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February 14, 2007
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Boston Financial Tax Credit Fund VIII, A Limited Partnership
Report on Form 10-QSB for the Quarter Ended December 31, 2006
File Number 0-26522
Dear Sir/Madam:
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, filed herewith is a copy of subject report.
Very truly yours,
/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller
TC8-Q3.DOC
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 December 31, 2006
--------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ ---------------------
Commission file number 0-26522
Boston Financial Tax Credit Fund VIII, A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-3205879
- ----------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
- --------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
---------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Balance Sheet (Unaudited) - December 31, 2006 1
Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 2006 and 2005 2
Statement of Changes in Partners' Equity (Deficiency)
(Unaudited) - For the Nine Months Ended December 31, 2006 3
Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 2006 and 2005 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Items 1-6 12
SIGNATURE 13
CERTIFICATIONS 14
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
BALANCE SHEET
December 31, 2006
(Unaudited)
Assets
Cash and cash equivalents $ 883,703
Investments in Local Limited Partnerships (Note 1) 6,826,740
Other assets 274
---------------
Total Assets $ 7,710,717
===============
Liabilities and Partners' Equity
Due to affiliate $ 991,076
Accrued expenses 16,649
---------------
Total Liabilities 1,007,725
---------------
General, Initial and Investor Limited Partners' Equity 6,702,992
---------------
Total Partners' Equity 6,702,992
---------------
Total Liabilities and Partners' Equity $ 7,710,717
===============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 2006 and 2005
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
---------------- ---------------- ---------------- ---------------
Revenue
Investment $ 3,365 $ 10,447 $ 15,259 $ 28,271
---------------- ---------------- ---------------- ---------------
Total Revenue 3,365 10,447 15,259 28,271
---------------- ---------------- ---------------- ---------------
Expenses:
Asset management fees, related party 63,444 59,627 186,989 178,879
Provision for (recovery of ) valuation
allowance on advances to
Local Limited Partnerships (Note 1) (176,323) 11,633 (40,000) 11,633
General and administrative
(includes reimbursement to affiliate
in the amounts of $49,117 and
$46,297 for the nine months ended
December 31, 2006 and 2005,
respectively) 35,422 35,097 162,821 123,866
Amortization 3,174 3,437 9,785 17,502
---------------- ---------------- ---------------- ---------------
Total Expense (74,283) 109,794 319,595 331,880
---------------- ---------------- ---------------- ---------------
Income (Loss) before equity in losses of
Local Limited Partnerships 77,648 (99,347) (304,336) (303,609)
Equity in losses of Local Limited
Partnerships (Note 1) (17,528) (245,543) (20,584) (538,436)
Gain on sale of investments in Local
Limited Partnership 351,997 - 351,997 -
---------------- ---------------- ---------------- ---------------
Net Income (Loss) $ 412,117 $ (344,890) $ 27,077 $ (842,045)
================ ================ ================ ==============
Net Income (Loss) allocated:
General Partners $ 320,467 $ (3,449) $ 316,617 $ (8,420)
Limited Partners 91,650 (341,441) (289,540) (833,625)
---------------- ---------------- ---------------- ---------------
$ 412,117 $ (344,890) $ 27,077 $ (842,045)
================ ================ ================ ==============
Net Income (Loss) Per Limited Partner
Unit (36,497) Units $ 2.51 $ (9.35) $ (7.93) $ (22.84)
================ ================ =============== ==============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
For the Nine Months Ended December 31, 2006
(Unaudited)
Initial Investor Net
General Limited Limited Unrealized
Partners Partner Partners Losses Total
Balance at March 31, 2006 $ (249,587) $ 100 $ 6,925,402 $ (1,079) $ 6,674,836
----------- ----------- -------------- ------------- --------------
Comprehensive Income (Loss):
Change in net unrealized
losses on investment
securities available for sale - - - 1,079 1,079
Net Income (Loss) 316,617 - (289,540) - 27,077
----------- ----------- -------------- ------------ --------------
Comprehensive Income (Loss) 316,617 - (289,540) 1,079 28,156
----------- ----------- -------------- ------------ --------------
Balance at December 31, 2006 $ 67,030 $ 100 $ 6,635,862 $ - $ 6,702,992
=========== =========== ============== ============ ==============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2006 and 2005
(Unaudited)
2006 2005
------------- ---------
Net cash used for operating activities $ (135,279) $ (815,093)
Net cash provided by investing activities 672,316 744,919
------------- --------------
Net increase (decrease) in cash and cash equivalents 537,037 (70,174)
Cash and cash equivalents, beginning 346,666 332,386
------------- --------------
Cash and cash equivalents, ending $ 883,703 $ 262,212
============= ==============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Fund's Form 10-KSB for the year ended March 31, 2006. In the opinion of the
Managing General Partner, these financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Fund's financial position and results of operations. The results of operations
for the periods may not be indicative of the results to be expected for the
year.
