UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2008
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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 0-22104
Boston Financial Tax Credit Fund Plus, A Limited Partnership
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(Exact name of registrant as specified in its charter)
Massachusetts 04-3105699
_______________________________ _____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Arch Street, Boston, Massachusetts 02110-1106
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
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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 .
----
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12 b-2 of the Exchange Act.
Large accelerated filer ___ Accelerated Filer ___
Non-accelerated filer ___ (Do not check if a
smaller reporting company) Smaller reporting company X
---
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12 b-2 of the Exchange Act).
Yes No X .
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BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements
Balance Sheet (Unaudited) - September 30, 2008 1
Statements of Operations (Unaudited) -
For the Three and Six Months Ended September 30, 2008 and 2007 2
Statement of Changes in Partners' Equity
(Unaudited) - For the Six Months Ended September 30, 2008 3
Statements of Cash Flows (Unaudited) -
For the Six Months Ended September 30, 2008 and 2007 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
Item 4. Controls and Procedures 15
PART II - OTHER INFORMATION
Items 1-6 16
SIGNATURE 17
CERTIFICATIONS 18
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
BALANCE SHEET
September 30, 2008
(Unaudited)
Assets
Cash and cash equivalents $ 3,689,070
Investments in Local Limited Partnerships (Note 1) 3,303,350
Other investments (Note 2) 2,103,149
Accounts receivable 10,000
---------------
Total Assets $ 9,105,569
===============
Liabilities and Partners' Equity
Due to affiliate $ 214,710
Accrued expenses 38,730
---------------
Total Liabilities 253,440
---------------
General, Initial and Investor Limited Partners' Equity 8,852,129
---------------
Total Liabilities and Partners' Equity $ 9,105,569
===============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 2008 and 2007
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30, September 30, September 30,
2008 2007 2008 2007
---------------- ---------------- ---------------- ----------
Revenue
Investment $ 16,928 $ 41,275 $ 25,110 $ 42,650
Accretion of Original Issue Discount
(Note 2) 45,669 50,603 95,174 102,984
Other 2,586 128,217 8,334 133,278
---------------- ---------------- ---------------- ----------------
Total Revenue 65,183 220,095 128,618 278,912
---------------- ---------------- ---------------- ----------------
Expenses:
Asset management fees, affiliate 39,813 42,270 79,626 84,541
Provision for valuation allowance
on investments in Local
Limited Partnerships (Note 1) 266,000 - 266,000 -
General and administrative
(includes reimbursements to an affiliate
in the amounts of $79,581 and
$80,488 for the six months ended
September 30, 2008 and 2007,
respectively) 79,736 90,441 154,160 169,692
Amortization 1,921 2,164 3,982 4,327
---------------- ---------------- ---------------- ----------------
Total Expenses 387,470 134,875 503,768 258,560
---------------- ---------------- ---------------- ----------------
Income (Loss) before equity in income of Local
Limited Partnerships and gain on sale of investments
in Local Limited Partnerships (322,287) 85,220 (375,150) 20,352
Equity in income of Local Limited
Partnerships (Note 1) 25,504 25,427 104,655 117,744
Gain on sale of investments in Local Limited
Partnerships 16,290 75,000 2,185,821 75,001
---------------- ---------------- ---------------- ----------------
Net Income (Loss) $ (280,493) $ 185,647 $ 1,915,326 $ 213,097
================ ================ ================ ================
Net Income (Loss) allocated:
General Partners $ (8,175) $ (3,470) $ 13,783 $ (3,196
Class A Limited Partners (297,636) 129,650 1,690,761 106,058
Class B Limited Partners 25,318 59,467 210,782 110,235
---------------- ---------------- ---------------- ----------------
$ (280,493) $ 185,647 $ 1,915,326 $ 213,097
================ ================ ================ ================
Net Income (Loss) Per Limited Partner Unit
Class A Limited Partners (34,643 Units) $ (8.59) $ 3.74 $ 48.81 $ 3.06
================ ================ ================ ================
