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 ------------------------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------------- ---------- Commission file number 0-26522 --------= Boston Financial Tax Credit Fund VIII, A Limited Partnership _____________________________________________________________ (Exact name of registrant as specified in its charter) Massachusetts 04-3205879 - ------------------------------------------ ----------- (State or other jurisdiction of (I.R.S Employer identification No.) incorporation or organization) 101 Arch Street, Boston, Massachusetts 02110-1106 - --------------------------------------------- --------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 439-3911 ----------------------- 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: $36,497,000 as of March 31, 2009. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED MARCH 31, 2009 TABLE OF CONTENTS Page No. PART I Item 1 Business K-4 Item 2 Properties K-6 Item 3 Legal Proceedings K-9 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-13 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-13 Item 9A Controls and Procedures K-13 Item 9B Other Information K-14 PART III Item 10 Directors and Executive Officers of the Registrant K-14 Item 11 Management Remuneration K-15 Item 12 Security Ownership of Certain Beneficial Owners and Management K-16 Item 13 Certain Relationships and Related Transactions K-16 Item 14 Principal Accountant Fees and Services K-18 Item 15 Exhibits, Financial Statement Schedules, and Director Independence K-18 SIGNATURES K-19 - ---------- CERTIFICATIONS K-20 - -------------- PART I Item 1. Business Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a Massachusetts limited partnership formed on August 25, 1993 under the laws of the Commonwealth of Massachusetts. The Fund's partnership agreement ("Partnership Agreement") authorizes the sale of up to 200,000 units of Limited Partnership Interest ("Unit") at $1,000 per Unit in series. The first series offered 50,000 Units. On July 29, 1994, the Fund held its final investor closing. In total, the Fund raised $36,497,000 ("Gross Proceeds") through the sale of 36,497 Units. Such amounts exclude a fractional unregistered Unit previously acquired for $100 by the Initial Limited Partner. The offering of Units terminated on March 29, 1995. The Fund is engaged solely in the business of real estate investment. Accordingly, a presentation of information about industry segments is not applicable and would not be material to an understanding of the Fund's business taken as a whole. The Fund originally invested as a limited partner in ten limited partnerships ("Local Limited Partnerships") which own and operate residential apartment complexes ("Properties"), some of which were expected to benefit from some form of federal, state or local assistance programs and all of which qualify for 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 Fund include the following: (i) to provide investors with annual tax credits which they may use to reduce their federal income taxes; (ii) to provide limited cash distributions from the operations of apartment complexes; and (iii) to preserve and protect the Fund's capital. There cannot be any assurance that the Fund 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 sections of the Prospectus entitled "Investment Objectives and Policies - Principal Investment Objectives" and "Investment Risks", which are herein incorporated by this reference. Table A on the following page lists the properties originally acquired by the Local Limited Partnerships in which the Fund had 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 each Local Limited Partnership interest have been described in the Form 8-Ks and a supplement to the Prospectus; such descriptions are incorporated herein by this reference. TABLE A SELECTED LOCAL LIMITED PARTNERSHIP DATA Property owned by Local Date Limited Partnerships Interest Location Acquired - --------------------------- -------------------- ------------ Green Wood Apartments (1) Gallatin, TN 03/02/94 Webster Court Apartments Kent, WA 05/13/94 Springwood Apartments Tallahassee, FL 12/15/94 Meadow Wood of Pella Pella, IA 06/03/94 Hemlock Ridge Livingston Manor, NY 04/29/94 Pike Place Fort Smith, AR 01/31/94 West End Place Springdale, AR 01/12/94 Oak Knoll Renaissance Gary, IN 11/01/94 Beaverdam Creek Mechanicsville, VA 11/16/94 Live Oaks Plantation West Palm Beach, FL 06/28/94 (1)The Fund no longer has an interest in the Local Limited Partnership which owns this Property. Although the Fund's investments in Local Limited Partnerships are not subject to seasonal fluctuations, the Fund's equity in losses of Local Limited Partnerships, to the extent it reflects 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. Each Local Limited Partnership has, as its general partners ("Local General Partners"), one or more individuals or entities not affiliated with the Fund or its General Partners. In accordance with the partnership agreements under which such entities are organized ("Local Limited Partnership Agreements"), the Fund 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 specific percentage of total capital contributions in Local Limited Partnerships. Pike Place, A Limited Partnership and West End Place, A Limited Partnership, representing 14.85%, have Lindsey Management Company as a Local General Partner. The Local General Partners of the remaining Local Limited Partnerships are identified in the Acquisition Reports which are herein incorporated by reference. The Properties owned by Local Limited Partnerships in which the Fund has invested are, and will continue to be, subject to competition from existing and future apartment complexes in the same areas. The success of the Fund depends on many outside factors, most of which are beyond the control of the Fund 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 Fund, 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) the 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 suppress the ability of the Local Limited Partnerships to generate operating cash flow. Since most of the Properties benefit from some form of governmental assistance, the Fund 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 Fund. The Fund is managed by Arch Street VIII Limited Partnership, the sole General Partner of the Fund. The Fund, which does not have any employees, reimburses MMA Financial, Inc. (MMA), an affiliate of the General Partner, for certain expenses and overhead costs. A complete discussion of the management of the Fund 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 Fund 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 Fund. Item 2. Properties The Fund currently owns limited partnership interests in nine 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 Fund's ownership interest in the Local Limited Partnerships is 99%, with the exception of Springwood which is 79.20%, Hemlock Ridge which is 77% and Pike Place and West End Place which are 90%. Each of the Local Limited Partnerships has received an allocation of Tax Credits from the 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 Live Oaks Plantation, 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 Fund. Capital Contributions Mtge. loans Occupancy Local Limited Partnership Number Total Committed Paid Through payable at at Property Name of at March 31, March 31, December 31, Type of March 31, Property Location Apt. Units 