UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2009
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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
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Commission file number 0-19765
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Boston Financial Qualified Housing Tax Credits L.P. IV
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(Exact name of registrant as specified in its charter)
Massachusetts 04-3044617
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. |_| Yes |X| No
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. |_| Yes |X| No
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.
|X| Yes |_| No
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 229.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). |_| Yes |_| No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |X|
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 12b -2 of the Exchange Act.
Large accelerated filer|_| Accelerated Filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12 b-2 of the Exchange Act).
|_| Yes |X| No
State the aggregate sales price of Fund units held by nonaffiliates of the
registrant: $67,653,000 as of March 31, 2009.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED MARCH 31, 2009
TABLE OF CONTENTS
PART I Page No.
Item 1 Business K-4
Item 2 Properties K-6
Item 3 Legal Proceedings K-8
Item 4 Submission of Matters to a
Vote of Security Holders K-9
PART II
Item 5 Market for the Registrant's Units
and Related Security Holder Matters K-9
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations K-9
Item 8 Financial Statements and Supplementary Data K-15
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure K-16
Item 9A Controls and Procedures K-16
Item 9B Other Information K-16
PART III
Item 10 Directors and Executive Officers
of the Registrant K-17
Item 11 Management Remuneration K-17
Item 12 Security Ownership of Certain Beneficial
Owners and Management K-18
Item 13 Certain Relationships and Related
Transactions K-18
Item 14 Principal Accountant Fees and Services K-20
Item 15 Exhibits, Financial Statement Schedules, and
Director Independence K-20
SIGNATURES K-21
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CERTIFICATIONS K-22
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PART I
Item 1. Business
Boston Financial Qualified Housing Tax Credits L.P. IV (the "Partnership") is a
limited partnership formed on March 30, 1989 under the Revised Uniform Limited
Partnership Act of the Commonwealth of Massachusetts. The Partnership's
partnership agreement ("Partnership Agreement") authorized the sale of up to
100,000 units of Limited Partnership Interest ("Units") at $1,000 per Unit,
adjusted for certain discounts. The Partnership raised $67,653,000 ("Gross
Proceeds"), net of discounts of $390,000, through the sale of 68,043 Units. Such
amounts exclude five unregistered Units previously acquired for $5,000 by the
Initial Limited Partner, which is also one of the General Partners. The offering
of Units terminated on January 31, 1990. No further sale of Units is expected.
The Partnership is engaged solely in the business of real estate investment.
Therefore, a presentation of information about industry segments is not
applicable and would not be material to an understanding of the Partnership's
business taken as a whole.
The Partnership originally invested as a limited partner in thirty-seven limited
partnerships ("Local Limited Partnerships") which own and operate residential
apartment complexes ("Properties"), most of which benefit from some form of
federal, state or local assistance programs and all of which qualify for the
low-income housing tax credits ("Tax Credits") added to the Internal Revenue
Code (the "Code") by the Tax Reform Act of 1986. The investment objectives of
the Partnership include the following: (i) to provide current tax benefits in
the form of Tax Credits which qualified limited partners may use to offset their
federal income tax liability; (ii) to preserve and protect the Partnership's
capital; (iii) to provide limited cash distributions from Property operations
which are not expected to constitute taxable income during the expected duration
of the Partnership's operations; and (iv) to provide cash distributions from
sale or refinancing transactions. There cannot be any assurance that the
Partnership will attain any or all of these investment objectives. A more
detailed discussion of these investment objectives, along with the risks in
achieving them, is contained in the section of the prospectus entitled
"Investment Objectives and Policies - Principal Investment Policies" which is
herein incorporated by this reference.
Table A on the following page lists the Properties originally acquired by the
Local Limited Partnerships in which the Partnership has invested. Item 7 of this
Report contains other significant information with respect to such Local Limited
Partnerships. As required by applicable rules, the terms of the acquisition of
Local Limited Partnership interests have been described in supplements to the
Prospectus and collected in three post-effective amendments to the Registration
Statement (collectively, the "Acquisition Reports"); such descriptions are
incorporated herein by this reference.
TABLE A
SELECTED LOCAL LIMITED
PARTNERSHIP DATA
Date
Properties owned by Interest
Local Limited Partnerships Location Acquired
__________________________ __________ ______________
46th & Vincennes (1) Chicago, IL 03/29/91
Audobon (1) Boston, MA 12/22/89
Bent Tree (1) Jackson, TX 12/27/89
Bentley Court (1) Columbia, SC 12/26/89
Brookscrossing Atlanta, GA 06/30/89
Brown Kaplan (1) Boston, MA 07/01/90
BK Apartments (1) Jamestown, ND 12/01/90
Carolina Woods (1) Greensboro, NC 01/31/90
Canfield Crossing (1) Milan, MI 08/20/90
Dorsett Apartments (1) Philadelphia, PA 10/20/89
Findlay Market (1) Cincinnati, OH 08/15/90
Grandview (1) Grandview, TX 12/27/89
Green Tree Village (1) Greenville, GA 07/06/90
Gateway Village Garden (1) Azle, TX 06/24/91
Hampton Lane (1) Buena Vista, GA 12/20/89
Hilltop (1) Rhome, TX 12/27/89
Justin Place (1) Justin, TX 12/27/89
Lancaster House North Lancaster, PA 03/13/89
Lakeside Square (1) Chicago, IL 05/17/90
Lincoln Green (1) Old Town, ME 03/21/90
Leawood Manor Leawood, KS 12/29/89
Mayfair Mansions (1) Washington, DC 03/21/90
Nocona Terrace (1) Nocona, TX 12/27/89
Oakview Square (1) Chesterfield, MI 03/22/89
Orchard View (1) Gobles, MI 04/29/90
Orocovix IV (1) Orocovix, PR 12/30/89
Pecan Hill (1) Bryson, TX 12/28/89
Pine Manor (1) Jacksboro, TX 12/27/89
Pinewood Terrace (1) Rusk, TX 12/27/89
RoyalCrest (1) Bowie, TX 12/27/89
Seagraves (1) Seagraves, TX 11/28/90
Sencit Towne House Shillington, PA 12/26/89
Town House Apartments Allentown, PA 12/26/89
Valley View (1) Valley View, TX 12/27/89
West Pine (1) Findlay, PA 12/31/90
Willow Ridge (1) Prescott, AZ 08/28/89
Whitehills II (1) Howell, MI 04/21/90
(1)The Partnership no longer has an interest in the Local Limited Partnership
which owns this Property.
Although the Partnership's investments in Local Limited Partnerships are not
subject to seasonal fluctuations, the Partnership's equity in losses of Local
Limited Partnerships, to the extent they reflect the operations of individual
Properties, may vary from quarter to quarter based upon changes in occupancy and
operating expenses as a result of seasonal factors.
With the exception of Leawood Manor, each Local Limited Partnership has as its
general partners ("Local General Partners") one or more individuals or entities
not affiliated with the Partnership or its General Partners. In accordance with
the partnership agreements under which such entities are organized ("Local
Limited Partnership Agreements"), the Partnership depends on the Local General
Partners for the management of each Local Limited Partnership. As of March 31,
2009, the following Local Limited Partnerships have a common Local General
Partner or affiliated group of Local General Partners accounting for the
specified percentage of the capital contributions to Local Limited Partnerships:
Sencit Towne House L.P., Allentown Towne House, L.P. and Prince Street Towers
L.P., representing 33.95%, have AIMCO Properties as Local General Partner. The
Local General Partners of the remaining Local Limited Partnerships are
identified in the Acquisition Reports, which are incorporated herein by
reference.
The Properties owned by Local Limited Partnerships in which the Partnership has
invested are and will continue to be subject to competition from existing and
future apartment complexes in the same areas. The continued success of the
Partnership will depend on many outside factors, most of which are beyond the
control of the Partnership and which cannot be predicted at this time. Such
factors include general economic and real estate market conditions, both on a
national basis and in those areas where the Properties are located, the
availability and cost of borrowed funds, real estate tax rates, operating
expenses, energy costs and government regulations. In addition, other risks
inherent in real estate investment may influence the ultimate success of the
Partnership, including: (i) possible reduction in rental income due to an
inability to maintain high occupancy levels or adequate rental levels; (ii)
possible adverse changes in general economic conditions and adverse local
conditions, such as competitive overbuilding, a decrease in employment or
adverse changes in real estate laws, including building codes; and (iii)
possible future adoption of rent control legislation which would not permit
increased costs to be passed on to the tenants in the form of rent increases or
which would suppress the ability of the Local Limited Partnerships to generate
operating cash flow. Since most of the Properties benefit from some form of
government assistance, the Partnership is subject to the risks inherent in that
area including decreased subsidies, difficulties in finding suitable tenants and
obtaining permission for rent increases. In addition, any Tax Credits allocated
to investors with respect to a Property are subject to recapture to the extent
that the Property or any portion thereof ceases to qualify for the Tax Credits.
Other future changes in federal and state income tax laws affecting real estate
ownership or limited partnerships could have a material and adverse affect on
the business of the Partnership.
The Partnership is managed by Arch Street VIII, Inc., the Managing General
Partner of the Partnership. The other General Partner of the Partnership is Arch
Street IV Limited Partnership. The Partnership, which does not have any
employees, reimburses MMA Financial, Inc. ("MMA"), an affiliate of the General
Partners, for certain expenses and overhead costs. A complete discussion of the
management of the Partnership is set forth in Item 10 of this Report.
On June 26, 2009, Municipal Mortgage & Equity, LLC (the parent company of MMA
Financial, Inc.) entered into a purchase and sale agreement with JEN I, L.P. for
the sale of substantially all of its low-income housing tax credit business,
including the Partnership and its General Partners. Upon the consummation of the
sale transaction (expected to occur on or before August 31, 2009), the General
Partners will be owned or controlled by JEN I, L.P. The sale is not expected to
impact the Limited Partners of the Partnership.
Item 2. Properties
The Partnership currently owns limited partnership interests in five Local
Limited Partnerships which own and operate Properties, some of which benefit
from some form of federal, state or local assistance programs and all of which
qualify for the Tax Credits added to the Code by the Tax Reform Act of 1986. The
Partnership's ownership interest in each Local Limited Partnership is 99% with
the exception of Leawood Manor, which is 89%.
Each of the Local Limited Partnerships has received an allocation of Tax Credits
from its relevant state tax credit agency. In general, the Tax Credits run for
ten years from the date the Property is placed in service. The required holding
period (the "Compliance Period") of the Properties is fifteen years. During
these fifteen years, the Properties must satisfy rent restrictions, tenant
income limitations and other requirements, as promulgated by the Code, in order
to maintain eligibility for the Tax Credits at all times during the Compliance
Period. Once a Local Limited Partnership has become eligible for the Tax
Credits, it may lose such eligibility and suffer an event of recapture if its
Property fails to remain in compliance with the requirements. To date, with the
exception of Bentley Court, none of the Local Limited Partnerships have suffered
an event of recapture of Tax Credits.