Class B Limited Partners (3,290 Units) $ 7.70 $ 18.08 $ 64.07 $ 33.51
================ ================ ================ ================
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Six Months Ended September 30, 2008
(Unaudited)
Investor Investor
Initial Limited Limited
General Limited Partners, Partners,
Partners Partner Class A Class B Total
Balance at March 31, 2008 $ 74,738 $ 5,000 $ 4,741,559 $ 2,652,506 $7,473,803
Net Income 13,783 - 1,690,761 210,782 1,915,326
Limited Partners distribution - - - (537,000) (537,000)
------------ ------------ ------------ ------------ ------------
Balance at September 30, 2008 $ 88,521 $ 5,000 $ 6,432,320 $ 2,326,288 $ 8,852,129
============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 2008 and 2007
(Unaudited)
2008 2007
---------------- ----------------
Net cash provided by (used for) operating activities $ (182,514) $ 104,312
Net cash provided by investing activities 3,356,414 718,109
Net cash used for financing activities (537,000) (532,669)
---------------- ----------------
Net increase in cash and cash equivalents 2,636,900 289,752
Cash and cash equivalents, beginning 1,052,170 1,132,010
---------------- ----------------
Cash and cash equivalents, ending $ 3,689,070 $ 1,421,762
================ ================
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q 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, 2008. 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 has elected to report results of the Local Limited
Partnerships on a 90 day lag basis because the Local Limited Partnerships report
their results on a calendar year basis. Accordingly, the financial information
of the Local Limited Partnerships that is included in the accompanying financial
statements is as of June 30, 2008 and 2007.
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 a deficit position
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 fifteen 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 each Local Limited Partnership is 99%, except for Metropolitan, New
Garden Place and Findley Place, where the Fund's ownership interests are 98.75%,
97.9% and 98%, respectively. 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 Properties are sold to a third party, 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
September 30, 2008:
Capital contributions and advances paid to Local Limited Partnerships and purchase
price paid to withdrawing partners of Local Limited Partnerships $ 17,183,051
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $4,281,114) (7,210,893)
Cumulative cash distributions received from Local Limited Partnerships (3,776,478)
---------------
Investments in Local Limited Partnerships before adjustments 6,195,680
Excess investment costs over the underlying assets acquired:
Acquisition fees and expenses 558,784
Cumulative amortization of acquisition fees and expenses (196,913)
---------------
Investments in Local Limited Partnerships before valuation allowance 6,557,551
Valuation allowance on investments in Local Limited Partnerships (3,254,201)
---------------
Investments in Local Limited Partnerships $ 3,303,350
===============
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
For the six months ended September 30, 2008, the Fund advanced $32,223 to one of
the Local Limited Partnerships, none of which was reserved.
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 the net losses of the Local Limited Partnerships for the six
months ended September 30, 2008 is $497,930. For the six months ended September
30, 2008, the Fund has not recognized $602,585 of equity in losses relating to
certain Local Limited Partnerships in which cumulative equity in losses and
cumulative distributions exceeded its total investment in these Local Limited
Partnerships.
During the six months ended September 30, 2008, the Fund sold its interests in
four Local Limited Partnerships, resulting in a net gain of $2,185,821.
2. Other Investments
Other investments consists of the aggregate cost of the Treasury STRIPS
purchased by the Fund for the benefit of the Class B Limited Partners. The
amortized cost at September 30, 2008 is composed of the following:
Aggregate cost of Treasury STRIPS $ 608,166
Accumulated accretion of Original Issue Discount 1,494,983
-------------
$ 2,103,149
The fair value of these securities at September 30, 2008 is $2,196,996. Maturity
dates for the STRIPS range from November 15, 2008 to May 15, 2010 with a final
maturity value of $2,224,000.