2009 2009 2008 Subsidy* 2009 - ---------------------------------- -------------- ------------------- ------------ ---------------- ----------- --------- Webster Court Apartments a Limited Partnership Webster Court Apartments Kent, WA 92 2,318,078 2,318,078 2,440,377 None 96% Springwood Apartments a Limited Partnership (1) Springwood Apartments Tallahassee, FL 113 2,499,202 2,499,202 3,297,002 None 92% Meadow Wood Associates of Pella, a Limited Partnership Meadow Wood of Pella Pella, IA 30 893,808 893,808 856,497 Section 8 93% RMH Associates, a Limited Partnership (1) Hemlock Ridge Livingston Manor, NY 100 1,697,298 1,697,298 1,119,089 Section 8 95% Pike Place, a Limited Partnership (1) Pike Place Fort Smith, AR 144 1,915,328 1,915,328 2,600,645 None 100% Capital Contributions Mtge. Loans Occupancy Local Limited Partnership Number Total Committed Paid Through payable at At Property Name of at March 31, March 31, December 31, Type of March 31, Property Location Apt. Units 2009 2009 2008 Subsidy* 2009 - ---------------------------------- -------------- ------------------ ----------------- ----------------- -------- ----------- West End Place, a Limited Partnership (1) West End Place Springdale, AR 120 1,843,010 1,843,010 2,294,825 None 97% Oak Knoll Renaissance, a Limited Partnership Oak Knoll Renaissance Gary, IN 256 4,922,412 4,922,412 3,709,149 Section 8 98% 8 Beaverdam Creek Associates, a Limited Partnership (2) Beaverdam Creek Mechanicsville, VA 120 3,629,140 3,629,140 4,047,925 None 85% Schickedanz Brothers Palm Beach Limited Live Oaks Plantation West Palm Beach, FL 218 5,587,953 5,587,953 5,518,282 None 62% ------ ------------- ----------- ------------- 1,193 $25,306,229 $25,306,229 $ 25,883,791 ====== =========== ============ =========== (1)Boston Financial Tax Credits Fund VIII has a 79.20% interest in Springwood Apartments, L.P., a 77% interest in RMH Associates, L.P., and a 90% interest in Pike Place, L.P. and West End Place, L.P. The mortgage payable balances represent 100% of the outstanding balances. (2) The amount paid includes funds advanced under a promissory note agreement with Boston Financial Tax Credit Fund VIII, a Limited Partnership. *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. The Fund 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 Fund, is contained in Items 1, 7 and 8 of this Report. Item 3. Legal Proceedings -------------------- The Fund is not a party to any pending legal or administrative proceeding, and to the best of its knowledge, no legal or administrative proceeding is threatened or contemplated against it. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ 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 Fund. 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 Fund. The Partnership Agreement does not impose on the Fund or its General Partner 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 1,156 record holders of Units of the Fund. Cash distributions, when made, are paid annually. For the years ended March 31, 2009 and 2008, no cash distributions were made. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------------- Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words like "anticipate," "estimate," "intend," "project," "plan," "expect," "believe," "could," and similar expressions are intended to identify such forward-looking statements. The Fund intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements and is including this statement for purposes of complying with these safe harbor provisions. Although the Fund believes the forward-looking statements are based on reasonable assumptions and current expectations, the Fund can give no assurance that its expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, general economic and real estate conditions and interest rates. Executive Level Overview The Fund is a Massachusetts limited partnership organized to invest in Local Limited Partnerships which own and operate apartment complexes which are eligible for low income housing tax credits that may be applied against the federal income tax liability of an investor. The Fund's objectives are to: (i) provide investors with annual tax credits which they may use to reduce their federal income tax liability; (ii) provide limited cash distributions from the operations of apartment complexes; and (iii) preserve and protect the Fund's capital. Arch Street VIII Limited Partnership ("Arch Street L.P."), a Massachusetts limited partnership consisting of Arch Street VIII, Inc., a Massachusetts corporation ("Arch Street, Inc.") as the sole general partner and MMA as the sole limited partner, is the sole General Partner of the Fund. Arch Street L.P. and Arch Street, Inc. are affiliates of MMA. The fiscal year of the Fund ends on March 31. As of March 31, 2009, the Fund's investment portfolio consists of limited partnership interests in nine Local Limited Partnerships, each of which owns and operates a multi-family apartment complex and each of which has generated Tax Credits. Since inception, the Fund generated Tax Credits of approximately $1,429 per Limited Partner Unit. The aggregate amount of Tax Credits generated by the Fund was consistent with the objective specified in the Fund's prospectus. Properties that receive low income housing Tax Credits must remain in compliance with rent restriction and set-aside requirements for at least 15 calendar years from the date the property is placed in service (the "Compliance Period"). Failure to do so would result in the recapture of a portion of the property's Tax Credits. Between December 31, 2009 and December 31, 2010, the Compliance Period of the nine Properties in which the Fund has an interest will expire. It is unlikely that the General Partner will be able to dispose of the Fund's Local Limited Partnership interests concurrently with the expiration of each Property's Compliance Period. The Fund shall dissolve and its affairs shall be wound up upon the disposition of the final Local Limited Partnership interest and other assets of the Fund. Investors will continue to be Limited Partners, receiving K-1s and quarterly and annual reports, until the Fund is dissolved. The General Partner has negotiated an agreement that will ultimately allow the Fund to dispose of its interest in one Local Limited Partnership. In addition, the Fund is in negotiations with potential buyers to dispose of its interest in three Local Limited Partnerships in 2009. The Fund has not disposed of any Local Limited Partnership interests during the twelve months ended March 31, 2009. Critical Accounting Policies The Fund's accounting polices include those that relate to its recognition of investments in Local Limited Partnerships using the equity method of accounting. The Fund's policy is as follows: The Local Limited Partnerships in which the Fund invests are Variable Interest Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling limited partner equity holder. The investments in the Local Limited Partnerships are made primarily to obtain tax credits on behalf of the Fund'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 Fund, through its ownership percentages, may participate in property disposition proceeds. The timing and amounts of these proceeds are unknown but can impact the Fund's financial position, results of operations or cash flows. Because the Fund is not the primary beneficiary of these VIEs, it accounts for its investments in the Local Limited Partnerships using the equity method of accounting. As a result of its involvement with the VIEs, the Fund's exposure to economic and financial statement losses is limited to its investments in the VIEs ($4,235,556 and $5,935,354 at March 31, 2009 and 2008, respectively). The Fund may be subject to additional losses to the extent of any financial support that the Fund voluntarily provides in the future. Under the equity method, the investment is carried at cost, adjusted for the Fund's share of net income or loss and for cash distributions from the Local Limited Partnerships; equity in income or loss of the Local Limited Partnerships is included currently in the Fund's operations. A liability is recorded for delayed equity capital contributions to Local Limited Partnerships. Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that equity in losses are incurred when the Fund's carrying value of the respective Local Limited Partnership has been reduced to a zero balance, the losses will be suspended and offset against future income. Income from Local Limited Partnerships, where cumulative equity in losses plus cumulative distributions have exceeded the total investment in Local Limited Partnerships, will not be recorded until all of the related unrecorded losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, that distribution is recorded as income on the books of the Fund. The Fund 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 Fund'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 Fund may record similar impairment losses in the future if the expiration of tax credits outpaces losses and distributions from any of the Local Limited Partnerships. During the year ended March 31, 2009, the Fund concluded that three of the Local Limited Partnerships had experienced other-than-temporary declines in their carrying values and impairment losses were recorded for Beaverdam Creek Associates, a Limited Partnership for $106,000, Pike Place, a Limited Partnership for $453,000, and Oak Knoll Renaissance, a Limited Partnership for $813,000. During the year ended March 31, 2008, the Fund concluded that four of the Local Limited Partnerships had experienced other-than-temporary declines in their carrying values and impairment losses were recorded for Beaverdam Creek Associates, a Limited Partnership for $421,000, Pike Place, a Limited Partnership for $63,000, West End Place, a Limited Partnership for $44,000, and Oak Knoll Renaissance, a Limited Partnership for $589,000. Liquidity and Capital Resources At March 31, 2009, the Fund had cash and cash equivalents of $109,829, as compared to $469,376 at March 31, 2008. The decrease is primarily attributable to cash used for operating activities partially offset by cash distributions received from Local Limited Partnerships. The General Partner initially designated 5% of the Gross Proceeds as Reserves, as defined in the Partnership Agreement. The Reserves were established to be used for working capital of the Fund and contingencies related to the ownership of Local Limited Partnership interests. The General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. At March 31, 2009 and 2008, $109,829 and $469,376, respectively, has been designated as Reserves. To date, professional fees relating to various Property issues totaling approximately $69,000 have been paid from Reserves. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Fund's management might deem it in its best interest to voluntarily provide such funds in order to protect its investment. As of March 31, 2009, the Fund has advanced approximately $1,208,000 to Local Limited Partnerships to fund operating deficits. The General Partner believes that the investment income earned on the Reserves, along with cash distributions received from Local Limited Partnerships, to the extent available, will be sufficient to fund the Fund's ongoing operations. Reserves may be used to fund operating deficits, if the General Partner deems funding appropriate. To date, the Fund has used approximately $627,000 of Reserves to fund operations. If Reserves are not adequate to cover the Fund's operations, the Fund will seek other financing sources including, but not limited to, the deferral of Asset Management Fees paid to an affiliate of the General Partner or working with Local Limited Partnerships to increase cash distributions. Since the Fund invests as a limited partner, the Fund has no contractual duty to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, as of March 31, 2009, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. Cash Distributions No cash distributions were made during the two years ended March 31, 2009. It is expected that cash available for distribution will not be significant in fiscal year 2009. Based on results of 2008 Property operations, the Local Limited Partnerships are not expected to distribute significant amounts of cash to the Fund because such amounts will be needed to fund Property operating costs. In addition, some 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 For the year ended March 31, 2009, the Fund's operations resulted in a net loss of $1,995,432, as compared to a net loss of $1,300,618 for the year ended March 31, 2008. The increase in net loss is primarily attributable to an increase in impairment on investments in Local Limited Partnerships, a decrease in equity in income of Local Limited Partnerships, and a decrease in other income. Impairment on investments in Local Limited Partnerships increased due to the Fund recording a valuation allowance on its investments in certain Local Limited Partnerships. The change in equity in income in Local Limited Partnerships is primarily due to an increase in unrecognized losses by the Fund of Local Limited Partnerships with carrying values of zero. The decrease in other income is due to a decrease in distributions from Local Limited Partnerships that were sold in prior years. Low-Income Housing Tax Credits The Tax Credits per Limited Partner stabilized in 1997. The credits have ended as all Properties have reached the end of the ten year credit period. Property Discussions Five of the Properties in which the Fund has an interest had stabilized operations and operated above breakeven at December 31, 2008. Four Properties have generated cash flow deficits in prior periods that the Local General Partners of those Properties funded through project expense loans, subordinated loans or operating escrows. However, a few Properties have previously experienced operating difficulties that could either: (i) have an adverse impact on the Fund's liquidity; (ii) result in their foreclosure; or (iii) result in the General Partner deeming it appropriate for the Fund to dispose of its interest in the Local Limited Partnership prior to the expiration of the Compliance Period, in the event below breakeven operations recur. Also, the General Partner, in the normal course of the Fund's business, may arrange for the future disposition of its interest in certain Local Limited Partnerships. The following Property discussions focus only on such Properties. As previously reported, in 2004 the Local General Partner of Beaverdam Creek located in Mechanicsville, Virginia, requested approval for a refinancing on the Property's first mortgage. As part of the agreement to provide the General Partner's approval of the refinancing, a put agreement was entered into whereby the Fund has the right to transfer its interest in the Local Limited Partnership for a