The Managing General Partner of the Fund has elected to report results of the
Local Limited Partnerships in which the Fund has a limited partnership interest
on a 90 day lag basis because the Local Limited Partnerships report their
results on a calendar year basis. Accordingly, the financial information about
the Local Limited Partnerships that is included in the accompanying financial
statements is as of September 30, 2006 and 2005.
Generally, profits, losses, tax credits and cash flow from operations are
allocated 99% to the Limited Partners and 1% to the General Partners. Net
proceeds from a sale or refinancing will be allocated 95% to the Limited
Partners and 5% to the General Partners, after certain priority payments. The
General Partners may have an obligation to fund deficits in their capital
accounts, subject to limits set forth in the Partnership Agreement. However, to
the extent that the General Partners' capital accounts are in deficit positions,
certain items of net income may be allocated to the General Partners in
accordance with the Partnership Agreement.
1. Investments in Local Limited Partnerships
The Fund has limited partnership interests in nine Local Limited Partnerships,
which were organized for the purpose of owning and operating multi-family
housing complexes, all of which are government assisted. The Fund's ownership
interest in the Local Limited Partnerships is 99%, with the exception of
Springwood, which is 79.20%, Hemlock Ridge, which is 77% and Pike Place and West
End Place, which are 90%. The Fund may have negotiated or may negotiate options
with the Local General Partners to purchase or sell the Fund's interests in the
Local Limited Partnerships at the end of the Compliance Period at nominal
prices. In the event that Local Limited Partnerships are sold to third parties,
or upon dissolution of the Local Limited Partnerships, proceeds will be
distributed according to the terms of each Local Limited Partnership agreement.
The following is a summary of investments in Local Limited Partnerships at
December 31, 2006:
Capital contributions and advances paid to Local Limited Partnerships $ 26,647,252
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $601,513) (15,715,076)
Cumulative cash distributions received from Local Limited Partnerships (2,057,324)
---------------
Investments in Local Limited Partnerships before adjustments 8,874,852
Excess investment costs over the underlying assets acquired:
Acquisition fees and expenses 1,003,989
Cumulative amortization of acquisition fees and expenses (308,033)
---------------
Investments in Local Limited Partnerships before valuation allowance 9,570,808
Valuation allowance on investments in Local Limited Partnerships (2,744,068)
---------------
Investments in Local Limited Partnerships $ 6,826,740
===============
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
16
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
During the nine months ended December 31, 2006, the Fund advanced $136,323 to
one of the Local Limited Partnerships, all of which was subsequently refunded
when this Local Limited Partnership was sold The Fund has recorded a valuation
allowance for its investments in certain Local Limited Partnerships in order to
appropriately reflect the estimated net realizable value of these investments.
The Fund's share of net losses of the Local Limited Partnerships for the nine
months ended December 31, 2006 is $390,189. For the nine months ended December
31, 2006, the Fund has not recognized $369,605 of equity in losses relating to
five Local Limited Partnerships where cumulative equity in losses and cumulative
distributions exceeded its total investment in the Local Limited Partnership.
The Fund's interest in one of its investments in Local Limited Partnerships was
sold during the nine months ended December 31, 2006, resulting in a gain of
$351,997.