3. New Accounting Principle
In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, "Fair Value Measurements" ("SFAS No. 157"), which provides enhanced
guidance for using fair value to measure assets and liabilities. SFAS No. 157
establishes a common definition of fair value, provides a framework for
measuring fair value under U.S. generally accepted accounting principles and
expands disclosure requirements about fair value measurements. SFAS No. 157 is
effective for financial statements issued in fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. In February
2008, the FASB issued FASB Staff Position 157-2, "Effective Date of FASB
Statement No. 157", which delays the effective date of SFAS No. 157 for all
nonfinancial assets and liabilities except those that are recognized or
disclosed at fair value in the financial statements on at least an annual basis
until November 15, 2008. The Fund adopted the provisions of SFAS No. 157 for
financial assets and liabilities recognized at fair value on a recurring basis
effective April 1, 2008. The partial adoption of SFAS No. 157 did not have a
material impact on the Fund's financial statements. The Fund does not expect the
adoption of the remaining provisions of SFAS No. 157 to have a material effect
on the Fund's financial position, operations or cash flow. This standard
requires that a Fund measure its financial assets and liabilities using inputs
from the three levels of the fair value hierarchy. A financial asset or
liability classification within the hierarchy is determined based on the lowest
level input that is significant to the fair value measurement. The three levels
are as follows:
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
3. New Accounting Principle (continued)
Level 1 - Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Fund has the ability to
access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active,
inputs other than quoted prices that are observable for the
asset or liability and inputs that are derived principally from
or corroborated by observable market data by correlation or
other means (market corroborated inputs).
Level 3 - Unobservable inputs reflect the Fund's judgments about the
assumptions market participants would use in pricing the asset
or liability since limited market data exists. The Fund develops
these inputs based on the best information available, including
the Fund's own data.
Financial assets accounted for at fair value on a recurring basis at September
30, 2008 include cash equivalents of $3,689,070.
4. Significant Subsidiaries
The following Local Limited Partnership invested in by the Fund represents more
than 20% of the Fund's total assets or equity as of September 30, 2008 or 2007
or net losses for the three months ended either September 30, 2008 or 2007. The
following financial information represents the performance of this Local Limited
Partnership for the three months ended June 30, 2008 and 2007:
2008 2007
--------------- ------------
Hudson Square Apartments Limited Partnership
A Limited Partnership
Revenue $ 158,052 $ 166,654
Net Income $ 33,080 $ 42,427
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
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 use of
words like "anticipate," "estimate," "intend," "project," "plan," "expect,"
"believe," "could," and similar expressions are intended to identify such
forward-looking statements. 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 policies 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's exposure to economic and financial statement losses is limited
to its investments in the VIEs ($3,303,350 at September 30, 2008). 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. A liability is recorded for delayed equity capital contributions to
Local Limited Partnerships. 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. The tax benefits for each Local Limited Partnership consist of
future tax losses, tax credits and residual receipts at disposition. Included in
the residual receipts calculation is current net operating income capitalized at
the regional rate specific to each Local Limited Partnership. 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 similar 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 September 30, 2008, the Fund had cash and cash equivalents of $3,689,070 as
compared to $1,052,170 at March 31, 2008. The increase is primarily attributable
to proceeds from the sale of investments in Local Limited Partnerships and cash
distributions received from Local Limited Partnerships, partially offset by cash
used for operating activities and advances to a Local Limited Partnership.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources (continued)
The Managing General Partner initially designated 4% of the Adjusted Gross
Proceeds (which generally means Gross Proceeds minus the amounts committed to
the acquisition of Treasury STRIPS) 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 Managing General Partner may increase or decrease such Reserves
from time to time, as it deems appropriate. At September 30, 2008, approximately
$713,000 has been designated as Reserves.
To date, professional fees relating to various Property issues totaling
approximately $464,000 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 September 30, 2008,
the Fund has advanced approximately $303,000 to Local Limited Partnerships to
fund operating deficits.