In addition, some of the Local Limited Partnerships have obtained one or a
combination of different types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the Property is located at favorable terms; or iii) loans that have repayment
terms that are based on a percentage of cash flow. The schedule on the following
pages provides certain key information on the Local Limited Partnership
interests acquired by the Partnership.
Capital Contributions
Local Limited Partnership Total Paid Mtge. Loans Occupancy at
Property Name Number of Committed at Through Payable at Type of March 31,
Property Location Apts Units March 31, 2009 March 31, 2009 December 31, 2008 Subsidy * 2009
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Brookscrossing Apartments, L.P.
A Limited Partnership
Brookscrossing
Atlanta, GA 224 $ 3,363,776 $ 3,363,776 $ 5,327,408 None 88%
Leawood Associates, L.P.
A Limited Partnership
Leawood Manor
Leawood, KS 254 7,497,810 7,497,810 7,135,183 None 91%
Allentown Towne House, L.P.
Towne House Apartments
Allentown, PA 160 1,589,403 1,589,403 5,279,634 Section 8 99%
Prince Street Towers L.P.
A Limited Partnership
Lancaster House North
Lancaster, PA 201 1,996,687 1,996,687 5,746,535 Section 8 99%
Sencit Towne House L.P.
Sencit Towne House
Shillington, PA 200 1,996,687 1,996,687 2,348,288 Section 8 100%
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1,039 $ 16,444,363 $ 16,444,363 $ 25,837,048
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Section 8 This subsidy, which is authorized under Section 8 of Title II of the
Housing and Community Development Act of 1974, allows qualified low-income
tenants to pay 30% of their monthly income as rent with the balance paid by the
federal government. Also includes comparable state subsidies.
The Partnership does not guarantee any of the mortgages or other debt of the
Local Limited Partnerships. Duration of leases for occupancy in the Properties
described above is generally six to twelve months. The Managing General Partner
believes the Properties described herein are adequately covered by insurance.
Additional information required under this Item, as it pertains to the
Partnership, is contained in Items 1, 7 and 8 of this Report.
Item 3. Legal Proceedings
As previously reported, the Partnership, its general partners and additional
Boston Financial public funds (the "Funds") reached an agreement in February,
2007 to resolve several lawsuits and pending disputes between the Partnership
and the Funds and their general partners on the one hand, and a group of Limited
Partner investors on the other hand. The group of investors included Park G.P.,
Inc., Bond Purchase, L.L.C. and various other entities related to David L.
Johnson (the "Johnson Group") and Everest Housing Investors 2, LLC and various
other Everest-related entities (the "Everest Group"; the Johnson Group and the
Everest Group are hereinafter collectively referred to as the "Johnson and
Everest Groups"). Per the terms of the parties' agreement, these lawsuits were
then dismissed. The Johnson and Everest Groups further agreed at that time to
refrain from interfering in various ways with the conduct of the business of the
Partnership and the business of Boston Financial Qualified Housing Tax Credits
L.P. III ("QH3").
Also as previously reported, beginning in November, 2007, the Johnson and
Everest Groups filed new lawsuits against the Partnership and its general
partners in various jurisdictions as part of an effort to replace the existing
general partners with parties related to the Everest Group, to prevent the
Partnership from selling any of its assets without limited partner consent and
to interfere with specific arms length sales by the Partnership of certain of
its assets. The Partnership responded with its own lawsuits against the Johnson
and Everest Groups to block these efforts as well as to claim damages arising
from the Johnson and Everest Groups' conduct. The following lawsuits concerning
the Partnership (collectively, the "Johnson/Everest Lawsuits"), which were
described in detail in the Partnership's previous periodic reports, were filed
in the November 2007 through April 2008 time period:
o On November 29, 2007, the Partnership and its general partners
were sued in Superior Court for the County of Los Angeles,
California by a Limited Partner named Danford Baker and
companies named Everest Housing Investors 2, LP and Everest
Management, LLC with which Mr. Baker is affiliated
(collectively, "Everest"). Everest dismissed this lawsuit
without prejudice on April 17, 2008.
o On or about May 6, 2008, the same Everest parties referenced
above in the 1st California lawsuit filed a nearly identical
Complaint against the Partnership and its general partners in
the same Superior Court for the County of Los Angeles,
California. Everest dismissed this 2nd California lawsuit
without prejudice on November 11, 2008.
o On January 22, 2008, the Partnership and its general partners
were sued in the District Court of Johnson County, Kansas by a
Limited Partner named McDowell Investments, L.P. ("McDowell").
o On January 29, 2008, the Partnership and its general partners
filed suit against McDowell in the Superior Court for Suffolk
County, Massachusetts.
o On April 22, 2008, the Partnership and its general
partners filed suit against the following defendants in the
Superior Court for Suffolk County, Massachusetts.: Everest
Housing Investors 2, L.P.; Everest Management LLC;
Everest Properties, Inc.; Everest Properties, LLC; McDowell
Investments, L.P.; MGM Holdings, LLC; Park G.P., Inc., Bond
Purchase, L.L.C.; Anise L.L.C.; Paco Development, L.L.C.;
Maxus Realty Trust, Inc.; David L. Johnson; W. Robert
Kohorst; Danford M. Baker; Monte G. McDowell; and
Kevan D. Acord
Effective April 24, 2009, the Partnership and several of the Funds reached an
agreement with the Johnson and Everest Groups to resolve the Johnson/Everest
Lawsuits (the "Settlement Agreement"). The Settlement Agreement provides, among
other things, that (a) the parties exchange mutual releases and covenant not to
bring lawsuits against each other in the future, (b) the parties dismiss claims
and counterclaims asserted in the various lawsuits without prejudice, and (c)
the Johnson and Everest Groups agree not to take a variety of actions which
could interfere with the conduct of the business of the Funds. The Settlement
Agreement also sets out a schedule for future cash distributions to the Limited
Partners and for the eventual dissolution of the Partnership and QH3. The
Settlement Agreement was attached as Exhibit 99-1 to the Partnership's Form 8-K
filed on May 21, 2009.
In addition, effective April 24, 2009, the Partnership and QH3 entered into
purchase agreements (the "Purchase Agreements") with certain members of the
Johnson and Everest Groups permitting them to purchase, subject to various
conditions and at specified prices which the Partnership believes represent fair
market value, certain interests held by the Partnership and by QH3 in Local
Limited Partnerships. The Settlement Agreement remains effective regardless of
whether any of the Local Limited Partnership interests are purchased.
With respect to the Partnership, the Purchase Agreements provide for the
purchase by affiliates of the Everest Group, for the total price of $1,850,000,
of the Partnership's interests in:
Prince Street Towers, L.P., which owns a property in Lancaster, PA;
Sencit Towne House L.P., which owns a property in Shillington, PA; and
Allentown Towne House, L.P., which owns a property in Allentown, PA;and
the purchase by affiliates of the Johnson Group, for the total price of
$3,300,000, of the Partnership's interests in:
Brookscrossing Apartments, L.P., which owns a property in Riverdale GA; and
Leawood Associates, L.P., which owns a property in Leawood, KS.
Closing on the sales of the Leawood and Brookscrossing Local Limited Partnership
interests occurred on April 30, 2009, and May 8, 2009, respectively, and the
sale of the other Local Limited Partnership interests is expected to close over
the coming months.
Item 4. Submission of Matters to a Vote of Security Holders
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None.
PART II
Item 5. Market for the Registrant's Units and Related Security Holder Matters
There is no public market for the Units, and it is not expected that a public
market will develop. If a Limited Partner desires to sell Units, the buyer of
those Units will be required to comply with the minimum purchase and retention
requirements and investor suitability standards imposed by applicable federal or
state securities laws and the minimum purchase and retention requirements
imposed by the Partnership. The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers, will be subject
to negotiation by the Limited Partner seeking to sell his Units. Units will not
be redeemed or repurchased by the Partnership.
The Partnership Agreement does not impose on the Partnership or its General
Partners any obligation to obtain periodic appraisals of assets or to provide
Limited Partners with any estimates of the current value of Units.
As of March 31, 2009, there were 2,880 record holders of Units of the
Partnership.
Cash distributions, when made, are paid annually. During the year ended March
31, 2009, no cash distributions were paid. A cash distribution of $15,548,170
was paid for the year ended March 31, 2008.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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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 Partnership 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 Partnership believes the forward-looking
statements are based on reasonable assumptions and current expectations, the
Partnership 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.
Executive Level Overview
The Partnership was formed on March 30, 1989 under the laws of the Commonwealth
of Massachusetts for the primary purpose of investing, as a limited partner, in
Local Limited Partnerships which own and operate apartment complexes, most of
which benefit from some form of federal, state or local assistance program and
each of which qualifies for low-income housing tax credits. The Partnership's
objectives are to: (i) provide current tax benefits in the form of Tax Credits
which qualified investors may use to offset their federal income tax liability;
(ii) preserve and protect the Partnership's capital; (iii) provide limited cash
distributions which are not expected to constitute taxable income during
Partnership's operations; and (iv) provide cash distributions from sale or
refinancing transactions. The General Partners of the Partnership are Arch
Street VIII, Inc., which serves as the Managing General Partner, and Arch Street
IV L.P., which also serves as the Initial Limited Partner. Both of the General
Partners are affiliates of MMA. The fiscal year of the Partnership ends on March
31.
As of March 31, 2009, the Partnership's investment portfolio consisted of
limited partnership interests in five 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 Partnership has generated Tax
Credits, net of recapture, of approximately $1,287 per Limited Partner Unit. The
aggregate amount of Tax Credits generated by the Partnership was consistent with
the objective specified in the Partnership's prospectus.
In May 2009, the Partnership distributed $6,315,070.83, or $92.81 per Unit to
Limited Partners, representing a distribution from the proceeds of previously
reported property sales, in addition to two recent property disposals; Leawood
Manor and Brookscrossing. In October 2007, the Partnership distributed
$15,392,688, or $226.22 per Unit, to Limited Partners. The Partnership was able
to make this distribution primarily as a result of the disposition of
twenty-nine of the Partnership's thirty-seven properties or Limited Partnership
interests in these properties, most notably the sale of Mayfair Mansions,
located in Washington, DC. We anticipate making additional distributions in the
future.