2. Significant Subsidiaries
The following Local Limited Partnerships invested in by the Fund represent more
than 20% of the Fund's total assets or equity as of December 31, 2006 or 2005 or
net losses for the three months ended either December 31, 2006 or 2005. The
following financial information represents the performance of these Local
Limited Partnerships for the three months ended September 30, 2006 and 2005:
Beaverdam Creek Associates, a Limited Partnership 2006 2005
- ------------------------------------------------- --------------- --------
Revenue $ 261,560 $ 296,782
Net Loss $ (19,242) $ (41,178)
Oak Knoll Renaissance, Limited Partnership
Revenue $ 501,440 $ 494,656
Net Income (Loss) $ 61,774 $ (47,393)
Springwood Apartments, a Limited Partnership
Revenue $ 245,656 $ 266,566
Net Loss $ (26,906) $ (20,588)
Pike Place, a Limited Partnership
Revenue $ 164,010 $ 165,551
Net Loss $ (25,070) $ (39,293)
West End Place, a Limited Partnership
Revenue $ 143,381 $ 137,258
Net Loss $ (17,516) $ (27,250)
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The Fund
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements and is including this statement for
purposes of complying with these safe harbor provisions. Although the Fund
believes the forward-looking statements are based on reasonable assumptions, the
Fund can give no assurance that its expectations will be attained. Actual
results and timing of certain events could differ materially from those
projected in or contemplated by the forward-looking statements due to a number
of factors, including, without limitation, general economic and real estate
conditions and interest rates.
Critical Accounting Policies
The Fund's accounting polices include those that relate to its recognition of
investments in Local Limited Partnerships using the equity method of accounting.
The Fund's policy is as follows:
The Local Limited Partnerships in which the Fund invests are Variable Interest
Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling
limited partner equity holder. Because the Fund is not the primary beneficiary
of these VIEs, it accounts for its investments in the Local Limited Partnerships
using the equity method of accounting. As a result of its involvement with the
VIEs, the Fund exposure to economic and financial statement losses is limited to
its investments in the VIEs ($6,826,740 at December 31, 2006). The Fund may be
subject to additional losses to the extent of any financial support that the
Fund voluntarily provides in the future. Under the equity method, the investment
is carried at cost, adjusted for the Fund's share of net income or loss and for
cash distributions from the Local Limited Partnerships; equity in income or loss
of the Local Limited Partnerships is included currently in the Fund's
operations. Under the equity method, a Local Limited Partnership investment will
not be carried below zero. To the extent that equity in losses are incurred when
the Fund's carrying value of the respective Local Limited Partnership has been
reduced to a zero balance, the losses will be suspended and offset against
future income. Income from Local Limited Partnerships, where cumulative equity
in losses plus cumulative distributions have exceeded the total investment in
Local Limited Partnerships, will not be recorded until all of the related
unrecorded losses have been offset. To the extent that a Local Limited
Partnership with a carrying value of zero distributes cash to the Fund, that
distribution is recorded as income on the books of the Fund and is included in
"other revenue" in the accompanying financial statements.
The Fund has implemented policies and practices for assessing
other-than-temporary declines in values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are compared
to their respective fair values. If an other-than-temporary decline in carrying
value exists, a provision to reduce the asset to fair value, as calculated based
primarily on remaining tax benefits, will be recorded in the Fund's financial
statements. Generally, the carrying values of most Local Limited Partnerships
will decline through losses and distributions in amounts sufficient to prevent
other-than-temporary impairments. However, the Fund may record impairment losses
in the future if the expiration of tax credits outpaces losses and distributions
from any of the Local Limited Partnerships.
Liquidity and Capital Resources
At December 31, 2006, the Fund had cash and cash equivalents of $883,703, as
compared to $346,666 at March 31, 2006. The increase is primarily attributable
to proceeds from the sale of one of the Local Limited Partnerships and proceeds
from the maturity of investment securities.