The Managing 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 operating deficits, if the
Managing General Partner deems funding appropriate. To date, the Fund has not
used any of Reserves to fund operations. 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 Managing 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 September 30, 2008, the Fund had no contractual or other
obligation to any Local Limited Partnership which had not been paid or provided
for.
Cash Distributions
Cash distributions of $537,000 were made to the Investor Limited Partners, Class
B during the six months ended September 30, 2008.
Results of Operations
Three Month Period
For the three months ended September 30, 2008, the Fund's operations resulted in
a net loss of $280,493, as compared to a net income of $185,647 for the same
period in 2007. The decrease in net income is primarily due to an increase in
provision for valuation allowance on investments in Local Limited Partnerships,
a decrease in other income, a decrease in gain on sale of investments in Local
Limited Partnerships, and a decrease in investment revenue, partially offset by
a decrease in general and administrative expenses. Provision for valuation
allowance on investments increased due to the Fund recording an impairment
allowance for its investment in a certain Local Limited Partnership. The
decrease in other income is due to a decrease in cash distributions received
from previously disposed Local Limited Partnerships. The decrease in gain on
sale of investments in Local Limited Partnerships is due to a decrease in
proceeds received from the sale of three properties during the current quarter
compared to proceeds received from the sale of one property during the same
quarter of the prior year. During the quarter ended September 30, 2007, the Fund
received a one-time reimbursement of 2006 interest that the Fund had lost while
its cash was invested in below-market interest bearing accounts. This primarily
resulted in a decrease in investment revenue during the current quarter. General
and administrative expenses decreased primarily due to a decrease in accounting
and copy expenses, partially offset by increases in salary expense and bank
fees.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Six Months Period
For the six months ended September 30, 2008, the Fund's operations resulted in a
net income of $1,915,326, as compared to a net income of $213,097 for the same
period in 2007. The increase in net income is primarily attributable to an
increase in gain on sale of investments in Local Limited Partnerships, partially
offset by an increase in provision for valuation allowance on investments in
Local Limited Partnerships, a decrease in investment income, and a decrease in
other income. The increase in gain on sale of investments in Local Limited
Partnerships is the result of a gain on sale related to the sale of four Local
Limited Partnerships during the six months ended September 30, 2008. Provision
for valuation allowance on investments increased due to the Fund recording an
impairment allowance for its investment in a certain Local Limited Partnership.
During the quarter ended September 30, 2007, the Fund received a one-time
reimbursement of 2006 interest that the Fund had lost while its cash was
invested in below-market interest bearing accounts. This primarily resulted in a
decrease in investment revenue during the current quarter. The decrease in other
income is due to a decrease in cash distributions received from previously
disposed Local Limited Partnerships.
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 also invests in, for the
benefit of the Class B Limited Partners, United States Treasury obligations from
which the interest coupons have been stripped or in such interest coupons
themselves (collectively "Treasury STRIPS"). The Fund used approximately 28% of
the Class B Limited Partners' capital contributions to purchase Treasury STRIPS
with maturities of 13 to 18 years, with a total redemption amount equal to the
Class B Limited Partners' capital contributions. The Fund's objectives are to:
(i) provide annual tax benefits in the form of tax credits which Limited
Partners may use to offset their Federal income tax liability; (ii) preserve and
protect the Fund's capital committed to Local Limited Partnerships; (iii)
provide cash distributions from operations of Local Limited Partnerships; (iv)
provide cash distributions from Sale or Refinancing transactions with the
possibility of long term capital appreciation; and (v) provide cash
distributions derived from investment in Treasury STRIPS to Class B Limited
Partners after a period of approximately 13 to 18 years equal to their Capital
Contributions. Arch Street VIII, Inc., a Massachusetts corporation, is the
Managing General Partner of the Fund. Arch Street VI Limited Partnership, a
Massachusetts limited partnership whose general partner consists of Arch Street,
Inc., is also a General Partner. Both of the General Partners are affiliates of
MMA. The fiscal year of the Fund ends on March 31.
