for environmental liabilities or costs
associated with its property.
Mold
The Partnership is aware of lawsuits against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims arising from the presence of mold and for personal injury
claims related to mold exposure. Affiliates of the General Partner have
implemented a national policy and procedures to prevent or eliminate mold from
it s properties and the General Partner believes that these measures will
minimize the effects that mold could have on residents. To date, the Partnership
has not incurred any material costs or liabilities relating to claims of mold
exposure or to abate mold conditions. Because the law regarding mold is
unsettled and subject to change the General Partner can make no assurance that
liabilities resulting from the presence of or exposure to mold will not have a
material adverse effect on the Partnership's financial condition or results of
operations.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") continues its formal investigation relating to certain
matters. Although the staff of the SEC is not limited in the areas that it may
investigate, AIMCO believes the areas of investigation have included AIMCO's
miscalculated monthly net rental income figures in third quarter 2003,
forecasted guidance, accounts payable, rent concessions, vendor rebates,
capitalization of payroll and certain other costs, tax credit transactions and
tender offers for limited partnership interests. AIMCO is cooperating fully.
AIMCO is not able to predict when the investigation will be resolved. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations. Similarly, the
General Partner does not believe that the ultimate outcome will have a material
adverse effect on the Partnership's financial condition or results of
operations.
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 Partnership's investment property consists of one apartment complex, which
is held for sale at September 30, 2005. The following table sets forth the
average occupancy of the property for each of the nine month periods ended
September 30, 2005 and 2004.
Average Occupancy
Property 2005 2004
Cedar Brooke Apartments 93% 91%
Independence, Missouri
The Partnership's financial results depended upon a number of factors including
the ability to attract and maintain tenants at the investment property, interest
rates on mortgage loans, costs incurred to operate the investment property,
general economic conditions and weather. The General Partner monitored the
rental market environment of its investment property to assess the feasibility
of increasing rents, maintaining or increasing occupancy levels and protecting
the Partnership from increases in expenses. The General Partner attempted to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, the General Partner may have used rental concessions and rental rate
reductions to offset softening market conditions; accordingly, there is no
guarantee that the General Partner will be able to sustain such a plan. Further,
a number of factors that are outside the control of the Partnership such as the
local economic climate and weather can adversely or positively affect the
Partnership's financial results.
Results of Operations
The Partnership's net loss from discontinued operations for the three and nine
months ended September 30, 2005 was approximately $52,000 and $98,000,
respectively, as compared to net loss of approximately $75,000 and $49,000 for
the three and nine months ended September 30, 2004, respectively. The decrease
in net loss from discontinued operations for the three months ended September
30, 2005 is due to a decrease in total expenses and an increase in total
revenues. The increase in net loss for the nine months ended September 30, 2005
is due to an increase in total expenses partially offset by an increase in total
revenues.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying statements of operations for the three and nine months ended
September 30, 2004 and 2005 reflect the operations of Cedar Brooke Apartments as
loss from discontinued operations due to the sale of the property on October 6,
2005.
On October 6, 2005, the Registrant sold its sole investment property, Cedar
Brooke Apartments, a 158-unit apartment complex located in Independence,
Missouri to three unrelated third parties for a gross purchase price of
$7,300,000. After payment of closing costs and the assumption of the first
mortgage of approximately $3,555,000 by the purchaser, the net proceeds received
by the Partnership were approximately $3,594,000. The Partnership used a portion
of the proceeds to repay the second mortgage of approximately $1,830,000. The
sale of the property resulted in a gain during the fourth quarter of 2005 of
approximately $5,704,000. In addition, a loss on early extinguishment of debt of
approximately $141,000 was recorded due to the write off of unamortized loan
costs. In accordance with SFAS No. 144, the assets and liabilities of Cedar
Brooke Apartments have been classified as held for sale at September 30, 2005
and its operations have been shown as loss from discontinued operations for the
three and nine months ended September 30, 2005 and 2004.