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 recapture of a portion of the property's Tax Credits. The Compliance Periods
of the remaining Properties in which the Partnership has an interest as of March
31, 2009, all expired on or before December 31, 2005. The Partnership disposed
of two Local Limited Partnerships interests during the twelve months ended March
31, 2009. Further, the Partnership disposed of two additional Local Limited
Partnerships interests in April and May 2009. The Managing General Partner has
negotiated agreements that will ultimately allow the Partnership to dispose of
its interest in all three remaining Local Limited Partnerships.
The Managing General Partner will continue to closely monitor the operations of
the Properties and will formulate disposition strategies with respect to the
Partnership's remaining Local Limited Partnership interests. The Partnership
shall dissolve and its affairs shall be wound up upon the disposition of the
final Local Limited Partnership interest and other assets of the Partnership.
Investors will continue to be Limited Partners, receiving K-1s and quarterly and
annual reports, until the Partnership is dissolved.
Critical Accounting Policies
The Partnership's accounting policies include those that relate to its
recognition of investments in Local Limited Partnerships using the equity method
of accounting. The Partnership's policy is as follows:
The Local Limited Partnerships in which the Partnership invests are Variable
Interest Entities ("VIE"s). The Partnership is involved with the VIEs as a
non-controlling limited partner equity holder. The investments in the Local
Limited Partnerships are made primarily to obtain tax credits on behalf of the
Partnership's investors. The general partners of the Local Limited Partnerships,
who are considered to be the primary beneficiaries, control the day-to-day
operations of the Local Limited Partnerships. The general partners are also
responsible for maintaining compliance with the tax credit program and for
providing subordinated financial support in the event operations cannot support
debt and property tax payments. The Partnership, through its ownership
percentages, may participate in property disposition proceeds. The timing and
amounts of these proceeds are unknown but can impact the Partnership's financial
position, results of operations or cash flows. Because the Partnership 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 Partnership's exposure to economic and
financial statement losses is limited to its investments in the VIEs ($723,169
and $691,419 at March 31, 2009 and 2008, respectively). The Partnership may be
subject to additional losses to the extent of any financial support that the
Partnership voluntarily provides in the future. Under the equity method, the
investment is carried at cost, adjusted for the Partnership'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 Partnership'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 Partnership'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 Partnership, that distribution is recorded as
income on the books of the Partnership.
The Partnership has implemented policies and practices for assessing
other-than-temporary declines in the values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are tested
for other-than-temporary impairment. If an other-than-temporary decline in
carrying value exists, a provision to reduce the investment to the sum of the
estimated remaining benefits will be recorded in the Partnership's financial
statements. The estimated remaining benefits for each Local Limited Partnership
consist of estimated future tax losses and tax credits over the estimated life
of the investment and estimated residual proceeds at disposition. Included in
the estimated residual proceeds calculation is current net operating income
capitalized at a regional rate specific to each Local Limited Partnership less
the debt of the Local Limited Partnership. During the year ended March 31, 2009,
the Partnership concluded that one of the Local Limited Partnerships had
experienced other-than-temporary decline in its carrying value and impairment
losses were recorded for Sencit Towne House L.P., for $28,000. During the year
ended March 31, 2008, the Partnership concluded that three of the Local Limited
Partnerships had experienced other-than-temporary decline in their carrying
values and impairment losses were recorded: Allentown Towne House L.P., for
$4,000; Prince Street Towers L.P., for $374,000; and Sencit Towne House L.P. for
$2,028,000. 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 Partnership 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 March 31, 2009, the Partnership had cash and cash equivalents of $3,734,110
as compared to $2,704,392 at March 31, 2008. The increase is mainly attributable
to proceeds from the sale of investments in Local Limited Partnerships and the
reimbursement of advances to Local Limited Partnerships, partially offset by
cash used for operating activities.
The Managing General Partner originally designated 4.00% of the Gross Proceeds
as Reserves, as defined in the Partnership Agreement. The Reserves were
established to be used for working capital of the Partnership 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 March 31, 2009 and 2008, approximately $3,551,000 and
$2,704,392, respectively, has been designated as Reserves.
To date, professional fees relating to various Property issues totaling
approximately $2,039,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $379,000 also have been used to make additional
capital contributions to certain Local Limited Partnerships. In the event a
Local Limited Partnership encounters operating difficulties requiring additional
funds, the Partnership's management might deem it in its best interest to
voluntarily provide such funds in order to protect its investment. As of March
31, 2009, the Partnership has advanced approximately $860,000 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
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership 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. To date, the Partnership has used approximately $3,349,000 of
operating funds to replenish Reserves.
Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, as of March 31, 2009, the Partnership 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 year ended March 31, 2009. Cash
distributions of $15,548,170 was made during the year ended March 31, 2008. The
Partnership is currently working on disposing of its interest in certain Local
Limited Partnerships during the next twelve months. These dispositions may
result in cash available for distribution, but due to the uncertainty of the
sales, no guarantees can be made as to the extent of their outcome on
distributions to Limited Partners. Based on the results of 2008 Property
operations, the Local Limited Partnerships are not expected to distribute
significant amounts of cash to the Partnership because such amounts will be
needed to fund Property operating costs. In addition, many of the Properties
benefit from some type of federal or state subsidy and, as a consequence, are
subject to restrictions on cash distributions.
Results of Operations
The Partnership's results of operations for year ended March 31, 2009 resulted
in a net income of $1,912,419 as compared to a net loss of $2,939,328 for the
same period in 2008. The increase in net income is primarily attributable to a
decrease in impairment on investments in Local Limited Partnerships, an increase
in gain on sale of investments in Local Limited Partnerships and a decrease in
provision for valuation allowance on advances to Local Limited Partnerships.
Impairment on investments in Local Limited Partnerships decreased due to the
Partnership recording an impairment allowance for its investments in certain
Local Limited Partnerships in the prior year. The increase in gain on sale of
investments in Local Limited Partnerships is due to the transfer of two Local
Limited Partnerships during the current year. The decrease in provision for
valuation allowance on advances to Local Limited Partnerships results from the
reimbursement of advances received from one Local Limited Partnership during the
year ended March 31, 2009.
Low-Income Housing Tax Credits
The Tax Credits per Limited Partner stabilized in 1992. The Tax Credits have
ended, as all of the Properties have reached the end of the ten year credit
period.
Property Discussions
A majority of the Properties in which the Partnership has an interest had
stabilized operations and operated above breakeven as of December 31, 2008. Some
Properties generate cash flow deficits that the Local General Partners of those
Properties fund through project expense loans, subordinated loans or operating
escrows. However, a few Properties have had persistent operating difficulties
that could either: (i) have an adverse impact on the Partnership's liquidity;
(ii) result in their foreclosure; or (iii) result in the Managing General
Partner deeming it appropriate for the Partnership to dispose of its interest in
the Local Limited Partnership. Also, the Managing General Partner, in the normal
course of the Partnership'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, an IRS audit of the 1993 tax return for Bentley Court II
Limited Partnership questioned the treatment of certain items and had findings
of non-compliance in 1993. The IRS then expanded the scope of the audit to
include the 1994 and 1995 tax returns. As a result, the IRS disallowed the
Property's Tax Credits for each of these years (the disallowance of the 1993,
1994 and 1995 Tax Credits applies only to the Limited Partners of the
Partnership that claimed Tax Credits for those years and the recapture applies
to all current Limited Partners of the Partnership). On behalf of the
Partnership, the Managing General Partner retained counsel to appeal the IRS's
findings in order to minimize the loss of Tax Credits. This administrative
appeal has been unsuccessful, and the IRS has not retracted its position of
disallowing Tax Credits for 1993, 1994 and 1995, a total of $2,562,173, plus
accrued interest of approximately $3,900,000, or approximately $95 per Unit.
Based on advice of tax counsel, the Managing General Partner determined to
concede the disallowance of Tax Credits for those three years.
In addition, the Local General Partner received notification that the IRS was
expanding its claims to recapturing $502,472 of Tax Credits taken in 1990, 1991
and 1992, plus accrued interest of approximately $800,000, or approximately $20
per Unit. Based on advice of tax counsel, the Managing General Partner
determined to challenge the IRS's findings with respect to this $502,472 of
recapture, and a trial was held on this issue in November 2005. In May 2006, the
Tax Court ruled against the Partnership. Upon advice of counsel, this decision
was not appealed by the Managing General Partner.
It is possible that the IRS will further expand its claims for additional
amounts with respect to other years. However, counsel has advised that the
statute of limitations has expired for the tax years 1996, 1997 and 1998. At
this point, there appears to be no possibility of a settlement with the IRS, and
the Managing General Partner anticipates that the IRS will forward the
assessments for disallowance and recapture directly to the affected Limited
Partners. The accrued interest calculations above respecting the disallowance
and recapture of Tax Credits are estimates only, based upon a rate of 8% simple
interest from the dates that the taxes were deemed to be owed. The Managing
General Partner has not included estimates for penalties because it is not
expecting them. However, it is possible that the IRS will attempt to claim
penalties. Tax counsel has advised that Limited Partners that acquired Units
after 1998 will not be affected by these assessments. The Managing General
Partner strongly recommends that Limited Partners consult with their tax
advisors regarding the appropriate treatment of any disallowance or recapture
assessments.
As previously reported, the Managing General Partner began marketing Bentley
Court II in May 2008. On October 9, 2008, the Property was sold, effectively
terminating the Partnership's interest in the Local Limited Partnership that
owned and operated this Property. The sale resulted in the Partnership receiving
a total of $2,833,748, or $41.65 per Unit. $658,017 of these proceeds were
applied against advances that the Partnership had made to the Local Limited
Partnership during the current and previous years. This disposition resulted in
2008 taxable income of $1,412,428 or about $20.76 per Unit. The Partnership no
longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner expected a disposition of
46th and Vincennes, located in Chicago, Illinois, during 2008. On May 30, 2008,
an assignment of interest in the Local Limited Partnership was executed by the
Partnership, effectively terminating the Partnership's interest in the Local
Limited Partnership. No proceeds from the transfer of interest were received by
the Partnership, but approximately $56,000 of cumulative priority distributions
from the Local Limited Partnership was received in January 2009 after a
developer fee escrow was released. The Managing General Partner reported 2008
taxable income of $929,996, or $13.67 per Unit. The Partnership's investment
value in the Local Limited Partnership has been zero since 1999. The assignment
of interest did not have an impact on the Partnership's financial position,
results of operations or cash flows. The Partnership no longer has an interest
in this Local Limited Partnership.