On August 15, 2008 the Fund received $537,000, or $163.22 per Class B unit, as
the Fund's investment in four Treasury STRIPS matured. The Managing General
Partner distributed these funds to Class B Limited Partners in August 2008.
On February 15, 2007 the Fund received $187,000 or $56.87 per Class B unit, as
the Fund's initial investment in Treasury STRIPS matured. The Managing General
Partner distributed these funds to Class B Limited Partners in August 2007. On
August 15, 2007, the Fund received $342,000 or $103.95, per Class B unit, as the
Fund's second, in a series of sixteen, investment in Treasury STRIPS matured.
The Managing General Partner distributed these funds to Class B Limited Partners
in September 2007.
The next scheduled maturity date is November 15, 2008, when four more U.S.
Treasury STRIPS, in the amount of $880,000, or $267.48 per Class B Unit, will
mature. The Managing General Partner will distribute these proceeds in November
2008, to the Limited Partners recognized as holders of the Class B Units on the
date these Treasury Strips mature. Six more securities, totaling $1,344,000, or
$408.51 per Class B Unit, are scheduled to mature between May 15, 2009 and May
15, 2010.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update (continued)
As of September 30, 2008, the Fund's investment portfolio consisted of Limited
Partnership interests in fifteen Local Limited Partnerships, each of which owns
and operates a multi-family apartment complex and each of which has generated
Tax Credits. As a result of the transfer of the Fund's interest in one Local
Limited Partnership, Atkins Glen, located in Stoneville, South Carolina, on
October 1, 2008, the Fund's investment portfolio currently consists of Limited
Partnership interests in fourteen Local Limited Partnerships. Since inception,
the Fund generated Tax Credits, net of recapture, of approximately $1,467 per
Class A Unit. Class B Unit investors have received Tax Credits, net of
recapture, of approximately $1,056 per Limited Partner Unit.
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. Failure to do so would result
in the recapture of a portion of the Property's Tax Credits. The Compliance
Period for eleven of the remaining fifteen Properties has expired on or before
December 31, 2007, while the other four Properties have compliance periods that
expire on December 31, 2008. The Managing General Partner has negotiated
agreements that will ultimately dispose of the Fund's interest in two Local
Limited Partnerships. The Fund disposed of four Local Limited Partnership
interests during the six month period ending September 30, 2008.
The Managing General Partner will continue to closely monitor the operations of
the Properties during their Compliance Periods and will formulate disposition
strategies with respect to the Fund's remaining Local Limited Partnership
interests. It is unlikely that the Managing General Partner's efforts will
result in the Fund disposing of all of its remaining 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 Fund is not a party to any pending legal or administrative proceeding, and
to the best of its knowledge, no legal or administrative proceeding is
threatened or contemplated against it.
Property Discussions
A majority of the Properties in which the Fund has an interest had stabilized
operations and operated above breakeven at June 30, 2008. Several Properties
generated cash flow deficits that the Local General Partners of those Properties
funded through project expense loans, subordinated loans or operating escrows.
However, some Properties have had persistent 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 Managing 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. Also, the Managing
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.