The decrease in total expenses for the three months ended September 30, 2005 is
due to a decrease in depreciation expense partially offset by increases in
operating and interest expenses. The increase in total expenses for the nine
months ended September 30, 2005 is due to increases in operating, general and
administrative and interest expenses partially offset by a decrease in
depreciation expense. General and administrative expenses remained relatively
constant for the three months ended September 30, 2005. The decrease in
depreciation expense for the three and nine months ended September 30, 2005 is
due to assets being classified as held for sale (as discussed above). The
increase in operating expense for the three and nine months ended September 30,
2005 is due to an increase in maintenance expenses. The increase in operating
expense for the nine months ended September 30, 2005 is also due to an increase
in property and insurance expenses. The increase in maintenance expense is
primarily due to increases in repairs and maintenance expenses and contract
services. The increase in property expense for the nine months ended September
30, 2005 is primarily due to increases in salaries and related benefit expenses.
The increase in insurance expense for the nine months ended September 30, 2005
is due to higher insurance premiums. The increase in interest expense for the
three and nine months ended September 30, 2005 is primarily due to the second
mortgage obtained on Cedar Brooke Apartments, resulting in a higher debt balance
and the modification of terms of the existing mortgage encumbering the property
at a higher interest rate (as discussed in "Liquidity and Capital Resources").
General and administrative expenses increased for the nine months ended
September 30, 2005 primarily due to an increase in the costs associated with the
quarterly and annual communications with investors and regulatory agencies, the
costs associated with the annual audit required by the Partnership Agreement and
increased asset management fees which are paid to the General Partner per the
Partnership Agreement partially offset by a decrease in the costs of services
included in the management reimbursements to the General Partner as allowed
under the Partnership Agreement.
The increase in total revenues for the three and nine months ended September 30,
2005 is due to increases in rental and other income. The increase in total
revenues for the nine months ended September 30, 2005 is also due to an increase
in casualty gain recognized during the nine months ended September 30, 2005
compared to the casualty gain recognized during the nine months ended September
30, 2004. The increase in rental income for the three and nine months ended
September 30, 2005 is due to an increase in occupancy and a decrease in bad debt
expense at Cedar Brooke Apartments. The increase in rental income for the nine
months ended September 30, 2005 is partially offset by a decrease in the average
rental rate at Cedar Brooke Apartments. The increase in other income for the
three and nine months ended September 30, 2005 is due to an increase in tenant
charges at the Partnership's property.
On January 7, 2005, a fire occurred at Cedar Brooke Apartments causing damage to
two apartment units. The property incurred damages of approximately $140,000.
During the nine months ended September 30, 2005, insurance proceeds of
approximately $130,000 were received to cover the damages. After writing off the
undepreciated cost of the damaged asset of approximately $6,000, the Partnership
recognized a casualty gain of approximately $124,000 for the nine months ended
September 30, 2005. During reconstruction of the damaged units approximately
$2,000 of interest and approximately $1,000 of both property taxes and operating
expenses were capitalized related to this project.
On February 25, 2004, a fire occurred at Cedar Brooke Apartments, causing damage
to four apartment units. The property incurred damages of approximately
$144,000. During the nine months ended September 30, 2004, insurance proceeds of
approximately $99,000 were received to cover the damages to the property. After
writing off the undepreciated cost of the damaged asset, the Partnership
recognized a casualty gain of approximately $92,000 for the nine months ended
September 30, 2004.
Liquidity and Capital Resources
At September 30, 2005, the Partnership had cash and cash equivalents of
approximately $90,000, compared to approximately $60,000 at September 30, 2004.
The increase in cash and cash equivalents of approximately $37,000 from December
31, 2004 is due to approximately $113,000 and $109,000 of cash provided by
operating and financing activities, respectively, partially offset by
approximately $185,000 of cash used in investing activities. Cash provided by
financing activities consisted of advances from affiliates partially offset by
payments of principal made on the first mortgage encumbering Cedar Brooke
Apartments. Cash used in investing activities consisted of property improvements
and replacements and net deposits to an escrow account maintained by the
mortgage lender, partially offset by insurance proceeds received related to the
January 2005 fire at Cedar Brooke Apartments. The Partnership invests its
working capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the investment property to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements.
During the nine months ended September 30, 2005, the Partnership completed
approximately $277,000 of capital improvements at Cedar Brooke Apartments
consisting primarily of reconstruction related to the fire that occurred at the
property in January 2005 (as discussed in "Results of Operations"), floor
covering replacements and structural improvements. These improvements were
funded from operations, insurance proceeds and advances from affiliates. The
property was sold to a third party on October 6, 2005.