nominal price at any time after December 31, 2009, the end of the Property's Compliance Period. As a result of the refinancing, which closed on May 4, 2005, the Fund received Refinancing Proceeds, as defined in the Local Limited Partnership Agreement, of $890,727. The General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of the net proceeds in Reserves. As previously reported, turnover at Green Wood Apartments, located in Gallatin, Tennessee, as a result of few employment opportunities in the immediate area, was the main cause for below breakeven operations at the Property. Rental concessions, provided in an effort to alleviate the turnover issue, had proven successful, at least in the short term, as rental revenue increased to a level sufficient to result in above breakeven operations at June 30, 2006. Occupancy averaged 92% throughout the six-month period ending June 30, 2006 while debt service coverage and working capital were at acceptable levels as of June 30, 2006. As a result of a prior agreement, Green Wood Apartments was sold on November 30, 2006. This sale resulted in net proceeds to the Fund of $528,320 or $14.60 per Unit and resulted in 2006 taxable income of $459,116, or $12.68 per Unit. For financial reporting purposes, $176,323 represented repayment of prior advances made to the Local Limited Partnership and $351,997 represents gain on sale. Upon a reconciliation of cash balances after disposition, the Fund received additional proceeds of $194,970, or $5.38 per Unit, in September 2007. As a result of these additional proceeds, the Fund incurred 2007 taxable income equivalent to the additional proceeds. The Managing General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of net proceeds in Reserves. The Fund no longer has an interest in this Local Limited Partnership. As previously reported, the Managing General Partner anticipated the Fund's interest in the Local Limited Partnership that owns SpringWood Apartments, located in Tallahassee, Florida, would be terminated upon the sale of the Property in the third quarter of 2008, a transaction that could have resulted in net sales proceeds to the Fund of approximately $1,600,000, or $44.20 per Unit. In July 2008, the potential buyer withdrew their interest to purchase this Property. The Managing General Partner is currently exploring alternative exit strategies for this Local Limited Partnership interest. The Managing General Partner anticipates the Fund's interest in the Local Limited Partnership will terminate upon the sale of the Property in June 2010. Net sales proceeds to the Fund are not known at this time. The Managing General Partner anticipates the Fund's interest in the Local Limited Partnership that owns Webster Court, located in Kent, Washington, to terminate upon the sale of the Property in the third quarter fiscal year 2010. Net sales proceeds, if any, as well as taxable income, are unknown at this time. The Managing General Partner anticipates the Fund's interest in the Local Limited Partnership that owns Pike Place, located in Fort Smith, Arkansas, to terminate upon the sale of the Property in the third quarter fiscal year 2010. Net sales proceeds, if any, as well as taxable income, are unknown at this time. The Managing General Partner anticipates the Fund's interest in the Local Limited Partnership that owns West End Place Apartments, located in Springdale, Arkansas, to terminate upon the sale of the Property in the third quarter fiscal year 2010. Net sales proceeds, if any, as well as taxable income, are unknown at this time. The Managing General Partner anticipates the Fund's interest in the Local Limited Partnership that owns Live Oak Apartments, located in West Palm Beach, Florida, to terminate as a result of the Property foreclosing in late 2009. Currently, the Managing General Partner estimates that there will be a $1,380,027 recapture penalty, or $37.81 per Unit, and estimates 2009 taxable gain for approximately $3,175,000, or $86.99 per Unit, which does not include the recapture penalty. Inflation and Other Economic Factors Inflation had no material impact on the operations or financial condition of the Fund for the years ended March 31, 2009 and 2008. Since most Properties benefit from some form of governmental assistance, the Fund 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. Certain Properties in which the Fund 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 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 Fund's internal control over financial reporting involves a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes the controls themselves, as well as monitoring of the controls and internal auditing practices and actions to correct deficiencies identified. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management assessed the Fund's internal control over financial reporting as of March 31, 2009. Based on this assessment, management concluded that, as of March 31, 2009, the Fund'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 General Partner of the Fund is Arch Street VIII Limited Partnership, a Massachusetts limited partnership (the "General Partner"), an affiliate of MMA. The General Partner was formed in August 1993. The Investment Committee of the General Partner approves all investments. The names and positions of the principal officers and directors of the General Partner are set forth below. Name Position Greg Judge Executive Vice President Michael H. Gladstone Principal, Member The General Partner provides day-to-day management of the Fund. 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 Fund is organized as a limited partnership solely for the purpose of real estate investment and does not have any employees. Therefore the Fund has not adopted a Code of Ethics. The Fund 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 Fund. Item 11. Management Remuneration Neither the partners of Arch Street VIII Limited Partnership nor any other individual with significant involvement in the business of the Fund receives any current or proposed remuneration from the Fund. Item 12. Security Ownership of Certain Beneficial Owners and Management As of March 31, 2009, the following entities are the only entities known to the Fund 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 Oldham Institutional Tax Credits LLC 2,476 Units 6.78% Partner 101 Arch Street Boston, MA Limited Oldham Institutional Tax Credits 5,220 Units 14.30% Partner VI LLC 101 Arch Street Boston, MA Limited Liberty Corporation 2,079 Units 5.70% Partner PO Box 789 Greenville, SC Limited Everest Housing Investors 2, LLC 2,458 Units 6.73% Partner 155 North Lake Avenue Suite 1000 Pasadena, CA 91101 Oldham Institutional Tax Credits LLC and Oldham Institutional Tax Credits VI LLC are affiliates of Arch Street VIII Limited Partnership, the General Partner. The equity securities registered by the Fund under Section 12(g) of the Act of 1934 consist of 200,000 Units, 36,497 of which have been sold to the public. Holders of Units are permitted to vote on matters affecting the Fund only in certain unusual circumstances and do not generally have the right to vote on the operation or management of the Fund. Arch Street VIII, Inc. owns a fractional (unregistered) Unit not included in the Units sold to the public. Except as described in the preceding paragraphs, neither Arch Street VIII, Inc., Arch Street VIII Limited Partnership, MMA, nor any of their executive officers, directors, partners