As previously reported, the Managing General Partner negotiated an agreement to
transfer the Local General Partner interest in West Pine, located in Findlay,
Pennsylvania, to an affiliate of the Allegheny County Housing Authority
("ACHA"), contingent upon receiving approval from the U.S. Department of Housing
and Urban Development ("HUD"). HUD approval was received, and the Local General
Partner interest was transferred on October 17, 2003. In addition, the ACHA
informed the Managing General Partner of its interest in acquiring the
Partnership's interest in the Local Limited Partnership, pending their
assumption of the Local General Partner interest. Concurrent with the
replacement of the Local General Partner, another ACHA affiliate acquired 30% of
the Partnership's limited partner interest in the Local Limited Partnership. As
part of this transaction, the Partnership acquired a put option for the
remaining 70% exercisable for $1 anytime after the expiration of the Compliance
Period on December 31, 2006. West Pine generated its final year of Tax Credits
in 2001. The Managing General Partner's pursuit of an exit strategy culminated
in the transfer of the Partnership's interest in the Local Limited Partnership
for $20,000, or $0.29 per Unit, on December 2, 2007. The Managing General
Partner, in accordance with and as permitted by the Partnership Agreement, will
retain the sales proceeds in Reserves for the time being until it deems a
subsequent distribution to be prudent. This transaction resulted in 2007 taxable
income of $519,798, or $7.64 per Unit. The Partnership no longer has an interest
in this Local Limited Partnership.
In accordance with the terms of their respective Local Limited Partnership
Agreements, the Managing General Partner, effective November 28, 2007,
transferred the Partnership's interest in the following Local Limited
Partnerships: Prince Street Towers, L.P., located in Lancaster, Pennsylvania;
Sencit Towne House L.P., located in Shillington, Pennsylvania; and Allentown
Towne House, L.P., located in Allentown, Pennsylvania. The interests in the
aforementioned Local Limited Partnerships were transferred to MMA Lancaster
North, L.P., MMA Sencit Townhouse, L.P. and MMA Allentown Towne House, L.P.,
respectively (together, the "Transferee Partnerships"). The Partnership is the
sole limited partner of each of the Transferee Partnerships. An affiliate of the
Partnership is the general partner of each of the Transferee Partnerships and
has obtained a 1% interest in each of the Transferee Partnerships in exchange
for a promissory note in favor of the Partnership.
In processing these transactions, the Managing General Partner acted out of
necessity, due to the impending expiration of the Partnership's ability to
transfer its interest in the above-mentioned Local Limited Partnerships without
the Local General Partner's consent. As previously disclosed, these Local
Limited Partnership interests were originally expected to be sold as part of a
settlement agreement between the Partnership, Boston Financial Qualified Housing
Tax Credits L.P. III, , Boston Financial Qualified Housing Tax Credits L.P. V,
Boston Financial Tax Credit Fund VII, A Limited Partnership, and certain of
their affiliates on the one hand, and on the other hand, Everest Housing
Investors 2, LP, certain of its affiliates, Park GP, Inc., Bond Purchase, L.L.C,
Anise, L.L.C., and Paco Development, L.L.C. (together, the "Everest and Park
Parties"). When the Everest and Park Parties failed to exercise their option to
purchase these Local Limited Partnership interests, the above-described
transfers were carried out. The Managing General Partner may now have
flexibility in being able to dispose of the Partnership's interest in the Local
Limited Partnerships without the Local General Partners' consent, expediting the
Managing General Partner's ability to liquidate the assets of, and dissolve, the
Partnership. It is possible that such Local General Partner may contest this
right to free transferability.
Effective April 24, 2009, contemporaneously with signing the Settlement
Agreement, the Managing General Partner and the Everest and Park Parties have
entered into a Purchase Agreement which creates rights for the Johnson/Everest
Group to acquire the Partnership's interests in MMA Lancaster North, L.P., MMA
Sencit Towne House, L.P. and MMA Allentown Towne House, L.P. for cash at fair
market prices, for an aggregate sum of $1,850,000, or about $27.19 per Unit. The
Managing General Partner expects the sale of these Local Limited Partnership
interests to occur in November 2009.
As previously reported, the Partnership's interest in the Local Limited
Partnership that owns Mayfair Mansions, located in Washington, DC, was
terminated upon the July 2006 sale of the Property to an unaffiliated entity.
The Partnership received net sales proceeds in 2006 of $12,794,835, or $188.04
per Unit, resulting in taxable income of $17,236,598, or $253.32 per Unit. The
Managing General Partner believed that the Partnership had a claim of up to an
additional $1,500,000 of sale proceeds under the terms of the partnership
agreement and investment documents for this Local Limited Partnership. The Local
General Partners disputed that at least a portion of this amount was due.
On behalf of the Partnership, the Managing General Partner retained counsel and
filed suit in the Superior Court of the District of Columbia (Civil Action No.
0006755-06) seeking a declaratory judgment and damages. The Local General
Partners filed counter-claims and disputed the Partnership's claims. On January
10, 2007, representatives of the Managing General Partner and the Local General
Partners reached a settlement during court-ordered mediation with regard to all
of the above referenced legal claims. All pending legal matters were
subsequently dismissed with prejudice. The settlement required an additional
distribution in the amount of $1,096,441, or $16.11 per Unit, that was received
by the Partnership in October 2007. As previously reported, the Managing General
Partner estimated the additional distribution would result in 2007 taxable
income equal to the settlement distribution. Actual 2007 taxable income of
$46,441, or $0.68 per Unit, was incurred by the Partnership. This amount was
significantly lower than estimated because the Partnership included, as part of
the total 2006 gain of $17,236,598, or $253.32 per Unit, an estimated amount of
$1,050,000, or $15.43 per Unit, from the settlement proceeds. The Partnership
distributed a majority of the initial net sales proceeds in October 2007. The
Managing General Partner, in accordance with and as permitted by the Partnership
Agreement, will retain the remaining sales proceeds in Reserves for the time
being until it deems a subsequent distribution to be prudent. In March 2008, the
Partnership received an additional distribution of $13,904, or $0.20 per Unit.
In accordance with the terms of the Partnership agreement, the Managing General
Partner retained these funds in Reserves. This distribution resulted in 2008
taxable income of $13,904, or $0.20 per Unit. The Partnership no longer has an
interest in this Local Limited Partnership.
As previously reported, the Managing General Partner anticipated the termination
of the Partnership's interest in the Local Limited Partnership that owned
Oakview Square, located in Chesterfield, Michigan, upon the sale of the
Property. The sale of this Property, which resulted in net proceeds during the
year ended March 31, 2007 to the Partnership of $100,000, or $1.47 per Unit,
occurred on February 28, 2007, effectively terminating the Partnership's
interest in this Local Limited Partnership. In October 2007, the Partnership
received additional proceeds of $74,426, or $1.09 per Unit, upon a
reconciliation of tax and utility payments. This sale resulted in a 2007 taxable
loss of $59,158, or $0.87 per Unit. In April 2008, the Partnership received
final sale proceeds of $7,146, or $0.11 per Unit. In accordance with the terms
of the Partnership agreement, the Managing General Partner retained these funds
in Reserves. This distribution resulted in 2008 taxable income of $7,146, or
$0.11 per Unit. The Partnership no longer has an interest in this Local Limited
Partnership.
Effective April 24, 2009, contemporaneously with signing the Settlement
Agreement, the Managing General Partner and the Everest and Park Parties have
entered into a Purchase Agreement which creates rights for the Johnson/Everest
Group to acquire the Partnership's interests in Leawood Associates, L.P., the
partnership that owns Leawood Manor, located in Leawood, Kansas, and
Brookscrossing Apartments Limited Partnership, the partnership that owns
Brookscrossing, located in Riverdale, Georgia, for cash at fair market prices.
On April 30, 2009, the Managing General Partner exercised the Partnership's put
option and transferred its interest in the Local Limited Partnership that owned
Leawood Manor, located in Leawood, Kansas, for $3,318,768 or about $48.77 per
Unit. Proceeds related to this sale were received on April 30, 2009. The
Managing General Partner expects the sale of this Local Limited Partnership to
result in a 2009 estimated taxable gain of approximately $2,916,436, or about
$42.86 per Unit. As of April 30, 2009, the Partnership no longer has an interest
in this Local Limited Partnership.
On May 8, 2009, the Managing General Partner exercised the Partnership's put
option and transferred its interest in the Local Limited Partnership that owned
Brookscrossing, located in Riverdale, Georgia, for $100,000 or about $1.47 per
Unit. Proceeds related to this sale were received on May 8, 2009. The Managing
General Partner expects the sale of this Local Limited Partnership to result in
a 2009 estimated taxable gain of approximately $1,666,247, or about $24.49 per
Unit. As of May 8, 2009, the Partnership no longer has an interest in this Local
Limited Partnership.
Inflation and Other Economic Factors
Inflation had no material impact on the operations or financial condition of the
Partnership for the years ended March 31, 2009 and 2008.
Since most of the Properties benefit from some sort of government assistance,
the Partnership is subject to the risks inherent in that area including
decreased subsidies, difficulties in finding suitable tenants and obtaining
permission for rent increases. In addition, any Tax Credits allocated to
investors with respect to a Property are subject to recapture to the extent that
the Property or any portion thereof ceases to qualify for Tax Credits.
Certain Properties in which the Partnership has invested are located in areas
suffering from poor economic conditions. Such conditions could have an adverse
effect on the rent or occupancy levels at such Properties. Nevertheless, the
Managing General Partner believes that the generally high demand for
below-market rate housing will tend to negate such factors. However, no
assurance can be given in this regard.
Item 8. Financial Statements and Supplementary Data
Information required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- -------------------------------------------------------------------------
None.
Item 9A. 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 March 31, 2009, 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 Partnership'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 Partnership's internal control over financial reporting
as of March 31, 2009. Based on this assessment, management concluded that, as of
March 31, 2009, the Partnership's internal control over financial reporting were
designed effectively.
Item 9B. Other Information
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Managing General Partner of the Partnership is Arch Street VIII, Inc.,
a Massachusetts corporation (the "Managing General Partner"), an affiliate
of MMA. The Managing General Partner was incorporated in December 1988. The
Investment Committee of the Managing General Partner approved all investments.
The names and positions of the principal officers and the directors of the
Managing General Partner are set forth below.
Name Position
________ ______________________
Greg Judge Executive Vice President
Michael H. Gladstone Principal, Member
The other General Partner of the Partnership is Arch Street IV Limited
Partnership, a Massachusetts Limited Partnership ("Arch Street IV L.P.")
that was organized in December 1988. Arch Street VIII, Inc. is the managing
general partner of Arch Street IV L.P.
The Managing General Partner provides day-to-day management of the Partnership.
Compensation is discussed in Item 11 of this Report. Such day-to-day management
does not include the management of the Properties.