On September 1, 2008, the Managing General Partner transferred the Fund's
interest in Livingston Arms, located in Poughkeepsie, NY, to an affiliate of the
Local General Partner. The Fund received $10,000, or $0.26 per Unit. The
Managing General Partner, in accordance with and as permitted by the Partnership
Agreement, has retained the sales proceeds in Reserves for the time being until
it deems a subsequent distribution to be prudent. Based on the results of a
valuation of the Property and the Property's current physical condition the
Managing General Partner decided to transfer the Fund's interest in the Local
Limited Partnership that owned and operated Livingston Arms. The Property
delivered significantly more (36%) credits than originally anticipated. The Fund
no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner and Local General Partner
of Meadow Wood, located in Smyrna, Tennessee had reached an agreement that would
result in the early 2007 sale of this Property. On January 23, 2007, the
Property was sold, resulting in net proceeds to the Fund of $1,174,546, or
$30.96 per Unit. During the three month period ending September 30, 2007, the
Fund received additional sales proceeds of $75,000, or $1.98 per Unit, upon a
reconciliation of tax and utility expenses. This sale resulted in 2007 taxable
income of $1,165,374, or $30.72 per Unit. The Fund no longer has an interest in
this Local Limited Partnership.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
As previously reported, on March 21, 2007, the Managing General Partner
exercised the Fund's put option and transferred its interest in the Local
Limited Partnership that owned Broadway Tower, located in Revere, Massachusetts,
for $50,000 or $1.32 per Unit. Proceeds related to this sale were received on
April 18, 2007. The sale of this Local Limited Partnership resulted in 2007
taxable income of $749,398, or $19.76 per Unit. The Fund retained an economic
interest in the transferred Property in the form of a contingent note equal to
10% of Related Party Payments, as defined in the contingent note agreement. The
Fund no longer has an interest in this Local Limited Partnership.
As previously reported, due to concerns over the long-term financial health of
Primrose located in Grand Forks, North Dakota and Sycamore, located in Sioux
Falls, South Dakota, the Managing General Partner developed a plan that will
ultimately result in the transfer of the Fund's interest in each Local Limited
Partnership. Both Local Limited Partnerships have the same Local General
Partner. In 1997, in an effort to reduce possible future risk, the Managing
General Partner consummated the transfer of 50% of the Fund's interest in
capital and profits in these Local Limited Partnerships to an affiliate of the
Local General Partner. Effective June 17, 1999, the Local General Partner
transferred both its general partner interest and 48.5% of its interest in
capital and profits in the Local Limited Partnerships to a non-affiliated,
non-profit general partner. Effective August 31, 2000, the former Local General
Partner withdrew its remaining interest in each of the Local Limited
Partnerships. In July 2008, the Managing General Partner transferred the Fund's
remaining interest in both Primrose and Sycamore to the Local General Partner.
As expected, these transfers, effectively dated January 1, 2008, did not result
in any proceeds to the Fund. The Managing General Partner is currently
projecting a 2008 taxable loss of approximately $127,000, or $3.35 per Unit,
from Primrose, and taxable income of approximately $140,000, or $3.69 per Unit,
from Sycamore. The Fund no longer has an interest in these two Local Limited
Partnerships.
As previously reported, with regard to Sycamore and Primrose, the Fund received
its full share of Tax Credits. In addition, the Local General Partner had the
right to call the remaining interest subsequent to the Compliance Period, which
expired on December 31, 2007.
As previously reported, as of March 31, 2008, occupancy at 45th and Vincennes,
located in Chicago, Illinois, was unstable at 67%, while working capital and
debt service coverage levels remained below acceptable levels. As of June 30,
2008, occupancy improved to 83% while working capital and debt service coverage
levels remained below acceptable levels. A representative of the Managing
General Partner visited the Property in December 2007 to reassess the management
agent and physical condition and noted that the Property remains in need of
significant improvement. Although advances from the Local General Partner have
enabled the Property to remain current on its loan obligations, the Managing
General Partner believes that the Local General Partner and its affiliated
management company are not adequately performing their responsibilities with
respect to the Property. The Managing General Partner has expressed these
concerns to the Local General Partner and will continue to closely monitor the
Property's operations. Based on the results of a market valuation confirming the
property's value is less than its outstanding debt, the Managing General Partner
will proceed to assign the Fund's interest to the Local General Partner, now
that the Transfer of Physical Assets application has been approved by HUD. The
Managing General Partner currently estimates a late 2008 disposition is likely.