or affiliates is the beneficial owner of any Units. None of the foregoing persons possesses a right to acquire beneficial ownership of Units. The Fund does not know of any existing arrangement that might at a later date result in a change in control of the Fund. Item 13. Certain Relationships and Related Transactions The Fund is required to pay certain fees to and reimburse certain expenses of the General Partner or its affiliates (including MMA) in connection with the organization of the Fund and the offering of Units. The Fund is also required to pay certain fees to and reimburse certain expenses of the General Partner or its affiliates (including MMA) in connection with the administration of the Fund and its acquisition and disposition of investments in Local Limited Partnerships. In addition, the General Partner is entitled to certain Fund distributions under the terms of the Partnership Agreement. Also, an affiliate of the General Partner 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, expenses and distributions paid in the years ended March 31, 2009 and 2008 are described below and in the sections of the Prospectus entitled "Estimated Use of Proceeds", "Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions". Such sections are incorporated herein by reference. The Fund is permitted to enter into transactions involving affiliates of the General Partner, subject to certain limitations established in the Partnership Agreement. Information regarding the Fees paid and expense reimbursements made in the two years ended March 31, 2009 is as follows: Organizational Fees and Expenses and Selling Expenses In accordance with the Partnership Agreement, the Fund was required to pay certain fees to and reimburse expenses of the General Partner and others in connection with the organization of the Fund and the offering of its Limited Partnership Units. Selling commissions, fees and accountable expenses related to the sale of the Units totaling $4,664,369 have been charged directly to Limited Partners' equity. In connection therewith, $2,828,918 of selling expenses and $1,835,451 of offering expenses incurred on behalf of the Fund have been paid to an affiliate of the General Partner. The Fund was also required to pay a non-accountable expense allowance for marketing expense equal to a maximum of 1% of Gross Proceeds. The Fund has capitalized an additional $50,000 which was reimbursed to an affiliate of the General Partner. Total organization and offering expenses exclusive of selling commissions and underwriting advisory fees did not exceed 5.5% of the Gross Proceeds and organizational and offering expenses, inclusive of selling commissions and underwriting advisory fees, did not exceed 15.0% of the Gross Proceeds. There were no organizational fees and expenses paid for the two years ended March 31, 2009. Acquisition Fees and Expenses In accordance with the Partnership Agreement, the Fund was required to pay acquisition fees to and reimburse acquisition expenses of the General Partner or its affiliates for selecting, evaluating, structuring, negotiating and closing the Fund's investments in Local Limited Partnerships. Acquisition fees totaled 6% of the Gross Proceeds. Acquisition expenses, which include such expenses as legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses, were expected to total 1.5% of the Gross Proceeds. Acquisition fees totaling $2,189,820 for the closing of the Fund's Local Limited Partnership investments were paid to an affiliate of the General Partner. Acquisition expenses totaling $335,196 were reimbursed to an affiliate of the General Partner. There were no acquisition fees and expenses paid for the two years ended March 31, 2009. Asset Management Fees In accordance with the Partnership Agreement, an affiliate of the General Partner currently receives 0.50% (annually adjusted by the CPI factor) of Gross Proceeds annually as an Asset Management Fee for administering the affairs of the Fund. Asset Management Fees earned in each of the two years ended March 31, 2009 and 2008 are as follows: 2009 2008 -------------- ---------------- Asset management fees $ 263,210 $ 255,371 Salaries and Benefits Expense Reimbursement An affiliate of the General Partner is reimbursed for the cost of certain salaries and benefits expenses which are incurred by an affiliate of the General Partner on behalf of the Fund. The reimbursements are based upon the size and complexity of the Fund's operations. Reimbursements paid or payable in each of the two years ended March 31, 2009 and 2008 are as follows: 2009 2008 -------------- ------------- Salaries and benefits expense reimbursements $ 87,007 $ 77,130 Cash Distributions Paid to the General Partners In accordance with the Partnership Agreement, the General Partner of the Fund, Arch Street VIII Limited Partnership receives 1% of cash distributions paid to partners. As of March 31, 2009, the Fund has not paid any cash distributions to partners. Additional information concerning cash distributions and other fees paid or payable to the 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 and 2008 is presented in Note 4 to the Financial Statements. Item 14. Principal Accountant Fees and Services The Fund paid or accrued fees for services rendered by the principal accountants for the two years ended March 31, 2009 and 2008 as follows: 2009 2008 -------------- --------- Audit fees $ 64,784 $ 69,100 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 and 2008. 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 TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP By: Arch Street VIII Limited Partnership its General Partner By: /s/Greg Judge Date: July 15, 2009 ---------------------------------- ------------ Greg Judge President Arch Street VIII Limited Partnership 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 Fund and in the capacities and on the dates indicated: By: /s/Greg Judge Date: July 15, 2009 ---------------------------------- ------------ Greg Judge President Arch Street VIII Limited Partnership By: /s/Michael H. Gladstone Date: July 15, 2009 ----------------------------- ------------- Michael H. Gladstone Vice President Arch Street VIII Limited Partnership BOSTON FINANCIAL TAX CREDIT FUND VIII, 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 Tax Credit Fund VIII, A Limited Partnership We have audited the accompanying balance sheets of Boston Financial Tax Credit Fund VIII, A Limited Partnership 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 one operating limited partnership as of and for the year ended March 31, 2008, in which the Partnership owns a limited partnership interest. The investment in such partnership is stated at $0 at March 31, 2008 and the Partnership's equity in loss in this operating partnership is stated at $592,708 for the year then ended. The financial statements of this operating partnership was audited by another auditor whose report has been furnished to us, and our opinion, insofar as it relates to information relating to this operating limited partnership, is based solely on the report of the other auditor. 