The business experience of each of the persons listed above is described below.
There is no family relationship between any of the persons listed in this
section.
Greg Judge, age 44, Executive Vice President, Head of the Affordable Housing
Group of MMA Financial since February 2008. As head of the Company's Affordable
Housing Group, Mr. Judge is responsible for both the affordable tax exempt and
taxable lending and equity businesses. Prior to his appointment as EVP, Mr.
Judge was responsible for tax credit equity investments and underwriting of
equity and debt investments for the Affordable Housing Group. Mr. Judge joined
MMA as a result of the Boston Financial and Lend Lease HCI acquisitions,
starting with Boston Financial in 1989 as an asset manager. Mr. Judge is a
frequent speaker on affordable housing and tax credit industry issues. Mr. Judge
is a graduate of Colorado College (BA) and Boston University (MBA).
Michael H. Gladstone, age 52, Senior Vice President. Mr. Gladstone is
responsible for capital transactions work in the Asset Management group of MMA
Financial. He joined MMA as a result of the Boston Financial and Lend Lease HCI
acquisitions, starting with Boston Financial in 1985 as the firm's General
Counsel. Prior to joining Boston Financial, Mr. Gladstone was associated with
the law firm of Herrick & Smith and served on the advisory board of the Housing
and Development Reporter. Mr. Gladstone has lectured at Harvard University and
Cornell University on affordable housing matters and is a member of the Cornell
Real Estate Council and the Massachusetts Bar. Mr. Gladstone is a graduate of
Emory University (BA) and Cornell University (J.D. & MBA).
The Partnership is organized as a limited partnership solely for the purpose of
real estate investment and does not have any employees. Therefore the
Partnership has not adopted a Code of Ethics.
The Partnership is structured as a limited partnership that was formed
principally for real estate investment and is not a "listed" issuer as defined
by Rule 10A-3 of the Securities Exchange Act of 1934. Accordingly, neither an
audit committee nor a financial expert to serve on such a committee has been
established by the Partnership.
Item 11. Management Remuneration
Neither the directors nor officers of Arch Street VIII, Inc., nor the partners
of Arch Street IV L.P. nor any other individual with significant involvement in
the business of the Partnership receives any current or proposed remuneration
from the Partnership.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 31, 2009, the following are the only entities known to the
Partnership to be the beneficial owners of more than 5% of the Units
outstanding:
Amount
Title of Name and Address of Beneficially
Class Beneficial Owner Owned Percent of Class
___________ _____________________ ________________ _________________
Limited Bond Purchase, LLC 10,819 Units 15.90%
Partner 104 Armor Road
P.O Box 34729
Kansas City, MO 64116-1129
Limited Everest Management, LLC 4,372 Units 6.42%
Partner 155 North Lake Avenue
Suite 1000
Pasadena, CA 91101
Limited Anise, LLC 3,833 Units 5.63%
Partner 1001 Walnut
Kansas City, MO 64106
The equity securities registered by the Partnership under Section 12(g) of the
Act of 1934 consist of 100,000 Units, of which 68,043 were sold to the public.
The remaining Units were deregistered in Post-Effective Amendment No. 3, dated
February 21, 1990. Holders of Units are permitted to vote on matters affecting
the Partnership only in certain unusual circumstances and do not generally have
the right to vote on the operation or management of the Partnership.
Arch Street IV L.P. owns five (unregistered) Units not included in the 68,043
Units sold to the public.
Except as described in the preceding paragraph, neither Arch Street VIII, Inc.,
Arch Street IV L.P., MMA nor any of their executive officers, directors,
principals or affiliates is the beneficial owner of any Units. None of the
foregoing persons possess a right to acquire beneficial ownership of Units.
The Partnership does not know of any existing arrangement that might at a later
date result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions
The Partnership paid certain fees to and reimbursed certain expenses of the
Managing General Partner or its affiliates in connection with the organization
of the Partnership and the offering of Units. The Partnership is also required
to pay certain fees to and reimburse certain expenses of the Managing General
Partner or its affiliates in connection with the administration of the
Partnership and its acquisition and disposition of investments in Local Limited
Partnerships. In addition, the General Partners are entitled to certain
Partnership distributions under the terms of the Partnership Agreement. Also, an
affiliate of the General Partners will receive up to $10,000 from the sale or
refinancing proceeds of each Local Limited Partnership, if it is still a limited
partner at the time of such transaction. All such fees and distributions are
more fully described in the sections entitled "Estimated Use of Proceeds",
"Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax
Credits and Cash Distributions" of the Prospectus. Such sections are
incorporated herein by reference.
The Partnership is permitted to enter into transactions involving affiliates of
the Managing General Partner, subject to certain limitations established in the
Partnership Agreement.
Information regarding the fees paid and expense reimbursements made in the two
years ending March 31, 2009 is presented as follows:
Organizational Fees and Expenses
In accordance with the Partnership Agreement, affiliates of the General Partner
were reimbursed by the Partnership for organizational, offering and selling
expenses advanced on behalf of the Partnership for salaries and direct expenses
of certain employees of the Managing General Partner and its affiliates in
connection with the registration and organization of the Partnership. Such
expenses included printing expenses and legal, accounting, escrow agent and
depository fees and expenses. Such expenses also included a non-accountable
expense allowance for marketing expenses equal to 1% of the Gross Proceeds.
Organization and offering fees and expenses of $8,351,601 were incurred on
behalf of the Partnership were paid and reimbursed to an affiliate of the
Managing General Partner. Total organization and offering expenses did not
exceed 5.50% of the Gross Proceeds. No payments were made or expenses reimbursed
in each of two years ended March 31, 2009.
Acquisition Fees and Expenses
In accordance with the Partnership Agreement, the Partnership was required to
pay acquisition fees to and reimburse acquisition expenses of the Managing
General Partner or its affiliates for selecting, evaluating, structuring,
negotiating and closing the Partnership's investments in Local Limited
Partnerships. Acquisition fees totaled 7.50% of the Gross Proceeds. Acquisition
expenses, which included such expenses as legal fees and expenses, travel and
communications expenses, costs of appraisals, accounting fees and expenses, did
not exceed 1.75% of the Gross Proceeds. Acquisition fees totaling $5,080,756 for
the closing of the Partnership's Local Limited Partnership investments were paid
to an affiliate of the Managing General Partner. Acquisition expenses totaling
$974,240 were incurred and were reimbursed to an affiliate of the Managing
General Partner. No payments were made or expenses reimbursed in each of the two
years ended March 31, 2009.
Asset Management Fees
In accordance with the Partnership Agreement, an affiliate of the Managing
General Partner is paid an annual fee for services in connection with the
administration of the affairs of the Partnership. The affiliate receives the
base amount of $5,500 (annually adjusted by the CPI factor) per Local Limited
Partnership as the annual Asset Management Fee. Fees earned in each of the two
years ended March 31, 2009 are as follows:
2009 2008
-------------- --------------
Asset management fees $ 61,939 $ 78,453
Salaries and Benefits Expense Reimbursements
An affiliate of the Managing General Partner is reimbursed for the cost of the
Partnership's salaries and benefits expenses. The reimbursements are based upon
the size and complexity of the Partnership's operations. Reimbursements paid or
payable in each of the two years ended March 31, 2009 are as follows:
2009 2008
-------------- ---------------
Salaries and benefits
expense reimbursements $ 65,160 $ 73,951
Cash Distributions Paid to the General Partners
In accordance with the Partnership Agreement, the General Partners of the
Partnership, Arch Street VIII, Inc. and Arch Street IV L.P., receive 1% of
cash distributions paid to partners.
A cash distribution of $155,482 was made to the General Partners during the year
ended March 31, 2008.
Additional information concerning cash distributions and other fees paid or
payable to the Managing General Partner and its affiliates and the reimbursement
of expenses paid or payable to MMA and its affiliates during each of the two
years ended March 31, 2009 is presented in Note 4 to the Financial Statements.
Item 14. Principal Accountant Fees and Services
The Partnership paid or accrued fees for services rendered by the principal
accountants for the two years ended March 31, 2009 as follows:
2009 2008
-------------- ---------------
Audit fees $ 62,286 $ 72,768
Tax fees $ 2,500 $ 2,500
No other fees were paid or accrued to the principal accountants during the two
years ended March 31, 2009.
Item 15. Exhibits, Financial Statement Schedules and Director Independence
(a) Documents filed as a part of this Report
In response to this portion of Item 15, the financial statements and the
auditors' reports relating thereto are submitted as a separate section of this
Report. See Index to the Financial Statements on page F-1 hereof.
All other financial statement schedules and exhibits for which provision is made
in the applicable accounting regulations of the Securities and Exchange
Commission are not required under related instructions or are inapplicable and
therefore have been omitted.
(b) 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.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
By: Arch Street VIII, Inc.
its Managing General Partner
By: /s/Greg Judge Date: July 15, 2009
---------------------------------- -------------
Greg Judge
President
Arch Street VIII, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Managing General
Partner of the Partnership and in the capacities and on the dates indicated:
By: /s/ Greg Judge Date: July 15, 2009
----------------------------------- -------------
Greg Judge
President
Arch Street VIII, Inc.
By: /s/Michael H. Gladstone Date: July 15, 2009
----------------------------- -------------
Michael H. Gladstone
Vice President
Arch Street VIII, Inc.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
Annual Report on Form 10-K
For the Year Ended March 31, 2009
Index
Page No.
Report of Independent Registered Public Accounting Firm
for the years ended March 31, 2009 and 2008 F-2
Financial Statements
Balance Sheet - March 31, 2009 and 2008 F-3
Statements of Operations - For the years ended
March 31, 2009 and 2008 F-4
Statements of Changes in Partners' Equity -
For the years ended March 31, 2009 and 2008 F-5
Statements of Cash Flows - For the years ended
March 31, 2009 and 2008 F-6
Notes to the Financial Statements F-7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners of
Boston Financial Qualified Housing Tax Credits L.P. IV
We have audited the accompanying balance sheets of Boston Financial
Qualified Housing Tax Credits L.P. IV as of March 31, 2009 and 2008, and the
related statements of operations, changes in partners' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of certain operating limited partnerships as of and for the year
ended March 31, 2009 and 2008 in which the Partnership owns a limited
partnership interest. Investments in such partnerships are stated at $0 and
$700,283 at March 31, 2009 and 2008, respectively, and the Partnership's equity
in income (loss) of these operating limited partnerships is stated at $3,604,943
and $(399,718) for the years then ended, respectively. The financial statements
of those operating limited partnerships were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to
information relating to those operating limited partnerships, is based solely on
the reports of the other auditors.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The partnership is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the partnership's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other
auditors, the financial statements referred to above present fairly, in all
material respects, the financial position of Boston Financial Qualified Housing
Tax Credits L.P. IV as of March 31, 2009 and 2008 and the results of its
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ Reznick Group, P.C.