The Managing General Partner does not expect this disposition to result in any
proceeds to the Fund, or result in a significant taxable event for Limited
Partners. The Property's Compliance Period ended on December 31, 2007.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
As previously reported, as a result of concerns regarding the then-existing
operating deficits and capital requirements of Findley Place, located in
Minneapolis, Minnesota, in 1999 the Managing General Partner developed a plan
that will ultimately result in the transfer of the Fund's interest in the Local
Limited Partnership. On March 1, 2000, the Managing General Partner consummated
the transfer of 1% of the Fund's interest in losses, 48.5% of its interest in
profits and 30% of its capital account to the Local General Partner. The
Managing General Partner has the right to put the Fund's remaining interest to
the Local General Partner any time after March 1, 2001. In addition, the Local
General Partner has the right to call the remaining interest after the
Compliance Period has expired, which will occur on December 31, 2008. The
Property operated at above break even for the six-month period ending June 30,
2008, due mainly in part to achieving 100% occupancy throughout the same period.
As previously reported, New Garden Place, located in Gilmer, North Carolina, in
early 2004 the Local General Partner requested and the Fund provided its
approval to a refinancing of the Property's first mortgage. The new first
mortgage, which closed in April 2004, had a lower interest rate and lower annual
debt service payments than the original mortgage, thereby increasing the
Property's cash flow. In connection with the Fund's approval of this
refinancing, the Fund and the Local General Partner entered into a put agreement
whereby the Fund can transfer its interest in the Local Limited Partnership to
the Local General Partner for a nominal amount any time after the Property's
Compliance Period ends on December 31, 2008.
As previously reported, Metropolitan Apartments, located in Chicago, Illinois,
continues to incur operating deficits. Despite an increase in occupancy to 90%
at June 30, 2008, from 84% at March 31, 2008, debt service coverage and working
capital levels declined during the three month period ending June 30, 2008. The
decline was mainly attributable to the rising cost of natural gas and an
increase in debt service caused by the Property's five year adjustable rate
first mortgage being reset in late 2007. The deficit was funded by advances from
the Management Agent, an affiliate of the Local General Partner. The Local
General Partner, having exceeded their working capital obligation, will no
longer continue to fund deficits. The Managing General Partner, as part of a
disposition agreement with the Local General Partners to jointly fund operating
deficits from Fund reserves, advanced $50,000 in 2007, $32,223 in August 2008,
and expects to provide approximately $18,000 more in 2008, to address the need
for structural repairs as cited in the City of Chicago's report of recent
building code violations. Although the Managing General Partner will endeavor to
recover all advances upon disposition which is currently expected to occur in
early 2009, their collection is in jeopardy as the potential purchase price for
the Fund's interest has declined due to the Chicago multifamily market's overall
weakness. The Property remains current on its debt service obligations.
As previously reported, the Managing General Partner and Local General Partner
of Tree Trail, located in Gainesville, Florida, were exploring an exit strategy
that would have allowed for a late summer 2008 disposal of the Fund's interest,
via a sale of the underlying Property, in the Local Limited Partnership that
owns and operates Tree Trail. Due to current market conditions, the Managing
General Partner is reexamining the exit strategy for the Fund's interest in this
Local Limited Partnership and does not anticipate a disposition in the near
future.
As previously reported, the Managing General Partner anticipated that the Fund's
interest in the Local Limited Partnership that owns Walker Woods II, located in
Dover, Delaware, would be terminated upon the sale of the Property in late 2008.
The Managing General Partner no longer believes a 2008 disposition is possible.
Although no deal is pending at this time, the Managing General Partner will
continue to explore an exit strategy that may lead to a 2009 disposition.