The General Partner initially designated 5% of the Gross Proceeds as Reserves,
as defined in the Partnership Agreement. The Reserves were established to be
used for working capital of the Fund and contingencies related to the ownership
of Local Limited Partnership interests. The General Partner may increase or
decrease such Reserves from time to time, as it deems appropriate. At December
31, 2006, $883,703 of cash and cash equivalents has been designated as Reserves.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources (continued)
To date, professional fees relating to various Property issues totaling
approximately $62,000 have been paid from Reserves. In the event a Local Limited
Partnership encounters operating difficulties requiring additional funds, the
Fund's management might deem it in its best interest to voluntarily provide such
funds in order to protect its investment. As of December 31, 2006, the Fund has
advanced approximately $1,208,000, net of repayments, to Local Limited
Partnerships to fund operating deficits.
The General Partner believes that the investment income earned on the Reserves,
along with cash distributions received from Local Limited Partnerships, to the
extent available, will be sufficient to fund the Fund's ongoing operations.
Reserves may be used to fund Fund operating deficits, if the General Partner
deems funding appropriate.
To date, the Fund has used approximately $329,000 of operating funds to
replenish Reserves. If Reserves are not adequate to cover the Fund's operations,
the Fund will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the General Partner or
working with Local Limited Partnerships to increase cash distributions.
Since the Fund invests as a limited partner, the Fund has no contractual duty to
provide additional funds to Local Limited Partnerships beyond its specified
investment. Thus, as of December 31, 2006, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 2006.
Results of Operations
Three Month Period
For the three months ended December 31, 2006, the Fund's operations resulted in
net income of $412,117, as compared to a net loss of $344,890 for the three
months ended December 31, 2005. The decrease in net loss is attributed to a
current year gain on sale of one of the Local Limited Partnerships, a decrease
in equity in losses of Local Limited Partnerships and a current year recovery of
provision for valuation of advances to Local Limited Partnerships. The gain on
sale of investments in Local Limited Partnerships is due to proceeds received
during the three months ended December 31, 2006. Equity in losses decreased
primarily due to an increase in unrecognized losses by the Fund of Local Limited
Partnerships with carrying values of zero. The decrease in provision for
valuation of advances is due to the reimbursement of advances previously made to
one of the Local Limited Partnerships.
Nine Month Period
For the nine months ended December 31, 2006, the Fund's operations resulted in a
net income of $27,077, as compared to a net loss of $842,045 for the nine months
ended December 31, 2005. The decrease in net loss is primarily attributable to a
decrease in equity in losses of Local Limited Partnerships, a current year gain
on sale of one of the Fund's investments in Local Limited Partnerships, and a
current year recovery of advances to Local Limited Partnerships due to
reimbursement of previously reserved for advances made to one of the Local
Limited Partnerships. Equity in Losses of Local Limited Partnerships decreased
due to an increase in losses not recognized by the Fund relating to Local
Limited Partnerships where cumulative equity in losses and cumulative
distributions have exceeded its total investment. The decrease in net loss is
partially offset by an increase in general and administrative expenses due to
increased legal expenses associated with litigation in which the Fund is
currently involved.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update
The Fund is a Massachusetts limited partnership organized to invest in Local
Limited Partnerships which own and operate apartment complexes which are
eligible for low income housing tax credits that may be applied against the
federal income tax liability of an investor. The Fund's objectives are to:
(i) provide investors with annual tax credits which they may use to reduce
their federal income tax liability; (ii) provide limited cash distributions
from the operations of apartment complexes; and (iii) preserve and protect
the Fund's capital. Arch Street VIII Limited Partnership ("Arch Street
L.P."), a Massachusetts limited partnership consisting of Arch Street VIII,
Inc., a Massachusetts corporation ("Arch Street, Inc.") as the sole general
partner and MMA as the sole limited partner, is the sole General Partner of
the Fund. Arch Street L.P. and Arch Street, Inc. are affiliates of MMA. The
fiscal year of the Fund ends on March 31.
As of December 31, 2006, the Fund's investment portfolio consists of limited
partnership interests in nine Local Limited Partnerships, each of which owns and
operates a multi-family apartment complex and each of which has generated Tax
Credits. Since inception, the Fund has generated Tax Credits of approximately
$1,429 per Limited Partner Unit. The aggregate amount of Tax Credits generated
by the Fund was consistent with the objective specified in the Fund's
prospectus.
Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 calendar years
from the date the property is placed in service (the "Compliance Period").
Failure to do so would result in the recapture of a portion of the property's
Tax Credits. Between 2008 and continuing through 2009, the Compliance Period of
the nine Properties in which the Fund has an interest will expire. It is
unlikely that the General Partner will be able to dispose of the Fund's Local
Limited Partnership interests concurrently with the expiration of each
Property's Compliance Period. The Fund shall dissolve and its affairs shall be
wound up upon the disposition of the final Local Limited Partnership interest
and other assets of the Fund. Investors will continue to be Limited Partners,
receiving K-1s and quarterly and annual reports, until the Fund is dissolved.
The General Partner has negotiated an agreement that will ultimately allow the
Funds to dispose of its interest in one Local Limited Partnership. In addition,
the Fund disposed of another Local Limited Partnership interest during the nine
months ended December 31, 2006.
On August 24, 2004, the Fund, Boston Financial Qualified Housing Limited
Partnership, Boston Financial Qualified Housing Tax Credits L.P. II, Boston
Financial Qualified Housing Tax Credits L.P. III, Boston Financial Qualified
Housing Tax Credits L.P. IV, Boston Financial Qualified Housing Tax Credits L.P.
V, Boston Financial Tax Credit Fund Plus, A Limited Partnership and Boston
Financial Tax Credit Fund VII, A Limited Partnership (collectively, the
"Partnerships"), and their general partners commenced litigation against Everest
Housing Investors 2, LLC ("Everest 2") and several other Everest-related
entities (collectively, the "Everest Entities") in Massachusetts state court,
seeking a declaratory judgment that certain materials the Everest Entities
sought to inspect are not "books and records" of the Partnerships and that the
Everest Entities are in any case not entitled to inspect said information under
applicable partnership agreements, partnership law or otherwise. On October 7,
2004, the Everest Entities filed an answer and counterclaim against the
Partnerships and their purported general partners, claiming that they breached
applicable partnership agreements, partnership law and their fiduciary duties to
the Everest Entities by failing to make the purported "books and records"
available. On January 12, 2005, the Partnerships and the general partners moved
to amend their complaint to, among other things, add a claim based on Everest
2's breach of a November 24, 2003 letter agreement which compelled Everest 2 to
keep confidential certain information contemporaneously disseminated by four of
the Partnerships to Everest 2. The Court granted this Motion. Discovery is
continuing in this matter, but no activity has taken place in recent months as
the parties have been discussing whether a negotiated resolution of the matter
is possible.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update (continued)
The Partnerships and their general partners maintain that the Everest Entities
are not entitled to review the materials requested and/or use the materials in
secondary market transactions because, among other things: (i) they are not
"books and records" of the Partnerships; (ii) the Everest Entities do not seek
to review them for a proper purpose; and (iii) selective disclosure of the
information to the Everest Entities would give them an unfair informational
advantage in secondary market transactions and may violate federal and/or state
securities laws. The Partnerships and their general partners have not formed an
opinion that an unfavorable outcome is either probable or remote, and their
counsel refrains from expressing an opinion as to the likely outcome of the case
or the range of any loss.
Property Discussions
A majority of the Properties in which the Fund has an interest had stabilized
operations and operated above break-even at September 30, 2006. A few Properties
have generated cash flow deficits in prior periods that the Local General
Partners of those Properties funded through project expense loans, subordinated
loans or operating escrows. However, a few Properties have previously
experienced operating difficulties that could either: i) have an adverse impact
on the Fund's liquidity; ii) result in their foreclosure; or iii) result in the
General Partner deeming it appropriate for the Fund to dispose of its interest
in the Local Limited Partnership prior to the expiration of the Compliance
Period, in the event below breakeven operations recur. Also, the General
Partner, in the normal course of the Fund's business, may arrange for the future
disposition of its interest in certain Local Limited Partnerships. The following
Property discussions focus only on such Properties.