Vienna, Virginia
July 15, 2009
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
BALANCE SHEETS
March 31, 2009 and 2008
2009 2008
--------------- ------------
Assets
Cash and cash equivalents $ 3,734,110 $ 2,704,392
Investments in Local Limited Partnerships (Note 3) 723,169 691,419
Accounts receivable (Note 3) - 7,146
---------------- ----------------
Total Assets $ 4,457,279 $ 3,402,957
=============== ================
=============== ===============
Liabilities and Partners' Equity
Due to affiliate (Note 4) $ 43,386 $ 755,070
Accrued expenses 151,561 297,974
--------------- ---------------
Total Liabilities 194,947 1,053,044
General, Initial and Investor Limited Partners' Equity 4,262,332 2,349,913
--------------- ---------------
Total Liabilities and Partners' Equity $ 4,457,279 $ 3,402,957
=============== ===============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended March 31, 2009 and 2008
2009 2008
---------------- ----------------
Revenue:
Investment $ 44,647 $ 663,481
Cash distribution income 68,489 -
---------------- ----------------
Total Revenue 113,136 663,481
---------------- ----------------
Expense:
Asset management fees, affiliate (Note 4) 61,939 78,453
Provision for (recovery of) valuation allowance on advances
to Local Limited Partnerships (Note 3) (616,300) 22,093
Impairment on investments in Local
Limited Partnerships (Note 3) 28,000 2,406,000
General and administrative (includes reimbursements
to an affiliate in the amount of $65,160 and
$73,951 in 2009 and 2008, respectively) 934,411 1,182,705
Amortization 3,149 2,757
---------------- -----------------
Total Expense 411,199 3,692,008
---------------- ----------------
Loss before equity in income (losses) of Local Limited Partnerships and gain on
sale of investments in Local Limited
Partnerships (298,063) (3,028,527)
Equity income (losses) of Local Limited Partnerships (Note 3) 34,751 (97,718)
Gain on sale of investments in Local Limited
Partnerships (Note 3) 2,175,731 186,917
---------------- ----------------
Net Income (Loss) $ 1,912,419 $ (2,939,328)
================ ================
Net Income (Loss) allocated:
General Partners $ 19,124 $ (29,393)
Limited Partners 1,893,295 (2,909,935)
---------------- ----------------
$ 1,912,419 $ (2,939,328)
================ ================
Net Income (Loss) per Limited Partner Unit
(68,043 Units) $ 27.82 $ (42.77)
================ ================
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
For the Years Ended March 31, 2009 and 2008
Initial Investor Net
General Limited Limited Unrealized
Partners Partner Partners Loss Total
Balance at March 31, 2007 $ 208,371 $ 5,000 $ 20,624,040 $ (248) $ 20,837,163
------------- -------------- -------------- -------------- ------------
Cash distributions (155,482) - (15,392,688) - (15,548,170)
------------- -------------- ---------------- -------------- ------------
Comprehensive Income (Loss):
Change in net unrealized
losses on investment securities
available for sale - - - 248 248
Net Loss (29,393) - (2,909,935) - (2,939,328)
------------- ---------------- -------------- -------------- ----------
Comprehensive Income (Loss) (29,393) - (2,909,935) 248 (2,939,080)
------------- ---------------- -------------- -------------- ----------
Balance at March 31, 2008 23,496 5,000 2,321,417 - 2,349,913
Net Income 19,124 - 1,893,295 - 1,912,419
------------- -------------- -------------- -------------- ----------
Balance at March 31, 2009 $ 42,620 $ 5,000 $ 4,214,712 $ - $ 4,262,332
============= ============== ============== ============== ==========
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 2009 and 2008
2009 2008
---------------- -----------------
Cash flows from operating activities:
Net Income (Loss) $ 1,912,419 $ (2,939,328)
Adjustments to reconcile net income (loss) to net
cash provided by (used for) operating activities:
Equity in losses (income) of Local Limited Partnerships (34,751) 97,718
Gain on sale of investments in Local Limited Partnerships (2,175,731) (186,917)
Provision for (recovery of) valuation allowance on advances
to Local Limited Partnerships (616,300) 22,093
Impairment on investments in Local
Limited Partnerships 28,000 2,406,000
Amortization 3,149 2,757
Cash distributions included in net income (68,489) -
Other non cash item - (222)
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivable 7,146 -
Other assets - 6,332
Due to affiliate (711,684) 734,477
Accrued expenses (146,413) 221,234
----------------- ----------------
Net cash provided by (used for) operating activities (1,802,654) 364,144
----------------- ----------------
Cash flows from investing activities:
Proceeds from maturities of investment securities - 500,000
Investments in Local Limited Partnerships (75,000) -
Advances to Local Limited Partnerships (41,717) (22,093)
Reimbursement of advances to Local Limited Partnerships 658,017 -
Cash distributions received from Local
Limited Partnerships 115,341 236,502
Proceeds received from sale of investments in Local
Limited Partnerships 2,175,731 186,917
Accounts receivable from sale of investments in Local
Limited Partnerships - 1,117,854
---------------- ----------------
Net cash provided by investing activities 2,832,372 2,019,180
---------------- ----------------
Cash flows from financing activities:
Cash distributions - (15,548,170)
---------------- ----------------
Net cash used for financing activities - (15,548,170)
---------------- ----------------
Net increase (decrease) in cash and cash equivalents 1,029,718 (13,164,846)
Cash and cash equivalents, beginning 2,704,392 15,869,238
---------------- ----------------
Cash and cash equivalents, ending $ 3,734,110 $ 2,704,392
================ ================
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS
1. Organization
Boston Financial Qualified Housing Tax Credits L.P. IV (the "Partnership") was
formed on March 30, 1989 under the laws of the Commonwealth of Massachusetts for
the primary purpose of investing, as a limited partner, in other limited
partnerships ("Local Limited Partnerships") which own and operate apartment
complexes, most of which benefit from some form of federal, state or local
assistance program and each of which qualifies for low-income housing tax
credits. The Partnership's objectives are to: (i) provide current tax benefits
in the form of tax credits which qualified investors may use to offset their
federal income tax liability; (ii) preserve and protect the Partnership's
capital; (iii) provide limited cash distributions which are not expected to
constitute taxable income during Partnership operations; and (iv) provide cash
distributions from sale or refinancing transactions. The General Partners of the
Partnership are Arch Street VIII, Inc., which serves as the Managing General
Partner, and Arch Street IV L.P., which also serves as the Initial Limited
Partner. Both of the General Partners are affiliates of MMA Financial, Inc.
("MMA"). The fiscal year of the Partnership ends on March 31. On June 26, 2009,
Municipal Mortgage & Equity, LLC (the parent company of MMA Financial, Inc.)
entered into a purchase and sale agreement with JEN I, L.P. for the sale of
substantially all of its low-income housing tax credit business, including the
Partnership and its General Partners. Upon the consummation of the sale
transaction (expected to occur on or before August 31, 2009), the General
Partners will be owned or controlled by JEN I, L.P.
The Partnership's partnership agreement ("Partnership Agreement") authorized the
sale of up to 100,000 units of Limited Partnership Interest ("Units") at $1,000
per Unit, adjusted for certain discounts. The Partnership raised $67,653,000
("Gross Proceeds"), net of discounts of $390,000, through the sale of 68,043
Units. Such amounts exclude five unregistered Units previously acquired for
$5,000 by the Initial Limited Partner, which is also one of the General
Partners. The offering of Units terminated on January 31, 1990.
Under the terms of the Partnership Agreement, the Partnership originally
designated 4.00% of the Gross Proceeds from the sale of Units as a reserve for
working capital of the Partnership and contingencies related to ownership of
Local Limited Partnership interests. The Managing General Partner may increase
or decrease such amounts from time to time as it deems appropriate. At March 31,
2009 and 2008, the Managing General Partner has designated approximately
$3,551,000 and $2,704,392, respectively, as such Reserves.
Generally, profits, losses, tax credits and cash flows 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.
2. Significant Accounting Policies
Cash Equivalents
Cash equivalents represent short-term, highly liquid instruments with original
maturities of 90 days or less.
Concentration of Credit Risk
The Partnership invests its cash primarily in money market funds with commercial
banks. At times, cash balances at a limited number of banks and financial
institutions may exceed federally insured amounts. Management believes it
mitigates its credit risk by investing in major financial institutions.
Investment Securities
The Partnership's investment securities were classified as "Available for Sale"
securities and reported at fair value as reported by the brokerage firm at which
the securities were held. All investment securities had fixed maturities.
Realized gains and losses from the sales of securities were based on the
specific identification method. Unrealized gains and losses are excluded from
earnings and reported as a separate component of partners' equity.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Investments in Local Limited Partnerships
The Local Limited Partnerships in which the Partnership invests are Variable
Interest Entities ("VIE"s). The Partnership is involved with the VIEs as a
non-controlling limited partner equity holder. The investments in the Local
Limited Partnerships are made primarily to obtain tax credits on behalf of the
Partnership's investors. The general partners of the Local Limited Partnerships,
who are considered to be the primary beneficiaries, control the day-to-day
operations of the Local Limited Partnerships. The general partners are also
responsible for maintaining compliance with the tax credit program and for
providing subordinated financial support in the event operations cannot support
debt and property tax payments. The Partnership, through its ownership
percentages, may participate in property disposition proceeds. The timing and
amounts of these proceeds are unknown but can impact the Partnership's financial
position, results of operations or cash flows. Because the Partnership 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 Partnership's exposure to economic and
financial statement losses is limited to its investments in the VIEs ($723,169
and $691,419 at March 31, 2009 and 2008, respectively). The Partnership may be
subject to additional losses to the extent of any financial support that the
Partnership voluntarily provides in the future. Under the equity method, the
investment is carried at cost, adjusted for the Partnership'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 Partnership'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 Partnership'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 Partnership, that distribution is recorded as
income on the books of the Partnership.
The Tax Credits generated by Local Limited Partnerships are not reflected on the
books of the Partnership as such credits are allocated to partners for use in
offsetting their Federal income tax liability.
Excess investment costs over the underlying net assets acquired have arisen from
acquisition fees paid and expenses reimbursed to an affiliate of the
Partnership. These fees and expenses are included in the Partnership's
investments in Local Limited Partnerships and are being amortized on a
straight-line basis over 35 years or until a Local Limited Partnership's
respective investment balance has been reduced to zero.