On June 25, 2004, the Partnership obtained a second mortgage, in the amount of
$1,830,000, on Cedar Brooke Apartments. The second mortgage required monthly
payments of interest beginning on August 1, 2004 until the loan matured July 1,
2007, with interest being equal to the one month LIBOR rate plus 300 basis
points (6.85% at September 30, 2005).
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Cedar Brooke Apartments.
The modification terms consisted of an interest rate of 7.74%, monthly payments
of approximately $26,000, commencing August 1, 2004 through its maturity of July
1, 2014, with a balloon payment of approximately $3,121,000 due at maturity. The
previous terms consisted of monthly payments of approximately $31,000 with a
stated interest rate of 7.44% through its maturity of July 1, 2021, at which
time the loan was scheduled to be fully amortized. The property was sold on
October 6, 2005. The second mortgage was paid with proceeds received from the
sale. The first mortgage was assumed by the buyer at closing.
The Partnership distributed the following amounts during the nine months ended
September 30, 2005 and 2004 (in thousands, except per unit data):
Nine Months Ended Per Unit of Nine Months Ended Per Unit of
September 30, Depositary September 30, Depositary
2005 Receipt 2004 Receipt
Financing
Proceeds (1) $ -- $ -- $1,590 $12.22
$ -- $ -- $1,590 $12.22
(1) Proceeds from the additional financing obtained on Cedar Brooke Apartments
in June 2004.
On October 28, 2005, the Partnership made a distribution of sale proceeds of
approximately $931,000 ($7.14 per limited partnership unit). Because Cedar
Brooke Apartments was the only property held by the Partnership, the General
Partner is considering liquidating the Partnership pending the resolution of the
items discussed in "Note F - Contingencies".
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 73,062 units of depositary receipt
(the "Units") in the Partnership representing 56.72% of the outstanding Units at
September 30, 2005. A number of these Units were acquired pursuant to tender
offers made by AIMCO or its affiliates. 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 General
Partner. As a result of its ownership of 56.72% of the outstanding Units, AIMCO
and its affiliates are in a position to control all voting decisions with
respect to the Partnership. Although the General Partner owes fiduciary duties
to the limited partners of the Partnership, the General Partner also owes
fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of
the General Partner, as general partner, to the Partnership and its limited
partners may come into conflict with the duties of the General Partner to AIMCO
as its sole stockholder.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
The Partnership's investment property is recorded at cost, less accumulated
depreciation, unless considered impaired. If events or circumstances indicate
that the carrying amount of a property may be impaired, the Partnership will
make an assessment of its recoverability by estimating the undiscounted future
cash flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeded the fair value of the
property.
Revenue Recognition
The Partnership generally leased apartment units for twelve-month terms or less.
The Partnership offered rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area. Rental
income attributable to leases, net of any concessions, was recognized on a
straight-line basis over the term of the lease. The Partnership evaluated all
accounts receivable from residents and established an allowance, after the
application of security deposits, for accounts greater than 30 days past due on
current tenants and all receivables due from former tenants.
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 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 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
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same defendants that are named in the Nuanes action. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution. On January 28, 2002, the trial
court granted defendants motion to strike the complaint. Plaintiffs took an
appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. On June 13, 2003, the
court granted final approval of the settlement and entered judgment in both the
Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an
appeal (the "Appeal") seeking to vacate and/or reverse the order approving the
settlement and entering judgment thereto. On May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeals reversed the trial court's order striking
the first amended complaint.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
AIMCO Properties L.P. and NHP Management Company, both affiliates of the General
Partner, are defendants in a lawsuit alleging that they willfully violated the
Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime
for all hours worked in excess of forty per week. The complaint, filed in the
United States District Court for the District of Columbia, attempts to bring a
collective action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. and NHP Management Company failed to
compensate maintenance workers for time that they were required to be "on-call".
Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management
Company failed to comply with the FLSA in compensating maintenance workers for
time that they worked in excess of 40 hours in a week. In June 2005 the Court
conditionally certified the collective action on both the on-call and overtime
issues, which allows the plaintiffs to provide notice of the collective action
to all non-exempt maintenance workers from August 7, 2000 through the present.