As previously reported the Managing General Partner and Local General Partner of
Pilot House, located in Newport News, Virginia, were exploring an exit strategy
that could have resulted in the mid 2008 disposal of the Fund's interest in the
Local Limited Partnership that owns Pilot House, for approximately $1,600,000 or
$42.18 per unit. The Managing General Partner continues to negotiate the sale of
the Fund's interest in this Local Limited Partnership. Terms of a possible
disposition have not been agreed upon at this time.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
As previously reported, the Managing General Partner anticipated that the Fund's
interest in the Local Limited Partnership that owns Cottages of Aspen, located
in Oakdale, Minnesota, would be terminated upon the sale of the underlying
Property in mid-2008. On June 4, 2008, the Fund's interest was transferred,
resulting in net sales proceeds to the Fund of $2,570,481, or $67.77 per Unit.
The Managing General Partner estimates this sale will result in 2008 taxable
income projected to be approximately $2,850,000, or $75.13, per Unit. The Fund
no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner anticipates that the Fund's
interest in the Local Limited Partnership that owns and operates Hudson Square,
located in Baton Rouge, Louisiana, will be terminated either upon the sale of
the underlying Property, or a sale of the Fund's interest, in early 2009. Based
on a 2007 valuation, the Managing General Partner expected a sale to result in
approximately $1,200,000, or $31.63 per Unit. Due to current market conditions,
the Managing General Partner is now estimating a late November 2008 disposition
to result in net sales proceeds of approximately $965,000, or $25.44 per Unit
and a loss projected to be approximately $584,000, or $15.40 per Unit.
As previously reported, the Managing General Partner currently estimated a late
2008 disposition, via a transfer to the Local General Partner, of the Fund's
interest in the Local Limited Partnership that owns Atkins Glen, located in
Stoneville, South Carolina. Effective October 1, 2008, the Managing General
Partner disposed of the Fund's interest for $3,334, or $0.09 per Unit. The
Managing General Partner, in accordance with and as permitted by the Fund
Agreement, has retained the sales proceeds in Reserves for the time being until
it deems a subsequent distribution to be prudent. The Managing General Partner
is currently projecting 2008 taxable income of approximately $285,000, or $7.51
per Unit. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner currently estimates a mid
2009 disposition, via a transfer to the Local General Partner, of the Fund's
interest in the Local Limited Partnership that owns Vista Villa, located in
Saginaw County, Michigan. The Managing General Partners does not presently
expect this transaction to result in any net sales proceeds to the Fund. The
Managing General Partner is currently projecting taxable income of approximately
$194,000, or $5.11 per Unit.
The Managing General Partner is currently exploring an exit strategy for
Jardines deJuncos, located in Juncos, PR that could lead to a 2009 disposition.
Net sales proceeds to the Fund, if any, are unknown at this time.
The Managing General Partner is currently exploring an exit strategy for Kings
Grant Court, located in Statesville, North Carolina. Net sales proceeds to the
Fund, if any, are unknown at this time.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A Limited Partnership
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Non Applicable
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
Exchange Commission's rules and forms, including to ensure that information
required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is accumulated and communicated to management to allow timely
decisions regarding required disclosure. Based on that evaluation, management
has concluded that as of September 30, 2008, our disclosure controls and
procedures were effective.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f) and 15d-15(f). Our management conducted an assessment of the
effectiveness of our internal control over financial reporting. This assessment
was based upon the criteria for effective internal control over financial
reporting established in Internal Control -- Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
The Fund's internal control over financial reporting involves a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Internal control over financial
reporting includes the controls themselves, as well as monitoring of the
controls and internal auditing practices and actions to correct deficiencies
identified. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.
Management assessed the effectiveness of the Fund's internal control over
financial reporting as of September 30, 2008. Based on this assessment,
management concluded that, as of September 30, 2008, the Fund's internal control
over financial reporting was effective.
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
31.2 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
32.2 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 September 30, 2008.
BOSTON FINANCIAL TAX CREDIT FUND PLUS,
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.
Date: November 14, 2008 BOSTON FINANCIAL TAX CREDIT FUND PLUS,
A LIMITED PARTNERSHIP
By: Arch Street VIII, Inc.,
its Managing General Partner
/s/Greg Judge
Greg Judge
President
Arch Street VIII, Inc.