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 report of the other auditor, the financial statements referred to above present fairly, in all material respects, the financial position of Boston Financial Tax Credit Fund VIII, A Limited Partnership 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 TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP BALANCE SHEET March 31, 2009 and 2008 2009 2008 ---------------- -------------- Assets Cash and cash equivalents $ 109,829 $ 469,376 Investments in Local Limited Partnerships (Note 3) 4,235,556 5,935,354 ------------------ --------------- Total Assets $ 4,345,385 $ 6,404,730 ================== =============== Liabilities and Partners' Equity Due to affiliate (Note 4) $ 692,470 $ 759,807 Accrued expenses 49,958 46,534 ------------------ --------------- Total Liabilities 742,428 806,341 General, Initial and Investor Limited Partners' Equity 3,602,957 5,598,389 ------------------ --------------- Total Liabilities and Partners' Equity $ 4,345,385 $ 6,404,730 ================== =============== The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS For the Years Ended March 31, 2009 and 2008 2009 2008 ---------------- ---------------- Revenue: Investment $ 3,017 $ 42,574 Cash distribution income 17,650 194,790 ---------------- ---------------- Total Revenue 20,667 237,364 ---------------- ---------------- Expense: Asset management fees, affiliate (Note 4) 263,210 255,371 Impairment on investments in Local Limited Partnerships (Note 3) 1,372,000 1,117,000 General and administrative (includes reimbursements to an affiliate in the amount of $87,007 and $77,130 in 2009 and 2008, respectively) (Note 4) 194,139 202,889 Amortization 6,552 11,871 --------------- --------------- Total Expense 1,835,901 1,587,131 ---------------- ---------------- Loss before equity in income (losses) of Local Limited Partnerships (1,815,234) (1,349,767) Equity in income (losses) of Local Limited Partnerships (Note 3) (180,198) 49,149 ---------------- ---------------- Net Loss $ (1,995,432) $ (1,300,618) ================ ================ Net Loss allocated: General Partners $ (19,954) $ (13,006) Limited Partners (1,975,478) (1,287,612) ---------------- ---------------- $ (1,995,432) $ (1,300,618) ================ ================ Net Loss per Limited Partner Unit (36,497 Units) $ (54.13) $ (35.28) ================= ================= The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP STATEMENTS OF CHANGES IN PARTNERS' EQUITY For the Years Ended March 31, 2009 and 2008 Initial Investor General Limited Limited Partners Partners Partners Total Balance at March 31, 2007 $ 68,990 $ 100 $ 6,829,917 $ 6,899,007 Net Loss (13,006) - (1,287,612) (1,300,618) ------------- -------------- -------------- ------------ Balance at March 31, 2008 55,984 100 5,542,305 5,598,389 Net Loss (19,954) - (1,975,478) (1,995,432) ------------- -------------- -------------- ------------ Balance at March 31, 2009 $ 36,030 $ 100 $ 3,566,827 $ 3,602,957 ============= ============== ============== ============ The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Years Ended March 31, 2009 and 2008 2009 2008 ---------------- ---------------- Cash flows from operating activities: Net Loss $ (1,995,432) $ (1,300,618) Adjustments to reconcile net loss to net cash used for operating activities: Equity in income (losses) of Local Limited Partnerships 180,198 (49,149) Impairment on investments in Local Limited Partnerships 1,372,000 1,117,000 Amortization 6,552 11,871 Cash distributions included in net loss (17,650) - Increase (decrease) in cash arising from changes in operating assets and liabilities: Due to affiliates (67,337) (319,499) Accrued expenses 3,424 23,495 ---------------- ---------------- Net cash used for operating activities (518,245) (516,900) ---------------- ---------------- Cash flows from investing activities: Cash distributions received from Local Limited Partnerships 158,698 128,390 ---------------- ------------- Net cash provided by investing activities 158,698 128,390 ---------------- --------------- Net decrease in cash and cash equivalents (359,547) (388,510) Cash and cash equivalents, beginning 469,376 857,886 ---------------- ------------- Cash and cash equivalents, ending $ 109,829 $ 469,376 ================ ================ The accompanying notes are an integral part of these financial statements. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS 1. Organization Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a Massachusetts limited partnership organized to invest in other limited partnerships ("Local Limited Partnerships") which own and operate apartment complexes which are eligible for low income housing tax credits that may be applied against the federal income tax liability of an investor. The Fund's objectives are to: (i) provide investors with annual tax credits which they may use to reduce their federal income tax liability; (ii) provide limited cash distributions from the operations of apartment complexes; and (iii) preserve and protect the Fund's capital. Arch Street VIII Limited Partnership ("Arch Street L.P."), a Massachusetts limited partnership consisting of Arch Street VIII, Inc., a Massachusetts corporation ("Arch Street, Inc.") as the sole general partner and MMA Financial, Inc. ("MMA") as the sole limited partner, is the sole General Partner of the Fund. Arch Street L.P. and Arch Street, Inc. are affiliates of MMA. The fiscal year of the Fund ends on March 31. 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 Fund 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 Agreement authorizes the sale of up to 200,000 units of limited partnership interest ("Units") at $1,000 per Unit in series. The first series offered 50,000 Units. On July 29, 1994, the Fund held its final investor closing. In total, the Fund received $36,497,000 of capital contributions from investors admitted as Limited Partners, for a total of 36,497 Units. Under the terms of the Partnership Agreement, the Fund originally designated 5% of the Gross Proceeds from the sale of Units as a reserve for working capital of the Fund and contingencies related to ownership of Local Limited Partnership interests. The General Partner may increase or decrease such amounts from time to time, as it deems appropriate. At March 31, 2009 and 2008, the General Partner has designated $109,829 and $469,376, 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 Partner. Net proceeds from a sale or refinancing will be allocated 95% to the Limited Partners and 5% to the General Partner, 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 Fund 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. BOSTON FINANCIAL TAX CREDIT FUND VIII, 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 Fund invests are Variable Interest Entities ("VIE"s). The Fund 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 Fund'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 Fund, through its ownership percentages, may participate in property disposition proceeds. The timing and amounts of these proceeds are unknown but can impact the Fund's financial position, results of operations or cash flows. Because the Fund is not the primary beneficiary of these VIEs, it accounts for its investments in the Local Limited Partnerships using the equity method of accounting. As a result of its involvement with the VIEs, the Fund's exposure to economic and financial statement losses is limited to its investments in the VIEs ($4,235,556 and $5,935,354 at March 31, 2009 and 2008, respectively). The Fund may be subject to additional losses to the extent of any financial support that the Fund voluntarily provides in the future. Under the equity method, the investment is carried at cost, adjusted for the Fund's share of net income or loss and for cash distributions from the Local Limited Partnerships; equity in income or loss of the Local Limited Partnerships is included currently in the Fund's operations. A liability is recorded for delayed equity capital contributions to Local Limited Partnerships. Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that equity in losses are incurred when the Fund's carrying value of the respective Local Limited Partnership has been reduced to a zero balance, the losses will be suspended and offset against future income. Income from Local Limited Partnerships, where cumulative equity in losses plus cumulative distributions have exceeded the total investment in Local Limited Partnerships, will not be recorded until all of the related unrecorded losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, that distribution is recorded as income on the books of the Fund. The Tax Credits generated by Local Limited Partnerships are not reflected on the books of the Fund 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 Fund. These fees and expenses are included in the Fund'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 Fund provides advances to the Local Limited Partnerships to finance operations or to make debt service payments. The Fund assesses the collectibility of these advances at the time the advance is made and records a reserve if collectibility is not reasonably assured. The Fund does not guarantee any of the mortgages or other debt of the Local Limited Partnerships. The Fund, 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 of facilities and continued eligibility of tax credits. If the cost of operating a property exceeds the rental income earned thereon, the Fund may deem it in its best interest to voluntarily provide funds in order to protect its investment. The General Partners have decided 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 about 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. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) Investments in Local Limited Partnerships (continued) - ---------------------------------------------------- The Fund 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 Fund'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 Fund may record similar impairment losses in the future if the expiration of tax credits outpaces losses and distributions from any of the Local Limited Partnerships. 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 Fund'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 Fund. 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 Fund's disclosures if the FASB's guidance regarding the application of FIN48 to pass-through entities changes. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) 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 statements on at least an annual basis until November 15, 2008. The Fund adopted the provisions of SFAS No. 157 for financial assets and liabilities recognized at fair value on a recurring basis effective April 1, 2008. The partial adoption of SFAS No. 157 did not have a material impact on the Fund's Financial Statements. The Fund does not expect the adoption of the remaining provisions of SFAS No. 157 to have a material effect on the Fund's financial position, operations or cash flow. This standard requires that a Fund measure its financial assets and liabilities using inputs from the three levels of the fair value hierarchy. A financial asset or liability classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The three levels are as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Fund has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs reflect the Fund's judgments about the assumptions market participants would use in pricing the asset or liability since limited market data exists. The Fund develops these inputs based on the best information available, including the Fund's own data. Financial assets accounted for at fair value on a recurring basis at March 31, 2009 include cash equivalents of $109,829. 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 Fund has not elected to measure any financial assets and financial liabilities at fair value under the provisions of SFAS No. 159. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 3. Investments in Local Limited Partnerships The Fund currently owns limited partnership interests in nine Local Limited Partnerships, which were organized for the purpose of owning and operating multi-family housing complexes, all of which are government assisted. The Fund's ownership interest in the Local Limited Partnerships is 99%, with the exception of Springwood, which is 79.20%, Hemlock Ridge, which is 77% and Pike Place and West End Place, which are 90%. The Fund may have negotiated or may negotiate options with the Local General Partners to purchase or sell the Fund's interests in the Local Limited Partnerships at the end of the Compliance Period at nominal prices. In the event that Local Limited Partnerships are sold to third parties, or upon dissolution of the Local Limited Partnerships, proceeds will be distributed according to the terms of each Local Limited Partnership agreement. The following is a summary of investments in Local Limited Partnerships at March 31, 2009 and 2008: 2009 2008 ---------------- -------------- Capital contributions and advances paid to Local Limited Partnerships $ 26,647,252 $ 26,647,252 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $2,625,408 and $1,622,665) (15,517,498) (15,354,950) Cumulative cash distributions received from Local Limited Partnerships (2,335,491) (2,176,793) ---------------- -------------- Investments in Local Limited Partnerships before adjustments 8,794,263 9,115,509 Excess investment costs over the underlying assets acquired: Acquisition fees and expenses 1,003,989 1,003,989 Cumulative amortization of acquisition fees and expenses (329,628) (323,076) ---------------- ----------------- Investments in Local Limited Partnerships before valuation allowance 9,468,624 9,796,422 Valuation allowance on investments in Local Limited Partnerships (5,233,068) (3,861,068) ---------------- ----------------- Investments in Local Limited Partnerships $ 4,235,556 $ 5,935,354 ================ ================== The Fund has recorded a valuation allowance for its investments in certain Local Limited Partnerships in order to appropriately reflect the estimated net realizable value of these investments. BOSTON FINANCIAL TAX CREDIT FUND VIII, 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 Fund has invested as of December 31, 2008 and 2007 (due to the Fund'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 $ 37,726,084 $ 39,501,283 Other assets 3,742,006 4,087,444 ---------------- ---------------- Total Assets $ 41,468,090 $ 43,588,727 ================ ================ Liabilities and Partners' Equity: Mortgage notes payable $ 25,883,791 $ 26,833,652 Other liabilities 11,318,344 10,916,144 ---------------- ---------------- Total Liabilities 37,202,135 37,749,796 ---------------- ---------------- Fund's Equity 6,434,351 7,738,338 Other partners' deficiency (2,168,396) (1,899,407) ---------------- ---------------- Total Partners' Equity 4,265,955 5,838,931 ---------------- ---------------- Total Liabilities and Partners' Equity $ 41,468,090 $ 43,588,727 ================ ================ Summarized Statements of Operations - for the year ended December 31, 2008 2007 ---------------- ---------- Rental and other income $ 8,563,911 $ 8,680,198 Expenses: Operating 5,705,541 5,507,941 Interest 2,119,849 2,201,528 Depreciation and amortization 2,007,274 1,998,169 ---------------- ---------------- Total Expenses 9,832,664 9,707,638 ---------------- ---------------- Net Loss $ (1,268,753) $ (1,027,440) ================ ================ Fund's share of net loss 2008 and 2007 (includes $2 and $65, $ (1,165,291) $ (923,534) ================ ================ respectively, from previous years) Other partners' share of net loss $ (103,464) $ (103,841) ================ ================ For the years ended March 31, 2009 and 2008, the Fund has not recognized $985,093 and $972,683, 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. The Fund's equity as reflected by the Local Limited Partnerships of $6,434,351 and $7,738,338 at December 31, 2008 and 2007, respectively, differs from the Fund's investments in Local Limited Partnerships before adjustments of $8,794,263 and $9,115,509 at December 31, 2008 and 2007, respectively, primarily due to cumulative unrecognized losses as described above and advances to Local Limited Partnerships that the Fund included in investments in Local Limited Partnerships. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 4. Transactions with Affiliates An affiliate of the General Partner receives a base amount of 0.50% (annually adjusted by the CPI factor) of the Gross Proceeds as the annual Asset Management Fee for administering the affairs of the Fund. Included in the Statements of Operations are Asset Management Fees of $263,210 and $255,371 for the years ended March 31, 2009 and 2008, respectively. During the years ended March 31, 2009 and 2008, $0 and $680,000 respectively, were paid out of available cash flow for Asset Management Fees. As of March 31, 2009 and 2008, $553,319 and $290,109, respectively, is payable for Asset Management Fees. An affiliate of the General Partner is reimbursed for the cost of the Fund's salaries and benefits expenses. Included in general and administrative expenses for the years ended March 31, 2009 and 2008 is $87,007 and $77,130, respectively that the Fund incurred for these expenses. During the years ended March 31, 2009 and 2008, $393,000 and $0 respectively, were paid to the affiliate of the General Partner. As of March 31, 2009 and 2008, $126,785 and $432,778, respectively, is payable to an affiliate of the General Partner. An affiliate of the General Partner is reimbursed for the actual cost of the Fund's operating expenses, which includes a reimbursement for salaries and benefits. As of March 31, 2009 2008, $12,366 and $36,920, respectively, is reimbursable to the affiliate. 5. Federal Income Taxes The following schedule reconciles the reported financial statement net loss for the fiscal years ended March 31, 2009 and 2008 to the net loss reported on the Form 1065, U.S. Partnership Return of Income for the years ended December 31, 2008 and 2007: 2009 2008 -------------- -------------- Net Loss per financial statements $ (1,995,432) $ (1,300,618) Equity in losses of Local Limited Partnerships for tax purposes in excess of equity in losses for financial reporting purposes (303,966) (154,560) Equity in losses of Local Limited Partnerships not recognized for financial reporting purposes (985,093) (972,683) Adjustment to reflect March 31 fiscal year end to December 31 taxable year end (325) 11,025 Amortization for tax purposes in excess of amortization for financial reporting purposes (29,957) (24,638) Provision for valuation allowance on investments in Local Limited Partnerships not deductible for tax purposes 1,372,000 1,117,000 Cash distributions included in net loss for financial reporting purposes (17,650) - -------------- -------------- Net Loss per tax return $ (1,960,423) $ (1,324,474) ============== ============== BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 5. Federal Income Taxes (continued) The differences in the assets and liabilities of the Fund 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 $ 4,235,556 $ 3,591,843 $ 643,713 ============== ============== ============== Other assets $ 109,829 $ 4,765,379 $ (4,655,550) ============== ============== ============== Liabilities $ 742,428 $ 628,769 $ 113,659 ============== ============== ============== The differences in assets and liabilities of the Fund for financial reporting and tax purposes are primarily attributable to: (i) the cumulative equity in losses from Local Limited Partnerships for tax reporting purposes is approximately $5,733,000 more than for financial reporting purposes, including approximately $2,625,000 of losses the Fund has not recognized relating to six Local Limited Partnerships whose cumulative equity in losses exceeded the total investment; (ii) the cumulative amortization of acquisition fees for tax purposes exceeds financial reporting purposes by approximately $161,000; (iii) the Fund has provided an impairment allowance of approximately $5,233,000 against its investments in Local Limited Partnerships for financial reporting purposes; and (iv) organizational and offering costs of approximately $4,664,000 that have been capitalized for tax purposes are charged to Limited Partners' equity for financial reporting purposes. The differences in the assets and liabilities of the Fund 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 $ 5,935,354 $ 5,238,657 $ 696,697 ============== ============== ============== Other assets $ 469,376 $ 5,162,274 $ (4,692,898) ============== ============== ============== Liabilities $ 806,341 $ 712,055 $ 94,286 ============== ============== ============== The differences in assets and liabilities of the Fund for financial reporting and tax purposes are primarily attributable to: (i) the cumulative equity in losses from Local Limited Partnerships for tax reporting purposes is approximately $4,426,000 more than for financial reporting purposes, including approximately $1,623,000 of losses the Fund has not recognized relating to five Local Limited Partnerships whose cumulative equity in losses exceeded the total investment; (ii) the cumulative amortization of acquisition fees for tax purposes exceeds financial reporting purposes by approximately $132,000; (iii) the Fund has provided an impairment allowance of approximately $3,569,000 against its investments in Local Limited Partnerships for financial reporting purposes; and (iv) organizational and offering costs of approximately $4,664,000 that have been capitalized for tax purposes are charged to Limited Partners' equity for financial reporting purposes. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 6. Significant Subsidiaries The following Local Limited Partnerships invested in by the Fund represent more than 20% of the Fund's total assets or equity as of March 31, 2009 or 2008 or net losses 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: Beaverdam Creek Associates, a Limited Partnership 2008 2007 - ------------------------------------------------- --------------- --------------- Total Assets $ 5,225,185 $ 5,467,085 Total Liabilities $ 4,139,080 $ 4,213,653 Revenue $ 1,109,874 $ 1,129,166 Net Income $ 36,062 $ 48,471 Oak Knoll Renaissance, Limited Partnership Total Assets $ 7,547,782 $ 8,029,600 Total Liabilities $ 4,277,446 $ 4,672,870 Revenue $ 2,029,546 $ 1,970,253 Net Income $ 15,561 $ 185,462 Pike Place, A Limited Partnership Total Assets $ 3,233,349 $ 3,459,348 Total Liabilities $ 2,881,876 $ 2,966,102 Revenue $ 657,330 $ 647,561 Net Loss $ (141,773) $ (104,413)