Those employees will have the opportunity to opt-in to the collective action,
and AIMCO Properties, L.P. and NHP Management Company will have the opportunity
to move to decertify the collective action. Because the court denied plaintiffs'
motion to certify state subclasses, on September 26, 2005, the plaintiffs filed
a class action with the same allegations in the Superior Court of California
(Contra Costa County). Although the outcome of any litigation is uncertain,
AIMCO Properties, L.P. does not believe that the ultimate outcome will have a
material adverse effect on its consolidated financial condition or results of
operations. Similarly, the General Partner does not believe that the ultimate
outcome will have a material adverse effect on the Partnership's financial
condition or results of operations.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
See Exhibit Index.
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.
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: November 14, 2005
JOHNSTOWN CONSOLIDATED INCOME PARTNERS
INDEX OF EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
3 Certificate of Limited Partnership, as amended to date,
incorporated herein by reference to the Partnership's
Annual Report on Form 10-KSB for the year ended December
31, 1991.
10.40 Multifamily Note dated June 27, 2001, by and between
Johnstown/Consolidated Income Partners, a California limited
partnership, and GMAC Commercial Mortgage Corporation relating
to Cedar Brooke Apartments. (Incorporated by reference to the
Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2001).
10.41 Allonge and Amendment to Multifamily Note dated June 25, 2004,
by and among Johnstown/Consolidated Income Partners, a
California limited partnership, GMAC Commercial Mortgage
Corporation, and Federal Home Loan Mortgage Corporation.
(Incorporated by reference to the Current Report on Form 8-K
dated June 25, 2004)
10.42 Multifamily Note dated June 25, 2004, by and between
Johnstown/Consolidated Income Partners, a California limited
partnership, and GMAC Commercial Mortgage Bank. (Incorporated
by reference to the Current Report on Form 8-K dated June 25,
2004)
10.43 Purchase and Sale Contract between Johnstown/Consolidated
Income Partners, a California limited partnership and First
Pacific Investments, Ltd., a Colorado Corporation, dated July
5, 2005. (Incorporated by reference to the Current Report on
Form 8-K dated July 5, 2005.)
10.44 Second Amendment to Purchase and Sale Contract between
Johnstown/Consolidated Income Partners, a California
limited partnership and First Pacific Investments, Ltd., a
Colorado Corporation, dated August 29, 2005. (Incorporated
by reference to the Current Report on Form 8-K dated August
29, 2005).
10.45 Third Amendment to Purchase and Sale Contract between
Johnstown/Consolidated Income Partners, a California limited
partnership and Western Terrace Apartments Associates, LLC, a
Colorado limited liability company, as to an undivided 44.39%
interest, Thomas W. Fischer and Melissa B. Fisher as Trustees
of the Fischer Family Trust dated March 30, 2005, as to an
undivided 36.92% interest and Vista Montanas Apartments, LLC,
a California limited liability company as to an undivided
18.69% interest, all as tenants in common, dated September 28,
2005. (Incorporated by reference to the Current Report on Form
8-K dated October 6, 2005).
10.46 Fourth Amendment to Purchase and Sale Contract between
Johnstown/Consolidated Income Partners, a California limited
partnership and Western Terrace Apartments Associates, LLC, a
Colorado limited liability company, as to an undivided 44.39%
interest, Thomas W. Fischer and Melissa B. Fisher as Trustees
of the Fischer Family Trust dated March 30, 2005, as to an
undivided 36.92% interest and Vista Montanas Apartments, LLC,
a California limited liability company as to an undivided
18.69% interest, all as tenants in common, dated October 4,
2005. (Incorporated by reference to the Current Report on Form
8-K dated October 6, 2005).
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.
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.
32.1 Certification of the equivalent of the Chief Executive
Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Johnstown/Consolidated Income Partners;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: November 14, 2005
/s/Martha L. Long
Martha L. Long
Senior Vice President of ConCap
Equities, Inc., equivalent of
the chief executive officer of
the Partnership
Exhibit 31.2
CERTIFICATION
I, Stephen B. Waters, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Johnstown/Consolidated Income Partners;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: November 14, 2005
/s/Stephen B. Waters
Stephen B. Waters
Vice President of ConCap
Equities, Inc., 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 Johnstown/Consolidated
Income Partners (the "Partnership"), for the quarterly period ended September
30, 2005 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Martha L. Long, as the equivalent of the chief executive officer
of the Partnership, and Stephen B. Waters, 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/Martha L. Long
Name: Martha L. Long
Date: November 14, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: November 14, 2005
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.