As previously reported, the Local General Partner of Live Oaks Plantation,
located in West Palm Beach, Florida, had indicated a desire to transfer its
interest in the Local Limited Partnership to a replacement Local General
Partner. Accordingly, the General Partner began working with the Local General
Partner to identify an acceptable replacement. Negotiations to replace the Local
General Partner were then delayed due to an audit by the Internal Revenue
Service ("IRS"). The audit focused on the tax treatment of certain items, such
as land improvements, impact fees, utility fees and developer fees. In April
2002, the Florida office of the IRS issued their report indicating an eligible
basis reduction of approximately $1,000,000, which would reduce the amount of
Tax Credits and losses generated by the Property. The Local General Partner
filed an appeal of the report to the Washington D.C. office of the IRS. The
appeal was successful, and during April 2004 a settlement was reached whereby
the eligible basis was reduced by approximately $93,000. Subsequent to reaching
a settlement with the IRS, negotiations to replace the Local General Partner
resumed. Effective June 28, 2004, an affiliate of the General Partner replaced
the Local General Partner. In June 2005, the Local General Partner interest was
transferred from the affiliate of the General Partner to a replacement Local
General Partner. While occupancy and working capital levels at the Property have
consistently remained adequate, the Property generated significant operating
deficits in 2001 and 2002. The Fund funded slightly more than $1,000,000 of
deficits from Fund Reserves. The General Partner anticipates that cash from
operations will continue to fund the monthly debt service. Occupancy was 94% as
of September 30, 2006 while debt service coverage and working capital remained
above appropriate levels during the nine-month period ending September 30, 2006.
As previously reported, in 2004 the Local General Partner of Beaverdam Creek
located in Mechanicsville, Virginia, requested approval for a refinancing on the
Property's first mortgage. As part of the agreement to provide the General
Partner's approval of the refinancing, a put agreement was entered into whereby
the Fund has the right to transfer its interest in the Local Limited Partnership
for a nominal price at any time after December 31, 2009, the end of the
Property's Compliance Period. As a result of the refinancing, which closed on
May 4, 2005, the Fund received Sale or Refinancing Proceeds, as defined in the
Local Limited Partnership Agreement, of $890,727. The General Partner, in
accordance with and as permitted by the Partnership Agreement, retained the
entire amount of net proceeds in Reserves.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
As previously reported, turnover at Green Wood Apartments, located in Gallatin,
Tennessee, as a result of few employment opportunities in the immediate area,
was the main cause for below breakeven operations at the Property. Rental
concessions, provided in an effort to alleviate the turnover issue, had proven
successful, at least in the short term, as rental revenue increased to a level
sufficient to result in above breakeven operations at June 30, 2006. Occupancy
averaged 92% throughout the six-month period ending June 30, 2006 while debt
service coverage and working capital were at acceptable levels as of June 30,
2006. As a result of a prior agreement, Green Wood Apartments was sold on
November 30, 2006. This sale resulted in net proceeds to the Fund of $528,320 or
$14.60 per Unit and is projected to result in 2006 taxable income of
approximately $1,200,000, or $24 per Unit. For financial reporting purposes,
$176,323 represented repayment of prior advances made to the Local Limited
Partnership and $351,997 represents gain on sale. The Managing General Partner,
in accordance with and as permitted by the Partnership Agreement, retained the
entire amount of net proceeds in Reserves. The Fund no longer has an interest in
this Local Limited Partnership.
Low visibility and turnover at the resident manager level have caused occupancy
and debt service coverage at Meadow Wood of Pella, located in Pella, Iowa, to
fall below acceptable levels during the three-month period ending September 30,
2006. In addition, the property is in default of its first mortgage loan
agreement due to an inability to pay its entire real estate tax liability due as
of September 30, 2006. The property may require advances from the Fund in order
to alleviate the unpaid real estate tax issue and fulfill first mortgage loan
debt service covenant requirements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a) Exhibits
31.1 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to section 302
of the Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to section 906
of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended December 31, 2006
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATED: February 14, 2007 BOSTON FINANCIAL TAX CREDIT FUND VIII,
A LIMITED PARTNERSHIP
By: Arch Street VIII Limited Partnership,
its General Partner
/s/Gary Mentesana
Gary Mentesana
President
Arch Street VIII, Inc.