The Partnership may provide advances to the Local Limited Partnerships to
finance operations or to make debt service payments. The Partnership assesses
the collectibility of any advances at the time the advance is made and records a
reserve if collectibility is not reasonably assured.
The Partnership does not guarantee any of the mortgages or other debt of the
Local Limited Partnerships.
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 December 31, 2008 and 2007 and for
the years then ended.
The Partnership, as a limited partner in the Local Limited Partnerships, is
subject to risks inherent in the ownership of property which are beyond its
control, such as fluctuations in occupancy rates and operating expenses,
variations in rental schedules, proper maintenance and continued eligibility for
tax credits. If the cost of operating a property exceeds the rental income
earned thereon, the Partnership may deem it in its best interest to voluntarily
provide funds in order to protect its investment.
The Partnership has implemented policies and practices for assessing
other-than-temporary declines in the values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are tested
for
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Investments in Local Limited Partnerships (continued)
other-than-temporary impairment. If an other-than-temporary decline in carrying
value exists, a provision to reduce the investment to the sum of the estimated
remaining benefits will be recorded in the Partnership's financial statements.
The estimated remaining benefits for each Local Limited Partnership consist of
estimated future tax losses and tax credits over the estimated life of the
investment and estimated residual proceeds at disposition. Included in the
estimated residual proceeds calculation is current net operating income
capitalized at a regional rate specific to each Local Limited Partnership less
the debt of the 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
Partnership 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.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"),
Disclosures About Fair Value of Financial Instruments, requires disclosure for
the fair value of most on- and off-balance sheet financial instruments for which
it is practicable to estimate that value. The scope of SFAS No. 107 excludes
certain financial instruments, such as trade receivables and payables when the
carrying value approximates the fair value and investments accounted for under
the equity method, and all nonfinancial assets, such as real property. Unless
otherwise described, the fair values of the Partnership's assets and liabilities
which qualify as financial instruments under SFAS No. 107 approximate their
carrying amounts in the accompanying balance sheets.
Income Taxes
No provision for income taxes has been made as the liability for such taxes is
an obligation of the partners of the Partnership.
In December 2008, the Financial Accounting Standards Board (`FASB") issued
Interpretation No. 48-3 "Effective Date of FASB Interpretation No. 48 for
Certain Nonpublic Enterprises" ("FIN48-3"). FIN48-3 deferred the effective date
of FIN48 for certain nonpublic organizations. The deferred effective date is
intended to give the FASB additional time to develop guidance on the application
of FIN48 by pass-through and not-for-profit entities. The General Partner may
modify the Partnership's disclosures if the FASB's guidance regarding the
application of FIN48 to pass-through entities changes.
Effect of New Accounting Principles
SFAS No. 157
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
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. Significant Accounting Policies (continued)
Effect of New Accounting Principles (continued)
SFAS No. 157 (continued)
statements on at least an annual basis until November 15, 2008. The Partnership
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
Partnership's Financial Statements. The Partnership does not expect the adoption
of the remaining provisions of SFAS No. 157 to have a material effect on the
Partnership's financial position, operations or cash flow. This standard
requires that a Partnership 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:
Level 1 - Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Partnership 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 Partnership's judgments
about the assumptions market participants would use in pricing
the asset or liability since limited market data exists. The
Partnership develops these inputs based on the best information
available, including the Partnership's own data.
Financial assets accounted for at fair value on a recurring basis at March 31,
2009 include cash equivalents of $3,734,110.
SFAS No. 159
In February 2007, the FASB issued Statement of Financial Accounting Standards
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities"
("SFAS No. 159"), which permits entities to choose to measure many financial
assets and financial liabilities at fair value. Unrealized gains and losses on
items for which the fair value option has been elected are reported in earnings.
SFAS No. 159 is effective for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Partnership has not elected
to measure any financial assets and financial liabilities at fair value under
the provisions of SFAS No. 159.
3. Investments in Local Limited Partnerships
The Partnership has limited partnership interests in five Local Limited
Partnerships which were organized for the purpose of owning and operating
multi-family housing complexes, all of which are government-assisted. The
Partnership's ownership interest in each Local Limited Partnership is 99%,
except for Leawood Manor where the Partnership's ownership interest is 89%. The
Partnership may have negotiated or may negotiate options with the Local General
Partners to purchase or sell the Partnership'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.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. Investments in Local Limited Partnerships (continued)
The following is a summary of investments in Local Limited Partnerships at March
31, 2009 and 2008:
2009 2008
---------------- ----------------
Capital contributions and advances paid to Local Limited
Partnerships and purchase price paid to withdrawing
partners of Local Limited Partnerships $ 16,444,363 $ 22,811,783
Cumulative equity in losses of Local Limited Partnerships
(excluding cumulative unrecognized losses of $1,899,096 and
$7,287,836 in 2009 and 2008, respectively) (9,433,653) (14,112,692)
Cumulative cash distributions received from Local Limited Partnerships (2,636,933) (2,609,221)
---------------- ----------------
Investments in Local Limited Partnerships before adjustments 4,373,777 6,089,870
Excess investment costs over the underlying assets acquired:
Acquisition fees and expenses 1,393,774 2,004,230
Cumulative amortization of acquisition fees and expenses (634,982) (765,735)
---------------- ----------------
Investments in Local Limited Partnerships before valuation allowance 5,132,569 7,328,365
Valuation allowance on investments in Local Limited Partnerships (4,409,400) (6,636,946)
---------------- ----------------
Investments in Local Limited Partnerships $ 723,169 $ 691,419
================ ================
For the year ended March 31, 2009, the Partnership advanced $41,717 to one of
the Local Limited Partnerships, all of which was reimbursed. In addition,
$616,300 was also reimbursed from the Local Limited Partnership relating to
advances made and reserved for in previous years. The Partnership has also
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.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. Investments in Local Limited Partnerships (continued)
Summarized combined financial information of the Local Limited Partnerships in
which the Partnership has invested as of December 31, 2008 and 2007 (due to the
Partnership's policy of reporting the financial information of its Local Limited
Partnership interests on a 90 day lag basis) is as follows:
Summarized Balance Sheets - as of December 31,
2008 2007
---------------- ----------------
Assets:
Investment property, net $ 26,741,786 $ 34,196,411
Other assets 4,312,920 6,153,746
---------------- ----------------
Total Assets $ 31,054,706 $ 40,350,157
================ ================
Liabilities and Partners' Equity (Deficiency):
Mortgage notes payable $ 25,837,048 $ 34,594,257
Other liabilities 2,923,717 7,541,583
---------------- ----------------
Total Liabilities 28,760,765 42,135,840
---------------- ----------------
Partnership's equity (deficiency) 2,295,261 (2,130,799)
Other partners' equity (deficiency) (1,320) 345,116
----------------- ----------------
Total Partners' Equity (Deficiency) 2,293,941 (1,785,683)
---------------- -----------------
Total Liabilities and Partners' Equity $ 31,054,706 $ 40,350,157
================ ================
Summarized Statements of Operations -
for the years ended December 31,
2008 2007
---------------- ----------------
Rental and other income $ 10,866,378 $ 11,366,445
---------------- ----------------
Expenses:
Operating 2,719,303 6,854,320
Interest 2,618,576 2,775,350
Depreciation and amortization 2,676,339 2,808,763
---------------- ----------------
Total Expenses 8,014,218 12,438,433
---------------- ----------------
Net Income (Loss) $ 2,852,160 $ (1,071,988)
================ ================
Partnership's share of Net Income (Loss) $ 3,248,592 $ (1,044,887)
================ ================
Other partners' share of Net Income (Loss) $ (396,432) $ (27,101)
================= =================
For the years ended March 31, 2009 and 2008, the Partnership has not recognized
$646,126 and $947,169, respectively, of equity in losses relating to certain
Local Limited Partnerships in which cumulative equity in losses and
distributions exceeded its total investment in these Local Limited Partnerships.
Previously unrecognized losses of $3,859,967 were included in losses recognized
in the year ended March 31, 2009.
The Partnership's equity (deficiency) as reflected by the Local Limited
Partnerships of $2,295,261 and ($2,130,799) at March 31, 2009 and 2008,
respectively, differs from the Partnership's investments in Local Limited
Partnerships before adjustments of $4,373,777 and $6,089,870 at March 31, 2009
and 2008, respectively, primarily due to cumulative unrecognized losses as
described above and advances to Local Limited Partnerships that the Partnership
included in investments in Local Limited Partnerships.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. Investments in Local Limited Partnerships (continued)
For the year end March 31, 2009, one of the Local Limited Partnerships with a
carrying value of zero was considered to have operating issues significant
enough to warrant their independent auditors to issue audit reports that raised
substantial doubt about the Local Limited Partnership's ability to continue as
a going concern. However, the Partnership believes that support from the Local
General Partner and adequate Local Limited Partnership reserve levels will
likely mitigate substantial risk to the Partnership.
The Partnership's interest in one of its investments in Local Limited
Partnerships was sold during the year ended March 31, 2009, resulting in a gain
on sale of $2,175,731. The Partnership's interest in another of its investments
in Local Limited Partnerships was transferred during the year ended March 31,
2009, having no impact on the Partnership's financial position, results of
operations or cash flows. During the year ended March 31, 2008, the Partnership
recorded sale proceeds receivable of $7,146 related to the prior year sale of
one Local Limited Partnership.
4. Transactions with Affiliates
An affiliate of the Managing General Partner receives the base amount of $5,500
(annually adjusted by the CPI factor) per Local Limited Partnership as the
annual Asset Management Fee for administering the affairs of the Partnership.
Asset Management Fees for the years ended March 31, 2009 and 2008 were $61,939
and $78,453, respectively. During the years ended March 31, 2009 and 2008, Asset
Management Fees of $66,687 and $82,372, respectively, were paid out of available
cash flow. As of March 31, 2009 and 2008, $11,926 and $16,674, respectively, is
payable to an affiliate of the Managing General Partner for Asset Management
Fees.
An affiliate of the General Partner is reimbursed for the actual cost of the
Partnership's operating expenses. As of March 31, 2009 and 2008, $10,415 and
$704,560, respectively, is reimbursable to the affiliate.
An affiliate of the Managing General Partner is reimbursed for the cost of the
Partnership's salaries and benefits expenses. Included in general and
administrative expenses for the years ended March 31, 2009 and 2008 is $65,160
and $73,951, respectively, which the Partnership has incurred for these
expenses. During the year ended March 31, 2009 and 2008, salaries and benefits
of $77,951 and $40,115, respectively, were paid to the affiliate of the Managing
General Partner. As of March 31, 2009 and 2008, $21,045 and $33,836,
respectively, of reimbursements to an affiliate of the Managing General Partner
remains unpaid.
5. Legal Procedings
As previously reported, the Partnership, its general partners and additional
Boston Financial public funds (the "Funds") reached an agreement in February,
2007 to resolve several lawsuits and pending disputes between the Partnership
and the Funds and their general partners on the one hand, and a group of Limited
Partner investors on the other hand. The group of investors included Park G.P.,
Inc., Bond Purchase, L.L.C. and various other entities related to David L.
Johnson (the "Johnson Group") and Everest Housing Investors 2, LLC and various
other Everest-related entities (the "Everest Group"; the Johnson Group and the
Everest Group are hereinafter collectively referred to as the "Johnson and
Everest Groups"). Per the terms of the parties' agreement, these lawsuits were
then dismissed. The Johnson and Everest Groups further agreed at that time to
refrain from interfering in various ways with the conduct of the business of the
Partnership and the business of Boston Financial Qualified Housing Tax Credits
L.P. III ("QH3").
Also as previously reported, beginning in November, 2007, the Johnson and
Everest Groups filed new lawsuits against the Partnership and its general
partners in various jurisdictions as part of an effort to replace the existing
general partners with parties related to the Everest Group, to prevent the
Partnership from selling any of its assets without limited partner consent and
to interfere with specific arms length sales by the Partnership of certain of
its assets. The Partnership responded with its own lawsuits against the Johnson
and Everest Groups to block these
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. Legal Procedings (continued)
efforts as well as to claim damages arising from the Johnson and Everest Groups'
conduct. The following lawsuits concerning the Partnership (collectively, the
"Johnson/Everest Lawsuits"), which were described in detail in the Partnership's
previous periodic reports, were filed in the November 2007 through April 2008
time period:
o On November 29, 2007, the Partnership and its general partners
were sued in Superior Court for the County of Los Angeles,
California by a Limited Partner named Danford Baker and
companies named Everest Housing Investors 2, LP and Everest
Management, LLC with which Mr. Baker is affiliated
(collectively, "Everest"). Everest dismissed this lawsuit
without prejudice on April 17, 2008.
o On or about May 6, 2008, the same Everest parties referenced
above in the 1st California lawsuit filed a nearly identical
Complaint against the Partnership and its general partners in
the same Superior Court for the County of Los Angeles,
California. Everest dismissed this 2nd California lawsuit
without prejudice on November 11, 2008.
o On January 22, 2008, the Partnership and its general partners
were sued in the District Court of Johnson County, Kansas by a
Limited Partner named McDowell Investments, L.P. ("McDowell").
o On January 29, 2008, the Partnership and its general partners
filed suit against McDowell in the Superior Court for Suffolk
County, Massachusetts.
o On April 22, 2008, the Partnership and its general partners
filed suit against the following defendants in the Superior
Court for Suffolk County, Massachusetts.: Everest Housing
Investors 2, L.P.; Everest Management LLC; Everest
Properties, Inc.; Everest Properties, LLC; McDowell
Investments, L.P.; MGM Holdings, LLC; Park G.P., Inc., Bond
Purchase, L.L.C.; Anise L.L.C.; Paco Development, L.L.C.;
Maxus Realty Trust, Inc.; David L. Johnson; W. Robert
Kohorst; Danford M. Baker; Monte G. McDowell; and
Kevan D. Acord
Effective April 24, 2009, the Partnership and several of the Funds reached an
agreement with the Johnson and Everest Groups to resolve the Johnson/Everest
Lawsuits (the "Settlement Agreement"). The Settlement Agreement provides, among
other things, that (a) the parties exchange mutual releases and covenant not to
bring lawsuits against each other in the future, (b) the parties dismiss claims
and counterclaims asserted in the various lawsuits without prejudice, and (c)
the Johnson and Everest Groups agree not to take a variety of actions which
could interfere with the conduct of the business of the Funds. The Settlement
Agreement also sets out a schedule for future cash distributions to the Limited
Partners and for the eventual dissolution of the Partnership and QH3. The
Settlement Agreement was attached as Exhibit 99-1 to the Partnership's Form 8-K
filed on May 21, 2009.
In addition, effective April 24, 2009, the Partnership and QH3 entered into
purchase agreements (the "Purchase Agreements") with certain members of the
Johnson and Everest Groups permitting them to purchase, subject to various
conditions and at specified prices which the Partnership believes represent fair
market value, certain interests held by the Partnership and by QH3 in Local
Limited Partnerships. The Settlement Agreement remains effective regardless of
whether any of the Local Limited Partnership interests are purchased.
With respect to the Partnership, the Purchase Agreements provide for the
purchase by affiliates of the Everest Group, for the total price of $1,850,000,
of the Partnership's interests in:
Prince Street Towers, L.P., which owns a property in Lancaster, PA;
Sencit Towne House L.P., which owns a property in Shillington, PA; and
Allentown Towne House, L.P., which owns a property in Allentown, PA; and
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. Legal Procedings (continued)
the purchase by affiliates of the Johnson Group, for the total price of
$3,300,000, of the Partnership's interests in:
Brookscrossing Apartments, L.P., which owns a property in Riverdale GA; and
Leawood Associates, L.P., which owns a property in Leawood, KS.
Closing on the sales of the Leawood and Brookscrossing Local Limited Partnership
interests occurred on April 30, 2009, and May 8, 2009, respectively, and the
sale of the other Local Limited Partnership interests is expected to close over
the coming months.
6. Federal Income Taxes
The following schedule reconciles the reported financial statement net income
(loss) for the fiscal years ended March 31, 2009 and 2008 to the net income
(loss) reported on the Form 1065, U.S. Partnership Return of Income for the
years ended December 31, 2008 and 2007:
2009 2008
-------------- ---------------
Net Income (Loss) per financial statements $ 1,912,419 $ (2,939,328)
Equity in losses of Local Limited Partnerships for financial reporting purposes
(tax) in excess of equity in losses for tax (financial reporting) purposes (4,299,612) 58,799
Equity in losses of Local Limited Partnerships not recognized
for financial reporting purposes (646,126) (947,169)
Recognition of previously unrecognized equity in losses of Local
Limited Partnerships for financial reporting purposes 3,859,967 -
Adjustment to reflect March 31 fiscal year end to
December 31 taxable year end (387,876) 559,767
Amortization not deductible for tax purposes 3,149 2,757
Provision for valuation allowance on advances to Local
Limited Partnerships not deductible for tax purposes - 22,093
Recovery of provision for valuation allowance on advances to Local
Limited Partnerships, not reportable for tax purposes (616,300) -
Impairment on investments in Local Limited
Partnerships not deductible for tax purposes 28,000 2,406,000
Gain on sale of investments in Local Limited Partnerships recognized
for tax purposes in excess of gain recognized
for financial reporting purposes 3,351,947 123,606
Cash distributions included in net income for financial reporting purposes (68,489) -
--------------- --------------
Net Income (Loss) per tax return $ 3,137,079 $ (713,475)
============== ==============
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
6. Federal Income Taxes (continued)
The differences in the assets and liabilities of the Partnership for financial
reporting purposes and tax purposes as of March 31, 2009 and December 31, 2008,
respectively, are as follows:
Financial
Reporting Tax
Purposes Purposes Differences
Investments in Local Limited Partnerships $ 723,169 $ (390,145) $ (1,113,314)
============== =============== ===============
Other assets $ 3,734,110 $ 12,271,276 $ (8,537,166)
============== ============== ==============
Liabilities $ 194,947 $ 141,133 $ 53,814
============== ============== ==============
The differences in the assets and liabilities of the Partnership for financial
reporting and tax purposes are primarily attributable to: (i) the cumulative
equity in losses from Local Limited Partnerships for tax purposes is
approximately $6,153,000 greater than for financial reporting purposes,
including approximately $1,899,000 of losses the Partnership has not recognized
relating to Local Limited Partnerships whose cumulative equity in losses
exceeded its total investment; (ii) the Partnership has provided an impairment
allowance of approximately $4,409,000 against its investments in Local Limited
Partnerships for financial reporting purposes; (iii) approximately $635,000 of
amortization has been deducted for financial reporting purposes only; and (iv)
organizational and offering costs of approximately $8,352,000 have been
capitalized for tax purposes and charged to Limited Partners' equity for
financial reporting purposes.
The differences in the assets and liabilities of the Partnership for financial
reporting purposes and tax purposes as of March 31, 2008 and December 31, 2007,
respectively, are as follows:
Financial
Reporting Tax
Purposes Purposes Differences
Investments in Local Limited Partnerships $ 691,419 $ (2,085,598) $ 2,770,017
============== ============== ==============
Other assets $ 2,711,538 $ 11,134,567 $ (8,423,029)
============== ============== ==============
Liabilities $ 1,053,044 $ 446,050 $ 606,994
============== ============== ==============
The differences in the assets and liabilities of the Partnership for financial
reporting and tax purposes are primarily attributable to: (i) the cumulative
equity in losses from Local Limited Partnerships for tax purposes is
approximately $10,173,000 greater than for financial reporting purposes,
including approximately $7,288,000 of losses the Partnership has not recognized
relating to Local Limited Partnerships whose cumulative equity in losses
exceeded its total investment; (ii) the Partnership has provided an impairment
allowance of approximately $6,637,000 against its investments in Local Limited
Partnerships for financial reporting purposes; (iii) approximately $766,000 of
amortization has been deducted for financial reporting purposes only; and (iv)
organizational and offering costs of approximately $8,352,000 have been
capitalized for tax purposes and charged to Limited Partners' equity for
financial reporting purposes.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
7. Significant Subsidiaries
The following Local Limited Partnerships invested in by the Partnership
represent more than 20% of the Partnership's total assets or equity as of March
31, 2009 or 2008 or net income (loss) for the years ended either March 31, 2009
or 2008. The following financial information represents the performance of these
Local Limited Partnerships for the years ended December 31, 2008 and 2007:
Sencit Towne House, L.P. 2008 2007
- ------------------------ --------------- ---------------
Total Assets $ 6,678,308 $ 6,902,166
Total Liabilities $ 2,558,620 $ 2,956,239
Revenue $ 2,110,300 $ 2,054,518
Net Income $ 173,761 $ 113,983
Bentley Court II, Limited Partnership 2008 2007
- ------------------------------------- --------------- ---------------
Total Assets $ 0 $ 6,922,071
Total Liabilities $ 0 $ 10,195,064
Revenue $ 1,464,748 $ 1,886,068
Net Income (Loss) $ 3,568,895 $ (362,661)
The Partnership does not guarantee any of the mortgages or other debt of the
Local Limited Partnerships.